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HomeMy WebLinkAbout12573 ORD - 04/02/1975MLM:VMR:3- 31- 75;1ST TEXAS: AN ORDINANCE AUTHORIZING AND DIRECTING THE CITY MANAGER TO EXECUTE A LEASE AGREEMENT BETWEEN THE CITY OF CORPUS CHRISTI AND DAVIS 01-L COMPANY FOR THE PURPOSE OF INVESTIGATING, EXPLORING, PROSPECTING, DRILLING AND MINING FOR AND PRODUCING OIL AND GAS BENEATH THE SURFACE OF THAT TRACT OR PARCEL OF LAND DESCRIBED AS LOTS 9 AND 10, SECTION 21, FLOUR BLUFF & ENCINAL FARM AND GARDEN TRACTS, AND BEING FOR A PRIMARY TERM OF THREE (3) YEARS, COMMENCING WITH THE DATE OF EXECUTION OF THE SAID OIL AND GAS LEASE, A COPY OF WHICH, IN SUBSTANTIALLY THE FORM ATTACHED HERETO, MARKED EXHIBIT "A ", IS MADE A PART HEREOF; AND DECLARING AN EMERGENCY. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, SECTION 1. THAT THE CITY MANAGER BE AND HE IS HEREBY AUTHORIZED AND DIRECTED, FOR AND ON BEHALF OF THE CITY OF CORPUS CHRISTI, TO EXECUTE AND OIL AND GAS LEASE BETWEEN THE CITY OF CORPUS CHRISTI, AS LESSOR, AND DAVIS OIL COMPANY, AS LESSEE, 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 DE- SCRIBED AS FOLLOWS: LOTS NINE (9) AND TEN (10), SECTION NO. TWENTY -ONE (21) OF THE FLOUR BLUFF AND ENCINAL FARM AND GARDEN TRACTS OF NUECES COUNTY, TEXAS, AS SHOWN BY MAP OR PLAT OF SAID SUBDIVISION OF RECORD IN VOLUME A, PAGE 43, OF THE MAP RECORDS OF NUECES COUNTY, TEXAS, TO WHICH REFERENCE IS HERE MADE, CONTAINING FORTY (4O) ACRES OF LAND, SAID LEASE BEING FOR A PRIMARY TERM OF THREE (3) YEARS, ON THE BASIS OF A CASH BONUS OF $25.00 PER ACRE AND THE ROYALTY OF NO LESS THAN 3/32 OF 8 /6, COMMENCING WITH THE DATE OF EXECUTION OF THE SAID OIL AND GAS LEASE, ALL AS MORE FULLY SET FORTH IN THE LEASE, A COPY OF WHICH IN SUBSTANTIALLY THE FORM ATTACHED HERETO MARKED EXHIBIT "P., IS MADE A PART HEREOF. SECTION 2. THE NECESSITY TO EXECUTE A LEASE AGREEMENT AS HEREIN_ ABOVE DESCRIBED CREATES A PUBLIC EMERGENCY AND AN IMPERATIVE PUBLIC NECESSITY REQUIRING THE SUSPENSION OF THE CHARTER RULE THAT NO ORDINANCE OR RESOLUTION SHALL BE PASSED FINALLY ON THE DATE OF ITS INTRODUCTION BUT THAT SUCH ORDI- NANCE OR RESOLUTION SHALL BE READ AT THREE SEVERAL MEETINGS OF THE CITY COUNCIL, AND THE MAYOR HAVING DECLARED SUCH EMERGENCY AND NECESSITY TO EXIST, JL25 3 AND HAVING REQUESTED THE SUSPENSION OF THE CHARTER RULE AND THAT THIS ORDINANCE TAKE EFFECT AND BE IN FULL FORCE AND EFFECT FROM AND AFTER ITS PASSAGE, IT IS ACCORDINGLY SO ORDAINED, THIS THE o2. AY of MARCH, 1975. ATTEST: SECRETARY MAYOR THE CITY OF CORPUS CHRISTI, TEXAS AP ROVED: DAY OFAORW, 1975 CITY ATTO NEY� �C7�N� OIL AND GAS LEASE THE STATE OF TEXAS X COUNTY OF NUECES X DESCRIPTION: Lots Nos. Nine �9) and Ten (10), Section No. Twenty -one (21) of the Flour Bluff and Encinal Farm and Garden Tracts of Nueces County, Texas, as shown by map or plat of said subdivision of record in Volume A, page 43, of the Map Records of Nueces County, Texas,'to which reference is here made,.containing forty (40) acres of land. THIS AGREEMENT made this day of , 1975, between the CITY OF CORPUS CHRISTI, TEXAS, Lessor, and _ nAVrc nTT COMPA Yp 527 Entex Bldg Houston Texas 77002 _ _ Lessee, W I T N E S S E T H_ 1. Lessor, in consideration of One Thousand - - - - - - - - - - _ - - - - - - - - - - - - - Dollars ($ 11000.00 ) (There shall be a Cash Bonus Minimum of Twenty -five Dollars ($25.00) per acre) in cash in hand paid and other good and valuable consideration of the royalties herein provided, and the agree- ments of Lessee herein contained, hereby GRANT, LEASES and LETS exclusively unto Lessee the above described land for the purpose of investigating, exploring prospecting, drilling and mining for and producing oil and gas, subject to the limitations contained herein. 2. Subject to the other provisions herein contained, this lease shall be for a term of three (3) years from this date and for such additional periods of time as may be earned by drilling operations as provided for in Paragraph 5 hereunder (collectively called "primary term ") and for as long thereafter as oil, gas or other mineral is produced from said land hereunder or produced from land with which it is pooled. 3. The royalties to be paid Lessor are (a)-on oil, or oil well gas from a well defined by Texas Railroad Commission as an oil well, no less than three- thirty - seconds of eight- eighths (3 /32nds of 8 /86s) of that produced and saved from said land, the same to be delivered at the wells or to the credit of Lessor into the pipeline to which the wells may be connected; (b) on gas, oil, or other substance from a well defined by the Texas Railroad Commission as a gas well, produced from said land and sold or used off the premises, the market value at the well of no less than three - thirty - seconds of eight - eighths . (3 /32nds of 8 /8ths) of the gas or oil so sold or used. Lessor reserves the right, at his option, for any well with a surface or bottomhole location on herein described lease, to at any time take his three - thirty - seconds (3 /32nds) of the gas well gas, and associated liquids, in kind, all delivered at the wellhead. Lessor further reserves the right, at his option, to take the remaining twenty -nine thirty- seconds (29/32nds) of the gas well gas, and associated liquids at the wellhead, all at the competitive price for other gas well gas produced and sold in the area, but the price of this gas not to exceed.$1.50 per mcf. Lessee shall have free use of oil and gas from said land, for all operations hereunder, and the royalty on oil and gas shall be computed after deducting any so used. Lessor is exempt as a matter of law from any and all State of Texas severance taxes on oil and gas, and no deductions shall be made for severance taxes in royalty settlements. 4. Lessee is hereby given the right and power to-pool or combine the land covered by this lease or any portion thereof for gas or oil with any other land, lease or leases located adjacent to or continguous with, when in Lessee's judgment it is necessary or advisable to do-so in order to properly develop and operate said premises, and upon notifying Lessor, provided that no unit for gas so created shall exceed 320 acres plus a tolerance of ten percent (107) in area and no unit for oil shall exceed 40 acres plus a tolerance of ten percent (107.) in area. If production is found on the pooled acreage, it shall be treated as if production is had from this lease, as to lands covered hereby and included in any pooled unit or units. In lieu of the royalties elsewhere herein specified, Lessor shall receive on production from a unit so pooled only such portion'of the royalty stipulated herein as the amount of his acreage placed in the unit or his royalty interest therein bears to the total acreage so pooled in the particular unit involved, but in no event less than One Hundred Dollars ($100.00) per year. 5. If operations for drilling of a well are not commenced on lands or acreage pooled herewith on or before one (1) year from this date, the lease shall terminate as to both parties, unless on or before such anniversary date Lessee shall pay or tender to Lessor, in the office of the Director of the Petroleum Inspection Division of the City of Corpus Christi; the sum of Two Hundred Dollars ($200.00) (herein called delay rentals) which shall cover the privilege of deferring commencement of drilling operations for a period of twelve (12) months. In like manner and upon like payments or tenders annually, the commencement of drilling operations may be further deferred for successive -2- periods of twelve (12) months each during the primary term. The cash bonus is considered for this lease according to its terms and shall not be allocated as mere delay rental for a period. By the terms "operations for drilling" and "drilling operations" is meant the actual drilling into the earth in a bonafide attempt to discover oil, gas or other minerals and not merely the placing of materials and /or equipment on the land. During the primary term, any portion of or all of the land herein described as the subject of this lease shall be held under this lease only by the payment of delay rentals or royalty payments; provided, however, that upon the expiration of the primary term, said lease will terminate as to any portion or all of the land described herein which is not pooled in a producing unit. 6. If prior to discovery of oil or gas on said land Lessee should drill a dry hole or holes on lands pooled herewith or if after discovery of oil or gas the production thereof should cease from any cause, this lease shall not terminate if Lessee commences additional drilling or reworking operations within sixty (60) days thereafter. If at the expiration of the primary term, oil, gas or other mineral is not being produced on lands pooled herewith but Lessee is then engaged in drilling or reworking operations thereon, the lease shall remain in force so long as operations are prosecuted with no cessation of more than thirty (30) consecutive days, and if.they result in the production of oil or gas so long thereafter as oil or gas is produced from said land. In the event a well or wells producing oil or gas in paying quantities should be brought in on adjacent land not pooled with the lands covered by this lease and within 467 feet of or draining the leased premises, Lessee agrees to drill such offset wells as a reasonably prudent operator would drill under the same or similar circumstances; provided, however, that should Lessee be unable to obtain a surface location on other lands leased herein, .then Lessee shall be excused from any and all liability or obligation to drill such offset well, provided that within thirty (30) days thereafter Lessee seeks and obtains the written permission of Lessor to use the surface of the lands leased herein for the purpose of drilling and producing sudh well. 7.- The right of either party hereunder may be assigned in whole or in part and the provisions hereof shall extend to the heirs, successors and assigns, but no change or divisions in ownership of the land or royalties, however accomplished, shall operate to enlarge the obligations or diminish the rights of Lessee. No sale or assignment by Lessor shall be binding on Lessee -3- until Lessee shall'beefurnished with a certified copy Iof recorded instrument evidencing same, if six (6) or more parties become entitled to royalty hereunder, Lessee may withhold payment thereof unless and until furnished with a recordable instrument executed by all such parties designating an agent to receive payment for all. 8. 'Lessor hereby warrants and agrees to defend the title to said land and agrees that Lessee at its option may discharge any tax, mortgage or other lien upon said land and in event Lessee does so, it shall be subrogated to such lien with the right to enforce same and apply royalties accruing hereunder toward satisfying same. Without impairment of Lessee's rights under the warranty in event of failure to title, it is agreed that if Lessor owns an interest in said land less than the entire fee simple estate, then.the royalties to be paid Lessor shall be reduced proportionately. 9. Should Lessee be prevented from complying with any express or' implied covenant of this lease, from conducting drilling or reworking operations thereon or from producing oil or gas therefrom by reason of strike, by operation of force majeure or by any Federal or State law or any order, rule or regulation of governmental authority, then while so prevented through no fault of Lessee, Lessee's obligation to comply with such covenant shall-be suspended, and Lessee shall not be liable in damages for failure to comply therewith; and this lease shall be extended while and so long as Lessee is prevented by any such cause from conducting drilling or reworking operations on or from producing oil or gas from the leased premises and the time while Lessee is ad prevenbed shall not be counted against Lessee, anything in this-lease to the contrary notwith- standing. 10. That if a well is drilled from a surface location on the subject property, then a City permit will be required with the payment of a Three Hundred Dollar ($300.00) application fee*and the drilling of the well will be subject to all conditions and requirements of the Land Drilling Ordinance #8879 with the exceptions of density and unitization portions of that Ordinance. IN WITNESS WHEREOF, this instrument is executed in duplicate on the date first above written. CITY OF CORPUS CHRISTI BY: ATTEST: R. Marvin Townsend, City Manager . LESSOR City Secretary -4- APPROVED AS TO LEGAL FORM: 1. 'day of 1975 DAVIS OIL COMPANY BY' City Attorney J. H. Curlee, Its Duly Authorized Agent LESSEE THE STATE OF TEXAS X COUNTY OF NUECES X 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 the day of . 1975. Notary Public, Nueces County, Texas THE STATE OF TEXAS X COUNTY OF NUECES X BEFORE ME, the undersigned authority, on this day personally appeared J. H. CURLEE, duly authorized to act for and on behalf of Davis Oil Company, 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, and in the capacity therein stated and as the act and deed of said Davis Oil Company. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of 1975. Notary Public in and for Nueces County, Texas -5- Corpus Christi, Texas day of 19 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 Council; I, therefore, request that you suspend said Charter rule or requirement and pass this ordi- nance finally on the date it is introduced, or at the present meeting of the City Council. Respectfully, MAYOR THE CITY OF CORPUS CHRISTI, TEXA The Charter rule was suspended by the following vote: Jason Luby James T. Acuff Rev. Harold T. Branch Thomas V. Gonzales Ricardo Gonzalez Gabe Lozano, Sr. / J. Howard Stark J The above ordinance was passed by the following vote: Jason Lub; James T. Acuff Rev. Harold T. Branch Thomas V. Gonzales Ricardo Gonzalez Gabe Lozano, Sr. J. Howard Stark