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Oil Gas Lease0111 Fb��1'��1 �L�G,�L�� 1 o1�L'°1�'ue�i��a; PLP�1�4���ot�ai 11111 Reception#: 749475 05130/2008 05:05:02 PM Jean Alberico 111111(1 1'1'I•III 1 of 6 Rec Fee:$31.00 Doc Fee:0.00 GARFIELD COUNTY CO Producers SS — PAID UP 676753 06/23/2005 11:23P B1699 P603 M PLSDORF Revisal 1 of 5 R 26.00 D 0.00 GARFIELD COUNTY CO PAID-UP OIL AND GAS LEASE AGREEMENT, Made and entered into the 3rd day of June , 200 5 , by and between CENTRAL AGGREGATES, INC., a COLORADO CORPORATION whose address is Box 61 Rifle, Co 81650 , hereinafter called Lessor (whether one or more) and whose address is 1625 17th Street, Suite 300, Denver, CO 80202 Antero Resources [l Corporation hereinafter called Lessee - WITNESSETH, That the Lessor, for and in consideration of TEN AND MORE DOLLARS (S10.00+) cash in hand paid, the receipt of which is hereby acknowledged, and the covenants and agreements Hereinafter contained, has granted, demised, leased and let, and by these presents docs grant, demise, lease and let exclusively unto the said Lessee, the land hereinafter described, with the exclusive .right for the purpose of drilling, mining, exploring by geophysical and other methods, and operating for and producing therefrom oil and all gas of whatsoever nature or kind, specifically including coalbed methane and any and all substances produced in association therewith from coal -bearing formations, with rights of way and easements for roads, laying pipe lines, and erection of structures thereon to produce, save and take care of said products, all that certain tract of land situated in the County of Gorfkid State of CQ, described as follows, to -wit: See Exhibit "A", Exhibit "B" and Exhibit "C" attached hereto and made a part hereof. This is a non -surface occupancy lease except for one (1) drill site pad as shown on exhibit "C" together with any reversionary rights therein, and together with all strips or parcels of land, (not, however, to be construed to include parcels comprising a regular 40 - acre legal subdivision or lot of approximately corresponding size) adjoining or contiguous to the above described land and owned or claimed by Lessor, and containing 109.712 acres, more or less. 1. It is agreed that this lease shall remain in force for a term of three (3) years and as long thereafter as oil or gas of whatsoever nature or kind is produced from said leased premises or on acreage pooled therewith, or drilling operations are continued as hereinafter provided. lf, at the expiration of the primary team of this lease, oil or gas is not being produced on the leased premises or on acreage pooled therewith but Lessee is then engaged in drilling or re -working operations thereon, then this tease shall continue in force so long as operations are being continuously prosecuted on the leased premises or on acreage pooled therewith; and operations shall be considered to be continuously prosecuted if not more than ninety (90) days shall elapse between the completion or abandonment of one well and the beginning of operations for the drilling of a subsequent well. If after discovery of oil or gas on said land or on acreage pooled therewith, the production thereof should cease from any cause after the primary term, this lease shall not terminate if Lessee commences additional drilling or re -working operations within ninety (90) days from date of cessation of production or from date of completion of dry hole. If oil or gas shall be discovered and produced as a result of such operations at or after the expiration of the primary term of this lease, this lease shall continue in force so long as oil or gas is produced from the leased premises or on acreage pooled therewith. in the event a well or wells is drilled and completed on the lands, or on the lands pooled therewith, for the purpose of developing coalbed gas, the word "operations" shall mean, in addition to those matters covered in the preceding paragraph. (1) operations of said wells to remove water or other substances from the coalbed, or to dispose of such water or other substances, even though such operations do not result in the production of hydrocarbons in paying quantities, or (2) shutting -in or otherwise discontinuing production from said wells to allow for surface or underground mining affecting the drillsite or wellbore. 2. This is a PAID-UP LEASE. In consideration of the down cash payment, Lessor agrees that Lessee shall not be obligated, except as otherwise provided herein, to commence or continue any operations during the primary term. Lessee may at any time or times during or after the primary term surrender this lease as to all or any portion of said land and as to any strata or stratum by delivering to Lessor or by filing for record a release or releases, and be relieved of all obligation thereafter accruing as to the acreage surrendered. 3. In consideration of the premises the said Lessee covenants and agrees: 3 st To deliver to the credit of Lessor, free of cost, in the pipe line to which Lessee may connect wells on said land, the equal seventeen weer!! (17%) part of all oil produced and saved from the leased premises. 2nd To pay Lessor on gas and casinghead gas produced from said land (1) when sold by Lessee, geveni en oere eni(17%( of the net proceeds derived from such sale or (2) when used b Lessee off said land or in the manufacture of gasoline or other products, the market value, at the mouth of the well, of ntee of such gas and casinghead gas, Lessor's interest, in either case, to bear sere leers percent (17.00%) of the cost of compressing, dehydrating and otherwise treating such gas or casinghead gas to render it marketable or usable and seventeen percent (17.00%)!. of the cost of gathering and transporting such gas and casinghead gas from the mouth of the well to the point of sale or use. 3rd To pay Lessor for gas produced from any oil well and used off the premises or in the manufacture of gasoline or any other product, a royalty of g@ventt;en percent (17.90%) of the proceeds, at the mouth of the well. payable monthly at the prevailing market rate_ 4. Where gas from a well capable of producing gas is not sold or used, Lessee may pay or tender as royalty to the royalty owners One Dollar per year per net acre retained hereunder, such payment or tender to be made on or before the anniversary date of this lease next ensuing after the expiration of 90 days from the date such well is shut in and thereafter on or before the anniversary date of this lease during the period such well is shut in. If such payment or tender is made, it will be considered that gas is being produced within the meaning of this lease. 5. lf said Lessor owns a less interest in the above described land than the entire and undivided fee simple estate therein, then the royalties (including any shut-in gas royalty) herein provided for shall be paid the Lessor only in the proportion which Lessor's interest bears to the whole and undivided fee. 6. Lessee shall have the right to use, fire of cost, gas, oil and water produced on said land for Lessee's operation thereon. 7. When requested by Lessor, Lessee shall bury Lessee's pipeline below plow depth. 8. No well shall be drilled nearer than 200 feet to the house or barn now on said premises without written consent of Lessor. 9. Lessee shall pay for damages caused by Lessee's operations to growing crops on said land. 10. Lessee shall have the right at any time to remove all machinery and fixtures placed on said premises, including the right to draw and remove casing. 11. The rights of Lessor and Lessee hereunder may be assigned in whole or part. No change in ownership of Lessor's interest (by assignment or otherwise) shall be binding on Lessee until Lessee has been furnished with notice, consisting of certified copies of all recorded instruments or documents and other information necessary to establish a complete chain of record title from Lessor, and then only with respect to payments thereafter made. No other kind of notice, whether actual or constructive, shall be binding on Lessee. No present or future division of Lessor's ownership as to different portions or parcels of said land shall operate to enlarge the obligations or diminish the rights of Lessee, and all Lessee's operations may be conducted without regard to any such division_ if all or any part of this lease is assigned, no leasehold owner shall be liable for any act or omission of any other leasehold owner. 12. Lessee, at its option, is hereby given the right and power at any time and from time to time as a recurring right, either before or after production, as to all or any part of the land described herein and as to any one or more of the fommations hereunder, to pool or unitize the leasehold estate and the mineral estate covered by this lease with other land, lease or leases in the immediate vicinity for the production of oil and gas, or separately for the production of either, when in Lessee's judgment it is necessary or advisable to do so, and irrespective of whether authority similar to this exists with respect to such other land, lease or leases. Likewise, units previously formed to include formations not producing oil or gas, may be reformed to exclude such non -producing formations. The forming or reforming of any unit shall be accomplished by Lessee executing and filing of record a declaration of such unitization or reformation, which declaration shall describe the unit. Any unit may include land upon which a well has theretofore been completed or upon which operations for drilling have theretofore been commenced. Production, drilling or reworking operations or well shut in for want of a market anywhere on a unit which includes all or a part of this lease shall be treated as if it were production, drilling or reworking operations or a well shut in for want of a market under this lease. In lieu of the royalties elsewhere herein specified, including shut-in gas royalties, Lessor shall receive on production from the unit so pooled royalties only on the portion of such production allocated to this lease; such allocation shall be that proportion of the unit production that the total number of surface acres covered by this lease and included in the unit bears to the total number of surface acres in such unit. in addition to the foregoing, Lessee shall have the right to unitize, pool, or combine all or any part of the above described lands as to one or more of the formations thereunder with other lands in the same general area by entering into a cooperative or unit plan of development or operation approved by any governmental authority and, from time to time, with like approval, to modify, change or terminate any such plan or agreement and, in such event, the terms, conditions and provisions of this lease shall be deemed modified 10 conform to the terms, conditions, and provisions of such approved cooperative or unit plan of development or operation and, particularly, all drilling and development requirements of this lease, express or implied, shall be satisfied by compliance with the drilling and development requirements of such plan or agreement, and this lease shall not terminate or expire during the life of such plan or agreement. in the event that said above described lands or any part thereof, shall hereafter be operated under any such cooperative or unit plan of development or operation whereby the production therefrom is allocated to different portions of the land covered by said plan, then the production allocalcd to any particular tract of land shall, for the purpose of computing the royalties to be paid hereunder to Lessor, be regarded as having been produced from the particular tract of land to which itis allocated and not to any other tract of land; and the royalty payments to be made hereunder to Lessor shall be based upon production only as so allocated. Lessor shall formally express Lessor's consent to any cooperative or unit plan of development or operation adopted by Lessee and approved by any governmental agency by executing the same upon request of Lessee. 13. When operations or production arc delayed or interrupted by lack of water, labor or material, or by fire, storm, flood, war rebellion, insurrection, riot, strike, differences with workmen, or failure of carriers to furnish transport or furnish facilities for transportation or lack of market in the field for the minerals A� a 11111' .1071101161f 11111 Reception#: 749475 05/30/2008 05:05:02 PM Jean Alberico 2 of 6 Rec Fee:$31.00 Doc Fee:0.00 GARFIELD COUNTY CO 1 produced, or as a result of any cause whatsoever beyond the control of Lessee, the time or sucn delay or interruption shall not be counted against Lessee and this lease shall remain in force during such delay or interruption and ninety (90) days thereafter, anything in this lease to thc contrary notwithstanding. 14. Lessor hereby warrants and agrees to defend the title to the lands herein described, and agrees that the Lessee shall have the right at any time to redeem for Lessor, by payment, any mortgages, taxes or other hens on the above described lands, in the event of default of payment by Lessor and be subrogated to the rights of the holder thereof, and the undersigned Lessors, for themselves and their heirs, successors and assigns, hereby surrender and release all right of dower and homestead in the premises described herein, insofar as said right of dower and homestead may in any way affect the purposes for which this lease is made, as reviled herein. 15. Should any one or more of the parties hereinabove named as Lessor fail to execute this lease, it shall nevertheless be binding upon all such parties who do execute it as Lessor. The word "Lessor," as used in this lease shall mean any one or more or all of the parties who execute this lease as Lessor. All the provisions of this lease shall be binding on the heirs, successors and assigns of Lessor and Lessee. 16. Lessor agrees that Lessee may locate a well or wells on any drilling site located any part of the land described herein, including the right to a subsurface easement through any part of the land described herein, which wells will be used to access the subsurface of adjacent mineral owners. 17. Notwithstanding anything to the contrary contained herein, Lessee has the option to extend the primary term an additional one (1) year with the payment of an amount equal to $400 per net acre, such amount being paid to Lessor on or before the expiration of the primary term set forth above in paragraph 1. Such payment shall be considered tendered by Lessee and received by Lessor when deposited, postage -paid, in the United States mail, or with a nationally recognized carrier service. IN WITNESS WI-[EREOF, this instrument is executed as of the date first above written. Gilbert T. Lee, stdent William Lee, Vice President STATE of Colorado COUNTY of Geld ACKNOWLEDGEMENT -INDIVIDUAL BEFORE ME, the undersigned, a Notary Public, in and for said County and State, on this /t day of a , 200 5 , personally appeared Gilbert T. Lee, President and William Lee, Vice President , to me known to be the identical person s , described in and who executed the within and foregoing instrument of writing and acknowledged to me that they duly executed same as their free and voluntary act and dad for the uses and purposes therein set forth and in the capacity stated therein. IN WITNESS WHEREOF, 1 have hereunto set my hand and affixed my notarial seal the day and year last above written. My Commission Expires: t, STATE of COUNTY of Notary Public: Address: ().C, , X I„;.( (tau pP,,,. SCO $tCne ACKNOWLEDGEMENT -INDIVIDUAL BEFORE ME, the undersigned, a Notary Public, in and for said County and Stain. on this day of , 200 , personally appeared .10 me knowei 10 be thc identical person _ , described in and who executed the within and foregoing instrument of writing and acknowledged to me that he - duly executed same as free and voluntary act and deed for the uses and purposes therein set forth and in the capacity stated therein. IN WITNESS WHEREOF, 1 have hereunto set my hand and of ixcd my notarial seal thc day and year last above written. My Commission Expires: 111111 11111 1!11111 11111 IIl11 Jill !Jill! SII 1101 IIII I��I 676753 06/23/2065 11:23A 61699 P604 M RLSDORF 2 of 5 R 26.00 D 0.00 GgRFIELD COUNTY CO After recording return tet: Return To Texhoma Land Consultants, Inc. P.O. Box 1214 Glenwood Springs, CO 01602 Notary Public: Address; 1 111111 11111 1111111 11111 11111 I11I1 111 1 ■11 r� N�". i ►li thi "�IM 0tion#• 749475 676753 06/23/2005 11:23iB1699 P605 05!3/2008 ���',�I►S t1111 05:05:02 Pf1 Jean A1ber ico 3 of 5 R 26.00 D 0.00 GRRF IELD COUNT 3 of 6 Ren Fee : $31.00 Doc Fee :0.00 GARF I FLD COUNTY CO EXHIBIT "A" Attached to and made a part for all purposes to that certain oil and gas lease dated 3rd day of June 2005, by and between Central Aggregates, Inc. and Antero Resources II Corporation, as lessee, covering various lands in Garfield County, Colorado. DESCRIPTION OF LANDS: Property # 1 A parcel of land lying south of the Denver and Rio Grande Western Railroad in Sec 17, Township 6 South, Range 93 West of the 6th P.M. being more fully described as follows: Beginning at a point on the southerly right of way line of the Denver and Rio Grande Western Railroad (as indicated by a fence line intersection in place) whence the North Quarter Corner of said Section 17, Tp. 6 S. R. 93 W. of the 6th P.M, bears N. 36° 01' 24" W. 2357.41 feet; thence S. 88° 24' 00" W. 1388.00 feet along said southerly right of way to a fence line intersection; thence S. 1° 54' 00" W. 393.00 feet along a fence line in place; thence S. 2° 13' 00" W. 1070.00 feet along a fence line in place to a point on the northerly meander line of the Colorado river (February 1981); thence along said meander line the following three courses; S. 69° 46'50" E. 320,24 feet; thence S. 53° 05' 42" E. 295.19 feet; thence S. 660 30' 10" E. 336.30 feet to a point being the intersection of the current meander line with the westerly most boundary of the parcel of land described in Document No. 175932 of the records of Garfield County, Colorado; thence along a portion of the westerly boundary of said property described in document No. 175932 the following seven courses; N 0 23' 00" W. 1130.54 feet; thence N. 89° 37' 00" E. 31.00 feet; thence N. 0° 23' 00" W. 38.80 feet; thence N. 84° 47' 00" E. 546.56 feet; thence N. 11° 54' 00" E. 64.97 feet; thence N. 90° 00' 00" E. 22.00 feet: thence N. 0° 32' 00" W. 650.00 feet to the point of beginning, Property # 2 Tract "A" and Lots 1, 2, 3, 4 and 5, Block 1 Lots 1, 2, 3, 4, 5, 6, 7 and 8, Block 2 Lots 1, 2, 3, 4, 5, 6, 7 and 8, Block 3 South Side Addition as reception No. 215941 City of Rifle County of Garfield Property # 3 Beginning at a point on the North line of Lot 3 of Section 17, Township 6 South, Range 93 West of the 6th Principal Meridian, whence the Northwest comer of Lot 3 (also being the Northwest comer of the Northeast One -Quarter of the Southwest One -Quarter (NE 1 /4S W 1 /4) of Section 17 bears South 89° 37' 57" West, 683.77 feet; thence South 0° 28' 00" East 405.24 feet to a point on the existing North bank of the Colorado River thence along said North bank of the Colorado River the following three courses: South 64° 04' 21" East 207.68 feet; thence South 56° 28' 26 East 297.64 feet; thence South 60° 21' 11" East 189.14 feet; thence, leaving said North bank, North 2° 13' 00" East 758.60 feet; thence South 89° 37' 57" West 631.93 feet along the North line of said Lot 3 to the point of beginning. II1111111MII1I1D11111ILI11iliSil 111 1 ■111 . NL�1�J';4N9I �G 'hi ll411411511VC Mill 11111 676753 06/23/2005 11:23A 01699 P606 05/307 2008 0 ©5.05 27PM Jean Alber ico 4 of 5 R 26.00 D 0,00 GARFI ELD COUN1 4 of 6 Rec Fee : $1.00 Doc Fee : 0.00 GARF I ELD COUNTY CO Except any portion of the above described property lying within the South Side Addition to Rifle the plat of which is recorded as Document No. 215942. Property #4 Tract 1 All that part of the SE1/4 of the SW1/4 of Section 17, T 6 S, R 93 W of the 6th P.M., lying North of the Northerly R/W Line of Highway I-70, And Tract 2 All that part of Lot 6, of Section 17, T 6 S, R 93 W, of the 6th P.M. more particularly described as follows; Beginning at the SW corner whence the corner of Sections 17, 18, 19 and 20 T 6 S, R 93 W, of the 6th P.M. bears S. 80° 06' 32" W 121.36 feet along the section line, S 00° 44' 58" E 1059.30 feet, said SW corner lying on the Northern boundary of that property described in book 518 at page 145, thence along said northerly boundary N 80° 06' 32" E 545.29 feet to the west line of the NEI/4 of said Lot 6, thence along said west line N 000 45' 47" E 178.57 feet to the South line of Lot 5, which is also referred to as Dixon Island #1, Thence along said South line, S 79°57' 19" W 548.61 feet to the high water line of the Colorado River South bank, thence along said high water line S 01° 45' 08" E 176.62 feet to the point of beginning. County of Garfield SIGNED FOR IDENTIFICATION: CENTRAL AGGREGATES, INC. X Gi rt . Lee, President William Lee, Vice President ti II11t ■Itis !�� ��,I�,�I�,NWS,ti��,tir,1�,�4��� 1I Il l 11111 11111 � 749475 Rece tion# . 676753 06/23/2005 11:23A B1699 P607 05/3012008 05:05:02 PM Jean a 1 ber i co 5 of 5 R 26.00 D 0.00 ARFIELD COUN 5 of 6 Rec Fee : $31.00 Doc Fee : 0.0O GRRFIELD COUNTY CO EXHIBIT "B" ATTACHED TO AND MADE A PART OF THAT CERTAIN OIL AND GAS LEASE DATED 3rd DAY OF JUNE, 2005, BY AND BETWEEN CENTRAL AGORTGATES, INC., LESSOR, AND ANTERO RESOURCES 11 CORPORATION, LESEE: (1) Determination of Market Value The "Market Value" of the royalty under Paragraph 3 on gas and casing head gas produced from the Leased Premises shall be determined as follows: i) The selling price, if sold under bona fide contract of sale with third persons, or ii) If they are not so sold to third persons, the fair and reasonable value thereof but in no event bear the costs and expenses of production, gathering, dehydration, compression, transportation, manufacturing, processing, treating or marketing of the oil, gas, or gas products from the leased premises, nor any part of the costs of construction, operation or depreciation of any plant or other facilities or equipment for processing oil or gas products from the leased premises or at the place where sold or used. (2) After drilling operations are completed, all berms and vegetation shall be reclaimed as near as practicable as they are found. SIGNED FOR IDENTIFICATION: CENTRAL AGGREGATES, INC. ilbe . Lee, President William Lee, Vice President ATTAC TO AND MADE A PART OF THAT CERTAIN OIL AND GAS LEASE DATED DAY OF , 411) E 2005 BY AND BETWEEN CENTRAL AGGREGATES, INC., LESSOR, AND ANTERO RESOURCES II CORPORATION, LESSEE: DESCRIPTION OF LAND: Township 6 South, Range 93 West, 6th P.M. Section 17 Designates the one (1) 3.5 to 4.0 acre drill site pad WELL DEDICATED ACCESS ROAD ALONG NORTH PROPERY LIN MAINTENANCE PURPOSES E�l4IfjIT "C •1 SIGNED FOR IDE IFICATION GILBERT T. LEE