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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 /, 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