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Res 2353 6/19/1979RESOLUTION NO. 2353 RESOLUTION ACCEPTING BID AND APPROVING OIL AND GAS LEASES TO EXPANDO OIL COMPANY. WHEREAS, heretofore the Board of Aldermen of the City of Wichita Falls determined that it is advisable to lease for oil and gas the lands described on the attached leases, and published notice of its intention to lease such lands in accord- ance with Sections 71. 004 and 71. 005 of the Texas Natural Resources Code; and, WHEREAS, at its meeting on April 17 , 1979, the date specified in such notice, the Board of Aldermen received, open- ed and considered the bids submitted, at a public hearing, in accordance with Section 71. 006 of such Code; and, WHEREAS, the Board of Aldermen believes that the bid of Expando Oil Company represents the fair value of the leases on such properties , and it is the only bid on such properties. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF ALDERMEN OF THE CITY OF WICHITA FALLS, TEXAS, THAT: Such bid of Expando Oil Company is hereby accepted, those two certain oil and gas leases, copies of which are attached hereto, between the City and Expando Oil Company are 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 June, 1979. M A Y O R ATTEST: City Clerk r 5/79 OIL AND GAS LEASE STATE OF TEXAS X COUNTIES OF ARCHER X KNOW ALL MEN BY THESE PRESENTS THAT: AND WICHITA 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- 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, Expando Oil Company, a partnership Lessee") was the highest and best bidder who submitted a bid for the lease 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 Seven and 50/100 Dollars ($7. 50)per net mineral acre and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lessor has granted, de- mised, leased and let, and by these presents does grant, demise, lease and let, unto Lessee all of the Property described in the attached Exhibit A" for the purpose of investigating, exploring, prospecting and drilling for and producing the oil and gas thereunder and to save , take care of, treat, transport and own said oil and gas. 1. Subject to the other provisions herein contained, this lease shall remain in force for a term of 1/$ 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 leg of 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 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 gas produced from said land (1) when sold by Lessee 1/$ 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, 1/8 of the amount realized from the sale of gasoline or other products extracted therefrom and 1/8 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. T 5/79 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- 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, 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.Lessee under the provisions hereof may poolyp1 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 to any stratum or strata need not conform in size or area with the unit or 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. Lessee shall file for record in the appropriate records of the county or counties in which the Property is located, an instrument describing anddesignatingthepooledacreageasapooledunit; and upon such recordation the unit shall be effective as to all parties hereto, their successorsand assigns; irrespective of whether or not the unit is likewise effective as to all other owners of surface, mineral, royalty or other rights in landincludedinsuchunit. Operations for drilling on or production of oil or gas from any part of the pooled unit which includes all or any portionoftheProperty, 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 includedinthisLease. 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 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, 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 shallbecomputedontheportionofsuchproduction, whether it be oil and gas, or either of them, so allocated to the Property and included in the unitjustasthoughsuchproductionwerefromtheProperty. 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. 4 . If operations for drilling are not commenced on said Property oracreagepooledtherewithasaboveprovidedonorbeforeone (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 ortothecreditofLessorinParkerSquareState 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)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 oftwelve (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 primaryterm. 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- 5/79 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 orbesucceededbyanotherbank, 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 stiall 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, priortosuchattemptedpaymentordeposit, has given Lessee notice, in accord-ance with subsequent provisions of this Lease, of the right to receiverental, and if such payment or deposit shall be ineffective or erroneousinanyregard, Lessee shall be unconditionally obligated to pay to suchLessortherentalpropgrfypayablefortherentalperiodinvolved, and this Lease shall not terminate but shall be maintained in the same mannerasifsucherroneousorineffectiverentalpaymentordeposithasbeenpro-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 asarenecessarytoenableLesseetomakeproperpayment. The down cash pay-ment is consideration for this Lease according to its terms and shall notbeallocatedasamererentalforaperiod. Lessee may at any time ortimesexecuteanddelivertoLessorortothedepositoryabovenamedor place of record a release or releases of this Lease as to all or part of theProperty, or of any mineral or horizon under all or any portion thereof, and thereby be relieved of all obligations as to the released Property orinterest. If this Lease is released as to all minerals and horizons underaportionofthePropertycoveredbythisLease, the rentals and other payments computed in accordance therewith shall thereupon be reduced intheproportionthatthenumberofsurfaceacreswithinsuchreleasedpor- tion bears to the total number of surface acres which was covered by thisLeaseimmediatelypriortosuchrelease. 5. If prior to discovery and production of oil or gas on saidPropertyoronacreagepooledtherewith, Lessee shall drill a dry hole orholesthereon, or, if after discovery and production of oil or gas, pro-duction thereof should cease from any cause, this Lease shall not terminateifLesseecommencesoperationsfordrillingorre-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 ensuingaftertheexpirationofsixty (60) days from the date of completion of dryholeorcessationofproduction. 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 operationsarenecessaryinordertokeeptheLeaseinforceduringtheremainderofthePrimaryTerm. If at the expiration of the Primary Term oil or gas isnotbeingproducedonsaidPropertyoronacreagepooledtherewith, butLesseeisthenengagedindrillingorre-working operations thereon orshallhavecompletedadryholethereonwithinsixty (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 areprosecutedwithnocessationofmorethansixty (60) consecutive days andiftheyresultinproductionofoilorgassolongthereafterasoilorgasisproducedfromsaidPropertyoracreagepooledtherewith. Any pooled unit designated by Lessee in accordance with the terms hereof maybedissolvedbyLesseebyaninstrumentfiledforrecordintheappro- 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 producingoilorgasinpayingquantitiesshallbebroughtinonadjacentland 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 byLesseeonsaidProperty, drnclmding the right to draw and remove all cas-ing. When required by Lessor, Lessee shall bury all pipelines below 3- 5/79 ordinary plow depth. 7. The rights of either party hereunder may be assigned in whole orinpart, and the provisions hereof shall extend to their heirs, successorsandassigns; but no change or division in ownership of the land, rentalsorroyalties, 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 LesseeshallhavebeenfurnishedbyregisteredU. 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 inpart, liability for breach of any obligation hereunder shall rest exclu- sively upon the owner of this Lease or of a portion thereof who commitssuchbreach. 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 affecttherightsofotherleaseholdownershereunder. 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 cancellationhereofinwholeorinpart. In the event Lessor considers that operationsarenotatanytimebeingconductedincompliancewiththisLease, Lessor shall notify Lessee in writing of the facts relied upon as constituting abreachhereof, 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 orgasinall, or any part, of said Property than the entire and undivided fee simple estate (whether Lessor' s interest is herein specified or not) or nointeresttherein, then the royalties, delay rentals and other monies accru- ing from any part as to which this Lease covers less than such full interestshallbepaidonlyintheproportiontowhichtheinteresttherein, if any,covered by this Lease bears to the whole and undivided fee simple estatetherein. All royalty interest covered by this Lease (whether or not ownedbyLessor) shall be paid out of the royalty herein provided. Failure of Lessee to reduce rental paid hereunder shall not impair the right of Lesseetoreduceroyalty. 10. Should Lessee be prevented from complying with any express or impliedcovenantofthisLease, from conducting drilling or re-working operations thereon or from producing oil or gas therefrom by reason of scarcity of orinabilitytoobtainortouseequipmentormaterial, or by operation offorcemajeure, any Federal or state law or any order, rule or regulation ofgovernmentalauthority, then while so prevented, Lessee ' s obligation to comply with such covenant shall be suspended, and Lessee shall not be liableindamagesforfailuretocomplytherewith; and this Lease shall be extend- ed while and so long as Lessee isg prevented by any such cause from conduct-ing drilling or re-working operations on or from producing oil or gas fromtheleasedpremisesorlandpooledwiththeleasedpremises; and the timewhileLesseeissopreventedshallnotbecountedagainstLessee, anythinginthisLeasetothecontrarynotwithstanding. 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 isapprovedbytheCityofWichitaFallsandthedrillinglocation, drillingoperations, installation and pipeline must meet the specifications design-ed by the City of Wichita Falls to protect the water in the lake locatedontheleasedProperty. Provided, however, Lessee does have the right todirectionallydrill, produce and conduct operations and exercise all other rights herein granted on the subsurface of the leased Property where thesurfacelocationofsuchwellisoffoftheleasedPropertyandsuchopera- tions shall be conducted in a manner to protect the water in the lake ontheleasedProperty. It is understood that the above provision, shall innowayimpairthepoolingprovisionsherein. 12. Nothwithstanding the other provisions of this Lease, if, at theendofthePrimaryTerm, this Lease is being maintained by production of oil or gas on the leased Property or on land pooled with the leased Property 4- 5/79 or is being maintained as otherwise herein provided, then at such time thereafter as Lessee fails to commence an additional well each six (6) months after the end of the Primary Term either on the leased Property or on property pooled with the leased Property, then at such time all of the leased Property shall revert to Lessor, 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 Property as to such acreage as the Railroad Commission of Texas allocates for the production of oil or gas for a pro- ration unit on the leased Property, which, in no event, shall exceed eighty (80) acres for an oil well and three hundred and twenty (320) acres for a gas well. 13. There is no warranty of title, either expressed or implied. IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed this 1st day of June CITY OF WICHITA FALLS, TEXAS BY: City Manager ATTEST: City Clerk Expando Oil Company By: By: By: Partners 5- ridtbellsryt,ivilmf' q' '. > In A r ? b s i EXHIBIT "A" ATTACHED TO AND MADE A PART OF AN OIL AND GAS LEASE FROM THE CITY OF WICHITA FALLS, TEXAS, AS LESSOR, TO EXPANDO OIL COMPANY, A PARTNERSHIP, AS LESSEE. 408. 5 acres, more or less , in Archer and Wichita Counties, Texas and covering all of the oil and gas rights owned by the City of Wichita Falls , Texas West of the Easterly line of Tract 1 described below and South of the North line of J. A. Scott Survey No. 4 and the South line of Blocks 22, 23 and 24 of Denton County School Land, League No. 1 , Wichita County, Texas , located in or adjacent' to Lake Wichita and including , but not limited to, the following described tracts, to-wit: Tract 1 : (a) 200 acres of land, being part of J . A. Scott Survey Nos . 4 and 5, situated partly in Wichita and partly in Archer Counties , Texas. BEGINNING at the Northeast corner of a 100 acre tract conveyed by Otis T. Bacon to W. H. Bachman, Jr. ; THENCE South 1344 vrs . to a stake for corner; THENCE West 921 .9 vrs . to a stake for corner ; THENCE North 1044 vrs . to a stake for corner; THENCE East 365.6 vrs . to a stake for corner ; THENCE North 300 vrs . to a stake for corner ; THENCE East 556 vrs. to the place of beginning, and containing 200 acres of land. b) 95.5 acres of land, being a part of said John A. Scott Survey No. 4 described by metes and bounds as follows : BEGINNING at the Northwest corner of the 200 acre tract above described ; THENCE South 1044 vrs ; THENCE West 515 vrs ; THENCE North 1044 vrs ; THENCE East 515 vrs. to the place of beginning, and containing 95.5 acres of land. The two above described tracts of land being the same land conveyed by H. J. Bachman and wife to C. W. Bean by Deed dated September 3, 1900, which Deed is recorded in Book 40, Page 403, Deed Records of Wichita County, Texas, SAVE AND EXCEPT 133 acres of land heretofore sold out of said above tract of land by Henry Sayles and C. W. Bean to G. R. Decker, by Deed dated November 10, 1900 and recorded in Book 31 , Page 382, Deed Records of Archer County, Texas. Tract 2: A tract of land situated in Archer County, Texas, being a part of the John A. Scott Surveys Nos. 4 and 5, described as follows : BEGINNING at the Southwest corner of a tract of 100 acres conveyed to Otis T. Bacon to W. H. Bachman, Sr. , THENCE North 148-1/38 vrs . to a stone for corner; THENCE West 380 vrs. to a stone for corner; THENCE South 148-1/38 vrs . to a stone for corner ; THENCE East 380 vrs . to the place of beginning, containing 10 acres of land, and being the same land conveyed by L. J . Brown , et al , to C. W. Bean by Deed dated October 9, 1900, and recorded in Book 31 , Page 123, Deed Records of Archer County, Texas . Tract 3: 123 acres of land out of John A. Scott Survey No. 4; BEGINNING at the Northeast corner of the G. R. Decker Home tract of land and beginning at the Northwest corner of the Aton-Bachman tract out of same Survey on the South line of Denton County School Land, League No. 2; THENCE West with with said South line of Denton County School Land 2350 feet to the Northeast corner of Albert Ludolphus tract out of said Survey No. 4; THENCE South with the East line of said Ludolphus tract 2220 feet to the water line of the proposed Reservoir on Holliday Creek, when even full with water; THENCE with said water line approximately Southeasterly 1000 feet and Northeasterly 1800 feet to the West line of said Aton-Bachman tract; THENCE North with said Aton- Bachman tract 's West line 1670 feet to place of beginning, containing 123 acres of land, and being the same land conveyed by G. R. Decker and wife to Henry Sayles , Trustee by Deed dated November 10, 1900, which Deed is recorded in Book 31 , Page 349, Deed Records of Archer County, Texas. f• i Tract 4: A tract of land in Archer County, Texas, part of John A. Scott Survey No. 4; BEGINNING at the Southwest corner of G. W. Decker 's tract of land out of said Survey; THENCE North with said Decker 's West line 1350 feet to the water line of the Reservoir to be constructed on Holliday Creek, when said Reservoir is even full ; THENCE Westerly and Southwesterly with said water line of said Reservoir to the East line of the Koeing tract out of same Survey; THENCE South 300 feet to the Southeast corner of said Koeing tract ; THENCE East with the South line of said John A. Scott Survey No. 4, 1900 feet to place of j beginning, containing 48 acres of land, and being the same land conveyed by Albert Ludolphus and wife to Henry Sayles, Trustee, by Deed dated November 2, 1900, which Deed is Recorded in Book 31 , Page 193, Deed Records of Archer County, Texas. Tract 5: A tract of land situated in Archer and Wichita Counties, Texas, being part of John A. Scott Survey No. 4; BEGINNING at the West line of the G. R. Decker Tract of land out of said Survey, at a point approximately 1350 feet North of the Southwest corner of said Decker ' s tract; THENCE Westerly and Southwesterly with the water line of said Reservoir when even full of water, to the East line of Koenig 's tract of land out of the same survey, at a point approximately 300 feet North of the Southeast corner of said Koeing 's tract to the water line of said reservoir when even full ; THENCE Northerly with East line of Koenig 's tract to water line of Reservoir when even full ; THENCE Easterly with said water line to the West line of said Decker tract; THENCE South with the West line of said Decker ' s tract, 1600 feet to the place of beginning, containing 65 acres of land, and being the same land conveyed by Albert Ludolphus and wife to Henry Sayles, Trustee by Deed dated November 2, 1900, which Deed is recorded in Book 31 , on Pages 182 and 183, Deed Records of Archer County, Texas . The tracts of land described above, and covered by the attached Oil and Gas Lease, are further indicated on the attached Plat colored in yellow and it being the in- tention to cover all of the oil and gas rights of the City of Wichita Falls , Texas within the area indicated on such Plats , and as described above, under the terms and provisions of the attached Oil and Gas Lease. f U i F-- ji-- i._ 0 cn x o z r cf. 1J o In o 2 1 N c I i I I- - N I--- 1 o 1 1_____ ___ I--- N I p I 5/79 OIL AND GAS LEASE STATE OF TEXAS X COUNTIES OF ARCHER X KNOW ALL MEN BY THESE PRESENTS THAT: AND WICHITA 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- 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, Expando Oil Company, a partnership Lessee") was the highest and best bidder who submitted a bid for the lease 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 Seven and 50/100 Dollars ($7 . 50)per net mineral acre and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lessor has granted, de- mised, leased and let, and by these presents does grant, demise, lease and let, unto Lessee all of the Property described in the attached Exhibit A" for the purpose of investigating, exploring, prospecting and drilling for and producing the oil and gas thereunder and to save , take care of, treat, transport and own said oil and gas. 1. Subject to the other provisions herein contained, this lease shall remain in force for a term of 1/ft years from the date hereof called the "Primary Term" ) and as long thereafter as oil and gas, or either of them, is produced from said Property or land with which said property is pooled herewith. 2. The royalties to be paid by Lessee are (a) on oil 1/8 of that pro- duced and saved from said Property, the same to be delivered at the wells or to the credit of Lessor into the pipeline to which the wells may be connected; Lessee may from time to time purchase any royalty oil in its possession, paying the market price therefor prevailing for the field where produced on the date of purchase; (b) to pay Lessor on gas and casinghead gas produced from said land (1) when sold by Lessee 1J$ 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, 1/8 of the amount realized from the sale of gasoline or other products extracted therefrom and 1/8 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 deductingeducting any so used. 5/79 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- 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, 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. 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 to any stratum or strata need not conform in size or area with the unit or units into which the Property is pooled or combined as to any other stratumorstrataandoilunitsneednotconformastoareawithgasunits. 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. Lessee shall file for record in the appropriate records of the county orcountiesinwhichthePropertyislocated, an instrument describing anddesignatingthepooledacreageasapooledunit; and upon such recordation the unit shall be effective as to all parties hereto, their successorsand assigns; irrespective of whether or not the unit is likewise effective as to all other owners of surface, mineral, royalty or other rights in landincludedinsuchunit. Operations for drilling on or production of oil or gas from any part of the pooled unit which includes all or any portionoftheProperty, 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 includedinthisLease. 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 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, 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 shallbecomputedontheportionofsuchproduction, whether it be oil and gas, or either of them, so allocated to the Property and included in the unitjustasthoughsuchproductionwerefromtheProperty. 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 fromanoilpooledunit. 4 . If operations for drilling are not commenced on said Property oracreagepooledtherewithasaboveprovidedonorbeforeone (1) year fromthisdate, the Lease shall then terminate as to both parties , unless onorbeforesuchanniversarydateLesseeshallpayortender (or shall makeabonafideattempttopayortender, as hereinafter stated) to Lessor ortothecreditofLessorinParkerSquareState 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)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 oftwelve (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 primaryterm. 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- 5/79 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 orbesucceededbyanotherbank, 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, priortosuchattemptedpaymentordeposit, has given Lessee notice, in accord-ance with subsequent provisions of this Lease, of the right to receiverental, and if such payment or deposit shall be ineffective or erroneousinanyregard, Lessee shall be unconditionally obligated to pay to suchLessortherentalpropqriypayablefortherentalperiodinvolved, 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 asarenecessarytoenableLesseetomakeproperpayment. The down cash pay-ment is consideration for this Lease according to its terms and shall notbeallocatedasamererentalforaperiod. Lessee may at any time ortimesexecuteanddelivertoLessorortothedepositoryabovenamedor place of record a release or releases of this Lease as to all or part of theProperty, or of any mineral or horizon under all or any portion thereof, and thereby be relieved of all obligations as to the released Property orinterest. If this Lease is released as to all minerals and horizons underaportionofthePropertycoveredbythisLease, 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 thisLeaseimmediatelypriortosuchrelease. 5. If prior to discovery and production of oil or gas on saidPropertyoronacreagepooledtherewith, Lessee shall drill a dry hole orholesthereon, or, if after discovery and production of oil or gas, pro-duction thereof should cease from any cause, this Lease shall not terminateifLesseecommencesoperationsfordrillingorre-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 ensuingaftertheexpirationofsixty (60) days from the date of completion of dryholeorcessationofproduction. 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 ofthePrimaryTerm. If at the expiration of the Primary Term oil or gas isnotbeingproducedonsaidPropertyoronacreagepooledtherewith, 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 andiftheyresultinproductionofoilorgassolongthereafterasoilorgasisproducedfromsaidPropertyoracreagepooledtherewith. Any pooled unit designated by Lessee in accordance with the terms hereof maybedissolvedbyLesseebyaninstrumentfiledforrecordintheappro- 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 producingoilorgasinpayingquantitiesshallbebroughtinonadjacentland 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 byLesseeonsaidProperty, including the right to draw and remove all cas-ing. When required by Lessor, Lessee shall bury all pipelines below 3- 5/79 ordinary plow depth. 7. The rights of either party hereunder may be assigned in whole orinpart, and the provisions hereof shall extend to their heirs, successors and assigns; but no change or division in ownership of the land, rentalsorroyalties, 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 inpart, liability for breach of any obligation hereunder shall rest exclu- sively upon the owner of this Lease or of a portion thereof who commitssuchbreach. 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 affecttherightsofotherleaseholdownershereunder. 8. The breach by Lessee of any obligation arising hereunder shall notworkaforfeitureorterminationofthisLeasenorcauseaterminationor reversion of the estate created hereby nor be grounds for cancellationhereofinwholeorinpart. In the event Lessor considers that operationsarenotatanytimebeingconductedincompliancewiththisLease, Lessor shall notify Lessee in writing of the facts relied upon as constituting abreachhereof, 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 orgasinall, or any part, of said Property than the entire and undivided fee simple estate (whether Lessor' s interest is herein specified or not) or nointeresttherein, then the royalties, delay rentals and other monies accru-ing from any part as to which this Lease covers less than such full interestshallbepaidonlyintheproportiontowhichtheinteresttherein, if any,covered by this Lease bears to the whole and undivided fee simple estatetherein. All royalty interest covered by this Lease (whether or not ownedbyLessor) shall be paid out of the royalty herein provided. Failure of Lessee to reduce rental paid hereunder shall not impair the right of Lesseetoreduceroyalty. 10. Should Lessee be prevented from complying with any express or impliedcovenantofthisLease, from conducting drilling or re-working operations thereon or from producing oil or gas therefrom by reason of scarcity of orinabilitytoobtainortouseequipmentormaterial, or by operation offorcemajeure, any Federal or state law or any order, rule or regulation ofgovernmentalauthority, then while so prevented, Lessee ' s obligation tocomplywithsuchcovenantshallbesuspended, and Lessee shall not be liableindamagesforfailuretocomplytherewith; 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 fromtheleasedpremisesorlandpooledwiththeleasedpremises; and the timewhileLesseeissopreventedshallnotbecountedagainstLessee, anythinginthisLeasetothecontrarynotwithstanding. 11. Notwithstanding the other provisions of this Lease, it is distinct-ly understood that Lessee shall not conduct any drilling operations or makeanyinstallationsorlayanypipelineontheleasedPropertyuntilthelo-cation of the well, installation of other equipment and any pipeline isapprovedbytheCityofWichitaFallsandthedrillinglocation, drillingoperations , installation and pipeline must meet the specifications design-ed by the City of Wichita Falls to protect the water in the lake locatedontheleasedProperty. Provided, however, Lessee does have the right todirectionallydrill, 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 ontheleasedProperty. It is understood that the above provision, shall innowayimpairthepoolingprovisionsherein. 12. Nothwithstanding the other provisions of this Lease, if, at theendofthePrimaryTerm, this Lease is being maintained by production of oil or gas on the leased Property or on land pooled with the leased Property 4- 5/79 or is being maintained as otherwise herein provided, then at such time thereafter as Lessee fails to commence an additional well each six (6) months after the end of the Primary Term either on the leased Property or on property pooled with the leased Property, then at such time all of the leased Property shall revert to Lessor, 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 Property as to such acreage as the Railroad Commission of Texas allocates for the production of oil or gas for a pro- ration unit on the leased Property, which, in no event, shall exceed eighty (80) acres for an oil well and three hundred and twenty (320) acres for a gas well. 13. There is no warranty of title, either expressed or implied. IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed this 1st day of June CITY OF WICHITA FALLS, TEXAS BY: City Manager ATTEST: City Clerk Expando Oil Company By: By: By: Partners 5- J . EXHIBIT "A" ATTACHED TO AND MADE A PART OF AN OIL AND GAS LEASE FROM THE CITY OF WICHITA FALLS , TEXAS , AS LESSOR, TO EXPAND() OIL COMPANY, A PARTNERSHIP, AS LESSEE. 900.95 acres , more or less , in Archer and Wichita Counties , Texas, and covering all of the oil and gas rights owned by the City of Wichita Falls, Texas out of the John A. Scott Survey No. 6, Abstract 30, Certificate 41 ; all of Block 35, League No. 1 , Denton County School Land; all of Block 36, League No. 1 , Denton County School Land; and that portion of John A. Scott Survey No. 5 lying east of a projection of the west line of Block No. 35, League No. 1 , Denton County School , Land in a southerly direction and including the following described tracts . Tract 1 : 432.50 acres of land out of the John A. Scott Survey No. 6, Abstract No. 301 , Certificate No. 41 described as follows: BEGINNING at the Northeast corner of John A. Scott Survey No. 5 ; THENCE North 556 varas to a corner; THENCE East 1285 vrs; THENCE South 1900 vrs; THENCE West 1285 vrs . to the Southwest corner of John A. Scott Survey No. 6; THENCE North 1344 vrs . to the place of beginning, located partly in Wichita and partly in Archer Counties , Texas , and being the same land conveyed by R. 0. C. Lynch to C. W. Bean by Deed dated October 19th, 1900, which Deed is recorded in Book No. 40, Page 448, Deed Records of Wichita County, Texas. Tract 2: 208 acres of land off the East side of John A. Scott Survey No. 6, located by virtue of Certificate issued to Thomas Toby, and patented to John A. Scott, Assignee, Patent No. 647 1/2, Volume 2, as shown by the Abstracts of Texas Land Titles , and for a more particular description of said tract, reference is hereby made to said Patent, this being the same land conveyed to Henry Sayles by Caroline S. Gibbs , et al , by Deed dated November 19, 1900, and recorded in Book 40, Page 621 , Deed Records of Wichita County, Texas ; also by Deed from Ellen Nelon, et al , to Henry Sayles dated November 19, 1900 and recorded in Book 40, Page No. 620, Deed Records of Wichita County, Texas . The above 2 tracts out of the Scott Survey No. 6, SAVE AND EXCEPT 60 acres out of 432.5 acre tract out of the Scott Survey No. 6 and SAVE AND EXCEPT 43.2 acres out of the 208 acre tract out of the Scott Survey No. 6, which lands were conveyed to T. R. T. Orth by C. W. Bean and Henry Sayles , Trustees , by Deed dated June 18, 1908 which Deed is recorded in Book 50, Page 583, Deed Records of Wichita County, Texas. Tract 3: A certain tract or parcel of land in Wichita County, Texas , being a part of Block No. 36, League No. 1 , Denton County School Land described as follows: BEGINNING at the ,Southwest corner of Simpson tract; THENCE East with the South line of said tract , which is also the North line of John A. Scott Survey No. 6, 1650 feet to a point Northeast of and 125 feet distant from the center line of the Kempner Dam, as now located; THENCE North 58 degrees West; parallel with and 125 feet distant from said center line, 1950 feet to the West line of the said Simpson tract; THENCE South with said West line 1000 feet to the place of beginning, containing 19 acres of land, being the same land conveyed by R. F. Simpson to C. W. Bean by Deed dated October 27, 1900, which Deed is recorded in Book No. 40, Page No. 602, Deed Records of Wichita County, Texas. Tract 4: All that certain tract or parcel of land situated in Wichita County, Texas , known as Block No. 35, League No. 1 , Denton County School Land, more particularly described as follows : BEGINNING at a Rock marked NWC, J. A. Scott Survey No . 6, it being the Northwest corner of said Scott Survey No. 6; THENCE East 18-1/2 vrs . a Rock the Southwest corner of Block No. 36, Rock marked L1SWC Block 36; THENCE North 749 vrs . a Rock marked L 1 SWC Block 25; THENCE West 915-1/2 vrs. a Rock marked L 1SWC Block 26; 4 A THENCE South 1394 vrs . a Rock on the South Boundary line of League No. 1 , Denton County School Land and North Boundary line of John A. Scott Survey No. 5, marked L 1 SWC 35; THENCE East 897 vrs . a Rock marked NEC 5, the Northeast corner John A. Scott Survey No. 5; THENCE North 646 vrs . to the place of beginning, containing 224. 1 acres of land and being the same land conveyed by John Myers , et al , to C. W. Bean by Deed dated December 10, 1901 , which Deed is recorded in Book 42, Page 338, Deed Records of Wichita County , Texas , LESS a tract of land out of the Northeast corner of said Block 35, which tract of land is North of the said Dam of Lake Wichita and is not covered by the waters of said lake, containing about 31 'acres of land, more or less. Tract 5: 151 acres , more or less, out of John A. Scott Survey No. 5 lying partly in Wichita and partly in Archer County, Texas , as follows : BEGINNING' at the Northeast corner of said Scott Survey No. 5; THENCE South 1344, vrs . a stake in the North line of the Harvey Cox Survey; THENCE West approximately 897 vrs. to a point in the South line of Survey No. 5 due South of the Southwest corner of Block 35, League No. 1 , Denton County School Land; THENCE North 1344 vrs . to the Southwest corner of said Block 35 ; THENCE East 897 vrs. to the place of beginning, SAVE AND EXCEPT 62 acres of land being the same land conveyed by C. W. Bean and Henry Sayles, Trustees , to Thos. R. T. Orth out of said tract by Deed dated June 18, 1908, recorded in Book 50, Page 583, Deed Records of Wichita County, Texas. The tracts of land described above, and covered by the attached Oil and Gas Lease, are further indicated on the attached Plat colored in yellow and it being the intention to cover all of the oil and gas rights of the City of Wichita Falls, Texas within the area indicated on such Plats , and as described above, under the terms and provisions of the attached Oil and Gas Lease. 7' V1 1 N N I K. 1\_,— -- . v) O r_ N i II W 1 I W N r O co I v to 0 O Z 1----. V.---- 1 t).± n 10 x i C u o 2 _ Z n 0