This Oil and Gas Lease (“Lease”) is made this ____ day of ________, _______, by and between

____________________

whose address is _________________________ (“Lessor” whether one or more) and

________________________

whose address is ________________________(“Lessee”).WITNESSETH, For and in consideration of TEN DOLLARS, the covenants and agreements contained herein, and othergood and valuable consideration the receipt and sufﬁciency of which are hereby acknowledged, Lessor does hereby grant,demise, lease and let exclusively unto said Lessee, with the exclusive rights for the purposes of mining, exploring bygeophysical and other methods and operating for and producing therefrom oil and all gas of whatsoever nature or kind(including coalbed gas), and laying pipelines, telephone and telegraph lines, building tanks, plants, power stations,roadways and structures thereon to produce, save and take care of said products, and the exclusive surface or subsurfacerights and privileges related in any manner to any and all such operations, and any and all other rights and privilegesnecessary, incident to, or convenient for the operation alone or conjointly with neighboring land for such purposes, thatcertain tract or tracts of land situated in _____________________ County, State of Colorado described as follows, to wit:Only that depth interval situated between the surface of the earth and the stratigraphic equivalent of the base of the____________ member of the ____________ Formation of the _____________ Group as encountered at a depth of ____________ in the ________________ Well located in the NE/4NE4 of Section ____, Township ________, Range________, and located on the following described land in _____________ County, Colorado:See Exhibit Aand containing _________ acres, more or less (the “Premises”)I

T IS THE INTENT OF THE

ESSOR TO RESTRICT THIS

EASE TO ALL DEPTHS

OCATED ON THE

BOVE

-D

ESCRIBED

ANDS

HICH ARE ABOVE THE STRATIGRAPHIC EQUIVALENT OF THE BASE OF THE

____________

EMBER OF THE

___________

ORMATION OF THE

___________

ROUP

It is agreed that this Lease shall remain in full force for a primary term of

Five (5)

years from this date (“PrimaryTerm”) and as long thereafter as oil or gas of whatsoever nature or kind is produced from the Premises in payingquantities or on acreage pooled or unitized therewith, or operations are continued as hereinafter provided. At the endof the ﬁve-year Primary Term or upon the later cessation of the continuous drilling of wells as hereafter provided, thisLease shall continue in effect only as to lands then subject to this Lease and not then within a drilling and spacing unitdesignated by the Colorado Oil and Gas Conservation Commission on which there is located a well then completedand producing in paying quantities, provided that if any such well on the Premises is not within such a drilling andspacing unit this lease shall not expire as to leased lands within an area theretofore designated by Lessee for suchwell, not to exceed 160 acres (“Unit”), provided that such Unit designation is recorded within 90 days of theexpiration of the Primary Term of this Lease; provided that if at the expiration of the Primary Term, oil or gas is notbeing produced from any part of the Premises or on acreage pooled or unitized therewith but Lessee is then engagedin drilling, reworking or dewatering operations on the Premises or on acreage pooled or unitized therewith, then thisLease shall continue in full force as to all the Premises so long as such operations are being continuously prosecuted.Operations shall be considered to be continuously prosecuted if not more than one hundred twenty (120) days shallelapse between the completion or abandonment of one well and the beginning of operations for the drilling of asubsequent well. If after discovery of oil or gas on the Premises or on acreage pooled or unitized therewith, theproduction thereof should cease from any cause after the primary term, this Lease shall not terminate (except asprovided above) if Lessee commences additional drilling, reworking or dewatering operations within one hundredtwenty (120) days from date of cessation of production or from date of completion of a dry hole. If oil or gas shall bediscovered and produced as a result of such operations at or after the expiration of the Primary Term, this Lease(except as provided above) shall continue in force so long as oil or gas is produced from the Premises or on acreagepooled or unitized therewith. Lessee shall provide Lessor with a written release of all released lands in recordablefrom within sixty (60) days of the expiration of the Primary Term. Lessor shall have the right thereafter to grantleases for the purpose of exploring for and producing oil, gas, and other minerals from the lands as to which this leasehas terminated. Lessor expressly reserves the right to grant leases for the purpose of exploring for and producing oil,gas, and other minerals from the depths below those subject to this lease.

This is a PAID-UP LEASE. In consideration of the payment made herewith, Lessor agrees that Lessee shall not beobligated, 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 thePremises and as to any strata or stratum, by delivering to Lessor or by ﬁling for record a release or releases, and berelieved of all obligations thereafter accruing as to the acreage surrendered.

Lessee covenants and agrees to pay royalty to Lessor as follows:(a)On oil, to deliver to the credit of Lessor, free of cost on the lease if sold on the Premises or free of cost intothe pipeline to which Lessee may connect wells at first point of sale, the equal sixteen and two-thirds percent(16.66667%) part of all oil produced and saved from the Premises.(b)On gas of whatsoever nature or kind produced and sold from or allocated to the Premises (“Gas”) Lessee shallpay to Lessor monthly, as royalty, one-sixth (16.6667%) of the sales proceeds actually received by Lessee orLessee's affiliate pursuant to a gas sales contract or other marketing arrangement made pursuant to an arm’slength transaction and entered into in good faith by Lessee or Lessee's affiliate with an unaffiliated purchaser;

OIL AND GAS LEASE

otherwise, royalty shall be computed on the fair market value of the gas. In either event, such computationshall be without reduction for any costs of any kind, including those of gathering, storing, separating, vaporrecovery, compressing, dehydrating, treating, processing, conditioning, transportation or other operation tomake gas produced from the Premises marketable, or for any costs of gathering and disposal of producedformation water; however, Lessor agrees to pay its share of processing costs and third party transportationcosts after the gas produced from the Premises is marketable. Sales proceeds shall include gross sale proceedsactually received by Lessee or Lessee’s affiliate for the liquid hydrocarbons extracted from the gas through alease separation, drip or similar device, or through processing. At Lessor's written request Lessee will makeavailable in Lessee’s office to Lessor and Lessor’s designated agents or representatives, on a confidentialbasis, a true copy of all applicable marketing agreements as and when entered into and a monthly writtenaccounting of the manner in which Lessor's royalty has been calculated.(c)Lessor’s interest shall also bear its proportionate share of any required severance, excise or gross productiontaxes.

When gas from a well capable by actual test of producing only gas and gas condensate in paying quantities, is shut infor lack of market or other reason, then Lessee shall have the right to pay to the Lessor as provided below the sum of Five Hundred Dollars ($500.00) for each such shut-in gas well, including any shut-in gas well on any part of landsunitized herewith, not to exceed two such payments in all, the ﬁrst such payment or tender to be made on or before theanniversary date of this lease next following 60 days from the date the well is shut in and thereafter on or before theanniversary date of this lease. If any such payment is made or tendered it shall be considered that gas is beingproduced and sold or used in paying quantities from such well for a period of one year from the date of payment ortender, not to exceed two years in total. Any shut-in well shall not serve to extend the Primary Term of this Leaseexcept as to such lands as are contained within the spacing unit where the well is located and above the deepest depthproducing in paying quantities, as deﬁned in Paragraph 1 above and Paragraph 8 below.

If Lessor owns a lesser interest in the Premises than the entire and undivided fee simple estate therein, then theroyalties,, herein provided for shall be paid Lessor only in the proportion which Lessor’s interest bears to the wholeand undivided fee.

Lessee shall have the right, at its own expense and risk, to use, free of cost, gas and oil produced on the Premises forLessee’s operations thereon.

The rights of the Lessor and Lessee hereunder may be assigned in whole or part. No change in ownership of Lessor’sinterest (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 acomplete chain of record title from Lessor, and then only with respect to payments thereafter made. Lessor shall bedeemed to have received notice for all purposes under this lease upon ﬁrst class mail to Lessee’s address writtenabove. No present or future division of Lessor’s ownership as to different portions or parcels of the Premises shalloperate to enlarge the obligations or diminish the rights of Lessee, and all Lessee’s operations may be conductedwithout regard to any such division. If all or any part of this Lease is assigned, no leasehold owner shall be liable forany act or omission of any other leasehold owner. Lessee and all future assignors shall provide written notice toLessor upon any assignment of whole or part of this Lease.

Lessee, at its option, is hereby given the right and power at any time and from time to time as a recurring right, eitherbefore or after production, as to all or any part of the leased Premises and as to any one or more of the formationsthereunder, to pool or unitize the leasehold estate and the mineral estate covered by this lease with other land, lease orleases in the immediate vicinity for the production of oil and gas, or separately for the production of either, when inLessee's judgment it is necessary or advisable to do so, and irrespective of whether authority similar to this exists withrespect to such other land, lease or leases. Likewise, units previously formed to include formations not producing oilor gas, may be reformed to exclude such non-producing formations. The forming or reforming of any unit shall beaccomplished by Lessee executing and delivering a copy to Lessor and ﬁling of record a declaration of suchunitization or reformation within ninety (90) days of forming such unit, which declaration shall describe the unit. Anyunit may include land upon which a well has theretofore been completed or upon which operations for drilling havetheretofore been commenced, but no unit shall exceed, with respect to lands subject to a spacing order of the ColoradoOil and Gas Conservation Commission, the area designated by such order for the formation which Lessee proposes topool, or if no such order exists, 160 acres. Production, drilling or reworking operations on a well shut in for want of market anywhere on a unit which includes all or a part of this lease shall be treated as if it were production, drilling orreworking operations or a well shut in for want of market under this lease, but no shut-in well on any portion of a unitshall operate to extend this Lease more than two years after the Primary Term, and shall be subject to the provisions of Paragraph 4. In lieu of the royalties elsewhere herein speciﬁed, including shut-in gas royalties, Lessor shall receive onproduction from the unit so pooled royalties only on the portion of such production allocated to this lease; suchallocation shall be that proportion of the unit production that the total number of surface acres covered by this leaseand included in the unit bears to the total number of surface acres in such unit.

Whenever as a result of war, acts of God, or a governmental law, order, or regulation, the Lessee, despite its good faitheffort, is prevented from exercising any rights or performing any obligations, either express or implied, under thislease, (the “force majeure condition”), this lease shall remain in full force and effect for the period of such preventionprovided Lessee acts diligently to legally overcome the cause that is preventing Lessee from exercising such right orperforming such obligations. This provision shall not operate to extend the lease for more than six (6) monthsfollowing the removal of the force majeure condition and shall not release the Lessee from paying the following:royalties on actual production, compensatory royalties that may be due by reason of violations of the express orimplied covenants, rentals, and shut-in payments. Lessee must provide written notice to Lessor within ten (10) days

of the commencement of the force majeure condition under which Lessee seeks to excuse performance under thisParagraph setting forth in detail the circumstances pertaining to such condition and the point in time that operationsceased as a result of the condition and estimated time for resumption of the operation that has been interrupted. Inorder to extend this Lease under this Paragraph 9 beyond the Primary Term hereof, Lessor must make annualpayments to Lessee in the amount of one-fifth of the initial bonus payment without proration for removal of thecondition, which must be paid within thirty (30) days following the end of the Primary Term or ten (10) daysfollowing the commencement of the force majeure condition, whichever is the later date, and annually thereafter andso long as the force majeure condition exists. Any payments made under this Paragraph 9 shall be applied to futureroyalty payments, if any, for oil and gas produced and sold or allocated to the Premises.10. INSPECTION, RECORDS AND INFORMATION. Lessee agrees that, upon Lessor’s written request:1.Inspection. Lessor and its agents shall have the right, at Lessor's risk, at all reasonable times to inspect anymachinery, equipment, well, or operation of Lessee upon the Leased Premises or Lands Unitized therewith.2.Reports Upon Request. During the process of drilling any well provided for herein, including the Test Well(whether or not drilled on the Leased Premises) and all wells located on the leased Premises or on landsunitized therewith, Lessee further agrees to furnish to Lessor weekly drilling progress reports and/or weeklymud logger reports on a weekly basis. The weekly reports will include the following information: depth,operations, progress for the preceding seven (7) days, deviation and mud characteristics (for example, weight,viscosity, water loss, Ph., chlorides, solids, oil percentages). With respect to all such wells, Lessee agrees tofurnish to Lessor copies of Application to Drill forms, Well Completion or Recompletion forms, and Plug andAbandon Reports. After completion of drilling operations any well on the Leased Premises or on landsunitized therewith, Lessee further agrees to furnish Lessor with copies of all records and reports obtainedfrom or pertaining to such well or wells all of the below-mentioned data, statements, reports, logs andinformation, together with any cost statements and title documents required to be delivered to Lessor underthis Lease, shall be mailed or delivered to Lessor at the address designated by Lessor.2.1.Title Opinion and Reports. All reports and legal opinions with respect to title to the minerals subject tothis Lease or on lands unitized therewith, only insofar as the same is applicable to Lessor’s interest;2.2.Logs. All electrical logs run in the well, including dual induction logs;2.3.Tests. Results of all tests, including drill stem tests, formation tests and/or core analysis;2.4.Dip Meter Surveys. All dip meter surveys, including the Lessee's interpretation thereof;2.5.Formation Identification. At Lessor's request, information showing Lessee's identification of allformations encountered on any electrical log as determined by Lessee's geologist or paleontologist;2.6.Samples. At Lessor's request, provide access to Lessor, cuts and samples taken from the mud or fromcoring;2.7.Confidentiality. Lessor agrees to maintain confidentiality with respect to all such information producedhereunder.3.Examination of Other Matters. In addition, Lessee agrees:3.1.1.Operation and Production Records. To keep and, at all reasonable times, make available to Lessorand its Representatives for examination and copying, full, complete and correct records showingoperations on and production from the Leased Premises, including the gross production, the quantitiessaved, the quantities sold, the quantities used, sales prices for production sold, the quantities andvalues of all other production, all sales contracts and all other data proper for the settlement of accounts between the parties;3.1.2.Exploration, Development, and Production Records. To make available to Lessor and itsRepresentatives for examination and copying all records, contracts, documents, books and any otherpapers in the possession or under the control of Lessee (except intra-company correspondence)reflecting the testing, exploration and/or development of and production from the leased Premises;and3.1.3.Notice of Spacing Application. Should Lessee deem it necessary or desirable to apply togovernmental authority for rules or orders governing the spacing of wells or the establishment of drilling or other Units affecting the Leased Premises, to notify Lessor, at least fifteen (15) days priorto the submission of such application, in writing of its proposed plan setting forth in detail thepurposes of such application or plan, the results to be achieved thereby and full and completeinformation with respect thereto, and thereafter to keep Lessor fully informed with respect to suchplan, including without limitation, any changes or modifications thereof; provided, however, that theinadvertent failure of Lessee to comply with the provisions of this Paragraph 10 shall not beconsidered grounds for termination of this Lease. Lessor shall not be required to provide Lessee anydata, tests, surveys or similar information which Lessor considers proprietary.11.No Warranty: This Lease is expressly made and accepted subject to all prior conveyances, requirements,conditions, and covenants of record and is without any covenant or warrant of title or any kind whatsoever and iswithout recourse against Lessor.12.Full Payment: Lessee or its assigns shall be responsible for the full and proper payment of Lessors' royalty fromthe date of first production until final depletion in accordance with the State of Colorado statutes concerningpayment proceeds from the sale of oil, gas and associated products. No statute of limitations or other affirmative