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HomeMy WebLinkAboutResolution - 022268E - Oil, Gas, & Mineral Lease - Joe G. Sauer - 3 Tracts, Block A - 02_22_1968FOS:tp RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock, and the City Manager of the City of Lubbock be and are hereby authorized and directed to execute for and on behalf of the City of Lubbock an Oil, Gas and Mineral Lease in favor of Joe G. Sauer, attached herewith which shall be spread upon the minutes of the Council and as spread upon the minutes of this Council shall constitute and be a part of this Resolution as if fully copied herein in detail. Passed by the City Council this W. R. ATT La enia Lowe, City Secretary -Treasurer FORM APPROVED red O. Senter, Jr., C Q STATE OF TEXAS COUNTY OF LUBBOCK S: S: KNOW ALL MEN BY THESE PRESENTS: Oil and Gas Mineral Lease This agreement made this,- ? Z day of FEB 19 lQs by and be- tween the City of Lubbock, Texas acting by and through W.D. Rogers, Jr., its Mayor, W.R. Blackwell, its City Manager, and Lavenia Lowe, its City Secretary under the authority of the City Council of the City of Lubbock, Texas; and acting by and through Dr. Clifford Breaud, Clem Boverie, and Edward L. Colby, Chairman, Secretary and Director of Aviation respectively of the Lubbock Municipal Airport Board, Lessor and Joe G. Sauer, Post Office Box 1792 Midland, Texas, Lessee: 1. Lessor, in consideration of Five Thousand Four Hundred Seventy-five & 38/100 ($5,475.38) in hand paid, .receipt of which is hoe acknowledged, and of the royalties herein provided and of the agreements of the Lessee herein contained, hereby grants, leases and lets exclusively unto Lessee for the purpose of investigating; exploring, prospecting, drilling and operating for and producing oil, gas and other minerals, injecting gas, waters, other fluids, and air into subsurface strata, laying pipe- lines, storing oil, building tanks, power stations, telephone lines, and other structures and things thereon to produce, save, take care of, treat, process, store and transport said minerals and other products manufactured therefrom, the following described land in Lubbock County, Texas, to -wit: FIRST TRACT: All of the S/2 of SW/4 of Section 32, Block A, containing 80 acres, more or less. SECOND TRACT: A tract of 260 acres, more or less, out of Section 32, Block A, Des- cribed by metes and bounds as follows: BEGINNING az the Southeast corner of said Section 32, Block A; THENCE North 3300 feet along the East line of said Section 32, Block A; THENCE West 3960 feet; THENCE South 1980 feet; THENCE East 1320 feet; THENCE South 1320 feet to South line of said Section 32, Block A; THENCE East 2640 feet along South line of said Section 32, Block A, to the place of BEGINNING. THIRD TRACT: That certain 13.25 acre tract of land awarded to the City of Lubbock in Cause No. 644, County Court of Law of Lubbock County, Texas, City of Lubbock vs C.E. Hobgood et al, recorded in Vol. 673, Pages 495-504,.DR of Lubbock County, Texas, described by metes and bounds as follows: BEGINNING at the Northwest corner of the NE/4 of Section 32, Block A, Lubbock County, Texas; Thence East 121.4 feet to a point; Thence South parallel to and 121.4 feet East of the West line'of said NE/4 of Section 32, Block A, a distance of 1980 feet to a point for the PLACE OF BEGINNING of this tract; THENCE West a distance of 1005 feet to a point for the Southwest corner of this tract; THENCE North parallel to and 883.6 feet West of the West line of NE/4 of said Section 32, Block A, a distance of 460 feet to.a point for the Northwest corner of this tract; THENCE East a distance of 1255 feet parallel to the North line of said Section 32, Block A, to a point for the Northeast corner of this tract; THENCE South parallel to the West line of the NE/4 of said Section 32, Block A, a distance of 460 feet to a point for the Southeast corner of this tract; THENCE West a distance of 250 feet to the PLACE OF BEGINNING. For the purpose of calculating the rental payments hereinafter provided for, said land is estimated to comprise 353.25 acres, whether it actually comprises more or less. It is mutually understood and agreed between Lessor and Lessee that the rights set out under numbered paragraph 1 hereof specifically excludes the right to explore for or develop uranium, thorium or any other fissionable material. It is further agreed before constructing or laying any pipelines, building tanks, power stations, telephone line and/or other structures on the property leased hereby the routes of such pipelines will require the prior written approval of the Airport Board. It is further agreed that no structure whether above ground or below ground shall be con- structed in such a manner as will create adverse electrical or electronic effect upon the navigational aids nor upon communications between aircraft, in the air or on the ground, and traffic control. No structure shall be permitted which adversely effects the operation of radar, radio communication, Instrument Landing System or any other aircraft communications or navigational aid. •2. Subject to the other provisions herein contained, this lease shall remain in force for a term of five (5) years from this date (called "primary term"), and as long thereafter_as.oil, gas, or other mineral is produced from said land or land with which said land is pooled. 3. The royalties to be paid by Lessee are: (a) on oil, and on other liquid hydrocarbons saved at the well, one -eighth of that produced and saved from said land, same to be delivered at the wells, or to the credit of Lessor in the pipe line to - 2 - which the wells may be connected; Lessor's interest in either case shall bear its proportion of any expenses for treating oil to make it marketable as crude; (b) on gas, including casinghead gas and all gaseous substances, produced from said land and sold or used off the premises or in the manufacture of gasoline or other pro- duct therefrom, the market value at the mouth of the well of one -eighth of the gas so sold or used, provided that on gas sold at the wells the royalty shall be one - eighth of the amount realized from such sale; (c) on all other minerals mined and marketed, one -eighth, either in kind or value at the well or mine, at Lessee's election, except that on sulphur the•royalty shall be One Dollar ($1.00) per long. ton; and (d) at any time, either before or after the expiration of the primary term of this lease, if there is a gas well or wells on the above land (and for the pur- poses of this clause (d) the term "gas well" shall include wells capable of pro- ducing natural gas, condensate, distillate or any gaseous substance and wells classified as gas wells by any governmental authority) and such well or wells are shut in before or after production therefrom, lessee or any assignee hereunder may pay or tender an advance annual royalty equal to the amount of delay rentals pro- vided for in this lease for the acreage then held under this lease by the party making such payment or tender, and if such payment or tender is made, 'it shall be considered under all provisions of this lease that gas is being produced from the leased premises in paying quantities for one (1) year from the date such payment or tender is made, and in like manner subsequent advance annual royalty payments may be made or tendered and it will be considered under all provisions of this lease that gas is being produced from the leased premises in paying quantities during any annual period for which such royalty is paid or tendered; such advance royalty may be paid or tendered in the same manner as provided herein for the payment or tender of delay rentals; royalty accruing to the owners thereof on any production from the leased premises during any annual period for which advance royalty is paid may be credited against such advance payment; and when there is a shut-in gas well or wells on the leased premises if this lease is not continued in force under some other pro- vision thereof, it shall nevertheless continue in force for a period of ninety (90) days from the last date on which a gas well located on the leased premises is shut in, or for ninety (90) days following the date to which this lease is continued in force by some other provision thereof, as the case may be, within which ninety -day period lessee or any assignee hereunder may commence or resume the payment or tender of the advance royalty as herein provided. - 3 - : 4 Notwithstanding any other provision of numbered paragraph 3 nothing herein con- tained shall operate to extend this lease beyond the five (5) year primary term un- less minerals are in fact being produced on said land or on land pooled therewith.. 4. If operations for drilling or mining are not commenced on said land or on land pooled therewith on or before one (1) year from this date, this lease shall terminate as to both parties, unless on or before one (1) year from this date less- ee shall pay or tender to the lessor a rental'of Three Hundred Fifty-three and 25/100 Dollars ($353.25) which shall cover the privilege of deferring commencement of such operations for a period of twelve (12) months. In like manner and upon like pay- ments or tenders, annually, the commencement of said operations may be further de- ferred for successive periods of the same number of months, each during the primary term. Payment or tender may be made to the lessor to the City of Lubbock Airport Revenue Fund, Municipal Airport, Lubbock, Texas for credit. The payment or tender of rental may be made by check or draft of lessee, mailed or delivered to lessor, or•either lessor if more than one, on or before the rental paying date. 5. Lessee is hereby granted the right to pool or unitize this lease, the land covered -.by it or any part thereof with any other land, lease, leases, mineral es- tates or parts thereof for the production of oil, gas, or any other minerals. Units pooled for oil hereunder shall not exceed eighty (80) acres plus a tolerance of ten per cent (10%) thereof, and units pooled for gas hereunder shall not exceed twelve hundred eighty (1280) acres plus a tolerance of ten per cent (10%) thereof, provid- ed that if any Federal or State law, Executive order, rule or regulation shall pres- cribe a spacing pattern for the development of the field or allocate a producing al- lowable on acreage per well, then any such units may embrace as much additional acre- age as may be so prescribed or as may be used in such allocation or allowable. Less- ee shall file written unit designations in the county in which the premises are lo- cated. Such units may be designated either before or after the completion of wells. Drilling operations and production on any part of the pooled acreage shall be treat- ed as if such drilling operations were upon or such production was from the land described in this lease whether the well or wells be located on the land covered by this lease or not. The entire acreage pooled into a unit shall be treated for all purposes, except the payment of royalties on production from the pooled unit, as if it were included in this lease. In lieu of the royalties herein provided, lessor, shall receive on production from a unit so pooled only such portion of the royalty stipulated herein as the amount of his acreage placedlin the unit or his royalty inter- - 4 - est therein on an acreage basis bears to the total acreage so pooled in the parti- cular unit involved. 6. If, prior to discovery of oil, gas, or other minerals on said land or land pooled therewith lessee should drill and abandon a dry hole or holes thereon, or if, after discovery of oil, gas, or other minerals, the production thereof should cease from any cause, this lease shall not terminate if lessee commences reworking or add- itional drilling operations within sixty (60) days thereafter, or (if it be within the primary term) commences or resumes the payment or tender of rentals or commences operations for drilling or reworking on or before the rental paying date next en- suing after the expiration of three (3) months from date of completion and abandon- ment of said dry hole or holes or the cessation of production. If a dry hole is completed and abandoned at any time during the last fifteen (15) months of the pri- mary term and prior to discovery of oil, gas, or other mineral on said land or land pooled therewith, no rental payment or operations are necessary in order to keep the lease in force during the remainder of the primary term. If, at the expira- tion of the primary term, oil, gas, or other mineral is not being produced on said land or land pooled therewith but lessee is then engaged in operations for drilling, mining, or reworking of any well or mine thereon, this lease shall remain in force so long as.drilling, mining, or reworking operations are prosecuted (whether on the same or different wells) with no cessation of more than sixty (60) consecutive days, and if they result in production, so long thereafter as oil, gas, or other mineral is produced from said land or land pooled therewith. In the event a well or wells producing oil or gas in paying quantities should be brought in on adjacent land and within six hundred sixty.(660) feet of and draining the leased premises, lessee agrees to drill such offset wells as a reasonably prudent operator would drill under the same or similar circumstances. 7. Lessee shall have free use of oil and gas from said land, for all operations hereunder, including repressuring, pressure maintenance, cycling, and the second- ary recovery operations, and the royalty shall be computed after deducting any so used. Lessee shall have free use of non -potable water from said land for the pur- pose of well development only. Any use of.water for repressuring, pressure main- tenance, cycling, and the secondary recovery operations shall require the prior written approval of the Airport Board and shall be granted by the Board at fair and equitable rates and charges. Lessee shall have the right at any time during or after the expiration of this lease to remove all property and fixtures placed by lessee on said land, including the right to draw and remove all casing. - 5 - 8. The rights of either party hereunder may be assigned in whole or in part and the provisions hereof shall extend to the heirs, executors, administrators, successors, and assigns, but no change or division in ownership of the land, rentals, or royalties, however accomplished, shall operate to enlarge the obligations or dimin- ish the rights of lessee. No such change or division in the ownership of the land, rentals or royalties shall be binding upon lessee for any purpose until such.person acquiring any interest has furnished lessee with the instrument or instruments, or certified copies thereof, constituting his chain of title from the original lessor. In the event of an assignment of this lease as to a segregated portion of said land, the rentals payable hereunder shall be apportioned as between the several leasehold owners ratably according to the surface area of each, and default in rental payment by one shall not affect the rights of other leasehold owners hereunder. An assing- ment of this lease, in whole or in part, shall, to the extent of such assignment, relieve and discharge lessee of any obligations hereunder, and, if lessee or assignee of part or parts hereof shall fail or make default in the payment of the proportion- ate part of the rentals due from such lessee or assignee or fail to comply with any other provision of the lease, such default shall not affect this lease in so far as it covers a part of said lands upon which lessee or any assignee thereof shall make payment of said rentals. No assignment on the part of the lessee shall be valid without the prior written approval of the City of Lubbock to be evidenced by a letter of consent authorized by the Airport Board. 9. Lessee shall not be liable for delays or defaults in its performance of any agreement or covenant hereunder due to force majeure. The term "force majeure as employed herein shall mean: any act of God including but not limited to storms, floods, washouts, landslides, and lightning; acts of the public enemy; wars, block- ades, insurrections or riots; strikes or lockouts; epidemics or quarantine regula- tions; laws, acts, orders or requests of federal, state, municipal or other govern- ments or governmental officers or agents under color of authority; freight embargoes or failures; exhaustion or unavailability or delays in delivery of any product, labor, service, or material. If lessee is required, ordered or directed by any federal, state or municipal law, executive order, rule, regulation or request enacted or promulgated under color of authority to cease drilling operations, reworking operations or pro- ducing operations on the land covered by this lease or if lessee by force majeure is prevented from conducting drilling operations, reworking operations or producing - 6 - operations, then until such time as such law, order, rule, regulation, request or force majeure is terminated and for a period of ninety (90) days after such termination each and every provision of this lease that might operate to terminate it or the es- tate conveyed by it shall be suspended and inoperative and this lease shall continue in full force. If any period of suspension occurs during the primary term, the time thereof shall be added to such term. 10. 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 the event lessee does so, it shall be subrogated to such lien with the right to enforce same and apply rentals and royalties accruing here- under toward satisfying same. Without imp3fanent of lessee's rights under the war- ranty in the event of failure of title, it is agreed that, if lessor owns an inter- est in said land less than the entire fee simple estate, then the royalties and rentals to be paid lessor shall be reduced proportionately; should anyione or more of the parties named above as lessors fail to execute this lease, it shall never- theless be binding upon the party or parties executing the same. 11. Lessee, its/his successors and assigns, shall have the right at any time to surrender this lease, in whole or in part, to lessor or his heirs and assigns by delivering or mailing a release thereof to the lessor, or by placing a release thereof of record in the county in which said land is situated; thereupon lessee shall be relieved from all obligations, expressed or implied, of this agreement as to the acreage so surrendered, and thereafter the rentals payable hereunder shall be reduced in the proportion that the acreage covered hereby is reduced by said release or releases. 12. No exploration or development under the terms of this lease shall conflict in any waylwith the easement granted the Canadian River Water District for the pur- poses recited therein, or any other existing easement. 13. No exploration or development under the terms of this lease shall con- flict with the primary aviation purposes of the Lubbock Municipal Airport, or shall conflict with Federal Aviation Administration safety regulations for airports or air traffic. 14. No exploration or development under the terms of this lease shall conflict with continued use and operation of all the landing area..facilities of the Lubbock Municipal -Airport, and no drilling rig shall be erected in any manner that would constitute a hazard to aircraft nor result in higher landing area minimum . - 7 - approach altitudes or visibilities. 15. Any proposed drilling pattern shall require the prior written approval of the Lubbock Municipal Airport Board and the Federal Aviation Administration, and all operations hereunder shall be conducted in accordance with and under the min- imum standards established by Chapter 19-A of the Code of Ordinances of the City of Lubbock. 16. Any sub -surface pits constructed for operations hereunder shall be lined so as to prevent contamination of the surrounding soil. 17. Subject to the other provisions hereof lessor agrees that it will use its best efforts to secure Federal Aviation Administration approval for a minimum" of two (2) drill sites on the lands covered hereby if development is proposed. IN WITNESS WHEREOF, this instrument is executed the day and year first above written in triplicate original each of which shall have the force and effect of an original instrument. Ck By ATTEST: Lavenia Lowe, City Secr tary W.R. Blackwell, City Manager Lubbock Municipal Airport Board By: 45/ Dr. C/: -fro,, d R rea Dr. CliUedrd Breaud, Chairman E and L. Colby, Direct o APPROVED AS TO FO :-��0/- 'Pied Senter, City Attorney TRIPLICATE ORIGINAL - 8 - STATE OF COUNTY OF BEFORE ME, A NOTARY PUBLIC IN AND FOR ON THIS DAY PERSONALLY APPEARED_ KNOWN TO ME TO BE THE PERSON WHOSE NAME IS SUBSCRIBED TO THE FOREGOING INSTRUMENT AND ACKNOWLEDGED TO ME THAT THE SAME WAS THE ACT AND DEED OF THE AND THAT HE EXECUTED THE SAME AS THE ACT AND DEED OF SUCH CORPORATION FOR THE PURPOSES AND CONSIDERATION THEREIN EXPRESSED, AND IN THE CAPACITY THEREIN STATED• GIVEN UNDER MY HAND AND: -SEAL OF OFFICE, THIS DAY OF 196 SEAL NOTARY PUBLIC IN AND FOR TERM EXPIRES STATE OF COUNTY OF BEFORE ME, A NOTARY PUBLIC IN AND FOR ON THIS DAY PERSONALLY APPEARED KNOWN TO ME TO BE THE PERSON WHOSE NAME IS SUBSCRIBED TO THE FOREGOING INSTRUMENT AND ACKNOWLEDGED TO ME THAT THE SAME WAS THE ACT AND DEED OF THE i AND THAT HE EXECUTED THE SAME AS THE ACT AND DEED OF SUCH CORPORATION FOR THE PURPOSES AND CONSIDERATION THEREIN EXPRESSED, AND IN THE CAPACITY THEREIN STATED. GIVEN UNDER MY HAND AND SEAL OF OFFICE, THIS DAY of 196 SEAL NOTARY PUBLIC JK AND FOR TERM EXPIRES