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Res 2354 6/19/1979RESOLUTION NO. • RESOLUTION ACCEPTING BID AND APPROVING OIL AND GAS LEASE TO TUTHILL & BARBEE. WHEREAS, heretofore the Board of Aldermen of the City of Wichita Falls determined that it is advisable to lease for oil and gas the land described on the attached lease, and published notice of its intention to lease such land 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 Tuthill & Barbee represents the fair value of the lease on such property, and it is the only 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 Tuthill & Barbee is hereby accepted, that certain oil and gas lease, a copy of which is attached hereto, between the City and Tuthill & Barbee is hereby approved, and the City Manager is authorized to execute the same for the City of Wichita Falls. PASSED AND APPROVED this the / -' day of L.1.-/-Le> , 1979. M A Y O R ATTEST: City Clerk L r 5/79 OIL AND GAS LEASE STATE OF TEXAS X COUNTY 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- 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, Tuthill & Barbee 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 Twenty-Five Dollars ($25) 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 three 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 1/8 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) or any portion thereof is included in a pooledthePropertycoveredherebyoypp 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. 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 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 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 assigns; irrespective of whether or not the unit is likewise effective as 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- 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- 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 shall 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 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 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 Parker Square State 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 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- 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 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 propgrly 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 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 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, incliding the right to draw and remove all cas- ing. When required by Lessor, Lessee shall bury all pipelines below 3- r 5/79 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 instrume nt o r instru- mentsments 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 the rights of other leasehold owners hereunder. 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 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 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 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 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- 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 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 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 TUTHILL & BARBEE BY: 5- 4 Exhibit "A" to Oil and Gas Lease from City of Wichita Falls to Tuthill and Barbee Those certain tracts of land situated in Archer County, Texas, described as follows: 1) All land owned by the City of Wichita Falls in R. Carson Survey 173 , Abstract 107 , Archer County, Texas. 2) All land owned by the City of Wichita Falls in the East one-third (E 1/3) of the R. Carson Survey 174, Abstract 108 , Archer County, Texas.