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HomeMy WebLinkAboutResolution - 2003-R0310 - Amendment To Oil And Gas Lease - _Cornell Amendment_ - 08_06_2003 (2)Resolution No. 2003-RO310 August 6, 2003 Item No. 27B RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock an Amendment of Oil and Gas Lease (the "Cornell Amendment"), by and between the City of Lubbock and Cornell Corporation, and any associated documents, amending that certain Oil and Gas Lease, Resolution No. 1896, dated December 13, 1984 and recorded in Volume 55, Page 685, Oil & Gas Lease Records, Lubbock County, Texas. The execution of the Cornell Amendment is conditioned upon the prior execution of that certain Amendment of Oil and Gas Lease by and between the City of Lubbock and Texland Petroleum, L.P., et al. Said Cornell Amendment is attached hereto and incorporated in this Resolution as if fully set forth herein and shall be included in the minutes of the City Council. Passed by the City Council this 6th day of August , 2003. ATTEST: Rebecca Garza, City Secretary APPROVED AS TO CONTENT: Ed Bucy, Right of Way gent APPROVED AS FO Richard K. Casner First Assistant City Attorney ke/ccdocs/Cornell Corp-Oi1GasLeaseAmendment August 6, 2003 Resolution No. 2003—RO310 AMENDMENT OF OIL AND GAS LEASE STATE OF TEXAS § § KNOW ALL MEN BY THESE PRESENTS THAT: COUNTY OF LUBBOCK § WHEREAS, CORNELL CORPORATION, (formerly known as Cornell Oil Company) ("Lessee") is the owner of an undivided 3/16ths of that certain Oil and Gas Lease dated December 13, 1984 (the "Lease") executed by the CITY OF LUBBOCK, as Lessor, in favor of Texland Petroleum, Inc., recorded in Volume 55, Page 685, Oil & Gas Lease Records, Lubbock County, Texas; and, WHEREAS, certain issues have arisen regarding the interpretation of the proportionate reduction clause and its effect on other terms and provisions contained within the Lease; and, WHEREAS, it is the desire of the Lessor and the Lessee to resolve the outstanding issues and to amend the Lease as set forth herein; and, WHEREAS, pursuant to Amendment of Oil and Gas Lease (the "Texland Agreement") effective July 1, 2003, Texland Petroleum, L.P., et al. (the "Texland Group"), owners of an undivided 13/16ths working interest in the Lease, and the City of Lubbock, amended the Lease, insofar as it covered and included the 13/16ths working interest of the Texland Group, regarding, among other things, the royalty payable thereunder; WHEREAS, Cornell and the City of Lubbock, in entering into this Amendment, are amending the Lease insofar and only insofar as the Lease covers and includes the 3/16ths working interest of Cornell, and its successors and assigns as to such interest; WHEREAS, this Amendment does not and shall not affect, in any way, manner or form, the Lease, other than the 3/ 16ths working interest of Cornell, and its successors and assigns as to such interest, including without limitation, the 13/16ths working interest of the Texland Group; NOW, THEREFORE, for and in consideration of ten dollars ($10.00) and other good and valuable consideration, the receipt of which is acknowledged by each of the undersigned parties, it is hereby agreed by the parties hereto to amend the Lease as follows, INSOFAR AND ONLY INSOFAR, as the Lease covers and includes the 3/16ths working interest of Cornell, and its successors and assigns as to such interest, and it is expressly agreed and stipulated that this Amendment does not and shall not affect the Lease, in any way, manner or form, insofar as it covers and includes ownership by parties or interests other than the 3/16ths working interest of Cornell, specifically including, without limitation, the ownership of the Texland Group and the Texland Amendment: (1) Paragraph 2(a) of the Lease section entitled "DESCRIPTION OF LAND" is hereby deleted in its entirety and the following is substituted in its place: 2. DESCRIPTION OF LAND: The land herein leased to Lessee is located in Lubbock County, Texas, and is described as follows: (a) All of Section 5, Block A, Lubbock County, Texas, LESS AND EXCEPT that certain 8.4 acre tract of land described as Lot 1, Allan Industrial Park Addition to the City of Lubbock, as described in that certain Dedication Deed, dated November 22, 1967, recorded in Volume 1149, page 327, Deed Records, Lubbock County, Texas. (2) Paragraphs 6(a) and 6(b) of the lease section entitled "PRODUCTION ROYALTIES" are hereby deleted in their entirety and the following are substituted in their place: 6. PRODUCTION ROYALTIES: Lessee agrees to pay or cause to be paid during the term hereof: (a) OIL: As a royalty on oil, 25 % of the value of the gross production of oil, which is defined as including all hydrocarbons produced in a liquid form from the land herein leased to Lessee, save and except casinghead gas, but including also all condensate, distillate, and other liquid hydrocarbons recovered from oil or gas run through a separator or other equipment, as hereinafter provided ("gross production of oil"). Provided, however, if on or after July 1, 2016, the gross production of oil shall average less than 9'/x bagels per producing well per day for the prior 12-month period, the royalty on oil shall reduce to 22% of the value of the gross production of oil, for so long as the gross production of oil from the land averages less than 91h barrds per producing well per day for the prior 12- month period. After any such reduction in royalty, in the event the gross production of oil from the land increases so as to average 91h barrek or more per producing well per day for the prior 12-month period, then such royalty shall increase to 25 % of the value of the gross production of oil for so long as such average remains at or above 91h barrels per producing well per day for the prior 30-day period. Notwithstanding anything to the contrary herein, the 25 % royalty prescribed in the first paragraph of Section 6(a), above, shall not be reduced any time or in any event prior to July 1, 2016. The value of said gross production shall be based on the highest posted price, plus any premium, offered or paid for oil, condensate, distillate, or other liquid hydrocarbons, respectively, of similar gravity and type in the general area, or the prevailing market price thereof in the general area, or the proceeds of the sale thereof, whichever is greatest. Lessee agrees that any gas produced from the land herein leased that contains liquid hydrocarbons recoverable in commercial quantities by separator on the lease shall be run through an adequate oil and gas separator of conventional type or other equipment at least as efficient prior to the sale, use or processing of such gas in a plant, so that all liquid hydrocarbons recoverable from such gas by such means shall be recovered. Upon written consent of the Lessor, acting through its City Manager, the requirement that such gas be run through a separator or other equipment may be waived upon terms and conditions prescribed by Lessor. (b) GAS: As royalty on any and all gas, including casinghead gas and other gaseous substances, produced from the land herein leased to Lessee, 25 % of the value of the gross production of such gas which is defined as all hydrocarbons and gaseous substances not defined as oil in subparagraph (a) above. Such value shall be determined on the basis of the highest price paid for gas of a similar quality in the general area or on the amount accruing to the producer from all hydrocarbons or other products produced from said gas, whichever is greater. Where gas is run through such separator or other equipment, as provided in subparagraph (a) above, its value, after having been run through such separator or other equipment, shall be determined as specified herein. (3) Paragraph 28 of the Lease entitled "NON WARRANTY AND PROPORTIONATE REDUCTION CLAUSE" is hereby deleted in its entirety and the following is substituted in its place: 28. NON WARRANTY AND PROPORTIONATE REDUCTION CLAUSE: Lessor does not, expressly or impliedly, warrant title to the leased premises. It is agreed that if Lessor owns an interest in the oil and gas in and under any of the leased premises less than the entire oil 3 and gas fee simple estate, then the royalties and all other benefits to accrue or to be paid to Lessor hereunder as to such lands shall be reduced to the proportion thereof which the mineral fee estate of Lessor in such lands bears to the entire mineral fee estate. (4) The Lessor and Lessee ratify and confirm the Lease to be in full force and effect as to all its terms, as amended hereby. (5) This Amendment shall not affect, in any way, manner or form, the Texland Amendment and the Texland Amendment shall remain valid and subsisting from and after the execution of this Amendment pursuant to the terms thereof. This instrument may be executed in multiple counterparts, all of which, taken together, shall constitute one and the same instrument, and any party hereto may execute this instrument by signing one or more counterparts. The undersigned have executed this Agreement this 6th day of August , 2003, however to be effective the 1st day of July, 2003. ATTEST: Q. LA—�� CitySecretary LESSOR: CITY OF Marc McDoij&V Mayor LESSEE: CORNEL ORPORATION A By: Brian Lee Modic, President 4 STATE OF TEXAS § COUNTY OF LUBBOCK § BEFORE ME, the undersigned authority, a Notary Public in and for said Lubbock County, Texas, on this day personally appeared MARC MCDOUGAL, MAYOR, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same as the act and deed of the CITY of LUBBOCK and as MAYOR, for the purposes and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this day of 2003. ,'(n Notary Public, State of Texas Donna Combs *'Notary Public. We of Texas t*, ? My cwmwW ExPM =:ro�o J4:. OCTOBER 04 2006 5 STATE OF TEXAS COUNTY OF DALLAS This instrument was acknowledged before me on the / day of , 2003, by BRIAN LEE MODIC, as President of Cornell Corporation, on beha of said corporation. `````�`��s �1uL1.,." Notary Public, State of Texas A.Z P �I ate= z rE d I No Text No Text • �1�t��u. � ��V � 1'Tn V iC'��ni� � �^l�r��Cl \ NpAuNl �---- AMENDMENT OF OIL AND GAS LEASE •-- 40980 �1 STATE OF TEXAS § § KNOW ALL MEN BY THESE PRESENTS THAT: COUNTY OF LUBBOCK § WHEREAS, CORNELL CORPORATION, (formerly known as Cornell Oil Company) ("Lessee") is the owner of an undivided 3/16ths of that certain Oil and Gas Lease dated December 13, 1984 (the "Lease") executed by the CITY OF LUBBOCK, as Lessor, in favor of Texland Petroleum, Inc., recorded in Volume 55, Page 685, Oil & Gas Lease Records, - Lubbock County, Texas; and, WHEREAS, certain issues have arisen regarding the interpretation of the proportionate reduction clause and its effect on other terms and provisions contained within the Lease; and, WHEREAS, it is the desire of the Lessor and the Lessee to resolve the outstanding issues and to amend the Lease as set forth herein; and, WHEREAS, pursuant to Amendment of Oil and Gas Lease (the "Texland Agreement") effective July 1, 2003, Texland Petroleum, L.P., et al. (the "Texland Group"), owners of an undivided 13/16ths working interest in the Lease, and the City of Lubbock, amended the Lease, insofar as it covered and included the 13/16ths working interest of the Texland Group, regarding, among other things, the royalty payable thereunder; WHEREAS, Cornell and the City of Lubbock, in entering into this Amendment, are amending the Lease insofar and only insofar as the Lease covers and includes the 3/16ths working interest of Cornell, and its successors and assigns as to such interest; WHEREAS, this Amendment does not and shall not affect, in any way, manner or form, the Lease, other than the 3/16ths working interest of Cornell, and its successors and assigns as to such interest, including without limitation, the 13/16ths working interest of the Texland Group; NOW, THEREFORE, for and in consideration of ten dollars ($10.00) and other good and valuable consideration, the receipt of which is acknowledged by each of the undersigned parties, it is hereby agreed by the parties hereto to amend the Lease as follows, INSOFAR AND ONLY INSOFAR, as the Lease covers and includes the 3/16ths working interest of Cornell, and its successors and assigns as to such interest, and it is expressly agreed and stipulated that this Amendment does not and shall not affect the Lease, in any way, manner or VOL O664pAGE242 form, insofar as it covers and includes ownership by parties or interests other than the 3/16ths working interest of Cornell, specifically including, without limitation, the ownership of the Texland Group and the Texland Amendment: (1) Paragraph 2(a) of the Lease section entitled "DESCRIPTION OF LAND" is hereby deleted in its entirety and the following is substituted in its place: 2. DESCRIPTION OF LAND: The land herein leased to Lessee is located in Lubbock County, Texas, and is described as follows: (a) All of Section 5, Block A, Lubbock County, Texas, LESS AND EXCEPT that certain 8.4 acre tract of land described as Lot 1, Allan Industrial Park Addition to the City of Lubbock, as described in that certain Dedication Deed, dated November 22, 1967, recorded in Volume 1149, page 327, Deed Records, Lubbock County, Texas. (2) Paragraphs 6(a) and 6(b) of the lease section entitled "PRODUCTION ROYALTIES" are hereby deleted in their entirety and the following are substituted in their place: 6. PRODUCTION ROYALTIES: Lessee agrees to pay or cause to be paid during the term hereof: (a) OIL: As a royalty on oil, 25 % of the value of the gross production of oil, which is defined as including all hydrocarbons produced in a liquid form from the land herein leased to Lessee, save and except casinghead gas, but including also all condensate, distillate, and other liquid hydrocarbons recovered from oil or gas run through a separator or other equipment, as hereinafter provided ("gross production of oil"). Provided, however, if on or after July 1, 2016, the gross production of oil shall average less than 9'/a barrels per producing well per day for the prior 12-month period, the royalty on oil shall reduce to 22 % of the value of the gross production of oil, for so long as the gross production of oil from the land averages less than 91h barrds per producing well per day for the prior 12- month period. After any such reduction in royalty, in the event the gross production of oil from the land increases so as to average 91h barreb or more per producing well per day for the prior 12-month period, then such royalty shall increase to 25 % of the value of the gross production of oil for so long as such average remains at or above 9'/a barrels per producing well per 2 VOL S604m,243 day for the prior 30-day period. Notwithstanding anything to the contrary herein, the 25 % royalty prescribed in the first paragraph of Section 6(a), above, shall not be reduced any time or in any event prior to July 1, 2016. The value of said gross production shall be based on the highest posted price, plus any premium, offered or paid for oil, condensate, distillate, or other liquid hydrocarbons, respectively, of similar gravity and type in the general area, or the prevailing market price thereof in the general area, or the proceeds of the sale thereof, whichever is greatest. Lessee agrees that any gas produced from the land herein leased that contains liquid hydrocarbons recoverable in commercial quantities by separator on the lease shall be run through an adequate oil and gas separator of conventional type or other equipment at least as efficient prior to the sale, use or processing of such gas in a plant, so that all liquid hydrocarbons recoverable from such gas by such means shall be recovered. Upon written consent of the Lessor, acting through its City Manager, the requirement that such gas be run through a separator or other equipment may be waived upon terms and conditions prescribed by Lessor. (b) GAS: As royalty on any and all gas, including casinghead gas and other gaseous substances, produced from the land herein leased to Lessee, 25 % of the value of the gross production of such gas which is defined as all hydrocarbons and gaseous substances not defined as oil in subparagraph (a) above. Such value shall be determined on the basis of the highest price paid for gas of a similar quality in the general area or on the amount accruing to the producer from all hydrocarbons or other products produced from said gas, whichever is greater. Where gas is run through such separator or other equipment, as provided in subparagraph (a) above, its value, after having been run through such separator or other equipment, shall be determined as specified herein. (3) Paragraph 28 of the Lease entitled "NON WARRANTY AND PROPORTIONATE REDUCTION CLAUSE" is hereby deleted in its entirety and the following is substituted in its place: 28. NON WARRANTY AND PROPORTIONATE REDUCTION CLAUSE: Lessor does not, expressly or impliedly, warrant title to the leased premises. It is agreed that if Lessor owns an interest in the oil and gas in and under any of the leased premises less than the entire oil 3 VOL 8604pur244 and gas fee simple estate, then the royalties and all other benefits to accrue or to be paid to Lessor hereunder as to such lands shall be reduced to the proportion thereof which the mineral fee estate of Lessor in such lands bears to the entire mineral fee estate. (4) The Lessor and Lessee ratify and confirm the Lease to be in full force and effect as to all its terms, as amended hereby. (5) This Amendment shall not affect, in any way, manner or form, the Texland Amendment and the Texland Amendment shall remain valid and subsisting from and after the execution of this Amendment pursuant to the terms thereof. This instrument may be executed in multiple counterparts, all of which, taken together, shall constitute one and the same instrument, and any party hereto may execute this instrument by signing one or more counterparts. The undersigned have executed this Agreement this ,"A day of Aj, iv,7- , 2003, however to be effective the 1st day of July, 2003. ATTEST: Ci Secretary LESSOR: LESSEE: CORNEL ORPORATION By: ',. v ",/, I;rez Brian Lee Modic, President O VOL 0604PAGE245 STATE OF TEXAS § COUNTY OF LUBBOCK § BEFORE ME, the undersigned authority, a Notary Public in and for said Lubbock County, Texas, on this day personally appeared MARC MCDOUGAL, MAYOR, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same as the act and deed of the CITY of LUBBOCK and as MAYOR, for the purposes and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 1241 day of G,J , 2003. SEAL Notary Public, State of Texas Donna Combs '•°' Public, State of Texas • «�lotary * My comet w EAwn OCTOBER 01 2006 5 VOL 8604PAQ246 STATE OF TEXAS § COUNTY OF DALLAS § This instrument was acknowledged before me on the �day of 4za, 2003, by BRIAN LEE MODIC, as President of Cornell Corporation, on beha f said corporation. SEAL Notary Public, State of Texas TILED FOR RFO-ORD iW3 AUG 25 APB 11, 52 (J vvt'oi /Lw ` iJ COUNTY CLERK. :.rI`f�COUNT`l.TEXAS o i Avt Of 1 tXAS COUNTY OF LUBBOCK 1 hereby certify that this instrtxneM wes FILED On 1118 date and at the time stamped hereo0 by me and Was RECORDED M the Vol and Page of the Oft*' DuDM[ Records of Lubbock County. Texas es stamped h"On by rns AUG 25 2003 A`/'Cl.d/ 4 COUNTY CLERK LUBBOCK COUNTY. TEXAS i