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Res 188-82 10/19/1982RESOLUTION NO, ll—I—' RESOLUTION APPROVING BID OF BURNS LEASING CORP. AND APPROVING OIL AND GAS LEASE ON TWO TRACTS OF LAND, CONTAINING 51.1 ACRES , MORE OR LESS, AND 189. 7 ACRES, MORE OR LESS , AT LAKE KICKAPOO, ARCHER COUNTY, TEXAS . WHEREAS, the Board of Aldermen of the City of Wichita Falls has determined that it is advisable to lease for oil and gas the land hereinafter described, and published notice of its intention to lease such land in accordance with Sections 71. 004 and 71. 005 of the Texas Natural Resources Code; and, WHEREAS, at the meeting on September 21, 1982 , the date specified in such notice, the 'hoard of Aldermen has received, opened and con- sidered, at a public hearing, the bids received, in accordance with Section 71. 006 of such code; and, WHEREAS, the Board of Aldermen believes that the bid of Burns Leasing Corp. of $35. 00 per net mineral acre represents the fair value of the lease on such property, and is the best bid on such property. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF ALDERMEN OF THE CITY OF WICHITA FALLS, TEXAS, THAT: Such bid of Burns Leasing Corp. for $35. 00 per net mineral acre is hereby accepted, that certain oil and gas lease , a copy of which is attached hereto, between the City and such bidder is hereby approved, and the City Manager is authorized to execute the same for the City of Wichita Falls. PASSED AND APPROVED this the 19th day of October, 1982 . rAYO R ATTEST: ih 40-/)4,t,a_,/ Ci Clerk STATE OF TEXAS X 1r.-: ;,-r-._., CODUTY OF ARCHER X KNOW ALL MEN BY THESE PRESENTS THAT X WHEREAS, the City of Wichita Falls, Texas ("Lessor") , is the owner of the tracts of land in said County and State described in Exhibit "A" attached hereto, incorporated herein by reference and made a part hereof for all purposes (the "Property") ; WHEREAS, Lessor has determined that it is advisable and in the best in- I-. terest of the City of Wichita Falls, Texas to lease the Property for pur- pose of producing the oil and gas thereunder in a manner which will not interfere with the public use of the Property; i. _rte- , WHEREAS, Lessor has given notice of its intention to lease the Property in accordance with Sections 71.004 and 71.005 of the State of F' _:,. Texas Natural Resources Code (the "Code") and has received and considered ff` - bids, at a public hearing, in accordance with Section 71.006 of the Code; WHEREAS, Burns Leasing Corp. Lessee") was the highest and best bidder who submitted a bid for the lease 4_2.2_,:. "`` - of the Property; WHEREAS, Lessor desires to lease the'Property to Lessee for the purpose of Producing the oil and gas thereunder, and Lessee desires to accept such lease from Lessor, in accordance with the terms, provisions and conditions ' hereinafter set forth; NOW, THEREFORE, for and in consideration of thirty-five dollars per net mineral acre . and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lessor has granted, de-e- mised, leased and let, and by these presents does grant, demise, lease And let, unto Lessee all of the Property described in the attached Exhibit A" for the purpose of investigating, exploring, prospecting and drilling for and producing the oil and gas thereunder and to save, take care of, a> -- treat, transport and own said oil and gas. 1• Subject to the other provisions herein contained, this lease r,'.....=-`- ' shall regain in force for a term of five years from the date hereof called the "Primary Term") and as long thereafter as oil and gas, or either of them, is produced from said Property or land with which said property is pooled herewith. 2• The royalties to be paid by Lessee are (a) on oil 3/16thsof that pro- _ . duced and saved from said Property, the same to be delivered at the wells or to the credit of Lessor into the pipeline to which the wells may be connecter; Lessee may from time to time purchase any royalty oil in its possession, paying the market price therefor prevailing for the field where produced on the date of purchase; (b) to pay Lessor on gas and casinghead gas produced from said land (1) when sold by Lessee 3/16thsof the amount realized by Lessee computed at the mouth of the well, or (2) when used by f said land orLesseeo:in the manufacture of gasoline or other products, 3/16thso the amount realized from the sale of gasoline or other products extracte:= therefrom and 3/16thsof the amount realized from the sale of res- - idue gds after deducting the amount used "for plant fuel and/or .compression; while there is a gas well on this Property or on acreage pooled therewith F'., :'. ; ;:; `:-. -, ,`i., ^,_ but gas is not being sold or used, Lessee may pay as royalty, on or before - _ ninety (`0) days after the date on which (1) said well is shut in, or (2) the Property covered hereby or any portion thereof is included in a pooled unit on %:hich a well is located, or (3) this lease ceases to be otherwise maintained as provided herein whichever is the later date, and thereafter at annual intervals on or before the anniversary of the date the first payment is made, a sum of Two Hundred and No/100 ($200.00) per well, and if such :'ayment is made or tendered, this lease shall not terminate and it will ='e considered that gas is being produced from this lease in pay- ing quay,:ities. Lessee shall have free use of oil and gas from said Property for all operations hereunder and the royalty on oil and gas shall be compr._ed after deducting any so used. Page 14 of 19 Pages Agenda Item No. pool 3. combine the its option, is hereby given the right and power to i sgj : Y,' p Property y portion thereof as to oil and gas, or '- ••- * either of them, with other land, lease or leases in the immediate vicinity thereof to the extent hereinafter stipulated in order to produce the oil and gas underneath the Property, rovided however, that in a unit pooled for oil or gas, said oil or gas unit shall be composed of no less than fif- ty percent (50%) acreage from the Property, or the entire Property, which- ever is the lesser amount of acreage. Units pooled for oil hereunder shall not substantially exceed eighty (80) acres each in area, and units pooled for gas hereunder shall not substantially exceed in area three hundred twenty (320) acres each, plus a tolerance of ten per cent (10%) thereof, ate provided that any such unit may not contain more than the minimum number of acres on which an oil and gas well must be located to comply with rules x or orders of the Railroad Commission of Texas as applied to the Property. Lessee under the provisions hereof may pool or combine the Property or any portion thereof as above provided as to oil in any one or more strata and as to gas in any one or more strata. The units formed by pooling as c-' to any stratum or strata need not conform in size or area with the unit or .=- :. • r,".7;•:'::.-:',.--.-::1',;::.;,,, units into which the Property is pooled or combined as to any other stratum or strata and oil units need not conform as to area with gas units. The pooling in one or more instances shall not exhaust the rights of the Lessee hereunder to pool the Property or portions thereof into any other units. rs`_• - Lessee shall file for record in the appropriate records of the county or counties in which the Property is located, an instrument describing and designating the pooled acreage as a pooled unit; and upon such recordation the unit shall be effective as to all parties hereto, their successorsand :,;:;:.,---'',,.'•:-'-,:'. i::... .•:. , assigns; irrespective of whether or not the unit is likewise effective as s '•'"'': to all other owners of surface, mineral, royalty or other rights in land included in such unit. Operations for drilling on or production of oil or gas from any part of the pooled unit which includes all or any portion of the Property, shall be considered as operations for drilling or pro- duction of oil or gas from the Property and the entire acreage constitut- inging such unit or nits, as to oil and gas, or either of them, as herein provided, shall be treated for _all purposes, except the payment of royal- ties upon production from the pooled unit, as if the same were included in this Lease. For the purpose of computing the royalties to which own- ers of royalties and payments out of production shall be entitled on production of oil and gas, or either of them, from the pooled unit, there shall be allocated to the Property and included in said unit a pro rata portion of the oil and gas, or either of them, produced from the pooled J "'"°' `" '" ```j`" unit. Such allocation shall be on an acreage basis (that is, there shall be allocated to the acreage covered by this Lease and included in the pooled unit that pro rata portion of the oil and gas, or either of them, d;N:;;-.7,;,..„ -....,;.„.-•-..,_,42. produced from the pooled unit which is the number of surface acres cover- ed by this Lease and included in the pooled-unit bears to the total number of surface acres included in the pooled unit) . Royalties hereunder shall be zcomputed on the portion of such production, whether it be oil and gas, T`.,L ` nc r,- } ;_ or either of them, so allocated to the Property and included in the unit just as though such production were from the Property. The production from an oil well will be considered production from the lease or oil pool- ed unit from which it is producing and not as production from a gas pooled unit; and production from a gas well will be considered as production from the lease or gas pooled unit from which it is producing and not from an oil pooled unit. 9_ If operations for drilling are not commenced on said Property or acreage pooled therewith as above provided on or before one (1) 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 (or shall make a bona fide attempt to pay or tender, as hereinafter stated) to Lessor or to the credit of Lessor in InterFirst Bank Bank at Wichita Falls, Texas, (which bank and its successors are Lessor's agent and shall continue as the depository for all rentals payable here- under regardless of changes in ownership of said Property or the rentals)WOMNK .a: l t'- - the sum of ONE DOLLAR ($1.00) per acre for the number of acres then sub- 4 ject to this Lease (hereinafter called "Rental") , which shall cover the privilege of deferring commencement of drilling operations for period of twelve (12) months. In like manner and upon like payments or tenders annually, the commencement of drilling operations may be further deferr- ed for successive period of twelve (12) months each during the primary term. The payment or tender of rental under this paragraph and of royalty under Paragraph 2 on any gas well from which gas is not being 2- pis: t=.A;Kn; 2=<4;ti ;^.- Page 15 of 19 Pages sold or used may be made by check or draft of Lessee mailed or delivertd to the parties entitled thereto or to said bank on or before the date of payment. If such bank (or any successor bank) should fail, liquidate or be succeeded by another bank, or for any reason fail or refuse to accept < • ' rental, Lessee shall not be held in default for failure to make such pay- _ -- ment or tender of rental until thirty (30) days after Lessor shall deliver to Lessee a proper recordable instrument naming another bank as agent to receive such payments or tenders. If Lessee shall, on or before any anni- versary date, make a bona fide attempt to pay or deposit rental to a Lessor entitled thereto according to Lessee's records or to a Lessor,. who, prior ' ' to such attempted payment or deposit, has given Lessee notice, in accord- once with subsequent provisions of this Lease, of the right to receive rental, and if such payment or deposit shall be ineffective or erroneous • in any regard, Lessee shall be unconditionally obligated to pay to such Lessor the rental properly payable for the rental period involved, and this Lease shall not terminate but shall be maintained in the same manner as if such erroneous or ineffective rental payment or deposit has been pro- perly made, provided that the erroneous or ineffective rental payment or deposit be corrected within 30 days after receipt by Lessee of written notice from such Lessor of such error accompanied by such instruments as are necessary to enable Lessee to make proper payment. The down cash pay- ROMVOStfr ment is consideration for this Lease according to its terms and shall not be allocated as a mere rental for a period. Lessee may at any time or times execute and deliver to Lessor or to the depository above named or place of record a release or releases of this Lease as to all or part of the. - Property, or of any mineral or horizon under all or any portion thereof, and thereby be relieved of all obligations as to the released Property or .. - interest. If this Lease is released as to all minerals and horizons under a portion of the Property covered by this Lease, the rentals and other payments computed in accordance therewith shall thereupon be reduced in the proportion that the number of surface acres within such released por- tion bears to the total number of surface acres which was covered by this Lease immediately prior to such release. 5. If prior to discovery and production of oil or gas on said Property or on acreage pooled therewith, Lessee shall drill a dry hole or holes thereon, or, if after discovery and production of oil or gas, pro- duction thereof should cease from any cause, this Lease shall not terminate if Lessee commences operations for drilling or re-working operations six- ty (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 re-working on or before the rental paying date next ensuing - after the expiration of sixty (60) days from the date of completion of dry . ,$.1411." 0 hole or cessation of production. If at any time subsequent to sixty (60) days prior to the beginning of the last year of the Primary Term and prior to the discovery of oil or gas on said property or on acreage pooled there- with, Lessee should drill a dry hole thereon no rental payment or operationst -,-;--4. . are necessary in order to keep the Lease in force during the remainder of the Primary Term. If at the expiration of the Primary Term oil or gas is not being produced on said Property or on acreage pooled therewith, but Lessee is then engaged in drilling or re-working operations thereon or shall have completed a dry hole thereon within sixty (60) days prior to the end of the Primary Term the Lease shall remain in force so long as opera- tions on said well or drilling or re-working of any additional well are prosecuted with no cessation of more than sixty (60) consecutive days and if they result in production of oil or gas so long thereafter as oil or gas is produced from said Property or acreage pooled therewith. Any pooled unit designated by Lessee in accordance with the terms hereof may be dissolved by Lessee by an instrument filed for record in the appro- priate records of the county or counties in which the leased premises are situated at any time after the completion of a dry hole or the cessa- tion of production on said unit. In the event a well or wells producing oil or gas in paying quantities shall be brought in on adjacent land and within 330 feet of and draining the lease premises or acreage pool- ed therewith Lessee agrees to drill such offset wells as a reasonable and prudent operator would drill under the same or similar circum- stances. 6. 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 Property, ,inclUding the right to draw and remove all cas- ing. When required by Lessor, Lessee shall bury all pipelines below 3- Page 16 of 19 Pages Agenda Item No. ordinary plow depth. d. 7. The rights of either party hereunder may be assigned in whole or in part, and the provisions hereof shall extend to their heirs, successors and assigns; but no change or division in ownership of the land, rentals or royalties, however accomplished, shall operate to enlarge the obliga- e tions or diminish the rights of Lessee; and no change or division in such ownership shall be binding on Lessee until thirty (30) days after Lessee shall have been furnished by registered U. S. mail at Lessee's principal place of business with a certified copy of recorded instrument or instru- ments evidencing same- In the event of assignment hereof in whole or in part, liability for breach of any obligation hereunder shall rest exclu- sively upon the owner of this Lease or of a portion thereof who commits such breach. In event of assignment of this Lease as to a segregated por- tion of said Property, the rentals payable hereunder shall be apportion- able as between the several leasehold owners ratably according to the sur- eae-. face area of each and default in rental payment by one shall not affect the rights of other leasehold owners hereunder. 8. The breach by Lessee of any obligation arising hereunder shall not e:. ..ee work a forfeiture or termination of this Lease nor cause a termination or t!"‘-' reversion of the estate created hereby nor be grounds for cancellation hereof in whole or in part. In the event Lessor considers that operations are not at any time being conducted in compliance with this Lease, Lessor shall notify Lessee in writing of the facts relied upon as constituting a breach hereof, and Lessee, if in default, shall have sixty (60) days after receipt of such notice in which to commence the compliance with the obli- gations imposed by virtue of this instrument. 9. It is agreed that if this Lease covers a less interest in oil or gas in all, or any part, of said Property than the entire and undivided fee simple estate (whether Lessor's interest is herein specified or not) or no interest therein, then the royalties, delay rentals and other monies accru- ing from any part as to which this Lease covers less than such full interest Y .. _ shall be paid only in the proportion to which the interest therein, if any, covered by this Lease bears to the whole and undivided fee simple estate therein. All royalty interest covered by this Lease (whether or not owned V V 15y Lessor) shall be paid out of the royalty herein provided. Failure of Lessee to reduce rental paid hereunder shall not impair the right of Lessee to reduce royalty. 10. Should Lessee be prevented from complying with any express or e-- covenant of this Lease, from conducting drilling or re-working operations ae-- .- thereon or from producing oil or gas therefrom by reason of scarcity of or inability to obtain or to use equipment or material, or by operation of force majeure, any Federal or state law or any order, rule or regulation of governmental authority, then while so prevented, Lessee's obligation to comply with such covenant shall be suspended, and Lessee shall not be liable in damages for failure to comply therewith; and this Lease shall be extend- ed while and so long as Lessee is prevented by any such cause from conduct- ing drilling or re-working operations on or from producing oil or gas from a_ . the leased premises or land pooled with the leased premises; and the time while Lessee is so prevented shall not be counted against Lessee, anything in this Lease to the contrary notwithstanding. 11. Notwithstanding the other provisions of this Lease, it is distinct- ly understood that Lessee shall not conduct any drilling operations or make any installations or lay any pipeline on the leased Property until the lo- cation of the well, installation of other equipment and any pipeline is approved by the City of Wichita Falls and the drilling location, drilling operations, installation and pipeline must meet the specifications design- ed by the City of Wichita Falls to protect the water in the lake located on the leased Property. Provided, however, Lessee does have the right to directionally drill, produce and conduct operations and exercise all other rights herein granted on the subsurface of the leased Property where the surface location of such well is off of the leased Property and such opera- tions shall be conducted in a manner to protect the water in the lake on the leased Property. It is understood that the above provision. shall in VV VV V no way impair the pooling provisions herein. 12. Nothwithstanding the other provisions of this Lease, if, at the end of the Primary Term, this Lease is being maintained by production of oil o gas on the leased Property or on land pooled with the leased Property 4- Page 17 of 19 Pages A cr.nint-1. T 4-en,rn vTr V,;.;*;','•; .:::.,;4afitH.4, ''ll' ',1*k.."'44§Z*W. ''' 4.i,-1,Vie,..,. •' lz-,1.,--r.-0-ts, .: --,-77.:'. or is being maintained as otherwise herein provided, then at such time thereafter as LesseP fails to emu- nce an additional well each six (6) t,..-:2'. :-.:- -..-. months after the end of the Primary Term either on the leased Property or on property pooled wi th the leaned'Property, then at such time all of the leased Property shall revert to 1-c asor, save and except such part of the leased Property as is included within producing pooled units or as to pro- ducing wells on the leased Propert i as to such acreage as the RailroadallocatesforCommissionofTexastheproductionofoilorgasforapro- ration unit on the leased Property which, in no event, shall exceed eighty (SO) acres for an oil we ll and three hundred and twenty (320) acres for a gas well. no warranty of13. There is title, either expressed or implied. IN WITNESS wHENEOF, the parties hereto have caused this Lease to be executed this Jay of 1982. A,',.-• 4-,:-...,..4.-:*.:.--4':.::....::•::-.,-,....,..,..-,. .7,--,,..,:.:-.-...,....:: CITY OF WICHITA FALLS, TEXAS s.,- --'-!'-'-'-`:-.-*-`7P-„,"... .*<".':•1;,-.. -::. .:3..;:,... BY: City Manager ATTEST: City Cler ATTEST: BURNS LEASING CORP. ej old , . • 4.e By: R--W. Davidson, :-ecretary H. R. Knotts, President THE STATE OF TEXAS c -..0r2.,.....-,--:.4,,,-...;•yr. --5,,---•, COUNTY OF WICHITA BEFORE ME, the undersigned, a Notary Public in and for Wichita County, Texas, on this day personally appeared Stuart A. Bach, City Manager of the City of Wichita Falls, Texas, a municipal corporation, 0- 5- - . known to me to be the person and Officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said City of Wichita Falls, Texas, a municipal corporation, and that he executed the same as the at of said City of Wichita Falls, for the pur- ion therein ex Pressed, pos es and considerat and in the capacity therein stated. GIVEN under my hand and seal o f office, this the day of 1982. Notary Public in and for Wichita County, Texas 1 ,2 .Z" y Commission expircs on the ... day of 19_. 5- Page 18 of 19 Pages Agenda Item No. xs zx.r, a ' Exhibit "A" to Oil and Gas Lease from City of Wichita Falls to Burns Leasing Corp. 240.8 acres, more or less, (215.25 net mineral acres) situated in Archer County, Texas, described in two tracts, as follows: First Tract: One-half mineral interest in and to all of the hereinafter described tract or parcel of land out of the T. P. Martin Survey, Abst. No 739, Archer County, Texas, and described r;; .:: r- Tr<` '_'• by metes and bounds as follows: BEGINNING at the N.W. corner of the T. P. Martin Survey, Abst. 739, the same being the N.E. corner of the G. W. Dugan Survey, Abst. 1193 and running thence South with the West line of the said Martin Survey 2009.6 feet to a point; Thence East 1110.8 feet to a point in the East line of the said Martin Survey, the same being the West line of Block 26 of the Harris Subdivision of- the Club Ranch; Thence North with the East line 'of the said Martin Survey 2000 feet to the N.E. corner of the said survey; Thence West 1110.8 feet to the place of beginning. Containing 51.1 acres of land, more or less. Being the same land described in Deed dated September 6, 1945, recorded in Volume 202, Page 320 of the Deed Records of Archer County, Texas wherein H. M. McCarty conveyed such land to the City of Wichita Falls. Second Tract: A tract or parcel of land out of, and being a part of the G. W. Dugan Survey, Abst. No. 1193, Archer County, Texas, more fully described as follows: BEGINNING at a point in the South line of the B. P. Cochran Survey, the same being the N.E. corner of the G. W. Dugan Survey, Abst. 1193, and the N.W. corner of the T. P. Martin Survey, Abet. 793; Thence South with the East line of the said Dugan Survey and the West line of the said Martin Survey, 2009.6 feet to a point; Thence West 1600 feet to a point; Thence S 61 deg. 11' , 1627.4 feet to a point; Thence S 88 deg. 30'W, 345 feet to a point; Thence N 24 deg. 30' E, 800 feet to a point; Thence N 28 deg. 30' E, 1090 feet to a point; Thence N 6 deg. 40' E, 935 feet to a point; Thence S 64 deg. 40' W, 915 feet to a point; Thence N 89 deg. 30' W, 335 feet to a point; Thence S 49 deg. 05' W, 1020 feet to a point; Thence N 75 deg. 29' W, 962,4 feet to a point in the West line of the said G. W. Dugan Survey and the East line of the S.P.R.R. Survey No 1, Abst. 440; Thence N 0 deg. 57' E with the West line of the said Dugan Survey and the East line of the S.P.R.R, Survey No 1, Abst. 440, 1050 feet to the N.W. corner of the said G. W. Dugan Survey; Thence S 89 deg. 30' E with the North line of the said G. W. Dugan Survey, Abet, 1193, 5251 feet to the place of beginning and containing 189.7 acres of land. Being the same land described in Deed dated March 25, 1945, recorded in Volume 199, Page 216 of the Deed Records of Archer County, Texas wherein Martha Julia Dugan, et al, conveyed such land to the City of Wichita Falls. Page 1. 9 of 19 Pages Agenda Item No.