Ordinance No. 5,08780825 -5
ORDINANCE NO. 5087
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS, ACCEPTING THE BID OF TRAYLOR AND MENARD, INC. FOR
AN OIL AND GAS LEASE; AUTHORIZING.AND DIRECTING THE
MAYOR AND THE CITY CLERK OF THE CITY OF BAYTOWN TO
EXECUTE AND ATTEST TO SUCH OIL AND GAS LEASE AGREEMENT;
AND PROVIDING FOR THE EFFECTIVE DATE HEREOF.
WHEREAS, the City Council of the City of Baytown did
authorize the Purchasing Department for the City of Baytown to
advertise for bids for an oil and gas lease to be received August
25, 1988; and
WHEREAS, notice to bidders as to the time and place, when
and where the contract would be let was published pursuant to the
provisions of TEX.NAT.RESOURCES CODE ch. 71; and
WHEREAS, all bids were opened and publicly read at City Hall
at 2:00 p.m., Thursday, August 25, 1988, as per published notice
to bidders, and a public hearing held at 7:00 p.m. on the same
date for the consideration of such bids; NOW THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN,
40, TEXAS:
Section 1: That the City Council of the City of Baytown
hereby accepts the bid of Traylor and Menard, Inc. for an oil and
gas lease having determined that the bid represents the fair
value of the lease.
Section 2: That the City Council of the City of Baytown,
Texas, hereby approves an oil and gas lease agreement with
Traylor and Menard, Inc. and authorizes the Mayor and City Clerk
of the City of Baytown to execute and attest to the said
agreement, a copy of said agreement is attached hereto, marked
Exhibit "A," and made a part hereof for intents and purposes.
Section 3: This ordinance shall take effect immediately
from and after its passage by the City Council of the City of
Baytown.
INTRODUCED, READ, and PASSED by the affirmative vote of the
City Council of the City of Baytown, this the 25th dax of August,
1988.
® JIM JOHNSCyN, ` yof Pro Tempore
s
B
C]
•
•
9 ATTEST:
EILEEN`P: HALL, City Clerk
RANDALL B. STRONG, Cit torney
C::1:12:6
"A
LI,
C]
c;
ki-A
OIL AND GAS LEASE
THE STATE OF TEXAS
COUNTY OF HARRIS
City
This Oil and Gas Lease made this 25th day of August, 1988,
between THE CITY OF BAYTOWN, TEXAS, acting herein through its
Mayor, hereunto duly authorized, whose address is P. 0. Box 424,
Baytown, TX 77520, as Lessor, and as
Lessee, whose address is
W I T N E S S E T H:
1. Estate Granted. Lessor, in consideration of TEN DOLLARS
($10.00) and other good and valuable consideration in hand paid,
of the royalties herein provided, and of the covenants and
agreements hereinafter contained on the part of the Lessee to be
kept and performed, hereby GRANTS, LEASES and LETS exclusively
unto said Lessee, its successors and assigns, for the sole and
only purpose of investigating, exploring, prospecting, drilling
and operating for, developing, producing, removing and marketing
oil and gas (for the purposes of this lease, references to "oil
and gas" shall include oil, gas, casinghead gas and the by-
products thereof, and such other hydrocarbon substances and
sulphur as are produced with, incidental to and as a part of the
production of oil or gas only, any other minerals being
specifically excluded from this lease), to produce, save, take
care of, treat, store and transport and own said products, the
lands in Harris County, Texas, described in Exhibit "A" which is
EMIBIT w
0
City
2. Primary Term. Subject to the other terms and provisions
herein contained, this lease shall be for a term from this date
until midnight, October 29, 1988 (called "primary term "), and as
long thereafter as oil or gas is produced in paying quantities
from the leased premises or so long as this lease may be
continued in force and effect under the other terms and
provisions hereof.
3. Royalties. As used in this paragragh 3, the "royalty
share" means twenty percent (20 %). Lessor reserves, and Lessee
covenants and agrees for Lessee, its heirs, successors and
assigns:
A. To deliver to Lessor, or at Lessor's option to
deliver to the credit of Lessor to the pipeline to which Lessee
may connect its wells the royalty share of all oil (which term
shall include all condensate and other liquid hydrocarbons which
are or can be extracted or removed from oil or gas by any
extraction methods provided for herein) produced and saved by
®
attached
hereto and
made a part hereof for all purposes, which
from
lands are
sometimes
referred to herein as the "leased premises ".
For the
purpose of calculating certain payments hereinafter
purchase such
provided
for, said
land is estimated to comprise 29.84203 acres,
®
whether
it actually
comprises more or less.
2. Primary Term. Subject to the other terms and provisions
herein contained, this lease shall be for a term from this date
until midnight, October 29, 1988 (called "primary term "), and as
long thereafter as oil or gas is produced in paying quantities
from the leased premises or so long as this lease may be
continued in force and effect under the other terms and
provisions hereof.
3. Royalties. As used in this paragragh 3, the "royalty
share" means twenty percent (20 %). Lessor reserves, and Lessee
covenants and agrees for Lessee, its heirs, successors and
assigns:
A. To deliver to Lessor, or at Lessor's option to
deliver to the credit of Lessor to the pipeline to which Lessee
may connect its wells the royalty share of all oil (which term
shall include all condensate and other liquid hydrocarbons which
are or can be extracted or removed from oil or gas by any
extraction methods provided for herein) produced and saved by
®
Lessee
from
said land, or
from
time to time, at
the option
of
Lessee,
to
purchase such
oil
and to pay Lessor
therefor
the
v
0
City
B. To pay Lessor on gas and casinghead gas, or other
gaseous substance, produced from said land, and sold or used off
the premises (and not processed as hereinafter provided), the
royalty share of the market value at the well of the gas so sold
or used. If such gas shall be processed in an extraction,
absorption or similar plant for the extraction of liquid
hydrocarbons, Lessee shall pay to Lessor the royalty share of the
market value of all gasoline and other products extracted from
® such gas or casinghead gas together with the royalty share of the
market value of the residue gas. For purposes hereof, the term
"market value" shall mean the price being paid for Lessee's share
of the gas at the time such gas is produced by a gas pipeline
purchaser which is unaffiliated by ownership or common control
with the Lessee. Unless Lessor or Lessor's representative
consent to any such gas purchase contract, which has in fact been
arrived at through good faith, arm's- length negotiations, then
Lessor shall be deemed to have elected to take the royalty share
of gas in kind for the term of such contract. Should Lessor
elect to take its royalty gas in kind, then Lessor and Lessee
agree that the royalty share of such gas shall be delivered to
Lessor at a single point on Lessee's gathering line on the leased
highest
posted market
price prevailing in the field where
produced
on the day of
purchase, the royalty
share in either case
to bear
no part of
the cost of treating
oil to render it
marketable
pipeline oil.
Lessor's royalty
share will bear no
cost of
any kind other
than production taxes,
if any.
B. To pay Lessor on gas and casinghead gas, or other
gaseous substance, produced from said land, and sold or used off
the premises (and not processed as hereinafter provided), the
royalty share of the market value at the well of the gas so sold
or used. If such gas shall be processed in an extraction,
absorption or similar plant for the extraction of liquid
hydrocarbons, Lessee shall pay to Lessor the royalty share of the
market value of all gasoline and other products extracted from
® such gas or casinghead gas together with the royalty share of the
market value of the residue gas. For purposes hereof, the term
"market value" shall mean the price being paid for Lessee's share
of the gas at the time such gas is produced by a gas pipeline
purchaser which is unaffiliated by ownership or common control
with the Lessee. Unless Lessor or Lessor's representative
consent to any such gas purchase contract, which has in fact been
arrived at through good faith, arm's- length negotiations, then
Lessor shall be deemed to have elected to take the royalty share
of gas in kind for the term of such contract. Should Lessor
elect to take its royalty gas in kind, then Lessor and Lessee
agree that the royalty share of such gas shall be delivered to
Lessor at a single point on Lessee's gathering line on the leased
�111
0
H
x.11 y
i
premises designated by Lessor. Lessor ishall install and
maintain, at its sole cost and expense, the necessary pipelines,
connections, valves, meters and other facilities for the delivery
of said royalty gas to Lessor, at the designated delivery
point.
C. To deliver to Lessor, or at Lessor's option, to
sell for Lessor's account and account to Lessor for, the royalty
share of such other mineral substances or the market value
thereof, as may be produced incidental to and as a part of or
mixed with oil, gas and other gaseous or liquid hydrocarbons.
The royalties retained by Lessor shall be free and clear
of any and all costs and charges whatsoever, including but not
limited to, costs of development, production, dehydration,
compression and transportation and other similar and related
costs and transportation surcharges.
All gross production, windfall profits and severance
taxes assessed against the royalties retained by Lessor shall be
paid by Lessor. All other taxes, except ad valorem taxes
assessed against Lessor's retained royalty, if any, shall be paid
by Lessee.
-4-
MBIT A
4. Shut -in Gas Royalties. While
there is a gas
well on the
®
leased premises capable of producing
gas in paying
quantities,
from which as is not being g produced
or sold, Lessee
may pay to
-4-
MBIT A
n
city
Lessor, as royalty, on or before ninety (90) days after the date
on which (1) such well is shut -in or (2) 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, the amount of
shut -.in royalty hereinafter provided for, and, if such payment is
made or tendered, it shall be considered that for the full
ensuing year gas is being produced from such well in paying
quantities, and the intermittent production of gas during such
year shall not render necessary any new or additional payment of
shut -in gas well royalty, but Lessee shall account to Lessor for
the royalty on any such gas actually produced and sold or used
off the premises in accordance with the provisions of Paragraph
3. For the purposes of this lease, the term "gas well" shall
mean any well so classified by the Railroad Commission of Texas.
The amount of shut -in royalty payable shall be the sum of One
Hundred Dollars ($100.00) per net acre for the first shut -in year
and One Thousand Dollars ($1000.00) per net acre for each
subsequent shut -in year.
Notwithstanding the payment of such shut -in gas well
royalty, Lessee shall be and remain (a) under the continuing
obligation to use all reasonable efforts to find a suitable
market for said gas, and to commence or resume marketing same
when a suitable market is available, and (b) under the obligation
to continuously develop the
lands then subject to
this lease and
to drill such wells thereon
as may be necessary
to protect the
same from drainage by wells on adjoining or nearby
land.
0
C
City
6. Operations Conducted After Expiration of Term. If at
the expiration of the primary term oil or gas is not being
produced in paying quantities from the lands covered by this
lease or lands pooled therewith, but Lessee is then engaged in
operations for drilling or completing any well thereon, this
lease shall, nevertheless, remain in force so long as Lessee
conducts such operations and, if production of oil or gas in
paying quantities is obtained, then this lease shall remain in
force so long as such production continues in paying quantities
in accordance with the terms hereof. Provided further, if any
production of oil or gas in paying quantities has been obtained
in any well drilled by Lessee, and such production should cease
from any cause, this lease shall not terminate if Lessee
commences additional drilling or reworking operations within
® ninety (90) days following such cessation and thereafter
diligently prosecutes drilling or reworking operations upon said
5. Partial Releases. Lessee may at
any time or times
execute and deliver or place of record a
release or releases
covering any portion or portions of the above described premises
®
and thereby surrender this lease as to such
portion or portions
and be relieved of all obligations except prior
obligations and
obligations for surface damages as to the
acreage surrendered,
and thereafter any payments dependant on the
number of acres then
subject to this lease shall be reduced in
proportion that the
acreage covered hereby is reduced by said release or releases.
6. Operations Conducted After Expiration of Term. If at
the expiration of the primary term oil or gas is not being
produced in paying quantities from the lands covered by this
lease or lands pooled therewith, but Lessee is then engaged in
operations for drilling or completing any well thereon, this
lease shall, nevertheless, remain in force so long as Lessee
conducts such operations and, if production of oil or gas in
paying quantities is obtained, then this lease shall remain in
force so long as such production continues in paying quantities
in accordance with the terms hereof. Provided further, if any
production of oil or gas in paying quantities has been obtained
in any well drilled by Lessee, and such production should cease
from any cause, this lease shall not terminate if Lessee
commences additional drilling or reworking operations within
® ninety (90) days following such cessation and thereafter
diligently prosecutes drilling or reworking operations upon said
11
r
U
s
city
land with no cessation of more than ninety (90) consecutive days,
® and if such activity results in the production of oil or gas in
paying quantities, then this lease shall continue in force for
the duration of such production in accordance with the terms
® hereof. "Operations for drilling" or "drilling operations" shall
mean the actual process of drilling a well in search of oil
and /or gas with adequate tools.
7. Use of Surface Restricted; Surface Damages and
Restoration. (a) Except as expressly provided herein, without
Lessor's written consent, no surface operations shall be
conducted upon the leased premises. If Lessor grants such
consent, or if Lessor elects to require Lessee to drill an offset
well to protect the leased premises from drainage in accordance
with the provisions of Paragraph 17 hereof, the following
provisions shall govern Lessee's use of the surface:
(1 ) Lessee agrees to hold, save and protect Lessor safe and
harmless of and from any and all claims that may arise
directly or indirectly from its operations on the leased
premises, including, but not limited to claims for personal
injury or death, property damage or loss, fires, blowouts,
leaks, spills, pollutants, contamination and explosions and
other causes. Lessee agrees to keep and maintain in force
adequate casualty, liability and property damage insurance
against all risk and all hazards with coverage in the amounts
specified in Exhibit "B" attached hereto, and to name Lessor
as an additional insured thereon and to provide written proof
of such coverage at Lessor's request.
(2) Lessee shall pay to Lessor reasonable compensation for
all Y P damages caused b its operations to the surface, roads
9
trees, landscaping, fences, sidewalks, subsurface fresh water
® strata, driveways, buildings, playground equipment, utility
interruptions, parklands, drainage watersheds, shrubbery,
® parking areas, curbs and gutters or any other property or
improvement of Lessor.
-7-
A' `
Ell
•
City
a. In the event Lessee uses any of Lessor's roadways,
parking areas, bridges or improvements for access to any
drillsite, whether such drillsite is located on the
lease premises or otherwise, then and in such event,
Lessee shall, prior to such use, post a bond in an
® amount to be set and established by the Lessor and which
bond shall be issued and signed by a corporate surety
approved by Lessor to indemnify and protect Lessor from
any damage of any kind to or destruction of any of
Lessor's paved roadway, parking area, 'curb or gutter,
bridges, or drainage or utility facilities. The bond
amount shall be adequate to insure repair of any such
damages, but shall not exceed that required by Section 9
of Ordinance No. 671 of the Code of Ordinances of the
City of Baytown as it may from time to time be
amended.
b. In addition to and not in substitution of the
damages provided for herein, and as additional
consideration for this lease, Lessee agrees to pay to
Lessor the sum of $10,000.00 per surface acre for each
acre used by Lessee for its operations hereunder. Prior
to the commencement of each drilling operation, Lessee
shall cause the drillsite, including access roads, to be
surveyed and a plat thereof made, and furnish the survey
plat to Lessor a minimum of ten (10) days prior to the
commencement of such operations. Payment of said sum by
Lessee's check shall be made contemporaneously with the
delivery of the survey plat. The advanced surface
damage payment called for herein shall be computed by
multiplying the total number of square feet in the
drillsite and access roads times .2255685.
(3) Lessee agrees that it shall permit Lessor, its agents,
attorneys and representatives (at their own risk) access to
the drillsites to inspect the facilities and insure
compliance herewith and with the terms of this lease and of
the Code of Ordinances of the City of Baytown as it is now or
may hereafter be constituted.
(4) During operations (whether drilling, completion or
workover) and thereafter, Lessee shall:
a. Fully abide in all respects with the Code of
Ordinances of the City of Baytown as it is now or
may hereafter be constituted.
b. Operate and power any well by electric motors
and lubricate and insulate in a manner to reduce
and maintain any noise to a reasonable standard.
C. Take necessary steps to keep dust to a
minimum.
A I - =`
C
E
City
® d. Restrict all agents, contractors, employees and
representatives to the immediate area of the
drillsite and advise all such employees to park and
congregate in such restricted area.
e. Keep the drillsite and immediate area free of
trash and debris.
® f. Confine the drillsite to the smallest possible
area.
g. Restore the surface to a clean and even
condition, remove all boards and building
materials, scrap or waste products and /or
chemicals, oil, drilling mud, cement or other
materials, to provide a suitable, nontoxic and non-
hazardous condition, including removal and
replacement of the surface if necessary.
h. Employ portable tanks rather than pits for the
retention or storage of drilling fluids, salt
water, chemicals and the like.
i. Prevent the overflow or spillage of oil, salt
water or chemicals on to the surface of the
® premises so that vegetation can grow.
j. Take steps in restoring the surface to provide
for adequate drainage.
k. Take such steps as may be necessary to prevent
salt water, waste materials, chemicals, acid or oil
from running or flowing on or across the premises
or into creeks, gullies, ditches or ravines that
flow across or on the premises, whether by overflow
or watershed caused by rain.
1. Use best efforts to prevent agents,
contractors, representatives or employees from
carrying firearms, alcohol or drugs onto the
premises.
M. Pay a penalty of $250.00 per day for each day
in which clean up and restoration work called for
herein is not completed within thirty (30) days
after the workover or completion rig is released.
n. Flare no gas except for such limited periods of
time as reasonably necessary for testing purposes.
® o. Keep all areas free of trash and debris and
® keep trash barrels, if any, emptied and of neat
appearance.
i
i
city
P. Confine workover operations to the hours of
6:00 a.m. to 7:00 p.m. (except for emergencies).
q. Maintain the locations and wells in a sightly
manner with clean stone, gravel or shell, fences
and appropriate landscaping.
r. Prevent at all times damage to or destruction
of any decorative or hardwood trees or outside the
drillsite.
(b) Nothing in this section shall prevent Lessee from
drilling to or through the subsurface of the leased premises by
directional techniques.
8. Removal of Property. Except as provided herein, Lessee
shall have the right at any time during or within ninety (90)
days after the expiration of this lease to remove all property
and fixtures placed by Lessee on said land, excluding the right
to draw and remove all casing unless specifically authorized in
writing by Lessor. Lessee will bury all pipe lines at least 36
inches below the surface, and no well shall be drilled within two
hundred (200) feet of any building now on said land without
Lessor's consent.
9. Assignability. The rights of either party hereunder may
be assigned, transferred or farmed out in whole or in part. No
change or division in ownership of the land, rentals or
royalties, however accomplished, shall operate to enlarge the
obligations or diminish the rights of Lessee, and no change or
0 division in such ownership shall be binding on Lessee until
0 thirty (30) days after Lessee shall have been furnished by
-10-
E�
0
•
City
;certified United States Mail at Lessee's principal place of
business with a certified copy of the recorded instrument or
instruments evidencing same. Except as provided in the next
sentence to the contrary, the rights of the Lessee hereunder may
not be assigned in whole or in part without the express written
consent of the Lessor hereunder, which consent shall not be
unreasonably withheld. Lessee shall have the right to make
assignments to its working interest partners without the prior
written consent of the Lessor so long as only Lessee is the
operator of the wells. Such assignment shall not be effective
unless the assignee or assignees thereunder first agree in
writing to be bound by the terms of and provisions of this
lease. In the event this lease shall be owned in whole or in
part or in undivided interests by more than four persons or
entities, all persons or entities owning working interests hereby
agree and designate the registered agent of Lessee as their
registered agent for service of process and as their attorney -in-
fact for the purposes of executing any release of this Oil and
Gas Lease. In the event of assignment hereof in whole or in
part, liability for breach of any obligation hereunder shall rest
upon the Lessee hereunder as well as any assignees of said lease
jointly and severally; provided, however, that Lessee or any
assignee of Lessee who is not an owner of a working interest in
said lease at the time of such breach shall no longer be liable
to Lessor for any such breach if Lessor shall have consented in
® writing to such assignment. Lessor shall have the right to
assure itself of the financial responsibility of any proposed
-11-
E
0
E
N
City
Assignee (except as provided in the second sentence of this
Paragraph) and Lessor may require any such proposed Assignee to
furnish a bond or other security to ensure its performance
hereunder.
10. Covenant to Reasonably Develop. After the discovery of
oil or gas in paying quantities on said premises, Lessee shall
develop the leased premises as would a reasonably prudent
operator under the same or similar circumstances.
11. Force Majeure. All express or implied covenants of this
lease shall be subject to all Federal and State laws, Executive
Orders, Rules or Regulations, and this lease shall not be
terminated in whole or in part, nor Lessee held liable in damages
for failure to comply therewith, if compliance is prevented by,
or failure is the result of, any such valid Law, Order, Rule or
Regulation, or if prevented by an Act of God or of the public
enemy.
If oil or gas is discovered but production or further
operations are prevented by any of the causes enumerated in this
P aragraph 11, t his lease shall be considered producing and shall
continue in full force and effect until Lessee is permitted to
produce the oil or gas, and as long thereafter as oil or gas
actually is produced in paying quantities as herein provided.
Lessee agrees to use its best efforts to cure the cause of any
® delay so as to commence or recommence operations or production as
-12-
ffif7 A
C,
A
E
E
City
soon as practicable and to promptly inform Lessor as to causes of
delay and efforts to cure same.
12. No Warranty of Title. Lessor believes that it is the
® owner of the mineral estate covered by,this lease, but it makes
no warranty of title to the Lessee. Lessee agrees to give to
Lessor a copy of its title opinion as to the ownership of the
mineral estate covered by this lease. It is agreed, however,
that if Lessor owns or controls a mineral interest in the leased
premises less than the entire fee simple estate, then the
royalties and other monies to be paid to Lessor shall be reduced
proportionately.
13. Notices. Any and all notices, reports or information
required or permitted to be given, hereunder shall be deemed to
have been delivered and received when delivered in person to the
party directed, or five (5) days after being deposited in the
United States mail, postage prepaid, certified with return
receipt requested, addressed to Lessor or Lessee at their
respective addresses stated above. The parties may change their
respective addresses for receiving notices hereunder by giving
notice of such change in the manner above provided.
14. Use of Water. Lessee shall have free use of water from
said land, except water from Lessor's wells, reservoirs, and
® tanks for drilling operations hereunder. Lessee shall not drill
® or operate water wells or take water in such way as to injure the
E
City
water wells of Lessor or interfere with or restrict the supply of
water to Lessor. Lessee shall not use fresh or potable water for
secondary recovery or waterflood operations. In drilling oil or
gas wells, Lessee shall advise Lessor of any fresh water bearing
® formations encountered and shall upon request furnish Lessor any
and all logs made by Lessee from the surface of the ground to the
bottom of the surface casing. Upon abandonment of any well
drilled for oil or gas, Lessee shall offer to turn it over to
Lessor, with the hole in suitable condition to be completed as a
water well in a fresh water formation. Lessor shall have thirty
(30) days after receipt of such offer in which to elect to take
over such well, unless a drilling rig is on location, in which
case the period shall be shortened to twenty -four (24) hours. It
is understood if Lessor takes over the well and pipe, Lessor will
assume all future responsibility for the well above the plugs
which shall be set by Lessee at all depths below the deepest
fresh water sand.
15. Pooling and Unitization. Lessee is hereby granted the
right to pool or unitize, as to any one or more formations, the
land covered by this lease or any part thereof with any other
land, lease, leases, mineral estates or parts thereof for the
production of oil, gas and other minerals and their respective
constituent products. Units pooled for oil hereunder shall not
exceed forty (40) acres each in area and gas units shall not
® exceed three hundred twenty (320) acres each in area, each plus a
tolerance of ten percent (10%), provided that if any federal or
-14-
n
�J
h
City
state law, executive order, rule or regulation shall prescribe a
spacing pattern for the development of the field or allocate a
producing allowable on acreage per well, then any such units may
embrace as much additional acreage as may be so prescribed or as
® may be used in such allocation or allowable. Lessee shall file
written unit designations in the county in which the premises are
located. Such units may be designated either before or after the
completion of wells, and Lessee may reduce, enlarge, retorm,
modify or dissolve such units at any time prior to the discovery
of oil or gas on the pooled acreage, or after discovery of oil or
gas at any time subsequent to the cessation of production thereof
by filing a written declaration to such effect in the same
county. A unit shall be effective on the date set forth in said
declaration or if said declaration provides no effective date,
then it shall be effective upon filing of the declaration.
Drilling operations on or production from any part of the pooled
acreage shall be treated as if such drilling operations were upon
or such production was from the well described in this lease
whether or not the well or wells are located on the leased
premises. The entire lease acreage shall be treated for all
purposes, except the payment of royalties on production from the
pooled unit, as if it were included in such unit. In lieu of the
royalties herein provided, Lessor shall receive on production
from a unit so pooled only such portion of the royalty stipulated
herein as the amount of Lessor's acreage placed in the unit or
® Lessor's royalty interest therein on an acreage basis bears to
the total acreage pooled in the particular unit involved.
-15-
LJ
city
Formation of one or more units shall not exhaust Lessee's right
is to form additional units, and any subsequently formed units
needed not conform in size, shape, area or stratum with other
units.
Except with Lessor's written consent no pooling is permitted
if the well is located on the leased premises. Land covered by
this lease shall contribute at least fifty percent (50 %) of any
unit created hereunder.
-16-
BIT A
Notwithstanding any provisions hereof to the contrary, if
a
part of the leased premises is included within a pool
or
proration unit, drilling operations or production from
the
unitized premises shall maintain this lease only as to that
portion of the leased premises within such pool or unit,
regardless of whether such unit is located totally within
the
acreage covered by this lease or not. As to that portion of
the
leased premises not included in a unit after expiration of
the
primary term this lease may be maintained only by production
or
by operation of other provisions herein which pertain
to
reworking operations, drilling operations or additional drilling
operations. Within sixty (60) days after the expiration of
the
primary term, Lessee agrees to release in recordable form
all
acreage not held by production in paying quantities or
by
operations as elsewhere herein provided.
Except with Lessor's written consent no pooling is permitted
if the well is located on the leased premises. Land covered by
this lease shall contribute at least fifty percent (50 %) of any
unit created hereunder.
-16-
BIT A
El
v
City
16. Compliance With Regulatory Authorities. The Lessee
agrees that it is bound by the rules of both the Texas Railroad
Commission and the City of Baytown as they may apply.
17. Offset Obligation. Should a well producing oil and /or
gas in paying quantities be completed with 200 feet of the leased
premises, or at any distance from the leased premises which is
capable of draining oil or gas from the leased premises, and
should such production continue for at least nine (9) months,
Lessor may, at its sole discretion, elect to require Lessee to
drill an offset well on the leased premises to prevent or
minimize drainange of. oil or gas from the leased premises. The
location of such offset well shall be designated by Lessor, but
must be as close as possible to the point on the premises nearest
the well to be offset which is reasonably suitable for drilling
purposes. If Lessor elects not to require the drilling of an
offset well, Lessee will have no liability to Lessor for drainage
of oil or gas from the premises. The obligation to drill offset
well shall not apply where (i) the well to be offset is separated
from the leased premises by a well, producing from the same
horizon, from which Lessor is receiving royalties or (ii) there
is already on the leased premises a well within 200 feet of the
outside boundary thereof which is producing from the same
horizon. In the event Lessee shall fail to timely commence
® operations for the drilling of any required offset well, then and
in such event, Lessee shall promptly file of record in the
® Official Public Records of Real Property of Harris County a full
-17-
EXHIBIT A
�_11
City
release of this lease except as to those areas which are included
within units created under the provisions hereof on which there
is production or operations, and except for two acres around each
well located on the leased premises which is not pooled with
® other land.
18. Lessor's Representative. Lessor hereby designates the
City Manager of the City of Baytown as its agent for purposes of
receiving all notices provided for herein. Wherever in this
lease consent, authorization or approval of the Lessor is
required or permitted, such consent, authorization or approval
may be granted by the City Manager. The City Manager, may, at
his discretion, refer any such matter to the City Council for
such consent, authorization or approval.
EXECUTED as of the date first above written.
ATTEST LESSOR
THE CITY OF BAYTOWN, TEXAS
City Clerk
il
By:
Emmett 0. Hutto, Mayor
LESSEE
By:
El
L.
v
•
•
City
THE STATE OF TEXAS §
COUNTY OF HARRIS §
Printed Name of Notary and
Expiration Date of Commission
-19-
This instrument
was
acknowledged before me on
the day
of
August, 1988 by
, the Mayor
of the CITY
OF
®
BAYTOWN, TEXAS, a municipal corporation.
Notary Public in
and for the
State of Texas
Printed Name of
Notary and
Expiration Date
of Commission
THE STATE OF TEXAS
§
COUNTY OF HARRIS
§
This instrument
was
acknowledged before me on
the day
of
August, 1988 by
, the of
a
corporation,
on behalf
of
said corporation.
Notary Public in
and for the
State of Texas
Printed Name of Notary and
Expiration Date of Commission
-19-
i
.7
r 1
City
EXHIBIT "A"
PAP('F.T. T
A tract of land containing 29.84203 acres, more or less,
and being a part of a 31.836 acre tract of land out of
said League conveyed by McKinnon Land Company to John M.
Kilgore et al by deed dated May 20, 1948, recorded in
Volume 1771 at Page 136 of the Deed Records of Harris
County, Texas, more particularly described as follows:
BEGINNING at an iron pipe situated North 34 deg. 29 min.
36 sec. East a distance of 211.69 feet from the
Southwest corner of said 31.836 acre tract, described in
the aforesaid deed recorded in Volume 1771 a Page 136 of
the Deed Records of Harris County, Texas;
THENCE North 81 deg. 29 min. 40 sec. East 365.50 feet to
a 1" iron pipe for corner;
THENCE North 34 deg. 29 min. 36 sec. East a distance of
201.31 feet to a point for corner, a 1" iron pipe;
THENCE
267.31
THENCE
263.50
right
way;
North 55 deg. 30 min. 24 sec. West a distance of
feet to a 1" iron pipe for corner;
North 34 deg. 29 min. 36 sec. East a distance of
feet to a 1" iron rod for corner in the Southeast
Df way line of Market Street Road 100 ft. right of
THENCE North 60 deg. 09 min. 41 sec. East along the
Southeast right of way line of Market Street Road, a
distance of 797.41 feet to a point for corner in the
South right of way line of Houston - Northshore Railroad
right of way;
THENCE South 69 deg. 49 min East along the South right
of way line of Houston - Northshore Railroad a distance of
164.33 feet to a 3/4" iron pipe for corner;
THENCE South 34 deg: 08 min. 56 sec. East a distance of
855.14 feet to an old grate bar for corner;
THENCE South 55 deg. 30 min. 24 sec. West 1002.48 feet
to a 1" iron pipe for corner in the North right of way
line of West Main Street, 60 ft. right of way;
® THENCE along the North right of way line of West Main
Street, North 77 deg. 59 min. West 260.64 feet; North 80
deg. 30 min. West 359.50 feet; North 80 deg. 50 min.
West 130.32 feet; North 82 deg. 25 min. 39 sec. West
288.35 feet to an iron pipe for corner;
-20-
0
0
b
THENCE North 34 deg. 29
the Place of Beginning;
land, more or less.
PARC ET, TT
city
min. 36 sec. East 211.69 feet to
and containing 29.84203 acres of
Tract One
A triangular tract of land out of the Isenhour 304 -3/10
acre tract in the William Scott Upper League in Harris
County, Texas, described by metes and bounds as follows:
BEGINNING at the intersection of the Northwest line of
said Isenhour 304 -3/10 acre tract, same being the
Northwest line of what is known as the Willis 114 acre
tract, with the North line of the County Road known as
Market Street Road;
THENCE North 56 deg. East along the Northwest line of
said Isenhour tract 94 feet, more or less, to the most
Northerly corner of said Isenhour 304 -3/10 acre tract;
THENCE South 28 deg. 30 min. East along the Easterly
line of said Isenhour tract 118 feet, more or less to
corner in the North line of said Market Street Road;
THENCE North 67 deg. 45 min. West along the North line
of said Road 143 feet, more or less, to the PLACE OF
BEGINNING and being the same property conveyed by Orra
Brown et vir et al to 0. H. Hunter, Sr. , et ux by deed
dated March 26, 1947, recorded in Volume 1596 at Page 53
of the Deed Records of Harris County, Texas; SAVE and
EXCEPT an undivided two- thirds (2/3) interest in the
oil, gas and other minerals retained in the above -
mentioned deed from Orra Brown et vir et al to 0. H.
Hunter, Sr., et ux; and
Tram Twn
All that certain lot, tract or parcel of land lying and
being situated in Harris County, Texas, and being out of
the William Scott Upper League and being off the West
end of a two acre tract of land conveyed by Mrs.
Katherine Josephine Bielstein and her husband, M. H.
Bielstein, to J. M. Harvey et ux by deed dated May 23,
1933, and of record in Volume 978 at Page 711 of the
Deed Records of Harris County, Texas, and described by
metes and bounds as follows, to -wit:
BEGINNING at a 1" iron pipe in the North or Northeast
® right -of -way line of West Main Street (formerly Baytown -
Pelly Road) which marks the Southwest corner of said J.
M. Harvey 2.0 acre tract as recorded in Volume 978 at
Page 711 of the Deed Records of Harris County, Texas;
-21-
IBIT A
0
y
THENCE North 28 deg. 31 min. West with the West or
Southwest line of the J. M. Harvey 2.0 acre tract and
is the Easterly or Northeasterly line of the 0. H. Hunter
acre tract, 120.7 feet to a 1/2" iron pipe marking
Me—Westernmost corner of the Harvey 2.0 acre tract and
the Northernmost corner of the Hunter acres tract;
THENCE North 56 deg. 45 min. East with the North line of
® the J. M. Harvey 2.0 acre tract 196.9 feet to the
Northernmost corner of said Harvey Tract;
THENCE South 65 deg. 52 min. East with the Northeasterly
line of the Harvey 2.O.acre tract, 39.9 feet;
a
THENCE South 35 deg. 58 min. West 244.2 feet to the
POINT OF BEGINNING, and containing .39 acres of land,
more or less, and being the same property conveyed by J.
M. Harvey et ux to 0. H. Hunter, Sr., et ux by deed
dated October 4, 1948, of record in Volume 1833 at Page
199 of the Deed Records of Harris County, Texas.
City
i„
k
EXHIBIT "B"
INSURANCE
Lessee shall obtain and at all times while operations are
being carried on hereunder maintain in effect insurance
policies as to the following risks:
(a) Workmen's Compensation and Employer's Liability
® Insurance to fully comply with the laws of the
State of Texas and to cover all employees working
on the leased premises or leases or in connection
therewith.
(b) General Liability (Bodily Injury) Insurance with
limits of not less than $500,000 for each
occurrence; and General Liability (Property Damage)
Insurance with limits of $100,000 for each
occurrence.
(c) Automobile Public Liability Insurance covering all
automotive equipment used hereunder with limits of
not less than $250,000 for Bodily Injury for each
person and $500,000 Bodily Injury for each
occurrence and $100,000 for Property Damage.
(d) Excess Liability (Umbrella Coverage) of not less
than $10,000,000.
(e) OEE /WELL Control of not less than $5,000,000.
90040548/OGA
City
1�1