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HomeMy WebLinkAboutResolution - 1896 - Oil & Gas Lease - Texland Petroleum Inc - Section 5, Block A Lubbock County - 12/13/1984LJM:js RESOLUTION RESOLUTION #1896 December 13, 1984 Agenda Item #33 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 a Oil and Gas Lease between the City of Lubbock and Texlend Petroleum, Inc., 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 13th day of December , 1984. " ALAN 11ENW, MAMR ATTEST: �- 12 Kaneme Boyd, City Secretary APPROVED AS TO CONTENT: Robert Massengale, sst. City Manager APPROVED AS TO FORM: (�Wj-wA a- M Laura J. Mont2,, Asst. City Attorney A OIL AND GAS LEASE RESOLUTION #1896 The lease, made and entered into in duplicate on this 13th d a y of - December , A.D., 19S_, by and between the City of Lubbock, Texas, designated as Lessor and Texland Petroleum, Inc. , designated as Lessee. WITNESSETH: 1.- CONSIDERATION AND GRANT: In consideration of the pay- ment by Lessee of the sum of $2S,S00.00 , the receipt of which is hereby acknowledged, and of the royalties, covenants, stipu- lations and conditions herein contained which Lessee hereby agrees to pay, observe and perform, the Lessor does hereby demise, grant, lease and let unto the Lessee the following described land for the sole and only purpose of prospecting and drilling for, and producing oil and/or gas that may be found and produced from said land. 2. DESCRIPTION OF LAND: The land herein leased to Lessee is located in Lubbock County, Texas and is described as follows: (a) An undivided one-half mineral interest in Section 59 Block A. Lubbock County, Texas. (b) This lease is made subject to all easements and road right-of-way, and railroad right-of-way, if any, affecting the land described in subparagraph (a) above set forth. (c) This lease is further made subject to any waiver of right of entry, if any, executed by or binding upon the City of Lubbock affecting the land described in subparagraph (a) above set forth. 3. LOCAL, STATE AND FEDERAL REGULATIONS: It shall be Lessee's sole responsibility to inform himself or itself regard- ing all applicable local, state, and federal regulations, rules, and laws, including but not limited to Chapter 71 of the Texas Nutural Resources Code, Vernon's Annotated Civil Statutes, and Chapter 14, Article VI of the Code of Ordinan.c.es.,.of _the,_:C.it.y of Lubbock. It is also the sole responsibility of Lessee to inform himself or itself of the interest owned by the Lessor in regard to the property both as to surface and mineral interests. 4. PRIMARY TERM: The primary term of this lease is a period of three years commencing on the date of the execution of this lease and as long thereafter as oil and/or gas is produced in paying quantities hereunder. 5. CONTINUATION OF TERM: If at the expiration of the primary term oil or gas in paying quantities shall not have been produced from the premises, this lease shall terminate; provided, however, the term or life of this lease may be extended under one or more of the provisions of this lease. (a) CESSATION, DRILLING AND REWORKING: If drilling operations for oil or gas are not commenced on the lands covered hereby prior to expiration of the primary term above provided, this lease will terminate at the expiration of the primary term hereof. If at the expiration of the primary term, oil or gas is not being produced from said land in paying quantities, but Lessee is then engaged in drilling or reworking operations thereon or has completed a dry hole thereon within sixty (60) days prior to the end of the primary term, this lease shall remain in force so long as drilling operations on said well or any additional well on said land are prosecuted in good faith and ' r• A in workmanlike manner with no cessation of more than sixty (60) days, and if any such operations result in the production of oil or gas, so long as oil or gas is produced from said land in paying quantities. If after discovery and production of oil or gas on said land the production thereof should cease from any cause, then in such event if Lessee commences drilling operations in or on a well'on said land within sixty (60) days after cessation of such production, this lease shall nevertheless continue in force so long as such drilling operations on said well or on any additional wells are prosecuted in good faith, and in workmanlike manner with no cessation of more than sixty (60) consecutive days, and if any such operations result in the production of oil or gas in paying quantities, so long thereafter as oil or gas is produced in such paying quantities. (b) SHUT-IN ROYALTIES AND COMPENSATORY ROYALTIES: If at the expiration of the primary term or at any time thereafter, there is located on the leased premises a well or wells capable of producing gas in paying quantities and such gas is not produced for lack of a suitable market and this lease is not being otherwise maintained in force and effect, the Lessee may pay as royalty $19200 per annum for each well on this lease capable of producing gas in paying quantities, such payment to be made to the City of Lubbock, c/o City Manager, P.O. Box 20002 Lubbock, Texas 794572 prior to the expiration of the primary term of the lease, or if the primary term has expired, within sixty (60) days after the Lessee ceases to produce gas from such well or wells; and if such payment is made, this lease shall be considered to be a producing lease and such shut-in gas well royalty payment shall extend the term of this lease for a period of one (1) year from the end of the primary term or from the first day of the month next succeeding the month in which production ceased; and thereafter if no suitable market for such - 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. (c) CONTINUOUS OPERATIONS: Whenever used in this lease, the words "drilling operations" or "operations" shall mean operations for and any of the following: pad constructions, drilling, testing, completing reworking, recompleting, deepening, side tracking, plugging back or repairing of a well in search for or in an endeavor to obtain production of oil or gas. After the expiration of the primary term hereof, this lease shall remain in force and effect as to all of the lands covered thereby so long and only so long as Lessee shall conduct contin- uous drilling operations on the leased premises as hereinafter provided. Continuous drilling operations shall mean that not more than -six (6) months shall expire between the completion as a producer or the abandonment as a dry hole of a preceding well and the commencement of operations for the drilling of the next succeeding well to the development of the leased premises to the density of maximum allowable production. If Lessee fails to conduct continuous drilling operations on the' leased premises this lease shall_ thereupon terminate as to all of the leased premises, except: (a) Surrounding each well theretofore completed on the leased premises as a well capable of producing only oil or oil and casinghead gas in paying quantities or classified by any governmental authority authorized to so classify such well as an oil well for proration purposes, the greater of: (1) forty acres, or - 2 - (2) that number of acres prescribed or permitted by such governmental authority to be allocated to such well to entitle such well to receive the maximum allowable production to a depth of 100 feet below the stratigraphic equivalent of the deepest depth at which such well is then completed as a well capable of producing in paying quanti- ties. (b) Surrounding each well theretofore completed on the lease premises as a well capable of producing gas (excluding casinghead gas) or classified by such governmental authority as a gas well, the greater of: (1) six hundred and forty acres, or (2) that number of acres prescribed or permitted by such governmental authority to be allocated to such well to receive the maximum allowable production, to a depth of 100 feet below the stratigraphic equivalent of the deepest depth at which such well is then completed as a well then capable of producing in paying quantities, and (c) Such rights-of-way and easements across the remainder of the lease premises for such pipelines and roads as may be necessary for the maintenance of the above tracts. 6. PRODUCTION ROYALTIES: Lessee agrees to pay or cause to be paid during the term hereof: (a) OIL: As a royalty on oil, 251 of the value of the gross production of oil, which is defined as including all hydrocarbons produced in a liquid form at the well head, 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. Provided, however, that if the gross production of oil is less than 10 barrels per day such royalty shall be 221 of the value of the gross production of oil as defined above. 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 casing- head gas and other gaseous substances, produced from any well located on the land herein leased to Lessee, 251 of the value of the gross production of such gas which is defined as all hydro- carbons and gaseous substance 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 hydro- carbons 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 - (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 purposes 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) NO DEDUCTIONS: Royalties payable under this lease shall be made without deduction for the cost of producing, gathering, storing, separating, treating, dehydrating, com- pressing, transporting and otherwise making the oil, gas and other products hereunder ready for sale or use. 7. DELAY RENTAL: If operations for drilling are not commenced on said land (or on acreage pooled therewith as hereinafter provided) on or before one year from this date, the lease shall then terminate as to both parties, unless on or before such anniversary date, Lessee shall pay or tender to Lessor the sum of One Dollar ($1.00) per acre which shall cover the privilege of deferring commencement of drilling operations for a period of twelve (12) months. In like manner and upon like payments or tenders annually, the commencement of drilling operations may be further deferred for successive periods of twelve (12) months each during the primary term. 8. 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. Accounting and payment to Lessor of royalties from production of oil and gas from any well shall commence no later than one hundred and twenty (120) days after the commencement of production. Thereafter, unless specifically provided herein, all accountings, and payments of royalties shall be made on or before the 15th day of the third calendar month following the calendar month in which the production occurred, 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. In all cases the authority of a manager or agent to act for the Lessee herein must be filed with the City Manager of the City of Lubbock. Any royalty payment not paid when due shall accrue interest at the highest rate which may be legally contracted for by parties in the position of Lessor and Lessee from due date until paid. Acceptance by Lessor of royalties which are past due shall not act as a waiver or estopped of its right to receive -or recover any and all interest due thereon. Any tender or payment to Lessor of a sum less than the total amount due to Lessor hereunder which is made or intended to be made as an offer of settlement or accord and satisfaction by or on behalf of Lessee must be accompanied by a Notice of Settlement Offer, so denominated, addressed to each Lessor. Any such offer of settlement submitted or accord and satisfaction printed or otherwise inserted thereon shall not be deemed an offer of settlement or accord and satisfaction unless preceded by such Notice of Settlement Offer. The Lessee shall bear all responsibility for paying or causing royalties to be paid, as prescribed by the due date provided herein. - 4 - Lessee shall pay all reasonable attorney's fees incurred by Lessor in connection with any lawsuit in which Lessor is success- ful in recovering any royalties or interest. 9. CONFIDENTIALITY OF RECORDS, CONTRACTS, RESERVES, AND OTHER DOCUMENTS OR INFORMATION: The Lessor believes that the information and documents required to be furnished by Lessee hereunder are necessary to enable the City of Lubbock to perform its duties in serving the public and in protecting the interests of its citizens and of the City in the property subject to this lease. -To assure confidentiality of any information or documents submitted by Lessee, Lessee should attach its statement to any records, contracts, documents, reports, or other information required to be submitted hereunder specifying that the informa- tion contained therein is confidential and is not known to persons outside of Lessee's business. Lessee should further state with specificity that only selected employees of Lessee have access to such information, that Lessee has taken measures to guard the secrecy of such information, that Lessee believes such information would be valuable to Lessee's competitors, and that Lessee has expended funds in developing such information or documents. Such records, contracts, documents, reports, or other information, when received by the City of Lubbock, shall be regarded as trade secrets exempt from disclosure under the Texas Open Records Act and shall be held in confidence by the City of Lubbock, unless the release of such documents or information is otherwise authorized by the Lessee or by operation of law. 10. CONTRACTS, RESERVES AND OTHER RECORDS: Lessee shall furnish the City Council of the City of Lubbock copies of all contracts under which gas is sold or processed and all subsequent agreements and amendments to such contracts within thirty (30) days after entering into or making such contracts, agreements and amendments. All gas contracts, agreements and amendments to such contracts shall be sent to the City of Lubbock, c/o City Manager, P.O. Box 2000, Lubbock, Texas 79457. The books and accounts, receipts, and discharges of all wells, tanks, pools, meters, pipelines and all transportation, sale, and marketing of the oil and gas produced on the leased premises shall be at all times subject to inspection and examination at Lessee's place of business or upon ten (10) days notice at a place designated by Lessor in Lubbock County, Texas, by the City Attorney of the City of Lubbock, by any member of the City Council of the City of Lubbock, or by the duly authorized representat.ixe of any of them. Lessee shall, upon request, make available for inspection by the City Council of the City of Lubbock or its duly authorized representative all data regarding Lessees estimate of oil and gas reserves underlying the land herein described and leased or allocable to this lease. 11. OFFSET WELLS: The Lessee shall adequately protect the oil and gas under the above-described land from drainage from adjacent lands or leases, including land not owned by the Lessor. If oil and/or gas should be produced in commercial quantities in a well on land not owned by lessor, which well is within six hundred sixty (660) feet of the area included herein, the Lessee shall, within sixty (60) days after such initial production on such land, begin in good faith and prosecute diligently the drilling of an offset well on this area, and such offset well shall be drilled to such depth as may be necessary to prevent the undue drainage of this ares, and the Lessee, manager, or driller shall use all means necessary in a good faith effort to make such offset well produce oil and/or gas in commercial quantities. Neither the bonus, annual rentals, nor royalties paid or to be paid hereunder shall relieve Lessee from the obligations herein expressed. 12. 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 - 5 - 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. 13. -(a)" RAILROAD COMMISSION FORMS: Lessee shall file with the City of Lubbock, c/o City Manger, P.O. Box 2000, Lubbock, Texas, 794579 copies of all forms and other information filed with the Texas Railroad Commission which pertain to operations of this lease within five (5) days after said filing with the Commission. (b) LOGS: Lessee shall have an electric or radioactivity survey made of the bore-hole section, from the surface of the ground 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 to the City of Lubbock, c/o City Manager, P.O. Box 2000, Lubbock, Texas 794579 within fifteen (1.5) days after the making of said surveys. All water bearing strata shall be noted by Lessee in the log. (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, or upon failure to furnish Lessor with a true copy of the required logs, Lessee shall be required to re-enter any well and run the required surveys and furnish a true copy of the logs to the City of Lubbock, c/o City Manager, P.O. Box 2000, Lubbock, Texas 794579 or the Lessee shall be required to pay the Lessor the sum of Five Thousand Dollars ($59000) 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 to make available for inspection by said City Manager or by his duly authorized representative any records, memoranda., accounts, reports, cuttings and cores, or other information relative to the operation of the above-described premises, that such Lessor may request, in addition to those herein expressly provided for. 14. OPTION TO SAYE 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. 15. 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 individuals 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 completely clean up drilling site of all rubbish thereon. Lessee shall bury its pipelines to a depth of 42 inches. 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 designation 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 - 6 - 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 plat 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. 16. LIEN: The City of Lubbock shall have a first lien upon one-half of all oil and gas produced upon the above premises, and upon all rigs, tanks, pipelines, telephone lines, and machinery and appliances 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 provisions contain in this lease contract. 17. FORFEITURE: If Lessee shall fail or refuse to make the payment of any sum due by the provisions of this lease, either as rental or royalty on the production, or if the Lessee or his authorized agent should make any false report or false return concerning production, royalty, or drilling, or if Lessee shall fail or refuse to drill any offset well or wells in good faith, as required herein, or if the Lessee or his agent should refuse the proper authority access to the records and other data pertaining to the operations, or if the Lessee, or his authorized agent, shall fail or refuse to give correct information to the proper authorities, or fail or refuse to make available the cuttings or cores of any well upon demand, or fail or refuse to furnish the log of any survey of any well, as required herein, after thirty (30) days' written notice given by Lessor, or if any of the material terms of this lease shall be violated, this lease shall be subject to forfeiture by an order of the City Council of the City of Lubbock entered upon the Minutes of the City Council reciting the facts constituting the default and declaring the forfeiture. The City Council may, if it so determines, have suit instituted for forfeiture. Upon proper showing by the Lessee, within thirty (30) days after the declaration of forfeiture, this lease may, at the discretion of the City Council and upon such terms as it may prescribe, be reinstated. In case of violations by Lessee of the provisions of this lease, the remedy of the City of Lubbock by forfeiture shall not be the exclusive remedy, but a suit for damages or specific performance, or both, may be instituted. 18. ASSIGNMENTS: The assignment of the rights acquired 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 a 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 within one hundred (100) days after the date of the first acknowledgement thereof, accompanied by ten cents ($.10) per acre for each acre assigned and a filing fee of Five Dollars ($5.00). Such assignment shall not relieve the lease owner of any past due obligations theretofore accrued or impair the Lessor's lien herein provided for. 19. RELINQUISHMENT BY LESSEE: All rights to any whole lease and to any assigned portion thereof may be relinquished to the City of Lubbock at any time by having an instrument of relinquishment recorded in Lubbock County and a certified copy of the relinquishment filed with the City Council of the City of Lubbock, c/o City Manager, P.O. Box 2000, Lubbock, Texas 79457. Such relinquishment shall not relieve the lease owner of any past due obligations theretofore accrued thereon, or impair the Lessor's lien herein provided for. - 7 - A 20. 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. Any 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. Any such approval shall not be unreasonably withheld. 21. 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. 22. WELL LOCATION: The location of all wells upon the property described herein shall be subject to the written approval of lessor, which approval shall not be unreasonably withheld. However, nothing in this section shall be construed to override the provisions of Art. VI of Chapter 14 of the Code of Ordinances of the City of Lubbock. 23. USE OF SURFACE: Lessee agrees to use no more of the leased surface than is reasonably necessary for the purpose for which this lease is granted. Lessee will keep the premises in and near its roads, wells and structures at its 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 shall be deemed to have fulfilled its obligation hereunder to control weeds and noxious plants if it keeps free from all weeds and noxious plants an area extending fifteen feet from each side of any of its roads and an area extending fifteen feet from the perimeter of any of its well sites or other structures. 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. Lessee shall pay Lessor reasonable compensation and damages for Lessee's use of leased premises for pipelines, storage tanks, telephone lines and all other structures 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 Lessee 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 des- cribed and covered by this lease. 24. COMPLIANCE WITH APPLICABLE LAW: The Lessee expressly agrees to comply with all applicable local, state and federal laws, rules and regulations. Lessee shall also comply with the provisions of Article VI of Chapter 14 of the Lubbock Code of Ordinances for the City of Lubbock. 25. 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 - 8 - purpose, with the exception that Lessee has no right, nor power, nor privilege to use water in or produced from wells or lakes or pits or other reservoirs now located on the leased premises or which may be constructed or placed thereon by or at the cost 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. 26. INDEMNITY: Lessee agrees to pay Lessor a reasonable sum to compensate Lessor for any and all damages caused directly or indirectly, by operations under this lease or by failure of Lessee to comply with its duties and obligations under this lease. 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 out of the granting of this lease or out of Lessee's operations hereunder. 27. 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. 26. 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 an undivided one-half of the entire oil 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. 29. FORCE MAJEURE: In the event the commencement of drilling operations or continuous drilling operations by Lessee on the leased premises are prevented, delayed or interrupted by war, flood, fire, strike, civil commotion, natural disaster or Act of God or as the result of any law, order, rule or regulation of any governmental authority, where Lessee is not at fault, it is agreed that upon Lessee's giving notice to Lessor of reason- ably full particulars in writing, of the cause of such delay, prevention or interruption within a reasonable: .time after the occurrence of the cause relied upon, then the time for the commencement of drilling such well shall be suspended during the continuance of the inability so caused, and for a period of thirty (30) days thereafter, but for no longer period, and limitation provisions herein provided shall be extended accord- ingly; provided, however, that nothing herein contained shall be construed to suspend or delay the time for the payment of shut-in gas well royalties or other payments payable under the provisions of this lease. 30. POOLING: No right to pool or unitize is granted under this lease, however, Lessor agrees that, if pooling or unitiza- tion of lands or interests be required for sound conservation practices or efficient production, then Lessor will execute a reasonable pooling or unitization agreement to accomplish such purposes. 31. TIME OF ESSENCE: Time is of the essence of this agreement. 32. TEXAS LAW CONTROLS: It is agreed that the lease has been executed under the laws of the State of Texas and that the law of the State of Texas will control in construing this lease or any part thereof. - 9 - Al 33. DOCUMENTS INCORPORATED BY REFERENCE: The following documents, on file in the office of the Purchasing Manager of the City of Lubbock, are hereby incorporated in this instrument by reference: a. Notice to Bidders. b. Instructions to Bidders. 34. LEASE AS ENTIRE AGREEMENT: It is agreed between the parties hereto that this lease agreement embodies the entire agreement and understanding of the parties hereto and no repre- sentation or promise, whether written or verbal, shall be binding on the parties if not set forth in this agreement or any amend- ment thereto. IN TESTIMONY WHEREOF, this instrument is executed on this the 13th day of December , A.D., 19R4 . (:;Scretary ATTEST: Su zi Brooks, Asst. Secretary THE STATE OF TEXAS COUNTY OF TARRANT CITY OF L ?B01K LESSOR BY: LA Y,94 A YO TEXLAND PETROLEUM. -INC. LESSEE BY / 44F 00 This instrument was acknowledged before me o �z./ , 1985, by R. J. SCHUMACHER, President of TEXLAND PETROLEUM, INC //, a Texas corporation, on behalf of said corporation. 24 My commission expires: S Nota PubW9 in or the State of Texas NANCY J. FRIAR 151112 V - THE STATE OF TEXAS § COUNTY OF LUBBOCK § BEFORE ME, the undersigned authority, a Notary Public in and for said County, Texas, on this day personally appeared ALAN HENRY, Mayor, known to me to be the person whose name is sub- scribed 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 ex- pressed -and in the capacity therein stated. VEN UNDER MY HAND AND SEAL OF OFFICE this��day of ' 198►. of ry Publicq Lubbock County, Texas RESOLUTION #1896 Bidding closes at .M. BID FOR OIL AND GAS LEASE WITH THE CITY OF LUBBOCK, TEXAS AFFIDAVIT STATE OF TEXAS COUNTY OF TARRANT The Undersigned, R. J. Schumacher being of lawful age, being first duly sworn, states upon oath that h e is President o f Texland Petroleum, Inc. _ I the Bidder, and being duly authorized and being informed as to the terms of the Oil and Gas Lease Agreement, proposes to enter into said Lease Agreement with the City of Lubbock, in accordance with the terms, conditions, and exceptions set forth in the Instructions to Bidders,' and the Oil and Gas Lease enclosed with "Solicitation for Bids" dated October 22, 1984 1. BID As set out in the Oil and Gas Lease Agreement, the Under- signed agrees to pay the City as follows: (State in words and figures) Bonus: Twenty -Five Thousand Five Hundred Dollars ( $25,5nn,,nn As part of this bid, the Undersigned submits herewith the following: (a) a cashier's or certified check issued by a bank satisfactory to the City of Lubbock or a Standard Commercial Guaranty Bond in the penalty amount of Five Thousand and No/100 Dollars ($5,000.00) as required by paragraph 3, "The Bid" of the Instructions to Bidders. The Undersigned, if he is notified that he has submitted the successful bid, agrees that he will within ten (10) days of approval of the Lease execute the aforesaid Oil and Gas Lease with the aforestated Bid incorporated therein. It is understood that the executed Lease will not be binding upon the parties unless and until it is approved,by the City Council of Lubbock, Texas. The Undersigned represents that this bid is made without any connection with any other person making a bid for the same purpose and that it is in all respects fair and without collusion. or fraud; that no councilman, or other officer or employee or person whose salary is payable in whole or in part from the City Treasury is directly interested therein or in the supplies, materials, or equipment and work or labor to which it relates, or in any portion of the profits thereof; that the bidder is not in arrears to the City of Lubbock, Texas or to any agency thereof upon a debt or contract and is not a defaulter, as surety or otherwise, upon any obligation. 2. QUALIFICATIONS The Undersigned gives the following information and cove- nants that the bidder is fully qualified to conduct operations on the land to be leased in accordance with the terms and conditions of the attached Oil and Gas Lease. The Undersigned further swears and affirms that the following submitted information is true and correct. a. The following is a list of all producing Leases operated by the Bidder in the Lubbock area. (Not limited to Lubbock County and including Garza, Hockley, Hale and other surrounding counties). See Attached List b. The following is a list of Bank references. Texas American Bank/Fort Worth Box 2050 Fort Worth, Texas 76101 Attention: Mr. Peter A. MacQueen First State Bank Box 3218 Abilene, Texas 79604 Attention: Mr. Sydney E. Niblo - 2 - The Undersigned hereby affirms that the bidder is authorized to conduct business in the State of Texas. TEXLAND PETROLEUM, INC. Bidder B . J. coacher, President STAT PF TEXAS 0 U N T Y `Or TARRANT scribed and sworn to before me,' a Notary Public in and for id Count and State aforesaid, this / "= day of Not y -P is in and for Tarrant C o u n t y, Texas Nancy J. Friar My Commission Expires: 12-13-85 - 3 - Wells Operated by TEXLAND PETROLEUM, INC. COUNTY LEASE & WELL Crosby Winnie Barnett #1 - #3 Winnie Barnett A #1 & #2 Cannon Estate McGee Price Thomas #15-1 - #15-15 Price Thomas #1106-1 - #1106-4 Price Thomas #1117-1 - 1117-11 Price Thomas #1118-1 - 1118-4 Durward E. Woodward #1 - #3 Dickens Pike Dobbins Hockley Mack Alexander #1 & #2 Armes -Bacon #1 - #8 D. B. Bryan A Children's Home #1 & #2 L. Combs F. E. Crume #1 & #2 Jack Goodgion F. A. Hilley #1 - #4 Vandiver F. Veretto #1 - #3 Levelland (Abo) Unit, Wells #1 - #14 NE Sundown (San Andres) Unit, Wells #1 - #21 Lubbock C. A. Bassinger Burford -Green Burford -Jordan Burford-Poyner Burford -Martin W. 0. & R. E. Byers Carpenter M. L. Crawford Virgie Crossland R. A. Davis Griffis -Westinghouse E. W. Harkey M. L. Harmon Hillcrest Country Club #1 - #5 R. L. Hooten #1 - #3 A. L. Horne E. C. Horne Olen Horne Johnson Lubbock (Cont.) G. H. Johnson Blanche Letbetter #1 - #5 Lubbock Country Club #1 - #4 Lubbock State School #1 & #3 Lucille Addition #1 Lulain Estate #1 - #4 Meador #1 Northridge Addition O'Hair #1 & #2 O'Neal Owens Red Raider Unit Sam Rosson Earl & Katy Rowan #1 - #6 A. Seggern H. A. Sessions L. Edwin Smith #1 - #6 Stallings, et al B, A. Stephenson #1 & #2 Wayne Teal L. D. Tisdale James Vickers 0. A. Webb Estate #1 - #3 T. P. & F. J. Welch L. C. Wheeler L. C. Wheeler A East Broadview Unit, Wells #1 - #51 Terry V. Lundell Pauline Morgenstern #1 - #10 Warhorse Unit, Wells #1 - #46 The total number of wells operated within the above counties is over 300.