Res 223-82 12/7/1982RESOLUTION NO. 223-82
RESOLUTION AUTHORIZING THE PUBLICATION OF NOTICE
OF INTENTION TO LEASE FOR OIL AND GAS CERTAIN
LAND LOCATED AT LAKE ARROWHEAD IN CLAY COUNTY,
TEXAS.
WHEREAS, the City of Wichita Falls has received a request that
certain land owned by the City at Lake Arrowhead in Clay County,
Texas, be leased for oil and gas exploration and production.
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF ALDERMEN OF THE
CITY OF WICHITA FALLS, TEXAS, THAT:
SECTION 1. It is advisable, under proper circumstances , to
lease for the development of oil and gas all of the following tract
of land located at Lake Arrowhead, Clay County, Texas , to-wit:
66 . 89 acres of land, more or less , in Lot 7
in Block No. 2 of the Clark & Plumb Subdivi-
sion, such land being described by metes and
bounds in the deed from E. J. Poirot and wife,
Emma M. Poirot to the City of Wichita Falls,
dated September 15 , 1965 and recorded in
Volume 240 , Page 296 of the Deed Records of
Clay County, Texas .
SECTION 2 . Any such oil and gas lease shall provide for at
least 3/16 royalty, and shall have a primary term of no more than
five years .
SECTION 3 . Any such oil and gas lease shall be executed on
the City' s standard form, a copy of which is attached hereto.
SECTION 4 . This land lies below the 50 year flood elevation
at Lake Arrowhead. Under any such oil and gas lease, no actual
drilling may occur on the property covered by such lease unless the
location of each well is approved in advance by the City, and the
methods used in drilling and producing each well meet all the speci-
fications to be required by the City for protecting the water in the
lake; provided, however, such provision would not prohibit the
drilling of a well on other lands with which a portion of the leased
property was pooled nor the drilling of a directional well under such
property from a location outside the lake.
SECTION 5 . City shall give notice of intention to lease such
land by publication once a week for three consecutive weeks in a
newspaper published in Clay County, which notice shall describe the
land and designate the time and place at which the Board of Aldermen
will receive and consider bids for such lease.
SECTION 6 . City will not warrant the title to the minerals
in such lands . The City apparently owns all of the minerals , subject
to an outstanding non-participating royalty of one-half of one-eighth.
SECTION 7 . The Board of Aldermen reserves the right to reject
any and all bids , and to give notice and call for additional bids ,
if same is determined to be in the best interest of the City.
PASSED AND APPROVED this the 7th day of December, 1982 .
7/9///`'
Y O R
ATTEST:
i
City lerk
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OIL AND GAS LEASE
STATE OF TEXAS X
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")
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WHEREAS, Lessor has determined that it is advisable and in the best in-
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;
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
Texas Natural Resources Code (the "Code") and has received and considered
bids at a public hearing, in accordance with Section 71.006 of the Code;
WHEREAS,
Lessee") was the highest and best bidder who submitted a bid for the lease
of the Property;
rwX`y;:_ :;,;.• 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;
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NOW, THEREFORE, for and in consideration of
and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, Lessor has granted, de-
mised, leased and let, and by these presents does grant, demise, lease
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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,
treat, transport and own said oil and gas.
1. Subject to the other provisions herein contained, this lease
shall remain in force for a term of 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 of that pro-
duced and saved from said Property, the same to be delivered at the wells
4' :1;!.1 .= ° ~IA; or to the credit of Lessor into the pipeline to which the wells may be
connected; 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
y.s gas produced from said land (1) when sold by Lessee of the amount
realized by Lessee computed at the mouth of the well or (2) when used by
Lessee off said land or in the manufacture of gasoline or other products,
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of the amount realized from the sale of gasoline or other products
r:;:_-;._:.-,•,..:';:.-:== extracted therefrom and of the amount realized from the sale of res-
idue gas 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
but gas is not being sold or used, Lessee may pay as royalty, on or before
ninety (90) 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 which 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 payment is made or tendered, this lease shall not terminate and
it will be considered that gas is being produced from this lease in pay-
ing quantities. 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 computed after deducting any so used
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3. Lessee, at its option, is hereby given the right and power to
pool or combine the Property or any 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, provided 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-
j'•:`` -- ever is the lesser amount of acreage. Unitsg 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,
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
or orders of the Railroad Commission of Texas as applied to the Property.
R k $ Lessee under the provisions hereof may pool or combine the Property or
s>: * i° `:- ^ : any portion thereof as above provided as to oil in any one or more strata
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a•;•:_: :,_ =--;a -.: and as to gas in any one or more strata. The units formed by pooling as
L-„__•;_,,,.. to any stratum or strata need not conform in size or area with the unit or
r,;_f,:_e, _` ,-.,„-;„ units into which the Property is pooled or combined as to any other stratum
ice 1--=;. or strata and oil units need not conform as to area with gas units. The
F= = ri.: y; pooling in one or more instances shall not exhaust the rights of the Lessee
hereunder tor;,:; pool the Property or portions thereof into any other units.
ate j Lessee shall file for record in the appropriate records of the county ormss'' •^`
r: ;
1:17,f,-:. ,
Q =;=-;_-.`.:._.: =: counties in which the Property is located, an instrument describing and
7",1;1a_ - `= _?c °,:-`` designating the pooled acreage pooled p5gPgeasaooledunit; and upon such recordation
V _ ..f the unit shall be effective as to all parties hereto, their successors and
i' ` :assigns; irrespective of whether or not the unit is likewise effective asrte_:,- a
y_ =: .pA ,.s ,. <;,. x,. __,Y
to all other owners of surface, mineral, royalty or other rights in land
r•s. µ#4' 1 included in such unit. Operations for drilling on or production of oil
1
1J&•4.-,,:,,,,,-•4_ or gas from any part of the pooled unit which includes all or any portion
sue=z;:.;. ; :- 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-
ing such unit or units, 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-
o., jy* ;: - l z ,;:^ t• W ers of royalties and, payments out of production shall be entitled on
4 ` "_ .-nr-x:_
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t_,_; production of oil and gas, or either of them, from the pooled unit, there
s- * .::. :- -..-: .. -.: shall be allocated to the Property and included in said unit a pro rata
1'--7., portion of the oil and gas, or either of them, produced from the pooled
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 gyy „,; j=_w:, yi _ p p portion of the oil and gas, or either of them,
r produced from the pooled unit which is the number of surface acres cover-
1 ed by this Lease and included in the pooled unit bears to the total number7"-`'-"'', .- :`” "u -•
of surface acres included in the pooled unit) . Royalties hereunder shall4f-
be computed on the portion of such production, whether it be oil and gas,
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
i 'rf '•'= 7":- from an oil well will be considered production from the lease or oil pool-r: •- r>
gas pooled5Y'= unit;
andrproductiontfrompaogas1wellnwilltbesconsiderednasrpm
a is
production gas production
from the lease or gas pooled unit from which it is producing and not from
an oil pooled unit. .
4. 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
W*:-; ._VV,i::=-"„, w''',; 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
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-Y:.•-'::=x 'v:A:'-..:.:..a: :;, under regardless of changes in ownership of said Property or the rentals)
the sum of ONE DOLLAR ($1.00) per acre for the number of acres then sub-
ject to this Lease (hereinafter called "Rental") , which shall cover the
privilege of deferring commencement of drilling operations for period of
r° 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
w,,. -:: w, 2-
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sold or used may be made by check or draft of Lessee mailed or delivered
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-
ance 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 prop4rly 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-
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
s'_ Y °:_W = =•=V _`-s 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
17:,1,4-- ,?.,• -s-`<'<- •-• - 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
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 operations
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-
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ordinary plow depth.
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-
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-
face area of each, and default in rental payment by one shall not affect
77the rights of other leasehold owners hereunder.
e 8. The breach by Lessee of any obligation arising hereunder shall not
work a forfeiture or termination of this Lease nor cause a termination or
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
7- receipt of such notice in which to commence the compliance with the obli-
gations imposed by virtue of this instrument.44nMASA-APV.4 1:TrOT!
9. It is agreed that if this Lease covers a less interest in oil or
7
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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
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
by Lessor) shall be paid out of the royalty herein provided. Failure o
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 implied
covenant of this Lease, from conducting drilling or re-working operations
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
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-
tood that Lessee shall not conduct any drilling operations or make
any installations or lay any pipeline on the leased Property until the lo-W.ti 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
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 or gas on the leased Property or on land pooled with the leased Property
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maintained as otherwise
well each six (6)an additional
or is being mai
ls to commence a .
Property orhontheleased
thereafter as Lessee fails
either
of the
the end of the Primaryary Term
all 0
herwise herein provided, then at such time
months after
f the
c
on property pooled
revert to Lessor, save and except
as to pro-
shallleasedProperty
is included pooled units orucing
led with the leased Property, then at sl.iclsiulli.m:
leased Property ah to such acreage
for a pro-
ration--,.- . .
leased Property as
o of oil or gas
d
part o
for the production
is included within producing
h in no eve I
pro-
ducing wells on tse
d Property, which,
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Railroad
leased
hundred and twenty (3
unit on the
Commission of Texaslallocates
gas well.acres for a ga
eighty (80) acres for an oil well and three
13. There is no warranty of tit I either expressed or implied
e to behavecausedthisLease'''''''-''.-::::',=---:". ,-..!, ;.=:. .. --;-: -
S..:. •. .:‘,..,„.,,,,,, , ,._
the par ties hereto halt
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rexecutedthis
IN WITNESS WHERE(OlFa of
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CITY OF WICHITA FALLS, TEXAS
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7- BY
City Manager
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City Clerk
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