11-34-120. Mortgages taken by board; control and disposition of property.

(a) All mortgages and accompanying promissory note or notes taken by the board for monies loaned shall run to state loan and investment board as mortgagee or payee, and all titles to property taken by the board shall run to the board as grantee. The board may control, manage, lease and dispose of the property, subject to the following:

(i) The board may lease any or all property for oil and gas for a primary term up to ten (10) years and as long thereafter as oil or gas is produced in paying quantities and extend the term of existing oil and gas leases in good standing for as long as oil or gas is produced in paying quantities and for coal and other mineral purposes for terms not exceeding ten (10) years, with the preferential right in each coal or other mineral lessee to renew the lease for successive periods of ten (10) years each;

(ii) The board may make and establish rules and regulations governing the issuance of mineral leases and covering the conduct of development and mining operations to be carried on thereunder;

(iii) Mineral leases may be issued upon monthly or annual minimum rental payment basis as fixed by the board, with payments annually applied against any royalty as shall accrue for the same lease year by the terms of the lease, which royalty, as to lands leased for oil or gas shall not be less than five percent (5%) of all oil and gas produced and saved from and not used in operations on the lands under the lease, and royalty of not less than five cents ($.05) per ton on coal produced from the lands under any lease for coal purposes, the royalty to be paid on mine run of coal.

(b) No mineral lease is assignable or transferable except with written consent of the board. It shall require the lessee's full compliance with all rules and regulations adopted by the board and compliance with all terms of the lease. All mineral leases shall be separate and distinct from each lease of the land for grazing or agricultural purposes. Rules and regulations adopted by the board shall provide for joint use of the lands for grazing and agricultural or mineral purposes without undue interference by the lessees under any class of leases with lessees under any other class. The board, on behalf of the state and its lessee in any mineral lease may join in the interest of conservation and greater ultimate recovery of oil and gas, in fair and equitable cooperative or unit plans of development or operation of oil and gas pools, with the United States government and its lessees or permittees, or others, and the board may modify and change any terms and conditions of any oil and gas lease as mutually agreed by the lessor and lessee to conform to the terms of any lease to the cooperative or unit plan and to effectuate proper operations thereunder. The changes may include extension of the term of years applicable to any lease for the full period of time during which the cooperative or unit plan may remain in effect.

(c) When a cooperative or unit agreement is terminated or ceases to be effective as to lands upon which there is no production of oil or gas, the lease covering the lands shall remain in effect for two (2) years from the date the lands ceased to be subject to the agreement, or for the remaining length of the term of the original lease, whichever is greater, and so long thereafter as oil or gas is produced from the lands in accordance with the requirements of the original lease.

(d) The terms of any lease issued under this section for land on which actual drilling operations were commenced prior to the end of its primary term and are being diligently prosecuted at that time shall be extended for one (1) year and so long thereafter as oil or gas is produced in paying quantities.

(e) If land acquired by the board and upon which improvements for mineral operations and other improvements have been made, are sold as to both surface and mineral rights, or if the lands are leased for minerals to other than the owner of the mineral improvements, the purchaser or new lessee shall pay the owner of the improvements the fair value thereof at a mutually agreed price. If agreement cannot be promptly reached the price shall be fixed by appraisement under the direction of the board. As used in this subsection "improvements" means improvements which are used or useful and necessary for subsequent operation of the land for mineral purposes and the price shall include the fair value of the work previously done in the development of the property if it is of practical use in future mineral operation. No well drilled on the land for oil or gas which does not produce either in commercial quantities, and no shaft, tunnel or drift from which coal or other minerals have been substantially exhausted shall be considered improvements for the purposes of this subsection.

(f) The board may sell or otherwise dispose of property at a price not less than seventy-five percent (75%) of the appraised value and upon terms determined by the board which shall adopt rules and regulations governing such sales. When land is sold which was acquired by the board through the foreclosure of any farm loan mortgage provided for by this act, the board shall not reserve any part of, or interest in, the mineral estate. When land otherwise acquired by the board is sold, the board may reserve all or any part of the mineral content of the land and the right to use so much of the surface of the land as it considers convenient or necessary in connection with mineral operations thereon, together with all needed rights of ingress and egress, but the board in each case shall appropriately provide for indemnification of the surface owner against all surface damages caused by mineral operations on the land.

(g) The board may lease for agricultural and grazing purposes any lands acquired by it on such terms and conditions as it prescribes and adopt rules and regulations it considers necessary in facilitating the leases.

(h) Revenue received by the board under this section from agricultural, grazing and mineral leases of lands acquired by foreclosure shall be credited to the loss reserve account as provided by W.S. 11-34-202(e).