HomeMy WebLinkAboutResolution - 1193 - Oil & Gas Lease To S.E. Cone, Jr. - 08/26/1982 { ' \
! �
. ' .
/
/
+
/
�
RESOLUTION 1193 8/26/82
/
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 oil and gas
lease between the City of Lubbock and S. E. Cone, Jr. , attached herewith which |
shall be spread upon the minutes of the Council and as spread upon the es
1982.of the Council sliall constitute a part of this Resolution as if fully copied
herein in detail.
Passed by the City Council this 26th dav-�Of - Aupd�t
APPROVED AS TO CONTENT:
Denzel Pe full, Di4ctor of Public Services
APPROVED AS TO FORM:
Susan M. I.-Torton, Assistant City Attorney
U |
gas exists, the Lessee may extend this lease for two (2) addi-
tional and successive periods of one (1) year each by the payment
of a like sum of money each year on or before the expiration of
the extended term. Provided, however, that if, while this lease
is being maintained in force and effect by payment of such shut-
in gas well royalty, gas should be sold and delivered in paying
quantities from a well situated within one thousand (1,000) feet
of the leased premises and completed in the same producing reser-
voir or in any case where drainage is occurring, the right to
further extend this lease by such shut-in gas well royalty pay-
ments shall cease, but this lease shall remain in force and
effect for the remainder of the current one (1) year period for
which the shut-in gas well royalty has been paid and for an
additional period not to exceed a combined total of three (3)
years from the expiration of the primary term or from the first
day of the month next succeeding the month in which production
ceased by payment by the Lessee of compensatory royalty, at the
royalty rate provided for in this lease as would be due on an
equivalent amount of like quality gas produced and delivered from
the well completed in the same producing reservoir from which gas
is being sold and delivered and which is situated within one
thousand (1,000) feet of, or draining, the leased premises on
which shut-in gas well is situated, such compensatory royalty to
be paid monthly to the City of Lubbock, c/o City Manager, P.O.
Box 2000, Lubbock, Texas 79457, beginning on or before the 20th
day of the month next succeeding the month in which such gas is
sold and delivered from the well situated within one thousand
(1,000) feet of, or draining, the leased premises and completed
in the same producing reservoir; provided, further, that in the
event such compensatory royalties paid in any twelve (12) month
period are in a sum less than the annual shut-in gas well royal-
ties provided for in this section, the Lessee shall pay an addi-
tional sum of money equal to the difference within thirty (30)
days from the end of such twelve (12) month period; provided,
further, that nothing herein shall relieve the Lessee of the
obligation of reasonable development.
(c) EXTENSIONS: If, at the expiration of the primary term,
production of oil and/or gas has not been obtained in paying
quantities on the leased premises but drilling operations are
being conducted thereon in good faith and in good workmanlike
manner, the Lessee may, on or before the expiration of the pri-
mary term, file with the City of Lubbock, c/o City Manager, P.O.
Box 2000, Lubbock, Texas 79457, written application for a thirty
(30) day extension of this lease, such application to be accom-
panied by a payment of Seven and 50/100 Dollars ($7.50) per acre
for each acre in the lease, and the City Manager for the Cit of
Lubbock, shall in writing extend this lease for a thirty OU day
period from and after the expiration of the primary term and so
long thereafter as oil or gas is produced in paying quantities
from the premises; provided, that the Lessee may, so long as such
drilling operations are beingconducted in good faith, make like
application and payment during any thirty (30) day extended
period for an additional extension of thirty (30) days not to
exceed a combined total of one hundred eighty (180) days; pro-
vided, however, Lessee may, so long as such drilling operations
are being conducted in good faith, make written application to
the City Manager for the City of Lubbock, P.O. Box 2000, Lubbock,
Texas 79457, on or before the expiration of the initial extended
period of one hundred eighty (180) days for an additional exten-
sion of one hundred eighty (180) days, such application to be
accompanied by a payment of Fifty Dollars ($50.00) per acre for
each acre in the lease, and the City Manager for the City of
Lubbock, shall in writing, extend this lease for an additional
one hundred eighty (180) day period from and after the expiration
of the initial extended period of one hundred eighty (180) days,
and so long thereafter as oil or gas is produced in paying quanti-
"
00.~!0
ties from the premises; provided, further, that this lease shall
not be extended for more than a total of three hundred sixty
(360) days from and after the expiration of the primary term,
unless production in paying quantities has been obtained.
3. PRODUCTION ROYALTIES: Lessee agrees to pay or cause to
be paid during the term hereof:
(a) OIL: As a royalty on oil, which is defined as including
all hydrocarbons produced in a liquid form at the mouth of the
well, save and except casinghead gas, and also all condensate,
distillate, and other liquid hydrocarbons recovered from oil or
gas run through a separator or other equipment, as hereinafter
provided, Twenty (20%) percent of the
value of the gross Production. Said value shall be based on the
highest posted price, plus premium, if any, offered or paid for
oil, condensate, distillate, or other liquid hydrocarbons, res-
pectively, or 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 the greater. Lessee
agrees that before any gas produced form the land hereby leased,
containing liquid hydrocarbons recoverable in commercial quan-
tities by separator on the lease is sold, used or processed in a
plant, it will be run through an adequate oil and gas separator
of conventional type or other equipment at least as efficient to
the end that all liquid hydrocarbons recoverable from the gas by
such means will be recovered. Upon written consent of Lessor,
the requirement that such gas be run through such a separator or
other equipment may be waived upon such terms and conditions as
prescribed by Lessor.
(b) GAS: As royalty on any and all gas, including casing-
head gas and flared or vented gas, which is defined as all hydro-
carbons and gaseous substances not defined as oil in subparagraph
(a) above, produce from any well by Lessee Twenty (20%) percent
of the value of the gross production, such
value to be eterm ned on the basis of the highest price paid for
gas of a similar quality in the general area or the amount ac-
cruing 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 sub-
paragraph (a) above, its value, after having been run through
such separator or other equipment, shall be determined as speci-
fied herein.
(c) KEEP WHOLE: In the event any such gas is processed for
the extraction of liquefiable hydrocarbons or other marketable
substances, the value of the extracted products and the remaining
residue gas attributable thereto shall for royalty payment pur-
poses never be less than if such gas had not been processed.
(d) RECYCLED GAS: Subject to the consent in writing of the
City Manager for the City of Lubbock, Lessee may inject gas into
any oil or gas producing formation underlying the leased premises
after the liquid hydrocarbons contained in the gas have been
removed, and no royalties shall be payable on the gas so injected
until such time as the same may thereafter be produced and sold
or used by Lessee in such manner as to entitle Lessor to a royalty
thereon under the royalty provisions of this lease.
(e) CONSERVATION: Lessee agrees to use reasonable diligence
to prevent the underground or above ground waste of oil or gas
and to avoid the physical waste and flaring or venting of gas
produced from the leased premises. Lessee shall pay a royalty of
TweUty (2p%) peraent of the market value on such oil or gas
specd Herein.
(f) NO DEDUCTIONS: Royalties payable under this lease shall
be made without deduction for the cost of producing, gathering,
storing, separating, treating, dehydrating, compressing, trans-
0000*1
0-)
porting and otherwise making the oil, gas and other products
hereunder ready for sale or use.
4. ANNUAL RENTALS: One (1) year from the date of this
lease, and on the same date of each of the following years during
the life of this lease, the Lessee shallay to the City of
Lubbock, P.O. Box 2000, Lubbock, Texas 79457, an annual rental of
($1.00) One Dollar per acre, payable each year in advance.
5. ROYALTY PAYMENTS AND REPORTS: All royalties shall be
paid to the City of Lubbock, c/o City Manager, P.O. Box 2000,
Lubbock, Texas 79457, as follows: Royalty on oil shall be due and
payable on or before the 5th day of the second month succeeding
the month of production and royalty on gas shall be due and
payable on or before the 15th day of the second month succeeding
the month of production, accompanied by the affidavit of the
owner, manager or other authorized agent, completed in the form
and manner prescribed by the City Council for the City of Lubbock
and showing the gross amount and disposition of all oil and gas
produced and the market value of the oil and gas, together with a
copy of all documents, records or reports confirming the gross
production, disposition and market value including gas meter
readings, pipeline receipts, gas line receipts and other checks
or memoranda of amount produced and put into pipelines, tanks, or
pools and gas lines or gas storage, and any other reports or
records which the City Council for the City of Lubbock may re-
quire to verify the gross production, disposition and market
value. In all cases the authority of a manager or agent to act
for the Lessee herein must be filed with the City Council of the
City of Lubbock. Each royalty payment shall be accompanied by a
check stub, schedule, summary or other remittance advice showing
the amount of royalty being paid on each lease. Any royalty not
paid or affidavits and supporting documents not filed when due
shall become delinquent and shall have added to the sum owing a
delinquency penalty of fifteen percent (15%) of such sum for each
sixty (60) day period of delinquency or a fractional period
thereof; provided, however, that each such penalty shall never be
less than Five Dollars ($5.00) . The Lessee shall bear all res-
ponsibility for paying or causing royalties to be paid, as pre-
scribed by the due date provided herein. Payment of the delin-
quency penalty shall in no way operate to prohibit the State's
right of forfeiture, as provided by law, nor act to postpone the
date on which royalties were originally due.
6. CONTRACTS, RESERVES AND OTHER RECORDS- Lessee shall
furnish the City Council for the City of Lubbock with copies of
all contracts under which gas is sold or processed and all subse-
quent agreements and amendments to such contracts within thirty
(30) days after entering into or making such contracts, agree-
ments or amendments. All gas contracts, agreements and amend-
ments to such contracts shall be sent to the City of Lubbock, c/o
City Manager, P.O. Box 2000, Lubbock, Texas 79457. Such con-
tracts, when received by the City of Lubbock shall be held in
confidence by the City of Lubbock unless otherwise authorized by
the Lessee.
The books and accounts, receipts, and discharges of
all wells, tanks, pools, meters, pipelines and all contracts and
other records pertaining to the production, transportation, sale,
and marketing of the oil and gas produced on said premises shall
be at all times subject to inspection and examination by the
Commissioner of the General Land Office, the Attorney General,
the Governor, any member of the City Council for the City of
Lubbock. Lessee shall, upon request, furnish the City Council
for the City of Lubbock with its best possible estimate of oil
and gas reserves underlying this lease or allocable to this
lease. All such reserve information, when received, shall be
held in confidence by the City Council for the City of Lubbock.
7. DEVELOPMENT: Notwithstanding any provision of this
lease to the contrary, after a well producing, or capable of
producing, oil or gas has been completed on the leased premises,
0 01 J0
Lessee shall exercise the diligence of a reasonably prudent
operator in drilling such additional well or wells as may be
reasonably necessary for the proper development of the leased
premises and in marketing the production therefrom.
8. REMOVAL OF EQUIPMENT: If this lease shall be forfeited
or terminated for any cause, the Lessee shall not, in any event,
be permitted to remove the casing or any part of the equipment
from any producing, dry, or abandoned well or wells without the
written consent of the City Manager for the City of Lubbock; nor
shall Lessee, without the written consent of said City Manager
remove from the leased premises the casing or any other equip-
ment, material, machinery, appliances or property owned by the
Lessee and used by the Lessee in the development and production
of oil or gas therefrom, until all dry or abandoned wells have
been plugged to the satisfaction of the Railroad Commission of
Texas and until all slush or refuse pits have been properly
filled and all broken or discarded lumber, machinery, or debris
shall have been removed from the premises to the satisfaction of
said City Manager.
9. (a) RAILROAD COMMISSION FORMS: Lessee shall file with
the City of Lubbock, c/o City Manager, P.O. Box 2000, Lubbock,
Texas, 79457, copies of all forms and other information filed
with the Texas Ratlroad Commission which pertain to operations of
this lease within five (5) days after said filing with the Commis-
sion.
(b) LOGS: Lessee shall have an electric or radioac-
tivity survey made of the bore-hole section, from the surface of
theround to the total depth of the well, of all wells drilled
on the above-described premises and shall transmit a copy of each
and every log of each required survey, along with copies of logs
of all other bore-hole surveys, to the City of Lubbock, c/o City
Manager, P.O. Box 2000, Lubbock, Texas 79457, within fifteen (15)
days after the making of said surveys.
(c) FAILURE TO LOG: At the option of Lessor, upon
failure of Lessee to have an electric or radioactivity survey
made on the bore-hole section from the surface of the ground to
the total depth of the well, and upon failure to furnish Lessor
with a copy of the required logs, Lessee shall be required to re-
enter any well and run the required surveys and furnish a copy of
the logs to the City of Lubbock, c/o City
Manager, P.O. Box 2000,
C1
Lubbock, Texas 79457, or the Lessee shallb required to pay the
Lessor the sum of Fifteen Thousand Dollars ($15,000) which shall
be considered liquidated damages for Lessee's failure to furnish
said log to Lessor as required hereby.
(d) DRILLING RECORDS: The Lessee herein agrees, inso-
far as possible, to supply said City Manager with any records,
memoranda, accounts, reports, cuttings and cores, or other infor-
mation relative to the operation of the above-described premises,
that such Lessor may request, in addition to those herein expressly
provided for.
10. OPTION TO SAVE CASING: Lessor reserves the right to
require that all or any part of the casing shall be left in any
non-productive well when Lessor deems it necessary to preserve or
maintain said well for water. For such casing requested by
Lessor to be left in wells, the Lessor shall pay to the Lessee
the reasonably estimated salvage value thereof.
11. MAINTENANCE OF WELL SITE AND IDENTIFICATION MARKERS:
Lessee shall build and maintain fences around its slush, sump,
and drainage pits, pump jacks, Christmas trees, and tank bat-
teries if requested by Lessor, and Lessee will take all necessary
care and precaution to protect livestock against loss, damage, or
injury; and upon completion or abandonment of any well or wells,
Lessee shall fill and level off all slush pits and cellars and
rl 0J
completely clean up drilling site of all rubbish thereon. Lessee
shall bury its pipelines below plow depth. Lessee shall also
erect, at a distance not to exceed twenty-five (25) feet from
each well on the premises covered by this lease, a legible sign
on which shall be stated the name of operator, the lease designa-
tion and the well number. Where two or more wells on the same
lease or where wells on two or more leases are connected to the
same tank battery, whether by individual flow line connections
direct to the tank or tanks or by use of a multiple header system,
each line between each well and such tank or header shall be
legibly identified at all times, either by a firmly attached tag
or plate or an identification properly painted on such line at a
distance not to exceed three (3) feet from such tank or header
connection. Said signs, tags, plates or other identification
markers shall be maintained in a legible condition throughout the
term of this lease.
12. LIEN: The City of Lubbock shall have a first lien upon
all oil and gas produced upon the above premises, and upon all
rigs, tanks, pipelines, telephone lines, and machinery and appli-
ances owned by Lessee used in the production and handling of oil
and gas produced therefrom, to secure any amount due from the
Lessee herein and to secure the performance of any of the pro-
visions contained in this lease contract.
13. ASSIGNMENTS: The assignment of the rights acqquired
under this lease shall be governed by the provisions of existing
law providing that any rights acquired may be assigned. In order
for an assignment to be valid and effective, all assignments
shall be filed in Lubbock County, and an original certified copy
of the assignment must be filed with the City Council of the City
of Lubbock, c/o City Manager, P.O. Box 2000, Lubbock, Texas 79457
accompanied by ten cents ($.10) per acre for each acre assigned
and a filing fee of Five Dollars ($5.00) .
14. APPROVAL OF LEASE OPERATIONS: Lessor and Lessee agree
that, as a part of the consideration for the granting of this
lease, if the operator is a different entity than the original
Lessee, Lessee shall, prior to the commencement of operations on
this lease, submit to the City Manager of the City of Lubbock,
for written approval, the name of the entity that will be the
operator of the leased premises. An yy subsequent change in the
operator of the leased premises shall also require that Lessee
obtain written approval of the City Manager of the City of Lubbock.
15. SUCCESSORS AND ASSIGNS: The covenants, conditions and
agreements contained herein shall extend to and be binding upon
the heirs, executors, administrators, successors or assigns of
the Lessee herein.
16. WELL LOCATION: The location of all wells upon the pro-
perty described herein shall be subject to the written approval
of Lessor and the Federal Aviation Administration.
17. MARKING AND LIGHTING OF STRUCTURES AND EQUIPMENT: All
structures and equipment (including all temporary structures)
used in the drilling operation and producing if production is
obtained shall be marked and lighted in such manner as prescribed
by the Lessor. No temporary or permanent structures or equipment
of any kind used in the development, production or transportation
of oil or gas shall be placed on the herein described property in
such a manner as to interfer with or introduce hazard to the
operation of aircraft. In the event drilling operation for oil
or gas result in production, Lessee at its own expense shall
immediately remove all temporary structures and place all equip-
ment in such manner as will not interfer with or introduce any
hazard to the operation of aircraft. In the event such drilling
U`• v
operations result in a dry hole, Lessee shall at its own expense
immediately remove all temporary structures used in such opera-
tions and level the area.
18. USE OF SURFACE: Lessee shall pay Lessor reasonable
compensation and damages for Lessee's use of leased premises for
pipelines, storage tanks, telephone lines and all other struc-
tures located thereon and for access roads thereto or to drilling
locations. Access roads will be built by Lessee as directed by
Lessor as to location and direction of said roads. The incidental
rights granted by this lease and the specific right, power and
privilege to construct, maintain and remove roadways, tanks,
pipelines, electric lines, and telephone lines, machinery and
structures are subject to the provisions of this contract and;
subject to the further right and power of Lessor to designate the
place where the items will be placed or constructed, and these
rights, powers and privileges of Lessor will be confined to the
necessary and reasonable right, power and privilege to produce,
store, transport, treat and remove all oil and gas produced or,
removed from the leased premises. No right, power nor privilege
is granted which concerns or relates to Land or oil and gas which
are not described and covered by this lease.
Lessee shall not interfere with the access roads to the
airport and shall not interfere with any other person or agent
having a lawful right to use said leased premises, or with any
building or improvements of any kind thereon, belonging to any
other person or agency, or with their right to enter thereon and
remove said buildings or improvements thereon. Lessee shall pay
for damages caused by its operation to all personal property,
improvements, livestock and crops on said land. The property is
subject to a Lease for farming purposes and all rights granted
under the oil and gas lease shall be subject to the present
tenant and payments by Lessee under the oil and gas and mineral
lease shall not be diminished by reason of such prior lease.
Lessee will keep the premises in and near its roads, wells
and structures at is present level, grade and condition and as
clean and free of all weeds and noxious plants and debris and
waste as is possible by the exercise of reasonable diligence.
Lessee will fill all slush pits, depressions and ruts and restore
all fences and make such other repairs as are necessary from time
to time to maintain or restore the premises to their present
grade, level and condition and which are made necessary as a
result of acts or omissions of Lessee under this lease.
19. COMPLIANCE WITH APPLICABLE LAW: The Lessee expressly
agrees to comply with all applicable local, state and federal
laws, rules and regulations. Lessee expressly agrees to comply
with 14 C.F.R. §77.
20. USE OF WATER: Lessee may use water produced on or from
the leased premises to the extent necessary for reasonable drilling
operations on the leased premises and for no other purpose, with
the exception that Lessee has no right nor power nor privilege to
use water in or produced from wells nor lakes nor pits nor other
reservoirs now located on the leased premises or which may be
constructed or placed thereon bq or at the cost of Lessor or a
tenant of Lessor. Lessee's right to the--use of water shall not
extend to nor be constructed to authorize the use of such water
for repressuring, pressure maintenance, cycling or secondary
recovery operations.
21. INDEMNITY: Lessee agrees to pay Lessor a reasonable sum
to compensate Lessor for any and all damages caused in whole or
in part, directly or indirectly, by o erations under this lease
or by failure of Lessee to comply with its duties and obligations
under this lease.
rti0v
_
} d _ r .�... . . ._. ,. ... .
i
5 '
r
Lessee agrees to indemnify Lessor and to save it harmless
from any and all claims and causes of action asserted by any third
person for damages or injuries of any kind or character which
arise or are by the third person said to arise out of Lessee's
operations hereunder.
22. CAPTIONS: The captions of the several paragraphs of this
lease are for reference purposes only and shall not affect the
meaning or interpretation of this lease.
In TESTIMONY WHEREOF, this instrument is executed on this the
day of November , A.D. , 1982
CITY OF LUBBOWn
LESSOR
f r
BY-
4KU McALTSTER, MA
ATTEST:
EVelyn Gaffga,' CitySelrary-
Treasurer
STATE OF TEXAS
COUNTY OF LUBBOCK
BEFORE ME, the undersigned, a Notary Public in and for said
county and state, on this date personally appeared BILL McALISTER,
Mayor of the City of Lubbock, known to me to be the person and
official whose name is subscribed to the foregoing instrument, and
acknowledged to me that the same was the act of the City of Lubbock,
Texas, and that he executed the same as the act of the City of
Lubbock, Texas for the purposes and considerations therein expressed,
and in the capacity therein stated.
GIVEN. UNDER MY HAND AND SEAL OF OFFICE, this day of
November, 1982.
Nota V Public in and for Lubbock
County, Texas
My Commission Expires:
S. E. CONE, JR.
LESSEE
By:.
,aA22
SWORN TO AND SUBSCRIBED by the said S. E 1E, JR. , before
me, the undersigned authority on this the day of
1982.
' '
Notary Public in andorLubbock
County, Texas
My Commission Expires:
UNDAV.PiLLS
If
1
-
�r
x,
:
o
SI A
N Iffy
c P�
E G 4 0 N A L
rdf
yy
2 03
2? A — -------------— 0 A
P 0 ft T
Jl
LJ CITY LIMIT$
—
I
10 A
_,_......... _..�_._.µM Z _............. r �y.,, .. arm
13M
J L
Cap, Ia60
LUBBOCK
COUNTRY
CLUB
I�Rll WL
:2 r
CARR,EVANS,POUTS &HUNT
ATTORNEYS AT LAW
9TH FLOOR LUBBOCK NATIONAL BANK BLDG.
WARUCK CARR LUBBOCK,TEXAS 79401 POST OFFICE BOX 2585
BERNARD P.EVANS 806.765-7491 79405-2.685
AUBREY JAN FOUTS
DONALD M.HUNT
FRANK I-MURCHISON Ili
ROBERT L CRAIG.JR.
DENNIS OLSON
BILLY R.WOLFE
MITCHELL D.HANKINS
STEPHBN J.STONE
August 16, 1982
City of Lubbock
Purchasing Department
P. 0. sox 2000
Lubbock, TX 79457
Attention: Floyd N. Nesbitt
Director of Purchasing
Dear Mr. Nesbitt:
Enclosed please find Mr. S. E. Cone, J'r. ' s proposal to lease
city property, such property being:
The North half of Section 10, Block A, of Lubbock
County, Texas.
Terms of proposal are as follows:
1. Bonus - $25.00 per acre (Total - $8,000.00)
2. Three year Lease
3. Twenty percent royalty
4. Delay Rentals - $1.00 per acre
I trust that these terms will meet with your approval, and should
you have any questions concerning this matter, please do not
hesitate to call.
Yours truly,
CARR, EV7h S, FUUTS & HUNT
Billy R. olfe
lh
Enclosure