Drilling in Oil Sand: When each of said wells shall have reached the oil-bearing sand, or other rock or material bearing oil, the party of the second part shall prescribe the methods to be followed in drilling through the sand or other oil-bearing rock, and of inserting the casing and of perforating the same.
Saving Oil: The said party of the first part also agrees to save all, or as much as possible, of any oil that may be pumped by means of the sand pump from each of said wells, and take such means, in accordance with the best usage, for obtaining and saving from each of said wells any and all oil that may be encountered in drilling. All of said oil shall be the exclusive property of the party of the second part.
Completion of Wells: It is understood and agreed by and between the parties hereto that said party of the second part shall determine when a well which has been drilled to less depth than 1100 feet, is completed, and that upon any completion of any wells or wells hereby contracted for, said party of the first part, at his own cost and expense, shall pull all casing in said well that can be pulled, and which said party of the second part shall require to be pulled, and shall thoroughly bail and sand pump each of said wells until all drillings and sediment are removed therefrom, and until said well shall be cleaned to the satisfaction of the said party of the second part, and shall thoroughly perforate the casing, wherever it passes through the oil-bearing formation, in such manner as to allow the oil to flow freely through the casing into the well; it being understood and agreed that the party of the second part shall furnish the perforator, together with one man to supervise and direct the operation of the same, but the party of the first part shall furnish all other labor in and about perforating the casing.
Dry Holes: Said party of the first part, in the event of a well being in a dry hole, shall draw all of the casing under the direction and to the satisfaction of the superintendent of the party of the second part. If the casing cannot be drawn or pulled, the party of the first part shall cut the casing as may be directed by said party of the second part, and draw or pull so much of the casing as may be obtained by such cutting.
Time for Drilling: It is further understood and agreed that time is of the essence of this contract, and that in case said party of the first part shall fail or neglect, for a space of ten days, to continue the work of drilling on either of said wells, unavoidable delays excepted, then, in such event, such failure or neglect shall of itself work a forfeiture of the right of the party of the first part to receive payment for the number of feet already drilled by him in said well, and the said party of the second part, without any notice to, or demand upon, the party of the first part, may declare this agreement terminated, and said party of the second part shall have the right, at any time after such forfeiture, to take possession of such well, and at its pleasure to abandon the same without liability to the party of the first part for any portion of the contract price for such well. The party of the second part shall also have the right at any time after such forfeiture, if it so elect, to take possession of all appliances belonging to said party of the first part, and if it so elect, to drill said well to completion. In case it shall succeed in completing such well, the cost for such completion, without any allowance to the party of the first part for the use of the appliances belonging to him, shall be deducted from the contract price of said well, and the balance, if any, shall be paid over to said party of the first part upon demand; but if said party of the second part shall not succeed in completing said well, it shall not be liable to the party of the first part in any sum whatever, and after such completion shall return said appliances belonging to the party of the first part to him in as good order as when received, the natural wear and tear, accidental loss and breakage, only excepted.
Discontinuing Work: The said party of the second part shall have the right and option to have the drilling of any well discontinued at any time during the progress of the work thereon by giving notice thereof to said party of the first part, and thereupon the drilling of such well shall be deemed to be completed, and said party of the first part shall forthwith stop drilling operations therein, and, at the option of said party of the second part, and as may be directed by it, shall, if the well be an oil-producing well, put same in proper condition, according to best usage, to save the oil therein; but if such well be not an oil-producing well, then said party of the first part shall draw the casing therefrom and plug said well in the manner herein provided, and as may be directed by said party of the second part.
Water Wells: In the event that either of said wells which shall be drilled to such depth as said party of the second part may determine, shall not produce oil in paying quantities, or shall contain water, and said party of the second part shall desire to have the casing all pulled therefrom and the hole plugged, then, in such event, the said party of the first part agrees to draw all casing from said hole, and to properly fill up the hole and to plug off the water therein, under the supervision of the party of the second part, so that the same shall not affect or enter into the oil-bearing formation.
Delivery of Wells: No part of the contract price herein agreed to be paid shall be paid until each of the said wells is completed to the depth of eleven hundred (1100) feet, or to such depth less than eleven hundred feet as said party of the second part may determine, and until the said well shall have been delivered to the party of the second part in thoroughly good order, as hereinabove provided, free and clear of all obstructions in the well, and of all encumbrances, liens and debts of every kind, and until evidence to that effect shall be furnished to the satisfaction of the party of the second part. The contract price for each well completed as aforesaid shall be paid on the fifteenth day of the month next following the month in which such well shall have been delivered.
Drilling Reports: The said party of the first part shall keep a full and accurate report as the work of drilling each well progresses, showing the formation encountered and passed through, the amount of casing of each size used and its condition, the points at which water and oil are found, and of all other matters necessary to a full and complete history of each well, and upon the completion thereof shall furnish full and accurate report in writing of the same to the party of the second part.
Materials to be Furnished by Driller: The party of the first part agrees to furnish at his sole cost and expense, all labor, tools, supplies and appliances of every name and nature not specifically mentioned in this contract to be furnished by the party of the second part, including all drilling and fishing tools, cables, sand-lines and all other articles needed, used or charged to said work of carrying out this contract.
Mechanics Liens: Said party of the first part furthermore agrees that no mechanics lien or liens shall be incurred, created, or filed, or; recorded against said premises, or any part thereof; that no liens or any incumbrance whatever shall be created, suffered or permitted on said premises, and that said party of the first part shall save and keep harmless said party of the second part, from all liens and incumbrances, and actions and proceedings to enforce such liens and incumbrances, or any of them, and from all damages, expenses, costs, and attorney fees, which Said party of the second part may incur by reason of or on account of such actions or proceedings, or any of them.
Contract Not to be Assigned: It is furthermore expressly agreed that said party of the first part shall not assign this agreement, or any of the rights herein mentioned, or sub-contract said work, without first obtaining the written consent thereto of said party of the second part, but shall keep said work under his personal supervision and control.
Heirs and Assigns Bound: Everything herein contained which in any way affects or binds either of the parties hereto shall in like manner affect and bind their, and each of their, respective heirs, executors, administrators, successors and assigns; provided, however, that this contract shall not be capable of assignment by said party of the first part except in the manner and to the extent herein specified.
In Witness Whereof, the said party of the first part has hereunto set his hand and seal, and the party of the second part has hereunto caused its corporate name to be subscribed and its corporate seal to be affixed by its President and its Secretary, the day and year first above written.
M. L. Pembroke. (Seal)
(Corporate Seal) Blue Bird Oil Company.
By Peter Prior, its President.
By Prester John, its Secretary.