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HomeMy WebLinkAbout09229 ORD - 02/05/1969JKH:1- 21+ -69 AN ORDINANCE AUTHORIZING AND DIRECTING THE CITY MANAGER, FOR AND ON BEHALF OF THE CITY, TO EXECUTE A GAS LEASE BETWEEN CITY OF CORPUS CHRISTI, AS LESSEE, AND GUARANTY NATIONAL BANK AND TRUST OF CORPUS CHRISTI, TRUSTEE, JOINED BY F. B. SECHRIST, AS LESSOR, FOR THE PURPOSE OF INVESTIGATING, EXPLORING, PROSPECTING, DRILLING, MINING AND OPERATING FOR AND PRODUCING GAS AND GASEOUS SUBSTANCES BENEATH THE SURFACE OF THAT TRACT OR PARCEL OF LAND DESCRIBED AS TEN (10) ACRES OUT OF BLOCK 23, J. C. RUSSELL FARM TRACTS, SITUATED IN CORPUS CHRISTI, NUECES COUNTY, TEXAS, BEING MORE PARTICULARLY DESCRIBED HEREINAFTER, AND BEING FOR A PRIMARY TERM OF ONE HUNDRED TWENTY (120) DAYS, COM- MENCING WITH THE DATE OF EXECUTION OF THE SAID GAS LEASE, A COPY OF WHICH IS ATTACHED HERETO AND MADE A PART HEREOF; AND DECLARING AN EMERGENCY. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, TEXAS: SECTION 1. THAT THE CITY MANAGER BE, AND HE IS HEREBY, AUTHORIZED AND DIRECTED, FOR AND ON BEHALF OF THE CITY, TO EXECUTE A GAS LEASE BETWEEN THE CITY OF CORPUS CHRISTI, AS LESSEE, AND GUARANTY NATIONAL BANK AND TRUST OF CORPUS CHRISTI, TRUSTEE, JOINED BY F. B. SECHRIST, AS LESSOR, FOR THE PURPOSE OF INVESTIGATING, EXPLORING, PROSPECTING, DRILLING, MINING AND OPERATING FOR AND PRODUCING GAS AND GASEOUS SUBSTANCES BENEATH THE SURFACE OF THAT TRACT OR PARCEL OF LAND DESCRIBED AS FOLLOWS: TEN (10) ACRES OUT OF BLOCK 23, J. C. RUSSELL FARM TRACTS, AS SHOWN BY MAP OR PLAT OF RECORD IN VOL. 3, PAGE 53, MAP RECORDS OF NUECES COUNTY, TEXAS, SAID 10 ACRES BEING MORE PARTICULARLY DESCRIBED AS 10 ACRES IN THE FORM OF A SQUARE WITH THE SURFACE LOCATION OF THAT CERTAIN ABANDONED WELL KNOWN AS WELL #18 BEING LOCATED IN THE EXACT CENTER OF SUCH 10 -ACRE TRACT, SAID LEASE BEING FOR A PRIMARY TERM OF ONE HUNDRED TWENTY (120) DAYS, COMMENCING WITH THE DATE OF EXECUTION OF THE SAID GAS LEASE, A COPY OF WHICH IS ATTACHED HERETO AND MADE A PART HEREOF. SECTION 2. THE NECESSITY TO AUTHORIZE THE EXECUTION OF THE AFORESAID GAS LEASE IN ORDER THAT THE CITY MAY BEGIN ITS PROPOSED OPERA- TIONS ON THE PARCEL OR TRACT OF LAND DESCRIBED HEREINABOVE CREATES A 9229 PUBLIC EMERGENCY AND AN IMPERATIVE PUBLIC NECESSITY REQUIRING THE SUSPEN- SION OF THE CHARTER RULE THAT NO ORDINANCE OR RESOLUTION SHALL BE PASSED FINALLY ON THE DATE OF ITS INTRODUCTION AND THAT SUCH ORDINANCE OR RESOLU- TION SHALL BE READ AT THREE SEVERAL MEETINGS OF THE CITY COUNCIL, AND THE MAYOR HAVING DECLARED SUCH EMERGENCY AND NECESSITY TO EXIST, HAVING REQUESTED THE SUSPENSION OF SAID CHARTER RULE AND THAT THIS ORDINANCE BE PASSED FINALLY ON THE DATE OF ITS INTRODUCTION AND THAT SUCH ORDINANCE TAKE EFFECT AND BE IN FULL FORCE AND EFFECT FROM AND AFTER ITS PASSAGE, IT IS ACCORDINGLY SO ORDAINED, THIS THE ��/1J DAY OF , 1969. ATTEST: CITY SECRE ARY MAYOR THE CITY OF CORPUS CHRISTI, TEXAS APPROVED: DAY OF JANUARY, 1969: CITY ATTORNEY li GAS LEASE THE STATE OF TEXAS ) COUNTY OF NUECES ) This Agreement made and entered into this the day of January, 1969, by and between Guaranty National Bank and Trust of Corpus Christi, Trustee, as Lessor, and the City of Corpus Christi, Texas, as Lessee, W 1 T N E S S E T H: 1. Lessor, in consideration of Ten Dollars ($10.00) in hand paid, of the royalties herein provided, and of the agreements of Lessee herein contained, hereby grants, leases and lets unto Lessee, for the sole and only purpose of investigating, exploring, prospecting, drilling, mining and operating for and producing gas and gaseous substances found or located in horizons between the surface of the ground and five thousand feet (5000') below the surface thereof, laying pipe lines, building tanks, roads, power stations, telephone lines, and other structures and things thereon, to produce, save, take care of, store, treat, transport and own said products, the following described land in Nueces County, Texas, to wit: An undivided one -half (1/2) interest in ten (10) acres out of Block 23, J. C. Russell Farm Tracts, as shown by map or plat of record in Vol. 3, page 53, Map Records of Nueces County, Texas, said 10 acres being more parti- cularly described as 10 acres in the form of a square with the surface location of that certain abandoned well known as Well 018 being located in the exact center of such 10 acre tract. 2. Without reference to the commencement, prosecution or cessation at any time of drilling or other development operations, and /or to the discovery, development or cessation, at any time, of production of gas, and without further payments than the royalties herein provided, and notwithstanding anything else herein contained to the contrary, this lease shall be for a term of one hundred twenty (120) days from this date (called "primary term ") and as long thereafter as gas is produced from said land hereunder, or as long as this lease is continued in effect as otherwise provided herein. 3. In consideration of the premises, it is hereby mutually agreed.as follows: (a) Lessee shall pay to Lessor as royalty on gas produced from the premises the sum of one and one -half cents (1 1 /2c) per mcf, said royalty to be free of all cost to Lessor except taxes, or 0.085 of the price paid by the City to Coastal States Gas Producing Company for similar gas, whichever is the greater. (b) In addition to the above royalty on gas, Lessee shall pay to Lessor an additional royalty of one - eighth (1 /8) of the market value of all liquid hydrocarbons separated or extracted from such gas, provided, however, in the event that Lessee shall make an "arm's length deal" with a third party for the separation or extraction of liquid hydrocarbons from gas produced from the premises, then Lessor shall receive a royalty of one - eighth (1/8) of the cash consideration or of the market price of whatever products or thing of value which the Lessee shall receive from and under the terms of such deal. In connection with the separation or extraction of liquid hydrocarbons from gas produced, Lessee covenants and agrees that it will process all gas through a field type separator or other extraction equipment if the liquefiable hydrocarbon content of such gas is sufficient to justify the cost and maintenance of such separator or other processing device. (c) While there is a gas well on this lease but gas is not being sold or used, Lessee may pay as royalty to the credit of Lessor on or before ninety (90) days after the date on which said gas well is shut in, and thereafter at annual intervals, the sum of Two Hundred Fifty Dollars ($250.00), and if such payment is made or tendered this lease shall not terminate and it will be considered that gas is being produced from the lease in paying quantities; provided, however, Lessee's right to maintain this lease solely by virtue of shut in gas royalty payments is hereby limited to two (2) consecutive years, but this right to maintain this lease for such two (2) consecutive year period shall be a recurring right and may be exercised at any -2- time and from time to time whenever Lessee finds it necessary to shut in such well or wells. Anything to the contrary notwithstanding, in no event shall Lessor's royalty bear any part of the cost of production, gathering, transportation, manufacture, processing, treating or marketing, or for construction, operation, or depreciation of any plant-or other facility or equipment for processing or treating gas produced from the leased premises; nor shall Lessor's royalty be charged with any tax unless same is directly assessed by the taxing agency to or levied by law as payable on account of, Lessor as owner of free royalty under the terms hereof. 4. In the event a well or wells producting gas in paying quantities should be brought in on adjoining land, whether such ad- joining land belongs to Lessor or not, and draining the leased prem- ises, Lessee agrees to drill or complete such offset well or wells as would be done by a prudent operator to prevent drainage from the leased premises. 5. If at the expiration of the primary term gas is not being produced on said land but Lessee is then engaged in drilling or reworking operations thereon, or shall have completed a dry hole thereon within sixty (60) days prior to the end of the primary term, the lease shall remain in force so long as operations on said well or for drilling or reworking of any additional well are prosecuted with no cessation of more than sixty (60) consecutive days, and if they result in the production of gas, so long thereafter as gas is produced from said land. If, after the expiration of the primary term of this lease and after gas is produced from said land, the production thereof should cease from any cause, this lease shall not terminate if Lessee commences operations for drilling or reworking within sixty (60) days after the cessation of such production, but shall remain in force and effect so long as such operations are prosecuted with no cessation of more than sixty (60) consecutive days, -3- , and if they result in the production of gas, so long thereafter as gas is produced from said land. 6. The rights of either party hereunder may be assigned, in whole or in part, and the provisions hereof shall extend to the successors and assigns of the parties hereto, but no change or division in the ownership of the land, rentals, or royalties, however accomplished, shall operate to enlarge the obligations or diminish the rights of Lessee. No change in the ownership of the land, or any interest therein, shall be binding on Lessee until thirty (30) days after Lessee ,shall be furnished with a certified copy of recorded instruments, all court proceedings, and all other necessary evidence of any transfer, inheritance, or sale of said rights. An assignment of this lease in whole or in part shall, to the extent of such assignment, relieve and discharge Lessee of any future obligations hereunder. 7. It is agreed and understood that a representative of Guaranty National Bank and Trust of Corpus Christi shall have access to the derrick floor at all times (at risk of Lessor) and to all books, accounts, contracts, records of tests, logs, charts, samples, electrical surveys, and other data of Lessee pertaining to the develop- ment, production, moving, processing, transportation, sale and market- ing of the gas from the leased premises. 8. All express or implied covenants of this lease shall be subject to all Federal and State laws, executive orders, rules or regulations, and this lease shall not be terminated, in whole or in part, nor Lessee held liable in damages, for failure to comply there- with if compliance is prevented by or if such failure is the result of any such law, order, rule or regulation. 9. Lessor hereby warrants and agrees to defend the title to said land (the warranty of the corporate Lessor being limited to its fiduciary capacities), and agrees that Lessee at its option may -4- discharge any tax, mortgage, or other lien upon said leased premises, and in the event Lessee does so, it shall be subrogated to such lien with the right to enforce and apply rentals and royalties accruing hereunder toward satisfying same. Without impairment of Lessee's right under the warranty in event of failure of title, it is agreed that if Lessor owns an interest in said land less than an undivided one -half (1 /2) interest in the mineral estate as to gas and gaseous substances, then the royalties to be paid Lessor.shall be reduced proportionately. 10. Lessee or its successors or assigns shall have the right at any time to surrender this lease to Lessor or its successors or assigns in whole or in part, subject to the limitations hereinafter set forth, by delivering or mailing a release thereof to the Lessor or by placing a release thereof of record in Nueces County, Texas, thereupon Lessee shall be relieved from all future obligations, express or implied, of this agreement as to the acreage so surrendered. 11. Subject to the rights of any person not a party to this lease, Lessee is hereby granted the right to enter any existing wells or holes for the purpose of complying with any provision of this lease. Furthermore, this lease is subject to the rights of Cummins & Walker Oil Company, Inc., a Texas corporation, if any, under the terms of that certain oil and gas lease dated November 4, 1966 between Guaranty National Bank and Trust of Corpus Christi, Trustee, as Lessor, and the said Cummins & Walker Oil Company, Inc., as Lessee, describing Tract 23 of the J. C. Russell Farm Tracts, as shown by map or plat of record in Vol. 3, page 53, Map Records of Nueces County, Texas, and covering oil and gas below a depth of five thousand feet (50001) below the surface. 12. Lessee shall have free use of gas produced from the leased premises under the terms of this lease for all operations hereunder, and the royalty on gas shall be computed after deducting any so used. -5- 13. Lessee covenants and agrees that it will comply with all Federal and State laws, executive orders, rules or regulations. 14. It is the understanding of the parties hereto that Well 418 referenced above has not been plugged. If this is the case, by execution of this lease, Lessee does not hereby assume the obligation to plug such well unless (1) Lessee perforates the well in a zone or horizon which is not now perforated, or (2) Lessee obtains production of gas or gaseous substances which, in the opinion of Lessee would be in sufficient quantities to justify connecting this well to the City gas system at the airport, in either of which events the well, upon abandonment, shall be plugged at Lessee's expense in accordance with the regulations of the Railroad Commission of Texas or other regulatory agency. Provided, however, no provision of this lease shall be construed as placing upon Lessor the burden of plugging such well. IN WITNESS WHEREOF, this instrument is executed in duplicate on the i date first above written. GURATANTY NATIONAL BANK AND TRUST OF CORPUS CHRISTI, TRUSTEE ATTEST: By Vice President Assistant Cashier LESSOR ATTEST: City Secretary THE STATE OF TEXAS ) COUNTY OF NUECES ) CITY OF CORPUS CHRISTI By R. Marvin Townsend City Manager LESSEE BEFORE ME, the undersigned authority, on this day personally appeared , known to me to be the person and officer whose name is subscribed to the foregoing instrument, as Vice President of Guaranty National Bank and Trust of Corpus Christi, and acknowledged to me that he executed the same for the purposes and consideration therein expressed, in the capacity therein stated, and as the act and deed of said bank in its capacity as Trustee. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this day of January, 1969. Notary Public, Nueces County, Texas -6- THE STATE OF TEXAS ) COUNTY OF NUECES ) BEFORE ME, the undersigned authority, on this day personally appeared R. Marvin Townsend, City Manager of the City of Corpus Christi, Texas, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein,expressed, and in the capacity therein stated and as the act and deed of said City. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this day of January, 1969. Notary Public, Nueces ounty, exas -7- THE STATE OF TEXAS COUNTY OF KERR Q FOR THE PURPOSE OF COVERING THE UNDIVIDED ONE -HALF INTEREST IN THE MINERAL ESTATE SHOWN BY SECTION 9 AS BEING OWNED OTHER THAN BY GUARANTY NATIONAL BANK AND TRUST OF CORPUS CHRISTI, TRUSTEE, AND INCLUD- ING THAT INTEREST INTO THIS LEASE AND SUBJECT TO THE TERMS THEREOF, THE UNDERSIGNED, F. B. SECHRIST, DOES HEREBY JOIN IN THIS LEASE AND AGREE THAT THE TERMS THEREOF SHALL APPLY TO HIS UNDIVIDED MINERAL ESTATE 50 AS TO RESERVE UNTO HIMSELF A ROYALTY EQUAL TO THAT HEREIN RESERVED TO GUARANTY NATIONAL BANK AND TRUST OF CORPUS CHRISTI, TRUSTEE. F. B. SECHRIST THE STATE OF TEXAS COUNTY OF KERR BEFORE ME, THE UNDERSIGNED, A NOTARY PUBLIC IN AND FOR SAID COUNTY AND STATE, ON THIS DAY PERSONALLY APPEARED F. B. SECHRIST, KNOWN TO ME TO BE THE PERSON WHOSE NAME IS SUBSCRIBED TO THE FOREGOING INSTRU- MENT, AND ACKNOWLEDGED TO ME THAT HE EXECUTED THE SAME FOR THE PURPOSES AND CONSIDERATION THEREIN EXPRESSED. GIVEN UNDER MY HAND AND SEAL OF OFFICE, THIS THE DAY OF JANUARY, 1969. NOTARY PUBLIC, KERR COUNTY, TEXAS CORPUS CHRISTI TEXAS DAY �7� ,,/ OF\ -�;�� TO THE MEMBERS OF THE CITY COUNCIL CORPUS CHRISTI TEXAS FOR THE REASONS SET FORTH IN THE EMERGENCY CLAUSE OF THE FOREGOING ORDINANCE, A PUBLIC EMERGENCY AND IMPERATIVE NECESSITY EXIST FOR THE SUSPEN- SION OF THE CHARTER RULE OR REQUIREMENT THAT NO ORDINANCE OR RESOLUTION SHALL BE PASSED FINALLY ON THE DATE IT IS INTRODUCED AND THAT SUCH ORDINANCE OR RESOLUTION SHALL BE READ AT THREE MEETINGS OF THE CITY COUNCILS Is THEREFORE REQUEST THAT YOU SUSPEND SAID CHARTER RULE OR REQUIREMENT AND PASS THIS ORDI- NANCE FINALLY ON THE DATE IT IS INTRODUCEI)j OR AT THE PRESENT MEETING OF THE CITY COUNCIL. RESPECTFULLYp l / YOR THE CITY OF CORPUS CHRISTI, TEXAS THE CHARTER RULE WAS SUSPENDED BY THE FOLLOWING VOTE: JACK R. BLACKMON RONNIE SIZEMORE •-"�__ V. A. "DICK" BRADLEY, JR. P. JIMENEZ, JR., M.D. GAGE LOZANO, SR. 61 KEN MCDANIEL W. J. "WRANGLER" ROBERTS THE ABOVE ORDINANCE WAS PASSED BY THE FOLLOWING VOTE: JACK R. BLACKMON RONNIE SIZEMORE V. A. "DICK" BRADLEY, JR. P. JIMENEZ, JR., M.D. GABE LOZANO, SR. KEN MCDANIEL W. J. "WRANGLER" ROBERTS