Exhibit 10.1
AGREEMENT FOR SERVICES
This Agreement for Services ("Agreement") is entered into as of this 12th day of
November, 2014 between PetroShare Corp., a Colorado corporation ("Company"), and
Kingdom Resources, LLC, a Colorado limited liability ("Contractor"), each of
whom is sometimes referred to as a "Party" and both of whom are sometimes
collectively referred to as the "Parties." The purpose of this Agreement is to
set forth the terms under which Contractor shall perform services for Company in
acquiring oil and gas interests and the consideration that shall be given by
Company to Contractor for performing those services.
ARTICLE I—CONTRACTOR SERVICES
Contractor shall pursue the acquisition of oil and gas leases and/or other oil
and gas interests in the Contract Area defined on Exhibit A to this Agreement,
including but not limited to gathering title and leasehold information, securing
the acquisition of fee, leasehold and other interests in oil and gas rights,
ordering necessary abstracts of title, promptly submitting all necessary
documentation concerning any acquisition or lease of such mineral rights to
Company, and performing or obtaining all other services needed to secure such
leases or other acquisitions of oil and gas mineral rights within the Contract
Area, pursuant to Company's guidance.
Contractor further agrees to use reasonable efforts to assist Company with
surface use negotiations on land located within the Contract Area that Company
intends to operate, which assistance shall include without limitation securing
potential drill sites and access to water for drilling operations based on
ordinary, reasonable and customary arm's length terms.
ARTICLE II—RELATIONSHIP OF PARTIES
The relationship of Contractor to Company throughout the term of this Agreement
shall be that of an Independent Contractor only, and it is understood and agreed
that nothing in this Agreement makes, or shall be construed to make, Contractor
an employee, agent or representative of the Company. Therefore, this Agreement
does not give Company any authority or right to direct or control Contractor's
actions and Contractor is fully responsible for determining when and how the
services being provided pursuant to this Agreement will be performed. Contractor
is also responsible for furnishing all supplies, equipment, and materials
necessary to provide the services set forth in this Agreement. All persons
engaged by Contractor to assist it in providing such services shall be employees
or subcontractors of Contractor.
ARTICLE III—SUBCONTRACTORS
If Contractor determines that subcontractors are necessary to assist it in
performing the services set forth herein, it may engage such subcontractors at
its sole cost and expense, subject to the reimbursement provisions set forth
herein. Contractor shall obtain from any such subcontractor a written agreement
containing, at a minimum, terms substantially similar to those set forth herein,
other than those relating to compensation to Contractor, and shall furnish an
executed copy of any such agreement to Company upon request. Notwithstanding its
decision to engage one or more subcontractors to assist it in performing
services hereunder, Contractor shall remain primarily liable to Company for all
of Contractor's obligations hereunder.
 
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ARTICLE IV—STANDARD OF CARE
Contractor shall perform its services under this Agreement in accordance with
the highest standards within the industry for the type of services provided
herein, and shall comply with all applicable laws, regulations, orders and
standards in providing services under this Agreement.
ARTICLE V—CONTRACTOR INSURANCE
Contractor shall be solely responsible for all of its own insurance and shall at
all times maintain such types and amounts of insurance, including without
limitation automobile, general liability and worker's compensation insurance, as
my be reasonably be required by Company. Contractor shall furnish to Company
proof of required insurance upon request.
ARTICLE VI—CONFIDENTIALITY
Because the services contemplated by this Agreement relate to information that
is highly proprietary and of considerable value to Company, Contractor agrees to
hold all work-related information, title information, areas of interest, maps,
letters, memoranda, negotiations with companies or persons, and all other
materials, plans and conversations concerning the services performed hereunder
strictly confidential while this Agreement is in effect and for a period of two
(2) years after termination hereof. Contractor shall obtain a like agreement
from any subcontractors it retains to assist it in providing services under this
Contract.
ARTICLE VII—PAYMENT AND AUDIT OF CONTRACTOR EXPENSES
Contractor agrees to pay all claims for labor, material, services and supplies
furnished by Contractor and to take all reasonable precautions to ensure that no
lawful lien or similar encumbrance is fixed upon any lease or other property of
Company as a result of Contractor's negligence, willful misconduct, intentional
act or misrepresentation. Company shall reimburse Contractor for such actual
expenses it incurs with respect to any leases or other acquisitions approved and
consummated under this Agreement, as set forth in Exhibit B hereto. Company
shall have the right at any time within six (6) months after making any payment
pursuant to this Article to audit any and all records, books and invoices
related thereto, and this audit right shall survive the termination of this
agreement.
ARTICLE VIII—PAYMENT OF ACQUISITION COSTS
Unless otherwise agreed by the Parties, all lease bonus or similar payments
necessary to acquire fee, leasehold, royalty or other oil and gas interests
under this Agreement shall be paid by means of Company sight drafts payable to
the proper owner of the interest involved, by time drafts payable to such
owners, or by such other method as may be agreed upon in writing by the Parties
hereto. Any lease bonus or similar payments necessary to acquire fee, leasehold,
royalty or other oil and gas interests under this Agreement advanced by
Contractor shall be reimbursed as set forth in Exhibit C hereto.
 
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ARTICLE IX—ACQUISITION DOCUMENTS
Company agrees that the form of lease attached hereto as Exhibit C, the form of
lease assignment attached hereto as Exhibit D, and the form of Access and Damage
Settlement Agreement attached hereto as Exhibit E may be used to lease oil and
gas mineral rights in the Contract Area, and that any lease obtained using those
forms shall be acceptable to Company, subject to the other provisions of this
Agreement, including without limitation those concerning the acceptability of
title to the mineral rights identified in any such lease. Company shall have the
right to approve in advance of execution the form and terms of any agreement
concerning the acquisition of oil and gas mineral rights by Contractor in the
Contract Area not in the forms attached hereto as Exhibits C, D and E, subject
to the other provisions of this Agreement, including without limitation those
concerning the acceptability of title to the mineral rights identified in any
such lease.
ARTICLE X—COMPENSATION
Contractor shall be entitled to compensation for the acquisition of any lease or
other oil and gas mineral rights in the Contract Area pursuant to the terms set
forth in Exhibit B hereto.
ARTICLE XI—CONTRACTOR TAX INDEMNITY
Contractor agrees to indemnify and hold Company, its parent, subsidiaries, and
affiliates harmless from payment of all federal, state and local taxes, as well
as the preparation and submission of all reports, returns and monies which may
be imposed or required under Unemployment Insurance, Social Security, Workmen's
Compensation, Federal or State Income Tax Law and all other applicable laws,
regulations and orders relative to any payments that Company makes to Contractor
pursuant to this contract. If required by federal or state taxing laws, Company
is authorized to withhold monies due to Contractor and remit same to such taxing
authority.
ARTICLE XII—MUTUAL LIABILITY INDEMNITY
To the full extent permitted by applicable law, Contractor and Company shall
indemnify, defend and hold each other, and their parents, subsidiaries,
affiliates and all members, officers and employees thereof, harmless against all
losses, expenses or judgments, including reasonable attorney's fees, arising out
of or related to claims made by any third-parties as a result of actions taken
by either of them in connection with the performance of this Agreement. This
obligation shall survive the termination of this Agreement.

 
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ARTICLE XIII—CONTRACTOR ASSIGNMENT AND POST-TERMINATION
OBLIGATIONS
During the term of this Agreement and for a period of six (6) months after this
Agreement terminates, Contractor shall not acquire directly or indirectly for
itself or anyone other than Company any fee interest, leasehold, royalty or
other interest in or options upon lands or mineral rights within the Contract
Area, without first obtaining the Company's written consent, provided that if
Company does not accept any lease obtained by Contractor within the Contract
Area within five (5) business days of being offered such lease by Contractor,
subject only to such standard conditions as acceptability of title to Company,
then notwithstanding this provision Contractor shall have the right to offer
that lease to other parties. If Contractor acquires any such interest in
violation of this paragraph, upon Company's demand it shall assign such interest
to Company on such form as Company may approve.
ARTICLE XIV—COMPANY POST-TERMINATION OBLIGATIONS
Following termination of this Agreement, whether upon the expiration of its Term
or for cause, Company shall pay Contractor compensation, and shall reimburse
Contractor for all lease acquisition expenses, as set forth in Exhibit B hereto,
for all leases and other interests within the Contract Area that were identified
to Company by Contractor prior to such termination and that are acquired by
Company, either directly or indirectly, within six (6) months after the
effective date of such termination.
ARTICLE XV—AUDIT OF CONTRACTOR
Company shall have the right to audit Contractor's books and records relating to
services performed hereunder. To facilitate such audit, Contractor shall retain
its books and records made in any calendar year during the term of Agreement,
for a period of two (2) years from the end of such calendar year. This
obligation survives termination of this Agreement. For the purpose of audit,
Company and its authorized representatives or agents shall have the right to
examine during business hours at Contractor's office and for a reasonable length
of time all books, records, accounts, correspondence, instructions,
specification, maps, receipts and memoranda insofar as they are pertinent to
this Agreement.
ARTICLE XVI—AUDIT OF COMPANY
Contractor shall have the right to audit Company's books and records relating to
any amounts payable to Contractor or that Contractor contends are payable
pursuant to the terms of this Agreement. To facilitate such audit, Company shall
retain its books and records made in any calendar year during the term of
Agreement, for a period of two (2) years from the end of such calendar year.
This obligation survives termination of this Agreement. For the purpose of
audit, Contractor and its authorized representatives or agents shall have the
right to examine during business hours at Company's office and for a reasonable
length of time all books, records, accounts, correspondence, instructions,
specification, maps, receipts and memoranda insofar as they are pertinent to
this Agreement

 
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ARTICLE XVII—TERM AND TERMINATION
This Agreement shall commence on the Effective Date and shall expire on December
31, 2015, unless earlier terminated for cause pursuant to the terms hereof.
Thereafter, the Parties may, each in its sole discretion, decide whether to
renew this Agreement on the same or different terms. During the term of this
Agreement it may be terminated for cause, consisting of actions by either
Company or Contractor in material breach of this Agreement, provided that (a)
written notice of any such alleged breach is provided by the non-breaching party
to the breaching party pursuant to the notice provisions of this Agreement,
which notice shall set forth the alleged material breach or breaches in
sufficient detail to allow the breaching party to attempt to cure the alleged
breach or breaches and (b) the non-breaching party fails to cure the breach or
breaches within thirty (30) days of such notice or, in the case of a breach or
breaches that cannot reasonably be cured within such thirty (30) day period,
within a reasonable time for curing such breach or breaches.
ARTICLE XVIII—NOTICES
Unless otherwise provided herein, any notice given pursuant to the terms of this
Agreement shall be in writing and shall be delivered by fax or email, with a
copy in writing sent by regular mail, to the addresses set forth below, which
addresses may be changed by notice sent to the addresses set forth below, with
such changes to be effective only when actually received:
To Company:

PetroShare Corp.
7200 South Alton Way, Suite B220
Centennial, CO 80112
Attn: Stephen J. Foley
(303) 770-6885 (Facsimile)
sfolev@PetroShareCorp.com

To Contractor:

Kingdom Resources LLC
7501 Village Square Drive, Suite 205
Castle Pines, CO 80108
(303) 600-9695 (Facsimile)
gene@equinoxland.com

With a copy to:
Peter C. Forbes, Esq.
Carver Schwarz McNab Kemper & Forbes, LLC

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1600 Stout Street
Suite 1700
Denver, CO 80203
(303) 893-1829 (Facsimile)
pforbes@csmkf.com
ARTICLE XIX—ENTIRE AGREEMENT
All exhibits to this Agreement are expressly made a part of this Agreement, and
the parties acknowledge and agreed that the written terms of this Agreement,
including the Exhibits incorporated herein, constitute the complete agreement of
the Parties with respect to the subject matter hereof, that any prior oral
agreements or understandings between the Parties concerning the subject matter
hereof are merged herein, and that no oral agreements or understandings between
the Parties concerning the subject matter hereof, including any amendments
hereto, shall be binding or enforceable unless agreed to in a writing signed by
the Parties or their authorized representatives.
ARTICLE XX—AUTHORIZED SIGNATURES
The persons executing this Agreement below represent that they have been duly
authorized to do so by the Party upon whose behalf they are executing this
Agreement, and that this Agreement shall accordingly be binding on such Party
ARTICLE XXI—EFFECTIVE DATE
This Agreement may be executed in counterparts, and shall be effective as of the
date first written above upon execution by both Parties.
ARTICLE XXII—GOVERNING LAW
This Agreement shall be interpreted according to the laws of the State of
Colorado applicable to contracts made within, and to be performed within, the
State of Colorado. Venue for any action between the Parties arising out of or
relating to this Agreement shall lie exclusively in the District Court for the
City and County of Denver.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first written above.

[Signatures on following page]
 
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PETROSHARE CORP

By:    /s/ Stephen J. Foley
Name:    Stephen J. Foley
Title:     CEO

KINGDOM RESOURCES LLC
By:    /s/ Gene Osborne
Name:    Gene Osborne
Title:      Manager
 
 

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EXHIBIT A
 
CONTRACT AREA

 
The project area subject to this Agreement shall be as follows:

Sections 1 through 36, All,
Township 1 South, Range 67 West, 6th PM
Adams County, Colorado

Any other areas as may be added to by mutual agreement by virtue of a revised
Exhibit A.

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EXHIBIT B

GUIDELINES FOR OIL & GAS LEASE AND MINERAL INTEREST ACQUISITIONS

It is the intent of these general guidelines to provide the basic terms and
conditions which are acceptable to Company for acquisitions made hereunder. All
obligations hereunder will be performed in good faith.

I.     LEASING OIL & GAS MINERAL INTERESTS
LESSEE OF RECORD:
Unless agreed otherwise, Contractor shall be the Lessee of record, as provided
in the oil and gas lease form at Exhibit C.
 
INTEREST TO BE LEASED:
Within the Contract Area, any unleased fee minerals, including fee minerals
owned by affiliates of Contractor.
 
MAXIMUM LEASE BONUS:
No less than $2,000 and no more than $3,000 per net acre to Landowner unless
agreed to otherwise by the Parties. Contractor shall receive a payment equal to
10% of Landowner Bonus (the "Standard Contractor Fee"), provided that the total
of the Landowner Bonus and the Standard Contractor Fee will not exceed $3,000
without Company's consent.
 
Example No. 1: Landowner Bonus is $2,500. Company pays $2,500 to Landowner as
Landowner Bonus and $250 to Contractor as Standard Contractor Fee.
 
Example No. 2: Landowner Bonus is $2,900. Company pays $2,900 to Landowner as
Landowner Bonus. Because total of Landowner Bonus and Standard Contractor Fee
would exceed $3,000, Company would only pay $100 to Contractor as Contractor Fee
unless Company agrees otherwise.
 
OIL & GAS LEASE TERMS:
3 year primary term with a minimum 2 year extension option at up to 75% of
original lease bonus per net acre, or 5 + year primary lease term.
 
LANDOWNER ROYALTY ("LOR"):
Maximum of 18.75%, unless agreed to otherwise by the Parties.

 
 
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NET REVENUE INTEREST ("NRI"):
Company shall own and/or retain no less than 79.00% NRI, proportionately
reduced, except with respect to leases obtained from entities affiliated with
Contractor, where Company shall own and/or retain no less than 80.00% NRI,
proportionately reduced.
 
OVERRIDING ROYALTY INTEREST:
Company and Contractor agree as to the following overriding royalty interest
("ORRI") distribution, proportionately reduced:
 
Unaffiliated Leases-79.00% Company NRI
● Reign Energy Partners, LLC ("Reign"): 2.00% ORRI
 
● Contractor: ORRI equal to positive difference between existing burdens of
record, including Reign ORRI, and 21.00%.
 
● Note: ORRI is subject to change if the Parties agree to an LOR greater than
18.75%, and could result in a net zero ORRI to Reign and/or Contractor.
Affiliated Leases-80.00% Company NRI
 
● Reign: 1.00% ORRI if LOR equals 18.75%; 2.00% ORRI if LOR is less than 18.75%.
 
● Contractor: ORRI equal to positive difference between existing burdens of
record, including Reign ORRI, and 20.00%.
 
● Note: ORRI is subject to change if the Parties agree to an LOR greater than
18.75%, which could result in a net zero ORRI to Reign and/or Contractor.
 
ORRI DISTRIBUTION METHOD:
Scenario 1-Contractor is Lessee: Contractor acquires and submits oil and gas
lease(s) acceptable to the Company for recording, which names Contractor as
Lessee. Within ten (10) business days of a return receipt of recorded lease,
Contractor shall assign all its right, title and interest in the subject
lease(s) to Company in the form of Exhibit D, and reserve an ORRI into
Contractor. Within a reasonable time thereafter, Contractor shall assign an ORRI
in accordance with the distribution amounts agreed to herein.

 
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Scenario 2-Company is Lessee: Contractor acquires and submits oil and gas
lease(s) acceptable to the Company for recording, which name Company as Lessee.
Within ten (10) business days of a return receipt of recorded lease, Company
shall execute an Assignment of ORRI to Reign and Contractor in accordance with
the distribution amounts agreed to herein.
 
NRI/ORRI EXAMPLES:
Example 1-15.00% LOR/Scenario 1-Unaffiliated: Contractor secures an oil and gas
lease in the Contract Area in the name of Contractor from an unaffiliated
entity, subject to a 15.00% LOR, and files it of record. Within ten (10)
business days of return receipt of recorded lease, Contractor shall assign
Company all right, title and interest in said lease, delivering a 79.00% NRI,
and reserve an ORRI equal to the positive difference between existing lease
burdens and 21.00%. Within a reasonable time thereafter, Contractor shall assign
a 2.00% ORRI to Reign, and retain a 4.00% ORRI. All interests being
proportionately reduced.
 
 
Example 2-18.75% LOR/Scenario 1-Unaffiliated:  Contractor secures an oil and gas
lease in the Contract Area in the name of Contractor from an unaffiliated
entity, subject to an 18.75% LOR, and files it of record. Within ten (10)
business days of return receipt of recorded lease, Contractor shall assign
Company all right, title and interest in said lease, delivering a 79.00% NRI,
and reserve an ORRI equal to the positive difference between existing lease
burdens and 21.00%. Within a reasonable time thereafter, Contractor shall assign
a 2.00% ORRI to Reign, and retain a 0.25% ORRI. All interests being
proportionately reduced.
 
 
Example 3-21.00% LOR/Scenario 1-Unaffiliated: Subject to prior agreement by the
Parties, Contractor secures an oil and gas lease in the Contract Area in the
name of Contractor from an unaffiliated party, subject to a 21.00% LOR, and
files it of record. Within ten (10) business days of return receipt of recorded
lease, Contractor shall assign Company all right, title and interest in said
lease, delivering a 79.00% NRI, and reserve an
 

 

 
 
 
 

 
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ORRI equal to the positive difference between existing lease burdens and 21.00%.
Under this scenario, there is no ORRI reserved or distributed. All interests
being proportionately reduced.
 
 
Example 4-18.75% LOR/Scenario 1-Affiliated: Contractor secures an oil and gas
lease in the Contract Area in the name of Contractor from an affiliated entity,
subject to an 18.75% LOR, and files it of record. Within ten (10) business days
of return receipt of recorded lease, Contractor shall assign Company all right,
title and interest in said lease, delivering an 80.00% NRI, and reserve an ORRI
equal to the positive difference between existing lease burdens and 20.00%.
Within a reasonable time thereafter, Contractor shall assign a 1.00% ORRI to
Reign, and retain a 0.25% ORRI. All interests being proportionately reduced.
 

 
II.        PURCHASING OIL & GAS MINERAL RIGHTS:
To be negotiated on a property by property basis, pursuant to subsequent
parameters established by and between the Parties. If applicable, the above ORRI
guidelines and understanding applies.
III.       PURCHASING OIL & GAS LEASEHOLD INTEREST:
To be negotiated on a property by property basis, pursuant to subsequent
parameters established by and between the Parties. If applicable, the above ORRI
guidelines and understanding applies.
IV.       COMPENSATION AND COST REIMBURSEMENT:
Company agrees to reimburse Contractor for actual documented land and title
costs related to Company's leasing and mineral acquisition efforts within the
Contract Area, based on customary industry standards which shall include, but
not be limited to, subcontractor day rates and related costs, related attorney's
fees, clerk and recorder fees, and as necessary, reasonable daily stipend for
meals, mileage, and office supplies. Contractor shall undertake reasonable best
efforts to control costs and work closely and transparently with Company towards
that objective, relative to the task that Company has assigned to Contractor.
Contractor shall submit an invoice for the costs related to the tasks assigned
to Company on a bi-monthly basis, and Company agrees to make payment to
Contractor within ten (10) days from receipt of said invoice.
Company and Contractor agree that the ORRI and Standard Contractor Fee, if any,
as described herein are just and adequate compensation for Contractor's
services, paid by Company in lieu of a Contractor day-rate.
 
 
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Company further agrees to pay all landowner lease bonus payments, lease option
or extension payments, surface use and access fees, and seismic costs associated
with leasing or the acquisition of other mineral interests within the Contract
Area pursuant to this Agreement.
Any costs incurred by Contractor that are unrelated to Company's leasing and
mineral acquisition efforts in the Contract Area, specifically costs
attributable to the drilling and completion of oil and gas wells that would
typically and proportionately be passed through to the Company's working
interest partners if Company were the operator of such wells shall not be billed
by Contractor to Company. However, in the event Company is the operator of wells
being drilled and completed on lands located in the Contract Area and such lands
coincide with materials that Contractor has in its possession that are
attributable to the drilling and completion of an oil and gas well, but which
Contractor has not previously billed to Company, then Company shall have the
option to obtain said materials by paying the cost incurred by Contractor to
obtain such materials.

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Producers 88-Paid Up
PetroShare Standard
(Colorado Rev. 9/2014)
EXHIBIT C - FORM OF PAID-UP
OIL AND GAS LEASE
This Lease Agreement, made and entered into this __________ day of
_______________, by and between ________________________________________ and
PetroShare Corporation whose mailing address is  Corporate 25. 7200 S. Alton Way
#8220, Centennial, Colorado, 80112 hereinafter called Lessee:
WITNESSETH:
1.     That Lessor, for and in consideration of Ten and More dollars ($10.00 &
More) 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 does grant, demise, lease and let exclusively unto
the said Lessee, for the purpose of mining, exploring for (by geophysical and
other methods), developing, producing, and marketing oil, gas and other
substances covered hereby on the leased premises as hereinafter described, or
lands pooled or unitized therewith, with rights of way and easements for ingress
and egress from lands by Lessee, or its assignees, agents or permittees, as may
be reasonably necessary to or associated with, but not limited to, the
construction and maintenance of pipelines, telephone and electric lines,
communication towers, tanks, ponds, pits, roadways, canals, water wells,
disposal wells, injection wells, power stations, equipment, structures and other
facilities deemed necessary by Lessee to produce, store, maintain, treat and
transport said oil, gas, and other substances.
Being situated in the County of Adams State of Colorado, described as follows,
to-wit:
See Exhibit A-Contract Area
and containing ______________acres, more or less.
In addition to the land described above, the term "leased premises" shall
include to the same extent as if specifically described, lands riparian in
nature; lands acquired or retained by avulsion, accretion, reliction or other
natural causes that result in changes to any boundaries or centerline of any
bodies of water, as commonly defined regardless of size, traversing or adjoining
the above described lands; lands located in and under any road, easement or
right-of-way traversing or adjoining the lands described above; any small strips
or parcels of land adjacent or contiguous to the lands described above now owned
or subsequently acquired, along with; any and all interests of Lessor now owned
or subsequently acquired through other methods regardless of the mineral or
gross acreage assumed or stated in this lease, and if Lessor owns or
subsequently acquires more mineral acres than the amount upon which Lessors
bonus payment was calculated, lessor shall notify Lessee and afford Lessee the
opportunity to pay Lessor for the additional mineral acres at the same rate of
the original bonus payment. In consideration of that additional bonus payment,
Lessor agrees to execute at Lessee's request any additional or supplemental
instrument required to cure and more accurately describe the leased premises.
The term "oil" as used herein shall include and be defined as any liquid
hydrocarbon substance that occurs naturally in the earth, including natural
condensate recovered from gas without resort to manufacturing process. The term
"gas" as used herein shall include and be defined as any substance which is
produced in a natural state from the earth and maintains a gaseous or rarified
state at ordinary temperature and pressure conditions, including but not limited
to, helium, carbon dioxide, coal-bed methane, nitrogen, sulphur, casinghead gas
and other commercial gases
2.      Subject to the other provisions herein contained, this lease shall
remain in force for a primary term of 5 years from the date hereof, and for as
long thereafter as oil, gas or other substances covered hereby are produced in
paying quantities from said leased premises or lands pooled therewith, or
drilling operations are continuously prosecuted. "Drilling Operations" as used
herein shall include operations for both the drilling of a new well and such
other operations conducted in efforts to establish, resume or re­establish
production of oil and gas including, but not limited to, reworking, deepening or
plugging back of a well or hole; such operations shall be considered
"continuously prosecuted" if not more than one hundred twenty (120) days shall
elapse between the completion and abandonment of one well or hole and the
commencement of drilling operations on another well or hole; for a new well,
drilling operations shall be deemed to have commenced when construction of the
wellsite location or the road providing access to the wellsite location begins;
for such other operations including but not limited to re-working, deepening,
and plugging back of a well or hole, drilling operations shall be deemed to have
commenced when Lessee has the requisite equipment in place at the wellsite.
3.      If at the expiration of the primary term of this lease, oil, gas or
other substances covered hereby are not being produced in paying quantities from
the leased premises or lands pooled therewith but drilling operations are being
continuously prosecuted, and such efforts results in production of oil, gas or
other substances therefrom, then this lease shall continue in force for so long
thereafter as oil, gas, or other substances continue to be produced from the
leased premises or lands pooled therewith
4.      This is a PAID-UP LEASE and all cash consideration first recited above
have been paid to Lessor in advance to keep this lease in full force and effect
throughout the primary term. In consideration of the payment, Lessor agrees that
Lessee shall not be obligated, except as otherwise provided herein, to commence
or continue any operations during the primary term or pay any annual

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rentals. Lessee may at any time or times during or after the primary term
surrender this lease as to all or any portion of the lands described above, and
as to any strata or stratum, by delivering to Lessor or by filing of record a
release or releases, and be relieved of all obligations thereafter accruing to
the acreage surrendered.
 
5.      Lessee shall deliver to the credit of Lessor as royalty, free of cost
but not applicable taxes, into the tanks or in the pipeline on the leased
premises to which lessee may connect its wells the equal one-sixth (116th) part
of all oil produced and saved from the leased premises, or Lessee may from time
to time at its option purchase any royalty oil in its possession, paying the
market price thereof prevailing for oil of like grade and gravity in the field
where produced on the date of purchase. The Lessee shall pay Lessor, as royalty,
on gas, including casinghead gas or other gaseous substances, produced from the
leased premises and sold or used off the premises or used in the manufacture of
gasoline or other products, the market value at the well of one-sixth (1/6th) of
the gas sold or used, provided that on gas sold the royalty shall be one-sixth
(116th) of the amount realized from such sale. The amount realized from the sale
of gas shall be the price established by the gas sales contract entered into in
good faith by lessee and a gas purchaser for such term and under such conditions
as are customary in the industry. Price shall mean the net amount received by
lessee after giving effect to applicable regulatory orders and after application
of any applicable price adjustments specified in such contract or regulatory
orders. In the event lessee compresses, treats, purifies or dehydrates such gas
(whether on or off the leased premises) or transports gas off the leased
premises, lessee in computing royalty hereunder may deduct from such price a
reasonable charge for each of such functions performed; including associated
fuel
 
6.     If at any time, either before or after the expiration of the primary term
of this lease, there is one or more wells capable of producing oil, gas or other
associated substances in paying quantities on lands covered by this lease, or on
other lands with which lands covered by this lease are pooled or unitized
therewith, but such well or wells are shut-in, whether before or after
production thereof, and this lease is not being maintained otherwise as provided
herein, this lease shall not terminate (unless released by Lessee) and it shall
nevertheless be considered that oil, gas or other associated substances are
being produced from lands covered by this lease during all times while the well
is so shut-in. Lessee shall use reasonable diligence to market the oil or gas
capable of being produced from such shut-in well, but shall be under no
obligation to market the oil or gas under terms, conditions or circumstances
which, in Lessee's judgment exercised in good faith, are unsatisfactory. When
the lease is continued in force in this manner, Lessee shall pay or tender to
the Lessor or Lessor's successors or assigns, an amount equal to $1.00 per year
per net mineral acre covered by the lease. Such payments shall be made on or
before the shut-in royalty payment date, as defined below, next occurring after
the expiration of one hundred twenty (120) days from the date the well was
shut-in, unless prior to such date oil or gas from the well is sold or used or
the lease is otherwise maintained as provided herein. In like manner, on or
before each succeeding shut-in royalty payment date while such well remains
shut-in, lessee shall make payment of shut-in royalty in the same amount and
manner. The term "shut-in royalty payment date" shall mean the anniversary date
of this lease. Any shut-in royalty payment may be made by cash, draft or check,
mailed or tendered at Lessor's address on or before the shut-in royalty date.
Lessee's failure to pay or tender, or properly pay or tender, any such sum shall
render Lessee liable for the amount due but it shall not operate to terminate
the lease
 
7.     If Lessor owns less than the full mineral estate in all or any part of
the leased premises, the royalties and shut-in royalties payable hereunder for
any well or wells on any part of the leased premises or lands pooled therewith
shall be reduced to the proportion that lessor's interest in such part of the
leased premises bears to the full mineral estate in such part of the leased
premises, calculated on a net acreage basis
 
8.     Lessee shall have the right to use, free of cost, gas, oil and water
produced on said lands for Lessee's operation thereon, except water from wells
and reservoirs of Lessor
 
9.      Lessee shall pay to lessor reasonable amounts for damages caused by its
operations on said land
 
10.     When requested by Lessor, Lessee shall bury its pipelines which traverse
cultivated lands below plow depth
 
11.     No well shall be drilled nearer than five hundred (500) feet to an
occupied dwelling on said premises, without written consent of Lessor.
 
12.     Lessee shall have the right at any time (but not the obligation), to
remove all improvements, machinery, and fixtures placed or erected by Lessee on
said premises, including the right to pull and remove casings.
 
13.     The interest of either Lessor or Lessee hereunder may be assigned,
devised or otherwise transferred in whole or in part, by area and/or by depth or
zone, and the rights and obligations of the parties hereunder shall extend to
their respective heirs, devisees, executors, administrators, successors and
assigns. No change in Lessor's ownership shall have the effect of reducing the
rights or enlarging the obligations of Lessee hereunder, and no change in
ownership shall be binding on Lessee until one hundred twenty (120) days after
Lessee has been furnished the original or certified or duly authenticated copies
of the documents establishing such change of ownership to the satisfaction of
Lessee or until Lessor has satisfied the notification requirements contained in
Lessee's usual form of division order. In the event of the death of any person
entitled to shut-in royalties hereunder, Lessee may pay or tender such shut-in
royalties to the credit of decedent or decedents estate in the depository
designated above. If at any time two or more persons are entitled to shut-in
royalties hereunder, Lessee may pay or tender such shut-in royalties to such
persons or to their credit in the depository, either jointly or separately in
proportion to the interest which each owns. If Lessee transfers its interest
hereunder in whole or in part Lessee shall be relieved of all obligations
thereafter arising with respect to the transferred interest, and failure of the
transferee to satisfy such obligations with respect to the transferred interest
shall not affect the rights of Lessee with respect to any interest not so
transferred. If Lessee transfers a full or undivided interest in all or any
portion of the area covered by this lease, the obligation to pay or tender
shut-in royalties hereunder shall be divided between Lessee and the transferee
in proportion to the net acreage interest in this lease then held by each.
 

--------------------------------------------------------------------------------

14.      Lessee, at its option, is hereby given the right and power at anytime
and from time to time as a recurring right, either before or after production,
as to all or any part of the lands described herein and as to any one or more of
the formations hereunder, to pool or unitize the leasehold estate and the
mineral estate covered by this lease with other land(s), 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(s), 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 therefore been commenced. Production, drilling or
reworking operations or a 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
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 land(s) 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 to 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 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 allocated 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 it
is 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
 
15.      In the event that Lessor, during the primary term of this lease,
receives a bona fide offer which Lessor is willing to accept from any party
offering to purchase from Lessor a lease covering any or all of the substances
covered by this lease and covering all or a portion of the land described
herein, with the lease becoming effective upon expiration of this lease, Lessor
hereby agrees to notify Lessee in writing of said offer immediately, including
in the notice the name and address of the offeror, the price offered and all
other pertinent terms and conditions of the offer. Lessee, for a period of
fifteen (15) days after receipt of the notice, shall have the prior and
preferred right and option to purchase the lease or part thereof or interest
therein, covered by the offer at the price and according to the terms and
conditions specified in the offer.
 
16.      Lessee's obligations and covenants hereunder, whether express or
implied, shall be subject to all federal and state, county or municipal laws,
executive orders, rules and regulations and Lessee's obligations and covenants
by Lessee hereunder, whether express or implied, shall be suspended at the time
or from time to time as compliance with such obligations and covenants is
prevented or hindered by or is in conflict with federal, state, county, or
municipal laws, rules, regulations or executive orders asserted as official by
or under public authority claiming jurisdiction, or Act of God, adverse field,
weather, or market conditions, inability to obtain materials in the open market
or transportation thereof, wars, strikes, lockouts, riots, or other conditions
or circumstances not wholly controlled by Lessee, and this lease shall not be
terminated in whole or in part, nor Lessee held liable in damages for failure to
comply with any such obligations or covenants if compliance therewith is
prevented or hindered by or is in conflict with any of the foregoing
eventualities. The time during which Lessee shall be prevented from conducting
drilling or reworking operations during the primary term of this lease, under
the contingencies above stated, shall be added to the primary term of the lease.
 
17.      No litigation shall be initiated by Lessor with respect to any breach
or default by Lessee hereunder, for a period of at leastninety days (90) days
after Lessor has given Lessee written notice fully describing the breach or
default, and then only if Lessee fails to remedy the breach or default, within
such period. In the event the matter is litigated and there is a final judicial
determination that a breach or default has occurred, this lease shall not be
forfeited or canceled in whole or in part unless Lessee is given a reasonable
time after said judicial determination to remedy the breach or default and
Lessee fails to do so.
 
18.      Lessor hereby warrants and agrees to defend the title to the lands
described above, and agrees that the lessee, at its option, shall have the right
at any time to pay for Lessor, any mortgage, taxes or other liens existing,
levied or assessed on or against the above described lands in the event of
default of payment by Lessor and be subrogated to the rights of the holder
thereof, and Lessor hereby agrees that any such payments made by Lessee for the
Lessor may be deducted from any amounts of money which may become due the Lessor
under the terms of this lease.
IN WITNESS WHEREOF, this lease is executed to be effective as of the date first
written above, but upon execution shall be binding on the signatory and the
signatory's heirs, devisees, executors, administrators, successors and assigns,
whether or not this lease has been executed by all parties herein above named as
Lessor.

____________________________________________        ____________________________________________

--------------------------------------------------------------------------------

ACKNOWLEDGMENT
 
STATE OF
}
 
 
}  ss.
 
COUNTY OF
}
 

 
BE IT REMEMBERED, That on this                                      day
of.    _________________,2014 , before me, a Notary Public in and for said
County and State, personally appeared
known to me to be the identical person(s) described in and who
executed the within and foregoing instrument and acknowledged to me that
he/she/they executed the same as his/her/their free and voluntary act and deed
for the uses and purposes therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Official Seal the
day and year first written above.
 
 
Notary Public
 
SEAL
 
Residing at  _________________________________________
 
 
 
My Commission Expires:  _______________________________
 

 
 
 
WHEN RECORDED, MAIL TO:
 
Kingdom Resources, LLC
Address:
 
 

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EXHIBIT D — FORM OF OIL AND GAS LEASE ASSIGNMENT

 
STATE OF COLORADO
}
 
 
}  KNOW ALL MEN BY THESE PRESENTS:
 
COUNTY OF DOUGLAS
}
 

THAT for the sum of Ten Dollars ($10.00) and other good and valuable
consideration paid to it, the receipt and sufficiency of which are hereby
acknowledged, KINGDOM RESOURCES, LLC, a Colorado limited liability company,
whose address is 7501 Village Square Drive, Suite 205, Castle Pines, Colorado
80108 (hereinafter referred to as "Assignor") has GRANTED, SOLD, TRANSFERRED,
ASSIGNED, and CONVEYED and by these presents does GRANT, SELL, TRANSFER, ASSIGN,
and CONVEY unto PETROSHARE CORPORATION, a Colorado corporation, whose address is
Corporate 25, 7200 S. Alton Way, #B220, Centennial, CO 80112 (hereinafter
referred to as "Assignee"), all of Assignor's right, title and interest in and
to the oil, gas, and mineral lease(s) set forth on Exhibit "A" attached hereto,
insofar and only insofar as said lease(s) cover the lands described on Exhibit
"A" (the "Leases"), all being located in Adams County, Colorado.

Reserving unto Assignor an overriding royalty interest in and to such leases to
KINGDOM RESOURCES, LLC equal to the positive difference between existing lease
burdens of record and _____ percent (__%) of all oil, gas and other hydrocarbons
produced, saved and marketed from the Leases hereby assigned, and further
reserving unto REIGN ENERGY PARTNERS, LLC an overriding royalty interest in and
to such leases equal to the positive difference between existing lease burdens
of record and __________ percent (___%) of all oil, gas and other hydrocarbons
produced, saved and marketed from the Leases hereby assigned. The foregoing
reserved overriding royalties and all other terms and conditions of this
Assignment shall apply to any and all extensions, renewal and substitute leases
obtained by Assignee, its successors or assigns, on the land described herein.
If said Leases cover less than the full fee simple estate in the oil, gas and
other hydrocarbons under any tract or tracts of the land assigned, with respect
to that tract or tracts, the overriding royalty herein reserved by Assignor
shall be proportionately reduced.

Assignor hereby warrants that the Leases conveyed herein shall be free and clear
of any and all claims, liens, and encumbrances created by, through, or under
Assignor, but not otherwise. Except for the special warranty of title set forth
in the immediately preceding sentence, this Assignment of Oil and Gas Lease is
made and delivered to Assignee without any warranty of title, express, implied
or statutory.

The terms and provisions of this Assignment of Oil and Gas Lease shall be
binding upon and inure to the benefit of the parties hereto together with their
respective heirs, successors and assigns.

Executed and effective this _______ day of _________, 201__.

 
 
ASSIGNOR
 
KINGDOM RESOURCES, LLC
 
 
 
By:
 
 
 
Name:
 
 
 
Title:
 

--------------------------------------------------------------------------------

 
STATE OF
}
 
 
}  ss.
 
COUNTY OF
}
 

 
 
 
The foregoing instrument was acknowledged before me on this _____day of, 2014,
by ________________________________________________________, for Kingdom
Resources, LLC, a Colorado limited liability company, on behalf of said entity.
 
 
(Seal)
 
 
Notary Public - State of Colorado
 
 
 
My Commission Expires:  _______________________________
 

 
 

--------------------------------------------------------------------------------

Exhibit E — Form of Access and Damage Settlement Agreement
KNOW ALL MEN BY THESE PRESENTS THAT:
This Access and Damage Settlement Agreement made and entered into this
______ day of, _________2014, by and between
___________________________________________, hereinafter referred to as "Owners"
and PetroShare Corporation, whose address is Corporate 25, 7200 S. Alton Way
#B220, Centennial, Colorado 80112.
For and in consideration of the sum of Ten and more dollars and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, we, the undersigned each of lawful age, do hereby release acquit
and forever discharge PetroShare Corporation, hereinafter referred to as
"Operator", its employees, agents and contractors, from any and all losses,
liabilities, claims, damages, demands and causes of action for any and all
injuries and damage to the surface of the tract of land herein below described
and to the appurtenances, improvements and vegetation on said tract of land
owned by the undersigned, their respective employees and/or tenants, arising
directly or indirectly in connection with the operations of Operator, its
employees, agents and contractors, which include but is not limited to i)
accessing, ii) building a drillsite, iii) drilling, completing and producing a
well or wells, and iv) exercising other contractual, lease, or statutory rights
of the Operator on the subject tract of land being more particularly described
as follows, to wit:
A strip of land ("Access Road") in the_________ 1/4 of Section __________,
Township 1 South, Range 67 West, 6th P.M., Adams County, Colorado and the tract
of land for a Drillsite ("Drillsite") located in the NW1/4 of said Section
__________, the Drillsite and Access Road to occupy approximately
___________ acres more or less.
The parties do hereby further agree as follows:
Operator shall pay the Sum of ___________ Thousand and No/100 Dollars
($_,000.00) per acre as surface damages to build the Access Road and Drillsite
location, to drill a well(s) for the purposes of developing the minerals
underlying the drilling and spacing unit comprised of Section(s) _________and
___________, Township 1 South, Range 67 West, or lands pooled therewith or
adjacent thereto, and in the event the well(s) is completed as producer or in
the effort thereof, then to use, install, construct and maintain gathering
lines, transportation lines, and power lines as well as the ability to use,
install, construct and maintain on the Drillsite equipment and facilities for
production, storage, transportation and/or marketing of produced substances.
Operator shall have the option to drill more than one well from the Drillsite
and shall pay Owner the sum of  ___________ Thousand Five Hundred Dollars
($_,500.00) for each additional well drilled therefrom within Thirty (30) days
of the date that Operator begins drilling operations on such well(s). Operator
shall also have the option to expand the size of the Drillsite and Access Road
by paying Owner the Sum of __________Thousand Dollars ($_,000.00) for each
additional acreage, or fraction thereof, which shall not exceed
______________ (______) total acres for the Drillsite.
It is expressly agreed by the undersigned that if a well is not drilled on said
Drillsite, or if the captioned premises are not entered for the purposes
described herein in preparation for the drilling of a well, then and in that
event, this Access and Damage Settlement Agreement shall be deemed null and
void, the
 
 

--------------------------------------------------------------------------------

payment in the amount described above for the surface damages is hereby waived
and Operator shall not be required by this agreement to make such payment to the
undersigned.
Access to the property shall be limited to Operator and its contractors,
personnel and agents involved in the drilling and operation of such well(s) and
shall not be open to the general public. Operator shall be responsible for the
repair and maintenance of the Access Road and Drillsite constructed hereunder
prior to termination of Operator's use. Operator shall leave all cattle guards
installed, if any, permanently in place.
Operator shall comply with and be subject to all applicable hazardous materials
laws and other applicable regulations or restrictions duly and validly adopted
by the State of Colorado or any political subdivision thereof and agrees to
indemnify and hold harmless Owner from and against any and all responsibility or
liability for violation of the same by Operator's agents or employees, including
responsibility for any hazardous waste spills that may be associated with
Operator's use of the premises.
Upon the termination of Operator's activities on the Access Road and Drillsite,
Operator agrees to restore the surface to its original condition (as nearly as
practicable) including reseeding or at Owner's written request, Operator may
leave the Access Road and/or Drillsite in place, as is, for Owner's use.
Operator shall indemnify and hold Owner, its officers, employees, agents,
successors and assigns harmless from and against any and all liability, loss
damage claims, demand actions, causes of actions, including court costs and
attorney's fees which may result from property damage for personal injury to, or
death to persons whomsoever, including any person using the Access Road and
Drillsite when such personal injury, death loss, destruction, or damage arises
because of the existence of any of the improvements or the construction,
operation, maintenance, repair, removal reconstruction, or use of the roadway
and Drillsite or any part thereof, except to the extent that such liability,
loss damage, claims, demands actions, causes of actions, including court costs
and attorney's fee arise out of the negligence, willful misconduct, or any act
or omission of Owner, or its agents, employees, successors or assigns. This
indemnity shall cease at such time as (i) Operator completes restoration of the
Access Road or Drillsite or (ii) Owner elects in writing to have the Operator
leave the Access Road and/or Drillsite in place.
The undersigned Owners, do hereby further agree that payment of the
consideration as set forth above shall be full and complete payment, settlement,
compromise and satisfaction of any and all of the above mentioned losses,
liabilities, claims, damages demands and causes of action accrued or accruing to
the undersigned, their respective employees and/or tenants arising directly or
indirectly in connection with the above mentioned operations by Operator, its
employees, agents and contractors and that such payment is in no way an
admission of liability by Operator, its employees, agents or contractors.
Any notice or payment required or permitted to be given hereunder shall be
deemed to be delivered when deposited in the U.S. Mail, postage prepaid,
certified with return receipt requested, or registered mail, addressed to the
party to which it is intended at the address set forth above for such part and
that each party may rely on the last known address of the other party until
notified by the other part, their successors or assigns.
This instrument may be executed in any number of counterparts and shall be
binding upon all parties who have executed such a counterpart with the same
force and effect as if all parties have signed the same document.
This Agreement shall inure to the benefit of the Owners and Operator as well as
their Successors and Assignees.
 
 

--------------------------------------------------------------------------------

 
Executed this ______ day of ____________, ________.
 
 
Name:
 
 
 
 
 
 
Signature
Owner
 

 

 

ACKNOWLEDGMENT
 
STATE OF
}
 
 
}  ss.
 
COUNTY OF
}
 

 
On this ______ day of __________, 2014, before me, a Notary Public, personally
appeared ___________________________, known to me to be the persons described in
and who executed the within instrument, and acknowledged to me that he executed
the same as her free and voluntary act and deed for the uses and purposes
therein set forth.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed by Notarial seal the
day and year first above written.

 
 
(S E A L )
 
 
NOTARY PUBLIC
 
 
 
My Commission Expires:  ____________________
 

 

PETROSHARE CORPORATION
by its representative, _____________________

_______________________________________
TITLE:    Duly Authorized Representative

 

--------------------------------------------------------------------------------

 
STATE OF
}
 
 
}  ss.
 
COUNTY OF
}
 

 
Before me, the undersigned, a Notary Public in and for said county and state, on
this _______ day of _______________, 2014, personally appeared
___________________________, the Duly Authorized Representative of PetroShare
Corporation, and that said instrument was signed on behalf of said corporation
and said instrument to be the free act and deed of said corporation.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed by Notarial seal the
day and year first above written.
 
(S E A L )
 
 
Notary Public
 
My Commission Expires:  _________________