This SURFACE USE AND DAMAGE AGREEMENT AND EASEMENT form
 was used by Evergreen for CBM Development in Kansas
(circa January 2004)
 


SURFACE USE AND DAMAGE AGREEMENT AND EASEMENT

            THIS SURFACE USE AND DAMAGE AGREEMENT AND EASEMENT (this
"Agreement"), is made and entered into this           day of                            by and between

                     , (hereinafter referred to as "Landowner"), and Evergreen Operating
Corporation, 1401 17th Street, Suite 1200, Denver, Colorado 80202 (hereinafter referred
to as "Operator"):

            WHEREAS, Landowner is the owner of and is in possession of the following described lands (the "Subject Lands"), situated in                    County, to wit:

 

 

            WHEREAS, Evergreen Resources, Inc. is the owner of an oil and gas lease(s) (the "Lease(s)") which covers all or part of the Subject Lands; and

            WHEREAS, Operator intends to enter upon the Subject Lands to conduct operations for exploration, drilling, production, marketing, treating, removal and transportation of oil, gas, coalbed methane gas, and all associated hydrocarbon substances produced in association therewith (collectively, "Hydrocarbons") from the Subject Lands and from other lands in the vicinity of the Subject Lands, and/or to drill, install, equip and operate a well or wells for the disposal of water produced in the operations of Operator; and

            WHEREAS, Operator intends to stake one or more wells ("the Well(s)") and/or water disposal wells ("the Disposal Well(s)") on the Subject Lands; and

            WHEREAS, Operator intends to construct upon the Subject Lands an access road or roads and/or to use existing roads or tracts located on the Subject Lands, ("Road(s)"), and to construct drilling locations and wellsites, reserve pits, and in the event of 
production (either from the Subject Lands or adjacent lands), tank batteries, compression facilities, dehydration facilities, separation equipment, and to install and construct flow
lines and gathering system lines ("Pipelines") for the transportation of Hydrocarbons, or water ("Water Lines"); and

            WHEREAS, Operator and Landowner desire to enter into this agreement, and to provide for assurances by the parties concerning Operator's operations and to grant Operator certain rights of way and easements for the foregoing purposes.

            NOW, THEREFORE, for and in consideration of the sum of TEN DOLLARS ($10.00) and other good arid valuable considerations, the receipt and sufficiency of which are hereby acknowledged by Landowner, the parties hereto agree as follows:

 

A)

Landowner hereby grants unto Operator, its agents, employees, contractors, invitees, licensees, representatives and assigns, ingress to, egress from and the right to enter upon and use the surface estate of the Subject Lands, together
with an access route or routes thereto for the unrestricted transportation of vehicles, materials, equipment, personnel and products to and from the location(s) at which the Well(s) will be drilled ("Wellsite(s)") and to and from 
the location(s) at which the Disposal Well(s) will be drilled ("Disposal Wellsite(s)") and to and from and across the Subject Lands for access from or
to adjacent lands.
B)

Operator agrees to pay to Landowner and Landowner agrees to accept a one time payment of $400.00 per Well drilled by Operator upon the Subject Lands for drilling, completing, equipping and producing the Well(s). The acreage allocated to each Wellsite location shall be approximately 200' by 125'. Landowner further grants Operator an easement, right-of-way and permission

 

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to install facilities on the Subject Lands for gas compression or more 
advanced gas processing, such as booster plants, separation equipment, dehydration plants, and other facilities that are necessary in connection with 
the production and marketing of Hydrocarbons. Landowner will be furnished with a survey plat showing the Wellsite location(s) following the staking of 
such locations.

 

C) For the drilling, installation, equipping, operating, repairing and maintenance 
of any Disposal Well, Operator agrees to pay to Landowner and Landowner agrees to accept, a one time payment of $400.00 for so long, and only for so long, as Operator uses the Disposal Well for the disposal of water from its operated wells. The acreage allocated to each Disposal Wellsite shall be approximately 200' by 125'. The acreage allocated for both a Wellsite and Disposal Wellsite on the same pad shall be approximately 300' by 250'. Landowner agrees that Operator shall have the right to use the Disposal 
Well(s) for the disposal of water from any of Operator's operated wells on or
off the Subject Lands. Landowner will be furnished with a survey plat 
showing the Disposal Wellsite location(s) following the staking of such 
locations.

 

D) Landowner hereby grants Operator an easement and right of way to construct and use the Road(s) for ingress to, egress from and access upon the 
Wellsite(s), Disposal Wellsite(s), or adjacent lands. Operator agrees to pay Landowner and Landowner agrees to accept, for use of any new Road constructed on the Subject Lands, or for the use of any existing Road which is not primarily maintained by governmental entities, necessary for ingress to,
egress from and access upon the Wellsite(s), the Disposal Wellsite(s), or for other access for the purposes of this Agreement, a one time payment of $3.00 per rod for the easement, right-of-way and damages; provided Operator may use Roads existing at the time of this Agreement, if primarily maintained by governmental entity, without any payment, as long as Operator maintains such Roads as a result of Operator's usage in at least as good a condition as such roads are found prior to Operator's use. Notwithstanding any provision contained herein to the contrary, Operator agrees that no new Roads shall be located within 200 feet of the presently existing residence or outbuildings on 
the Subject Lands, and that Operator shall cause no traffic on the portion of Landowner's Roads which are situated within said 200 feet of such presently existing structures without Landowner's permission. This restriction shall not 
be effective as to publicly maintained roads. In order to control dust on the access roads, Operator is granted the right to dispose produced water from the Well(s) on any new road or trail constructed on the Subject Land or on any existing road that is not maintained by governmental entities. If necessary, Operator is granted the right, but not the obligation, to hard surface said roads for year round use. Landowner shall have the right, at his own risk, to use any road constructed by Operator so long as the use thereof does not interfere with Operator's use thereof. Operator shall not interfere with Landowner's
reasonable use of such road.

 

E)

Landowner hereby grants Operator an easement and right of way for ingress
to, egress from and access upon the Subject Lands for the installation, construction, operation, maintenance, repair, usage, replacement and removal 
of Pipelines and Water Lines, for the movement of Hydrocarbons and water whether produced from the Subject Lands or from other lands. Operator 
agrees to pay Landowner and Landowner agrees to accept, for any Pipelines 
or Water Lines installed by Operator, the sum of $10.00 per rod for the right- of-way and damage therefore as a one-time payment ("ROW Fee") to cover 
the installation, construction, operation, maintenance, repair, usage, 
replacement and removal of the Pipelines and Water Lines. Placement of
multiple Pipelines, or placement of Water Lines with Pipelines, along the 
same right-of-way shall be subject to only one ROW Fee. The foregoing easement and right of way includes the right to install, construct, maintain, 
repair and replace one or more electrical lines necessary for the operation of

 

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Operator's equipment and facilities. Electrical lines or Water Lines placed 
within Road rights-of-way or along Pipeline rights-of-way shall not be subject 
to any fees for such placement or rights-of-way. It is understood that all Pipelines, Water Lines and electrical lines will be placed in consultation with
the Landowner to cause the least amount of disturbance, and the most benefit,
to Landowner's land use. Unless otherwise required in the Leases, all 
Pipelines. Water Lines and underground electrical lines constructed by 
Operator shall, at the time of construction thereof, be buried to a depth not less than plow depth as measured from the surface above the pipeline to the top of the pipeline, except if rock or other impenetrable substances make burial to 
the foregoing depth impractical, Operator shall have the right to bury the
pipelines to such lesser depth as is practical; and provided that at the option of Operator, such line or lines may be placed above the channel of any stream, ravine, ditch or other water courses. After payment of the ROW Fees for Pipelines and Water Lines, and the initial installation of such Pipelines and
Water Lines, it is understood that in the course of subsequently installing, additional Pipelines or Water Lines in the same right-of-way, or in routine maintenance of existing lines, that Operator, may damage crops. As to any 
such crop damage by Operator occasioned after the initial installation of a Pipeline or Water Line, Operator agrees to reimburse Landowner the actual market value of the portion of planted crops that are destroyed by Operator.

 

F) The easements granted herein are more specifically identified as a strip of land measuring 50 feet in width, in total for the easements for the Roads, Pipelines, Water Lines and electrical lines ("Entire Easement"), of which a strip of land measuring 20 feet in width shall be the easement for the Roads ("Road Easement"), and shall ordinarily extend 25 feet on each side of the Entire Easement centerline and 10 feet on each side of the Road Easement centerline. The location and dimensions of the easements shall be established by a
survey, a copy of which shall be furnished to Landowner upon construction of
the initial Roads, and will be modified, from time to time, as additional Roads, Pipelines arid Water Lines are constructed and installed.

 

G) The sum of the payments set forth above shall also constitute payment in full
for damages incurred, including crop damages, in the drilling, completing, operating, and equipping of Wells, Disposal Wells, laying of Pipelines, Water Lines and electrical lines (except for subsequent Pipelines, Water Lines and electrical lines in the same right-of way), the setting of tank batteries, the 
digging or building of catch, storage or overflow pits of every kind and
character whatsoever, the building of Roads, and the erecting of poles and
lines for carrying electrical power to said Well(s) or the Disposal Well(s)
across the Subject Lands, or across any other lands adjacent thereto, owned by Landowner. The Landowner hereby covenants and agrees to account to any other persons legally due any portion of the monies herein paid for damages. 
No additional damages or reimbursement shall be made for any crops
damaged or lost within the land area allotment for particular Wellsites, 
Disposal Wellsites, Roads, or facilities (other than Pipelines, Water Lines or electrical lines) after such are installed hereunder. Although Landowner may
plant crops within the allotted land area, and Operator shall endeavor to not damage same beyond what is reasonably necessary for carrying out Operator's purposes hereunder, Landowner nevertheless plants crops within such areas at his own risk.

 

H)

In addition to the above consideration, Operator, it's successors and assigns, agrees to pay actual damages to crops, fences, livestock, timber, and penalties assessed against CRP Lands, as well as damages to the surface of said lands, 
to the extent not located within the areas granted for Wellsite(s), Disposal Wellsite(s), Roads, Pipelines, Water Lines or electrical lines caused by or resulting from operations of Operator or its agents in connection with the location, drilling, completion, production and/or abandonment of the subject

 

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Well(s) or Disposal Well(s), except to the extent that such damages are 
included in any payments described above.

 

I) This agreement includes the right for Operator, at its option, to drill a water
well on the Subject Lands, which would be used in the drilling of any of Operator's wells on or off the Subject Lands. Operator shall not use any
surface or underground water which has been developed from or upon the Subject Lands or is presently in use by Landowner, unless Landowner's
consent is first obtained, and in the event consent is given, Operator and Landowner shall mutually agree upon the compensation Operator shall pay Landowner for the right to use such water.

 

            All payments required to be made pursuant to this Surface Use and Damage Agreement and Easement shall be mailed or delivered to Landowner at the address stated above, unless notice of change of address is given to Operator in writing. Payments for
the drilling of the Well(s) and/or the Disposal Well(s) will be due on the date that
Operator commences the drilling of any such well. Compensation for the surveyed roads and pipeline rights-of-ways and easements will be paid within 30 days after completion
of construction of any such road or pipeline. If Landowner owns less than 100 percent of the surface ownership as to lands covered hereby, then as to such lands the payments hereunder shall be proportionately reduced as to the percentage of surface interest owned.

            If Landowner believes that Operator is in default under any provision of this Agreement, as a condition precedent to Landowner initiating any legal proceeding, Landowner shall first give at least 30 days advance written notice to Operator specifying
the default claimed by Landowner. In the event of a dispute with respect to any matters arising out of this Agreement as to its terms and conditions or as to payment for any damages or losses incurred by Landowner whether or not the same were contemplated by this Agreement, Landowner agrees that Operator will not be prevented, in any manner,
from carrying on its operations upon the Subject Lands pending settlement of such 
dispute.

            Operator will conduct its operations on the subject lands in accordance with applicable federal, state or county governmental laws, rules and regulations. Upon termination of all operations contemplated herein on the Subject Lands, Operator agrees that it will restore all areas used or occupied, in compliance with all applicable federal, 
state or county governmental laws, rules and regulations and governmental or judicial 
orders which may be in effect at the time of the execution of this Agreement.

            This Agreement shall remain in effect for so long as Operator uses the Subject Lands for the purposes herein described and/or the Oil and Gas Lease remains in effect. Upon termination Operator shall have a reasonable period of time to remove from the Subject Lands any above-ground structures or any other above-ground improvements which may have been placed on the Subject Lands by Operator, and, at Operator's 
option, to remove any Pipelines, Water Lines and other buried facilities.

            Landowner represents and warrants that he is the owner in fee simple of the
Subject Lands, subject only to outstanding mortgages and rights of way, if any, now of record in said county, and in the event of default by Landowner, Operator shall have the right to discharge or redeem for Landowner, in whole or in part, any mortgage, tax or 
other lien on the Subject Lands and thereupon be subrogated to such lien and rights 
incident thereto.

            This Agreement shall be binding upon the parties hereto, and upon their devisees, personal representatives, heirs, successors and assigns. This Agreement and the rights of
the parties may be assigned in whole or in part.

            This Agreement may be executed in counterparts, with the same force and effect 
as if all parties had executed the same instrument.

 

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IN WITNESS WHEREOF, this instrument is executed effective the day and year first
hereinabove set forth.

LANDOWNER:                               EVERGREEN OPERATING CORPORATION

 

________________________          __________________________________
                                                          Dennis R. Carlton
                                                          President and Chief Operating Officer

________________________

 

 

ACKNOWLEDGMENTS

 

STATE OF KANSAS           )
                                              ) ss.
COUNTY OF ___________)

 

            Before me, the undersigned, a Notary Public within and for said County and State,

on this ________day of _____________,          personally appeared

                                                           to me known to be the identical persons who
executed the within and foregoing instrument and acknowledged to me that they executed
the same as their free and voluntary act and deed for the uses and purposes therein set
forth.

            In testimony whereof, I have hereunto set my hand and official seal the day and
year last above written.

My commission expires:                                            ______________________
                                                                                Notary Public

 

 

STATE OF COLORADO     )
                                              ) ss.
COUNTY OF DENVER       )

            Before me, the undersigned, a Notary Public within and for said County and State,
on this        day of                            personally appeared Dennis R. Carlton, the President and Chief Operating Officer of Evergreen Operating Corporation, to me known to be the identical person who executed the within and foregoing instrument and acknowledged to
me that he executed the same as the free and voluntary act and deed of the corporation for the uses and purposes therein set forth.

            In testimony whereof, I have hereunto set my hand and official seal the day and
year last above written.

 

My commission expires:                                            ______________________
                                                                                Notary Public: Gayle Peppeard

 

 

 

 

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