HomeMy WebLinkAbout17781 ORD - 08/17/1983AN ORDINANCE
AUTHORIZING THE EXECUTION OF A MINERAL LEASE FOR THE
CITY'S 173.025 MINERAL ACRE INTEREST IN A 217.12 ACRE
TRACT COMPRISED OF WATER AREAS ADJOINING THE GIRL SCOUT
CAMP, SUNRISE BEACH AND tTATE PARK AT LAKE CORPUS
CHRISTI, WITH JOHN R. THOMPSON OPERATING, INCORPORATED,
FOR A BONUS OF $9,343.35, A TWENTY-ONE PERCENT (21%)
ROYALTY, AND AN ANNUAL DELAY RENTAL OF $1,730.25 FOR A
THREE YEAR PRIMARY TERM; 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 authorized to execute a
mineral lease for the City's 173.025 mineral acre interest in a 217.12 acre
tract comprised of water areas adjoining the Girl Scout Camp, Sunrise Beach
and State Park at Corpus Christi, with John R. Thompson Operating,
Incorporated, for a bonus of $9,343.35, a twenty-one percent (21%) royalty,
and an annual delay rental of $1,730.25 for a three year primary term, all as
more fully set forth in the lease agreement, a substantial copy of which is
attached hereto and made a part herof, marked Exhibit "A".
SECTION 2. That upon written request of the Mayor or five Council
members, copy attached to find and declare an emergency due to the need of
executing the aforesaid lease so that drilling can begin at the earliest
practicable date, such finding of an emergency is made and declared requiring
suspension of the Charter rule as to consideration and voting upon ordinances
or resolutions at three regular meetings so that this ordinance is passed and
shall take effect upon first reading as an emergency this the /7 day of
August, 1983.
ATTEST:
4City' ecretary
APPROVED: I rI 'DAY OF AUGUST, 1983
ycock, City Attorney
Air
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THE TY OF CORPUS CHRISTI, TEXAS
MAYOR
17781
"SEP 2 81P74
MICROFILMED
OIL AND GAS LEASE
AGREEMENT, made and entered into the 17th day of August, 1983, by and
between the City of Corpus Christi whose post office address is Box 9277, Corpus
Christi, Texas, 78469, hereinafter called Lessor (whether one or more), and John
R. Thompson Operating, Incorporated, whose address is 1950 East Highway 80,
Abilene, Texas, 79601, hereinafter called Lessee:
1. WITNESSETH: That the said Lessor, for and in consideration of
Nine Thousand Three Hundred Forty Three and 35/100 Dollars ($9,343.35) cash in
hand paid, receipt of which is hereby acknowledged, and of the covenants and
agreements hereinafter contained on the part of Lessee to be paid, kept and per-
formed, has granted, demised, leased and let, and by these presents does grant,
lease and let unto the said Lessee for the purpose and with the exclusive right
of exploring, drilling, and operating for, producing, and owning oil and gas
and of laying pipelines and of building tanks, telephone lines, power stations
and other structures thereon to produce, save, treat and take care of said pro-
ducts, and housing its employees, subject to limitations contained herein, all
that certain tract of land situated in the Counties of San Patricio and Jim Wells,
state of Texas described as follows, to wit:
A 217.12 acre tract, being approximately 88.17 acres, except
for an undivided one-half mineral interest in said acreage,
out of the 832 acre tract described in Oil & Gas Lease be-
tween Wallis D. Wade et ux and Magnolia Petroleum Company,
dated April 19, 1926, recorded in Vol. 2, Page 419, Oil &
Gas Lease Records of San Patricio County, Texas, and approxi-
mately 128.94 acres out of an 1805.6 acre tract as described
in warranty deed from Wallis D. Wade et ux to City of Corpus
Christi dated October 3, 1927, recorded in Vol. 88, Page 151,
Deed Records of San Patricio County, Texas;
Said 217.12 acre tract, which is comprised of approximately
88.17 acres of the M. P. J. & N. Delgado Grant, Abstract 4,
San Patricio County and approximately 128.94 acres out of the
J. G. de la Garza (Casa Blanca) Grant, Abstract 296, Jim Wells
County, Texas, is situated in San Patricio and Jim Wells Coun-
ties, Texas, about 3.5 miles southwest of the town of Mathis,
being described by metes and bounds as follows:
Beginning at the south corner of the John R. Thompson 160
acre lease on the 94 ft, contour of Lake Corpus Christi, also
being the south corner of a 64.6 acre tract as described in
deed recorded in Vol. 98, Page 384, Deed Records of San Pat-
ricio County, Texas, in the northwest line of a 40.07 acre
tract of City of Corpus Christi dated September 20, 1934,
recorded in Vol. 128, Page 455, Deed Records of San Patricio
County, Texas, for the upper east corner of this tract;
EXHIBIT "A"
Thence S 34° 47' W, across said Lake Corpus Christi, along
the northwest line of said City of Corpus Christi 40.07
acre tract, a distance of 812.25 feet to the upper west
corner of said 40.07 acre tract and an inside corner of
this tract;
Thence S 45° 13' E, across said Lake Corpus Christi, along
the upper southwest line of said 40.07 acre tract, a dis-
tance of 420.00 feet to an inside corner of said 40.07
acre tract and a corner of this tract;
Thence S 34° 47' W, across said Lake Corpus Christi along
the lower northwest line of said 40.07 acre tract, a dis-
tance of 414.85 feet to the lower west corner of said
40.07 acre tract and an inside corner of this tract;
Thence S 45° 13' E, across said Lake Corpus Christi, along
the lower southwest line of said 40.07 acre tract, a dis-
tance of 439.00 feet to a point for the lower east corner
of this tract and the south corner of said 40.07 acre tract;
Thence S 34° 47' W, across said Lake Corpus Christi, a
distance of 1286.25 feet to a point in said Lake Corpus
Christi for the south corner of this tract;
Thence N 55° 13' W, across said Lake Corpus Christi, a
distance of 3988.26 feet to a point in said Lake Corpus
Christi for the west corner of this tract;
Thence N 34° 47' E, across said Lake Corpus Christi, a
distance of 3030.00 feet to a point in,the 94 ft. con-
tour of said Lake Corpus Christi at the west corner of
said 64.6 acre tract and John R. Thompson 160 acre lease
for the most northerly corner of this tract;
Thence along the southwest line of John R. Thompson 160
acre lease and southwest line of said 64.6 acre tract
following the approximate shoreline of Lake Corpus Christi
with the 94 ft. contour and meanders as follows:
S 04° 01' E 776.4', S 12° 51' E 205.0', N 72° 08' E 740.00',
S 05° 08' W 890.0', S 23° 13' E 145.6', S 42° 36' E 282.30',
N 43° 18' E 152.0', N 13° 19' E 395.5', N 43° 49' E 679.8',
S 02° 54' E 736.0', S 33° 34' E 102.3', N 66° 35' E 254.8',
and S 46° 20' E 559.10' to the place of beginning and con-
taining 217.12 acres, more or less.
2. For the purpose of determining the amount of any money payment
hereunder, said land shall be considered to comprise 173.025 mineral acres, even
though it actually comprises more or less, subject to paragraph 9.
3. It is agreed that this lease shall remain in force for a term of
three (3) years from this date, said term being hereinafter called "Primary
Term", and as long thereafter as either oil or gas is produced from said land
by Lessee subject to termination provisions as hereinafter provided.
4. 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, twenty one
percent (217) of that produced and saved from the net city 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 the net
city land and sold or used off the premises, the market value at the well of
twenty one percent (21%) of the gas or oil so sold or used. Lessor reserves
the right, at his option, to at any time take his share of the gas well gas,
and associated liquids, in kind, all delivered at the wellhead.
5. If operations for drilling a well are not commenced on said land
on or before the 17th day of August, 1984, this lease shall terminate as to
both parties, unless Lessee on or before that date shall pay or tender by the
check or draft of Lessee, and delivered or mailed to Petroleum Superintendent,
P. 0. Box 9277, Corpus Christi, Texas, 78469, the sum of $10.00 per net city
acre, which shall operate as rental and cover the privilege of deferring com-
mencement of operations for the drilling of a well for twelve (12) months, from
said date. In like manner, and upon like payments or tenders annually, the com-
mencement of such operations may be further deferred for like periods of the
same number of months successively during the primary term. The cash bonus is
to be considered for this lease according to its terms and shall not be allocated
as mere delay rental for any period. By the term "operations for drilling" and
"drilling operations" is meant the actual drilling into the earth in a bonafide
attempt to discover oil and/or gas and not merely the placing of materials and/or
equipment on the land.
During the primary term, any portion of or all the lands herein above
described as subject to 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, save as to the number
of acres allocated by the Railroad Commission of Texas for each well from which
oil or gas in paying quantities is being produced and said lease shall also
terminate as to all formations below the deepest formation from which oil and/or
gas is being produced in paying quantities.
6. Lessee is hereby given the right and power to unitize or combine
the land covered by this lease or any portion thereof for gas with any other
land, lease or leases located adjacent to or contiguous 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 360 acres or be less than 160 acres in size.
If production is found on the pooled acreage, it shall be treated as if pro-
duction is had from this lease, as to the land so pooled, whether the well or
wells be located on the premises covered by this lease or not. 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.
7. If at the expiration of the primary term Lessee has drilled holes
on said lands then the lease shall remain in force for ninety (90) consecutive
days and if drilling operations are commenced within said ninety (90) days,
then the lease shall remain in effect for so long as drilling operations are
continued without a cessation of more than ninety (90) days. If such drilling
operations result in the production of paying quantities of oil or gas, then
said lease will terminate, save as to the number of acres allocated by the
Railroad Commission of Texas for such well or wells and said lease shall also
terminate as to all formations below the deepest formation from which oil and/or
gas is being produced in paying quantities.
8. 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 obligation or diminish the
rights of Lessee. No sale or assignment by Lessor shall be binding on Lessee
until Lessee shall be furnished with a certified copy of recorded instrument
evidencing same. If six 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.
9. 'Lessor does not warrant the title to said land and it is agreed
that if Lessor owns an interest in said land more or less than the entire fee
simple estate, then the royalties to be paid Lessor shall be increased or
reduced proportionally.
10. Upon expiration or termination of this lease, or portion thereof,
Lessee shall provide Lessor a written release of all Lessee's rights or interest
in the minerals so expiring or terminating.
11. All drill sites, access roads, and surface equipment such as
separators, compressors, flowlines, and tank batteries will be located at
points to be agreed upon by the City of Corpus Christi Department of Petroleum
Inspection and the Lessee and will be installed, fenced, painted and maintained
in such way as to blend into the landscape and protect the quality of water in
Lake Corpus Christi.
12. Drilling from surface locations within the Girl Scout Camp and
State Park shall be prohibited during the months of June, July, and August of
each year. An exception to this requirement may be granted by the City of
Corpus Christi Department of Petroleum Inspection in unusual circumstances.
13. Prior to drilling each well on the herein described lease, a
performance bond of $5,000 will be posted and maintained to insure proper well
plugging and surface cleanup upon the expiration or termination of this lease.
14. lessee shall obtain and maintain in force a policy of comprehen-
sive general liability including explosion, collapse and underground endorse-
ments, and property damage insurance issued by a reliable insurance company
authorized to do business in Texas and having a policyholder rating of excellent
or better and financial rating of BBBB or better, insuring the Lessee against
claims for bodily injury or property damage which might be sustained by the City
or any member of the public by reason of any operations conducted under or inci-
dent to this lease, with coverage limits for bodily injury or death to any one
person of not less than one million dollars ($1,000,000) and not less than one
million dollars ($1,000,000) for any one accident, and for property damage of
not less than one million dollars ($1,000,000) for any one occurrence. The City
of Corpus Christi must be named as additional insured on the policy and insurers
must give the City of Corpus Christi Department of Petroleum Inspection written
notice of cancellation of such insurance not less than thirty (30) days prior
to the date of cancellation.
15. Lessee agrees to indemnify, save harmless and defend the City of
Corpus Christi, its agents, servants, and employees, and each of them against
and hold it and them harmless from any and all lawsuits, claims, demands, liabil-
ities, losses and expenses, including court costs and attorneys' fees, for or on
account of any injury to any person, or any death at any time resulting from such
injury, or any damage to any property, which may arise or which may be alleged
to have arisen out of or in connection with the privileges granted by this lease.
16. The use of earthen pits for reserve mud, drilling mud, test returns
and the like shall not be permitted. Earthen pits may be used for storage of
fresh water, drill cuttings and cement returns only and must be backfilled and
leveled upon the completion of drilling operations.
17. A dual controlled, fluid operated blowout preventer shall be used
for all drilling or completion operations involving the use of drill pipe or
tubing after the surface casing has been set.
18. Each storage tank or tank battery, as the case may be, shall be
surrounded by an earthen firewall located at such a distance from the tanks and
of sufficient height to hold and retain at least one and one-half times the
maximum capacity of such storage facilities.
19. No firearms will be taken on the herein described lease by any
agent, servant or employee of Lessee.
20. Lessee agrees to maintain all existing roads and parking areas
that are located on the leased property and utilized for drilling and producing
operations in original or improved condition as determined by the City of Corpus
Christi Department of Petroleum Inspection.
21. The Lessee will be responsible for damages resulting from the
Lessee's acts, negligence, and/or wrongful conduct of operations. Nothing in
the lease granted the Lessee is intended to absolve the Lessee of this legal
obligation.
22. 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, 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 there -
with; 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 so
prevented shall not be counted against Lessee, anything in this lease to the
contrary notwithstanding.
IN WITNESS WHEREOF, this instrument is executed in duplicate on the
date first above written.
CITY OF CORPUS CHRISTI, TEXAS
BY:
Edward A. Martin
City Manager LESSOR
ATTEST:
City Secretary
APPROVED AS TO LEGAL FORM:
day of , 1983
BY:
City Attorney LESSEE
APPROVED:
LOWER NUECES RIVER WATER SUPPLY DISTRICT
Secretary President
THE STATE OF TEXAS X
COUNTY OF NUECES X
BEFORE ME, the undersigned authority, on this day personally appeared
EDWARD A. MARTIN, 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
, 1983.
Notary Public, Nueces County, Texas
THE STATE OF TEXAS X
COUNTY OF NUECES X
BEFORE ME, the undersigned authority, on this day personally appeared
DON EMERY COX, President, Lower Nueces River Water Supply District, 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 District.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of
, 1983.
Notary Public, Nueces County, Texas
Corpus Christi, Texa
/? day of6tt'ft , 1983
TO THE MEMBERS OF THE CITY COUNCIL
Corpus Christi, Texas
For the reasons set forth in the emergency clause of the foregoing ordinance
or resolution, an emergency exists requiring suspension of the Charter rule
as to consideration and voting upon ordinances or resolutions at three
regular meetings; I/we, therefore, request that you suspend said Charter rule
and pass this ordinance or resolution finally on the date it is introduced,
or at the present meeting of the City Council.
Respectfully, Respectfully,
MAYOR
Council Members
THE CITY OF CORPUS CHRISTI, TEXAS
The above ordinance was passed by
Luther Jones
Betty N. Turner
Jack K. Dumphy
Bob Gulley
Herbert L. Hawkins, Jr.
Dr. Charles W. Kennedy
Cliff Zarsky
the
following
A
vote:
17781