Section 045. Royalties

01. Royalty Payments. Unless otherwise specified by the Board, the Lessee will pay to the state of Idaho, in money or in kind, a royalty of no less than twelve and one-half percent (12.5%) of the Oil and/or Gas o r Natural Gas Plant Liquids produced and saved. The Lessee will make payments in cash unless the state sends writte n instructions for payment in kind. Royalty is due on all production from the leased premises except that which wa s consumed for the direct operation of the producing wells or lost through no fault of the Lessee. (7-1-25) 02. Royalty Not Reduced. If royalties are paid in cash, then costs of marketing, transporting an d processing Oil and/or Gas or Natural Gas Plant Liquids, or all of them produced, are borne entirely by the Lessee, an d such cost will not reduce the Lessor’s royalty directly or indirectly. If the Director elects to take royalty in kind, th e Lessee will be reimbursed for reasonable additional storage and transportation costs. (7-1-25) 03. Oil, Gas, and Natural Gas Plant Liquids Royalty Calculation and Reporting. All royalty owe d to the Lessor, and not paid in kind, will be paid to the Lessor in the following manner: (7-1-25) a. Payment of royalty on production of Oil is due and must be received by the Lessor on or before th e 65th day after the month of production; (7-1-25) b. Payment of royalty on production of Gas and Natural Gas Plant Liquids is due and must b e received by the lessor on or before the 95th day after the month of production; (7-1-25) c. All royalty payments must be completed in the form and manner approved by the Departmen t including, the gross amount and disposition of all Oil, Gas, and Natural Gas Plant Liquids produced and the marke t value of the Oil, Gas, and Natural Gas Plant Liquids; (7-1-25) d. Lessee must maintain, and make available to the Lessor upon request, copies of all documents , records or reports confirming the gross production, disposition, and market value

rm and manner approved by the Departmen t including, the gross amount and disposition of all Oil, Gas, and Natural Gas Plant Liquids produced and the marke t value of the Oil, Gas, and Natural Gas Plant Liquids; (7-1-25) d. Lessee must maintain, and make available to the Lessor upon request, copies of all documents , records or reports confirming the gross production, disposition, and market value. This includes gas meter readings , pipeline receipts, gas line receipts, and other checks or memoranda of the amount produced and put into pipelines, tanks, pools, gas lines, or gas storage, and any other reports or records that the Lessor may require to verify the gross production, disposition, and market value; and (7-1-25) e. Each royalty payment must be accompanied by a check stub that includes: all information require d by Idaho Code § 47-332; a schedule, summary, or other remittance advice showing the Lease number; and the amoun t of royalty being paid on the Lease. (7-1-25) 04. Overriding Royalty. Any assignment of overriding royalty without a working interest mad e directly by Lessee, from Lessee’s working interest, and not included with an assignment of this Lease, must be file d with the Department, along with the processing fee, per Subsection 120.03, within ninety (90) calendar days from th e date of execution of the valid assignment. It is Lessee’s responsibility, not the Department’s, to process an d administer any overriding royalty

ing interest mad e directly by Lessee, from Lessee’s working interest, and not included with an assignment of this Lease, must be file d with the Department, along with the processing fee, per Subsection 120.03, within ninety (90) calendar days from th e date of execution of the valid assignment. It is Lessee’s responsibility, not the Department’s, to process an d administer any overriding royalty. Any assignment that creates an overriding royalty that cumulatively exceeds th e royalty payable to Lessor by greater than five percent (5%), is deemed a violation of this Lease, unless tha t assignment expressly provides that the obligation to pay the excess overriding royalty is suspended when the average production of oil per well per day, averaged on a monthly basis, is fifteen (15) barrels or less at sixty (60) °F a t atmospheric pressure, or; the average Production of gas per day, averaged on a monthly basis, is 60,000 cubic feet (1,700 m3) or less at fourteen and seventy-three hundredths (14.73) pounds per square inch absolute and the standard temperature base of sixty (60) °F. A reservation or assignment of an overriding royalty will not relieve Lessee of an y of Lessee’s obligations for payment of Royalties to Lessor. Any reservation or assignment of overriding royalty b y Lessee must terminate upon the termination of this Lease. (7-1-25) 046. -- 049. (RESERVED)