HomeMy WebLinkAboutRES 91-175 RESOLUTION
WHEREAS, bids were received for a three (3) year oil, gas and mineral lease of real
property owned by the City of Beaumont; and,
WHEREAS, Jones and Zwiener, Inc. of Houston, Texas submitted a bid in the amounts
stated in Exhibits 1-8 attached; and,
WHEREAS, the City Council is of the opinion that the bid submitted by Jones and
Zwiener, Inc. of Houston, Texas is the best bid meeting specifications and should be accepted;
NOW, THEREFORE, BE IT RESOLVED BY THE
CITY COUNCIL OF THE CITY OF BEAUMONT:
THAT the bid submitted by Jones and Zwiener, Inc. of Houston, Texas in the amounts stated
in Exhibits 1-8 attached hereto, be accepted by the City of Beaumont; and,
BE IT FURTHER RESOLVED, that the City Manager be, and he is hereby authorized
to execute the contract in substantially the form as attached hereto as Exhibit "9"; and,
BE IT FURTHER RESOLVED, that the City Manager be and he is hereby authorized
to execute the assignments necessary to assign the contract for future oil and gas exploration
and productions to Amerada Hess Corporation.
PASSED BY THE CITY COUNCIL of the City of Beaumont on this the8JAZ day of
1991.
gd,
- Mayor -
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EXHIBITS 1 - 8
1
BID SHEET
PROPERTY LOCATION:
ftem No.1.2 A. Savey Survey,A-46,Tract 5 and 15,Jefferson County; also known as
Beaumont Municipal Airport. Approximately 275.44 acres, more or less
(Exhibit B).
1. Bonus Payment $ 315.86 per acre
2. Oil and Gas Lease Provisions
2.1 Reference Paragraph 3. Annual Delay Rental $ 50.00 per acre
2.2 Reference Paragraph 4. Royalty
2.2.1 Reference Paragraph 4(1)
25.12 (%) percent of the entire eight-eights (8/8%) of that
produced and saved from the land described.
2.2.2 Reference Paragraph 4(iii)
25.12 (%) percent of the market value of the gas at the time it
is produced.
25.12 (%)percent of the amount realized therefrom by Leasee
of an affiliate of Leasee.
2.2.3 Reference Paragraph 4(iv)
25.12 (%)percent of the market value of such oil,condensate,
other liquid hydrocarbons, gas, casinghead gas, or other gaseous
substances at the well or delivery point on the leased premises.
25.12 (%) percent of the market value of the gross production
of products and components derived therefrom by such processing and
manufacturing at such plant.
25.12 (%) percent of the market value at the tailgate of the
plant on residue gas.
2.2.4 Reference Paragraph 4(v)
x,5.12 (%) percent of the market value at the well at the time it
is produced.
25.12 (%)percent of the market value at the downstream outlet
of an oil and gas separator.
2.2.5 Reference Paragraph 4(vi)
25.12 (%) percent of the amount realized by Leasee or
Leasee's affiliate from use, sale, delivery, or processing of such gas, oil,
or other liquid hydrocarbons.
2.3 Reference Paragraph 5.
Shut-in Gas Provision on Gas $ 500.00 per well
2.4 Reference Paragraph 6.
Minimum Royalty Payments $ 75.00 per acre
Jones & Zwiener, Inc. 1300 Main Street, Suite 1720'
COMP NY NAME STREET ADDRESS ZIP
J(?,
SIGNATU OF BibDER P.O. BOX ZIP
Douglas G. Jones Houston, Texas 77002
(PRINT OR TYPE NAME) CITY STATE ZIP
Vice-President (713) 650-0903
TITLE AREA CODE TELEPHONE NUMBER
2
EXHIBIT NO. 1
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BID SHEET
PROPERTY LOCATION:
Item No.1.4 A portion of the French Subdivision,Lot 4,5,6, and 7,Block 2,Jefferson
County; also known as Wuthering Heights Park. Approximately 19.95
acres, more or less (Exhibit D).
1. Bonus Payment $ 200.00 per acre
2. Oil and Gas Lease Provisions
2.1 Reference Paragraph 3. Annual Delay Rental $ 50.00 per acre
2.2 Reference Paragraph 4. Royalty
2.2.1 Reference Paragraph 4(1)
25.12 (%) percent of the entire eight-eights (8/8%) of that
produced and saved from the land described.
2.2.2 Reference Paragraph 4(iii)
25.12 (%) percent of the market value of the gas at the time it
is produced.
25.12 (%)percent of the amount realized therefrom by Leasee
of an affiliate of Leasee.
2.2.3 Reference Paragraph 4(iv)
25.12 (%)percent of the market value of such oil,condensate,
other liquid hydrocarbons, gas, casinghead gas, or other gaseous
substances at the well or delivery point on the leased premises.
25.12 (%) percent of the market value of the gross production
of products and components derived therefrom by such processing and
manufacturing at such plant.
25.12 (%) percent of the market value at the tailgate of the
plant on residue gas.
2.2.4 Reference Paragraph 4(v)
25.12 (%) percent of the market value at the well at the time it
is produced.
25.12 (%)percent of the market value at the downstream outlet
of an oil and gas separator.
2.2.5 Reference Paragraph 4(vi)
25.12 (%) percent of the amount realized by Leasee or
Leasee's affiliate from use, sale, delivery, or processing of such gas, oil,
or other liquid hydrocarbons.
2.3 Reference Paragraph 5.
Shut-in Gas Provision on Gas $ 500.00 per well
2.4 Reference Paragraph 6.
Minimum Royalty Payments $ 75.00 per acre
Jones & Zwiener, Inc. 1300 Main Street, Suite 1720
COMPAX NAME STREET ADDRESS ZIP
4 °
SIGNATURE BIDDE P.O. BOX ZIP
no,,91aS r Jong Hniictnn Taxac 7Z .n7
(PRINT OR TYPE NAME) CITY STATE ZIP
Vice-President (713) 650-0903
TITLE AREA CODE TELEPHONE NUMBER
4
EXHIBIT NO. 2
I I
BID SHEET
PROPERTY LOCATION:
Item No.1.5 A portion of the A.Williams Survey, Plat D19,Tract 44,Jefferson County;
also known as properties donated for Halbounty Park. Approximately 5.05
acres, more or less (Exhibit E).
1. Bonus Payment $ 200.00 per acre
2. Oil and Gas Lease Provisions
2.1 Reference Paragraph 3. Annual Delay Rental $ 50.00 per acre
2.2 Reference Paragraph 4. Royalty
2.2.1 Reference Paragraph 4(i)
25.12 (%) percent of the entire eight-eights (8/8%) of that
produced and saved from the land described.
2.2.2 Reference Paragraph 4(iii)
2F 12 (%) percent of the market value of the gas at the time it
is produced.
25.12 (%)percent of the amount realized therefrom by Leasee
of an affiliate of Leasee.
22.3 Reference Paragraph 4(iv)
25.12 (%)percent of the market value of such oil,condensate,
other liquid hydrocarbons, gas, casinghead gas, or other gaseous
substances at the well or delivery point on the leased premises.
25.12 (%) percent of the market value of the gross production
of products and components derived therefrom by such processing and
manufacturing at such plant.
2F 12 (%) percent of the market-value at the tailgate of the
plant on residue gas.
2.2.4 Reference Paragraph 4(v)
25.12 (%) percent of the market value at the well at the time it
is produced.
2F-12 (%)percent of the market value at the downstream outlet
of an oil and gas separator.
2.2.5 Reference Paragraph 4 (vi)
25.12 (%) percent of the amount realized by Leasee or
Leasee's affiliate from use, sale, delivery, or processing of such gas, oil,
or other liquid hydrocarbons.
2.3 Reference Paragraph 5.
Shut-in Gas Provision on Gas $ 500.00 per well
2.4 Reference Paragraph 6. _
Minimum Royalty Payments g 75.00 per acre
lnn s P 7wiener. Inc. 1300 Main Street S.iite 170
COMPANY AME STREET ADDRESS ZIP
c 4-,
SIGNATURE OF BIDDER P.O. BOX ZIP
naiiglac G Innat Hrni,;tnn Texac --)9?
(PRINT OR TYPE NAME) CITY STATE Z;P
Vice-President (713) 650-0903
TITLE AREA CODE TELEPHONE NUMBER
5
EXHIBIT NO. 3
r
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i
BID SHEET
PROPERTY LOCATION:
Item No. 1.6 Properties generally known as Combest Park. Approximately 2.99 acres,
more or less (Exhibit F).
1. Bonus Payment $ 200.00 per acre
2. Oil and Gas Lease Provisions
2.1 Reference Paragraph 3. Annual Delay Rental $ 50.00 per acre
2.2 Reference Paragraph 4. Royalty
2.2.1 Reference Paragraph 4(1)
25.12 (%) percent of the entire eight-eights (8/8%) of that
produced and saved from the land described.
2.2.2 Reference Paragraph 4 (iii)
75.17 (%) percent of the market value of the gas at the time it
is produced.
25.12 (%) percent of the amount realized therefrom by Leasee
of an affiliate of Leasee.
2.2.3 Reference Paragraph 4(iv)
75.17 (%)percent of the market value of such oil,condensate,
other liquid hydrocarbons, gas, casinghead gas, or other gaseous
substances at the well or delivery point on the leased premises.
25.12 (%) percent of the market value of the gross production
of products and components derived therefrom by such processing and
manufacturing at such plant.
75.17 (%) percent of the market value at the tailgate of the
plant on residue gas.
2.2.4 Reference Paragraph 4 (v)
25.12 _(%) percent of the market value at the well at the time it
is produced.
75 17 (%)percent of the market value at the downstream outlet
of an oil and gas separator.
2.2.5 Reference Paragraph 4(vi) -
25.12 (%) percent of the amount realized by Leasee or
Leasee's affiliate from use, sale, delivery, or processing of such gas, oil,
or other liquid hydrocarbons.
2.3 Reference Paragraph 5.
Shut-in Gas Provision on Gas $ 500.00 per well
2.4 Reference Paragraph 6.
Minimum Royalty Payments g 75.00 per acre _
Jones & Zwiener, Inc. 1300 Main Street, Suite 1720
COMPANY AME STREET ADDRESS ZIP
S � -
SIGNATURE OF BIDDER P.O. BOX Zip
Douglas G. Jnnas Houston. Texas 7700
(PRINT OR TYPE NAME) CITY STATE ZIP
Vice-President (713) 650-0903
TITLE AREA CODE TELEPHONE NUMBER
6
�. EXHIBIT NO. 4
I I I
BID SHEET
PROPERTY LOCATION:
Item No. 1.7 A portion of Glenwood Addition, Lot 11 and 12, Block 202, Jefferson
County;also known as Fire Station#6. Approximately.32 acres,more or
less(Exhibit G).
1. Bonus Payment $ 312.50 per acre
2. Oil and Gas Lease Provisions
2.1 Reference Paragraph 3. Annual Delay Rental $ 50.00 per acre
2.2 Reference Paragraph 4. Royalty
2.2.1 Reference Paragraph 4(1)
25.12 (%) percent of the entire eight-eights (8/8%) of that
produced and saved from the land described.
2.2.2 Reference Paragraph 4(iii)
25.12 (%) percent of the market value of the gas at the time it
is produced.
25.12 (%)percent of the amount realized therefrom by Leasee
of an affiliate of Leasee.
2.2.3 Reference Paragraph 4(iv)
25.12 (%)percent of the market value of such oil,condensate,
other liquid hydrocarbons, gas, casinghead gas, or other gaseous
substances at the well or delivery point on the leased premises.
25.12 (%) percent of the market value of the gross production
of products and components derived therefrom by such processing and
manufacturing at such plant.
25.12 (%) percent of the market value at the tailgate of the
plant on residue gas.
2.2.4 Reference Paragraph 4(v)
25.12 (%) percent of the market value at the well at the time it
is produced.
25.12 (%)percent of the market value at the downstream outlet
of an oil and gas separator.
2.2.5 Reference Paragraph 4 (vi)
25.12 (%) percent of the amount realized by Leasee or
Leasee's affiliate from use, sale, delivery, or processing of such gas, oil,
or other liquid hydrocarbons.
2.3 Reference Paragraph 5.
Shut-in Gas Provision on Gas $ 500.00 per well
2.4 Reference Paragraph 6.
Minimum Royalty Payments $ 75.00 per acre
Jones & Zwiener, Inc. 1300 Main Street, Suite 1720
COMPANY NAME STREET ADDRESS ZIP
�c
SIGNATURE F BIDDER P.O. BOX ZIP
Douglas G. Jones Houston, Texas 77002
(PRINT OR TYPE NAME) CITY STATE ZIP
Vice-President (713) 650-0903
TITLE AREA CODE TELEPHONE NUMBER
7
EXHIBIT NO. 5
BID SHEET
PROPERTY LOCATION:
Item No. 1.8 A portion of Glenwood Addition, Lot 12, Block 219, Jefferson County.
Approximately.16 acres,more or less (Exhibit H).
1. Bonus Payment $ 625.00 per acre
2. Oil and Gas Lease Provisions
2.1 Reference Paragraph 3. Annual Delay Rental $ 50.00 per acre
2.2 Reference Paragraph 4. Royalty
2.2.1 Reference Paragraph 4 (1)
25.12 (%) percent of the entire eight-eights (8/8%) of that
produced and saved from the land described.
2.2.2 Reference Paragraph 4(iii)
25.12 (%) percent of the market value of the gas at the time it
is produced.
25.12 (%)percent of the amount realized therefrom by Leasee
of an affiliate of Leasee.
2.2.3 Reference Paragraph 4(iv)
25.12 (%)percent of the market value of such oil,condensate,
other liquid hydrocarbons, gas, casinghead gas, or other gaseous
substances at the well or delivery point on the leased premises.
25.12 (%)percent of the market value of the gross production
of products and components derived therefrom by such processing and
manufacturing at such plant.
25.12 (%) percent of the market value at the tailgate of the
plant on residue gas.
2.2.4 Reference Paragraph 4(v)
25.12 (%) percent of the market value at the well at the time it
is produced.
25.12 (%)percent of the market value at the downstream outlet
of an oil and gas separator.
2.2.5 Reference Paragraph 4(vi)
25.12 (%) percent of the amount realized by Leasee or
Leasee's affiliate from use, sale, delivery, or processing of such gas, oil,
or other liquid hydrocarbons.
2.3 Reference Paragraph 5.
Shut-in Gas Provision on Gas $500.00 per well
2.4 Reference Paragraph 6.
Minimum Royalty Payments $ 75.00 per acre =
Jones R Zwiener, Inc. 1300 Main Street, Suite 1720
COMPA Y NAME STREET ADDRESS ZIP
SIGNATURE OF BIDDER P.O. BOX ZIP
Douglas G. Jones Houston, Texas 77nO?
(PRINT OR TYPE NAME) CITY STATE ZIP
Vice-President (713) 650-0903
TITLE AREA CODE TELEPHONE NUMBER
8
iEXHIBIT NO. 6
I
BID SHEET
PROPERTY LOCATION:
Item No.1.10 A portion of the Pinecrest Addition, Lot 1, Block 140, Jefferson County;
also known as Hayes Gully Right-of-Way. Approximately.16 acres,more
or less(Exhibit J).
1. Bonus Payment $625.00 per acre
2. Oil and Gas Lease Provisions
2.1 Reference Paragraph 3. Annual Delay Rental $ 50.00 per acre
2.2 Reference Paragraph 4. Royalty
2.2.1 Reference Paragraph 4(1)
25.12 (%) percent of the entire eight-eights (8/8%) of that
produced and saved from the land described.
2.2.2 Reference Paragraph 4 (iii)
25.12 (%) percent of the market value of the gas at the time it
is produced.
25.12 (%)percent of the amount realized therefrom by Leasee
of an affiliate of Leasee.
2.2.3 Reference Paragraph 4(iv)
25.12 (%)percent of the market value of such oil,condensate,
other liquid hydrocarbons, gas, casinghead gas, or other gaseous
substances at the well or delivery point on the leased premises.
25.12 (%)percent of the market value of the gross production
of products and components derived therefrom by such processing and
manufacturing at such plant.
25.12 (%) percent of the market value at the tailgate of the
plant on residue gas.
2.2.4 Reference Paragraph 4(v)
25.12 (%) percent of the market value at the well at the time it
is produced.
25.12 (°/,)percent of the market value at the downstream outlet
of an oil and gas separator. _
2.2.5 Reference Paragraph 4(vi)
25.12 (%) percent of the amount realized by Leasee or
Leasee's affiliate from use, sale, delivery, or processing of such gas, oil,
or other liquid hydrocarbons.
2.3 Reference Paragraph 5.
Shut-in Gas Provision on Gas $500.00 per well
2.4 Reference Paragraph 6.
Minimum Royalty Payments $ 75.00 per acre
Jones & Zwiener, Inc. 1300 f1ain Street , Suite 1720
COMPA Y NAME STREET ADDRESS ZIP
SIGNATURE''OF BIDDER P.O. BOX ZIP
Douglas G. Jones Houston, Texas 77002
(PRINT OR TYPE NAME) CITY STATE ZIP
Vice-President (713) 650-0903
TITLE AREA CODE TELEPHONE NUMBER
10
EXHIBIT NO. 7
i
' I
BID SHEET
PROPERTY LOCATION:
Item No.1.11 A portion of the Glenwood Addition, South 30 feet of Lot 16, Block 218,
Jefferson County. Approximately.10 acres,more or less (Exhibit K).
1. Bonus Payment $1,000.00 per acre
2. Oil and Gas Lease Provisions
2.1 Reference Paragraph 3. Annual Delay Rental $ 50.00 per acre
2.2 Reference Paragraph 4. Royalty
2.2.1 Reference Paragraph 4(1)
25.12 (%) percent of the entire eight-eights (8/8%) of that
produced and saved from the land described.
2.2.2 Reference Paragraph 4(iii)
25.12 (%) percent of the market value of the gas at the time it
is produced.
25.12 (%)percent of the amount realized therefrom by Leasee
of an affiliate of Leasee.
2.2.3 Reference Paragraph 4(iv)
25.12 (%)percent of the market value of such oil,condensate,
other liquid hydrocarbons, gas, casinghead gas, or other gaseous
substances at the well or delivery point on the leased premises.
25.12 (%)percent of the market value of the gross production
of products and components derived therefrom by such processing and
manufacturing at such plant.
25.12 (%) percent of the market value at the tailgate of the
plant on residue gas.
2.2.4 Reference Paragraph 4(v)
25.12 (%) percent of tha market va!u3 at the well at the time it
is produced.
25.12 (%)percent of the market value.at the downstream outlet
of an oil and gas separator.
2.2.5 Reference Paragraph 4(vi) _
25.12 (%) percent of the amount realized by Leasee or
Leasee's affiliate from use, sale, delivery, or processing of such gas, oil,
or other liquid hydrocarbons.
2.3 Reference Paragraph 5.
Shut-in Gas Provision on Gas S 500.00 per well
2.4 Reference Paragraph 6.
Minimum Royalty Payments $_75.00 per acre
Jones & Zwiener, Inc. 1300 Blain Street, Suite 1720
COMPA NAME STREET ADDRESS ZIP
SIGNATURE OF BIDDEA P.O. BOX ZIP
Douglas G. Jones Houston, Texas 77002
(PRINT OR TYPE NAME) CITY STATE ZIP
Vice- President (713) 650-0903
TITLE AREA CODE TELEPHONE NUMBER
11
EXHIBIT NO. 8
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EXHIBIT 9
EXHIBIT 'rMr'
OIL AND GAS LEASE
THE STATE OF TEXAS
COUNTY OF JEFFERSON j
THIS AGREEMENT made and entered into this the_day of by and
between the City of Beaumont, hereinafter called Lessor, and
hereinafter called Lessee,whether one or more,
WITNESSETH:
1. GRANTING CLAUSE: Lessor, for and in consideration of the sum of TEN AND
NO/100 DOLLARS($10.00)cash in hand paid,and other valuable consideration,receipt of which
is hereby acknowledged,hereby grants,leases and lets exclusively unto Lessee for the purpose
of exploring for and producing oil and gas and other liquid hydrocarbons. Upon the following
terms and conditions,the following described land,to wit:
As fully described in Exhibit"A"attached hereto and
made a part hereof.
Due to the nature of the present use of the surface of the herein leased premises Lessee
shall make no surface use whatsoever without the prior written consent of Lessor and all other
governmental authorities having jurisdiction hereof. -
There is expressly reserved and excepted unto Lessor(except as hereinabove provided)
all other mineral substances(except those expressly covered in this lease)owned by Lessor in,
under,or upon the leased premises,together with the rights of ingress and egress for purposes
of exploration for and production of those mineral substances and forms of energy hereby
reserved and excepted unto Lessor. There is further reserved unto Lessor the right to authorize
any and all geophysical and geological tests on the leased premises reasonably necessary and
incident to the exploration for such mineral substances and forms of energy. Such exploration
and production shall not unreasonably interfere with the operations of the Lessee herein.
For the purpose of calculating payments hereinafter provided(except royalties),the land
described in Exhibit"A"attached hereto is considered to constitute
acres,whether actually more or less.
2. LEASE TERM: Subject to the other provisions herein contained,this lease
shall be for a term of three (3)years from this date(called primary term) and as long thereafter
as oil,gas,other liquid hydrocarbons are produced in paying quantities(herein defined)from the
leased premises, or this lease is otherwise maintained in effect as hereinafter provided.
E MIBIT NO. 9
rn
Oil and Gas Lease Page 2
City of Beaumont
3. ANNUAL DELAY RENTAL: This lease shall terminate as to all the leased premises
lying outside of a producing well tract or unit one year from this date unless on or before such
anniversary date Lessee shall pay or tender to Lessor at 801 Main Street, Beaumont, Texas,
regardless of changes in ownership of said land or the rentals,the sum of
DOLLARS($ )per acre(herein called rentals)for all the leased premises lying
outside of a designated producing unit well tract or unit,which shall continue this lease in force
and effect as to all such land for a period of twelve(12) months. In like manner and upon like
payment or tender annually, such termination of all the leased premises lying outside of a
designated producing unit well tract may be further deferred for successive periods of twelve(12)
months each during the primary term. The payment or tender of rental under this paragraph and
of royalty under on any gas well from which gas is not being sold or used may be made by the
check or draft of Lessee mailed or delivered to the parties entitled thereto on or before the date
of payment.
4. ROYALTY: The royalties to be paid by Lessee to Lessor are:
(i) On oil and condensate or other liquid hydrocarbons produced at the well or at an
oil and gas separator of the conventional type ( %)percent of the entire eight-eights
(8/8%) of that produced and saved from the land described herein, free of any expense to
Lessor,to be,at Lessor's option either(1)delivered into the pipelines,tanks or other receptacles
to which Lessee may connect Lessee's well or wells for the purpose of storage and/or sale of
the oil produced, (2) delivered at the well into tanks or other receptacles provided by Lessor,at
Lessor's own expense, (3) purchased by Lessee or any affiliate of Lessee, at the market price
being paid on the date of purchase,or(4)sold by Lessee(for Lessor's account)to the purchaser
of Lessee's oil if sold by Lessee at the well or on the lease,for the price received by Lessee, or
any affiliate of Lessee,for its own oil produced from said land. In no event shall the price paid
be less than the market value on the date produced or the price received by Lessee, or any
affiliate of Lessee,for its own oil produced from said land. In no event shall the price paid be
less than the market value on the date produced or the price received by Lessee or an affiliate
of Lessee, whichever is greater. Provided, however, if the oil and condensate or other liquid
hydrocarbons be run through or processed in a plant of the type authorized below,the royalty
thereon shall be calculated and paid under the terms and provisions as herein provided.
(ii) Lessee agrees that before any gas containing recoverable liquid hydrocarbons -
(except gas run through an absorption plant or other type of plant for the extraction of
hydrocarbons products as hereinafter authorized below)produced from said land is sold or used,
it will be run through an adequate oil and gas separator of the conventional type or other
equipment as least as efficient, so that as much of such liquid hydrocarbons as can be
reasonable recovered from the gas by such means will be recovered, without diminishing the
BTU rating below the prevailing minimums of the industry for the sale of such gas in the area.
(iii) If gas,casinghead gas or the gaseous substances produced from said land is sold
at the well or at a delivery point on or off the leased land,the royalty on same shall be
( %) per cent of the market value of the gas at the time it is produced,
provided that in no event shall the price paid be less than ( %)percent of the amount
realized therefrom by Lessee of an affiliate of Lessee.
(iv) If Lessee,or an affiliate of Lessee shall themselves,or by arrangement with others,
run oil, condensate, other liquid hydrocarbons, gas, casinghead gas, or other gaseous
�r
Oil and Gas Lease Page 3
City of Beaumont
substances produced from said land through a processing absorption or extraction plant,or use
such production from said land in the manufacture, extraction or separation of gasoline,
condensate, distillate, butanes, propanes, chemicals, chemical compounds, or the liquid or
gaseous hydrocarbons,or products manufactured,processed,separated,or extracted therefrom,
the royalty therefor shall be,at the option of Lessor,either ( %) percent of the market
value of such oil,condensate,other liquid hydrocarbons,gas,casinghead gas,or other gaseous
substances at the well or delivery point on the leased premises,or ( %) percent of
the market value of the gross production of products and components derived therefrom by such
processing and manufacturing at such plant, and Lessor shall be paid on residue gas
( %)percent of the market value at the tail gate of the plant,but in no event less than the
proportionate amount realized by Lessee or an affiliate of Lessee for such residue gas. The
market value paid hereunder for gasoline, condensate,distillate,butanes,propanes,chemicals,
chemical compounds or other liquid or gaseous hydrocarbons, or products manufactured,
processed, so separated or extracted, shall be not less than the average selling price of the
respective grades thereof f.o.b.at the plant for the month in which same is delivered and shall
be not less than the average price quoted(if prices are quoted)in two of the leading periodicals
of the industry for similar grades of the products enumerated above.
(v) The royalty on any gas,casinghead gas or other gaseous substances,produced
from the land herein described and used, sold or delivered in any way other than specifically
provided above shall be_ ( %) percent of the market value at the well at the time
it is produced, except that if the same is run through an oil and gas separator as hereinabove
provided,the royalty shall be ( %) percent of the market value at the downstream
outlet of such separator, but not less than the amount realized by the Lessee, or an affiliate of
Lessee.
(vi) Should Lessee or an affiliate of Lessee use,sell, deliver, or contract with others
for the use,sale,delivery or processing of gas,oil,or other hydrocarbons from said land for any
purposes or under any condition not specifically covered by this Paragraph 4,then Lessor shall
have the option at any time,and from time to time,to elect as to the royalty thereon to(1)either
received the royalty herein provided for gas,oil or other liquid hydrocarbons produced and saved
or sold,or(2)to be paid ( %) percent of the amount realized by Lessee or Lessee's
affiliate from the use,sale, delivery or processing so such gas,oil or other liquid hydrocarbons
produced from said land or received by Lessee or an affiliate of Lessee in exchange for or in lieu
of gas,oil or other liquid hydrocarbons produced from the said land,or any components thereof.
(vii) Lessee shall not have the right to reinject or store oil,gas or other hydrocarbons
produced from said land into any underground reservoir or formation in or under the land
described herein.
(viii) The term"affiliate of Lessee"as herein used, means and includes any partner,
joint venturer,creditor,agent or representative of Lessee;any firm or corporation that,at the time
in question, is a subsidiary or part firm of Lessee; any firm or corporation which has the same
parent firm or corporation as or substantially the same officers or directors as Lessee; any firm
or corporation in which any officers,directors,stockholders,partners,joint venturers,agents or
representatives of Lessee own controlling interest;or any person,firm or corporation which owns
a controlling interest in the capital stock or interest of Lessee. In addition to the foregoing
definition of "affiliate of Lessee", it is understood and agreed that if any oil gas or other liquid
hydrocarbons or any portion thereof produced from the land described herein is delivered or sold
Oil and Gas Lease Page 4
City of Beaumont
to any person or entity and subsequently the same or any portion thereof is redelivered or resold
to Lessee, or an affiliate of Lessee,then within the meaning of this lease, and for the purposes
of calculating the royalty hereunder,the person or entity top which such oil gas or other liquid
hydrocarbons are delivered or sold,shall be regarded as an"affiliate of Lessee". If Lessee or an
affiliate of Lessee receives, purchases or uses all or any portion of the oil, gas or other liquid
hydrocarbons which were produced from the land covered by this lease which was obtained after
Lessee, or an affiliate of Lessee, has sold,transferred or delivered to a party, not an affiliate of
Lessee,at such time;or if Lessee,or an affiliate of Lessee,obtains by purchase in exchange or
in a trade out or exchange, gas, oil or other liqu'd hydrocarbons of a similar nature to those
produced or reasonably suite to the use to which the production from the land covered hereby
could be put, then in that event, the gas, oil or other liquid hydrocarbons obtained shall be
treated for all purposes under this Paragraph as if same had remained in the hands of Lessee,
or an affiliate of Lessee.
(ix) Notwithstanding any thing herein to the contrary contained, it is expressly
stipulated that Lessor, at Lessor's option, and from time to time, upon thirty (30) days prior
written notice to Lessee, may elect to take in kind any of its royalty share of gas, oil or other
hydrocarbons produced hereunder,and to separately sell,use or dispose of same or any portion
thereof. In the event Lessor so elects to take in kind all or a portion of its royalty share of any
mineral or production,Lessor shall install the necessary additional facilities at Lessors's cost and
expense. Any contract entered into by the Lessee for the sale of gas, oil or other liquid
hydrocarbons produced shall be subject to and express that it is subject to Lessor's right to take
in kind. Lessor may exercise such right to take in kind from time to time, and also may
countermand same from time to time on like written notice. Lessee shall forthwith furnish Lessor
true copies of all contracts entered into by Lessee for the sale or disposition of any gas, oil or
other liquid hydrocarbons produced under this lease. Unless and until and at all times, except
when Lessor is receiving and separately disposing of Lessor's royalty portion of gas, oil and
other liquid hydrocarbons, Lessee will be obligated to receive and dispose of same under the
royalty provisions of this lease.
(x) Lessee agrees that division order or other such documents shall not constitute a
valid amendment alteration or addition,o the provisions of this lease.
(xi) Lessee agrees that any royalties accruing under the lease (including those paid
in kind) shall be without deduction for the cost of producing, gathering, storing, separating,
treating,dehydrating,compressing,processing,trucking,transporting,and otherwise making the
oil, gas and other products produced hereunder ready for sale or use.
(xii) It is expressly provided that Lessee and any affiliate of Lessee shall at all times
exercise due diligence as the fiduciary agent for Lessor in the marketing of all products produced
under the terms of this lease.
(xiii) Royalties payable on production hereunder shall be due within sixty(60)days after
the sale of such production provided,however, it is agreed that the royalty payment due on the
first sale of a product produced hereunder shall not be due until one hundred twenty(120)days
after such sale. Any royalties not paid as herein provided, including suspended royalties shall
bear interest at the rate of ten percent(10%) per annum until paid.
5. SHUT-IN GAS PROVISION ON GAS: Notwithstanding anything to the contrary
i l
Oil and Gas Lease Page 5
City of Beaumont
herein,it is agreed that if and while there is a gas well or wells on the leased premises(the term
"gas well"shall be wells capable of producing natural gas which are classified as gas wells by
the governmental authority having jurisdiction) and such well or wells are shut-in, then Lessee
shall pay Lessor monthly an amount equal to $ per well. This amount shall be paid
monthly,the first payment being due no later than sixty(60)days after completion of such shut-in
well or wells,and shall continue until such gas is produced and sold. Provided,however,Lessee
may maintain this lease in force and effect solely by the tender of shut-in payments in
accordance with this paragraph for a period not to exceed twenty-four(24)consecutive months
for the first and twelve(12)consecutive months for any subsequent occurrence during the term
of this lease. It is expressly understood and agreed that such shut-in payments shall be
considered a rental and shall not constitute advance royalty.
It is understood that shut-in gas payments are additional delay rental payments and must
be timely made.
6. MINIMUM ROYALTY PAYMENTS: After the end of the primary term, should the
total payments made under this lease for the preceding lease year be less than$ per acre
for each acre covered by this lease on the first day of such lease year,then within 60 days after
the end of such lease year Lessee shall pay to Lessor the difference between that amount and
the payments actually made. The term'lease year"shall mean each yCar commencing on the
anniversary date of this lease. Should this minimum royalty payment not be timely made to
Lessor or the depository bank above designated,then it shall be considered that this lease is not
producing in paying quantities. A minimum royalty payment shall be allowed for no longer than
two(2)consecutive years,after that time if the well is not providing production so that the actual
royalty due lessor equals the minimum royalty,then this lease shall terminate. -
7. PARTIAL OWNERSHIP OF MINERAL ESTATE: It is agreed that if Lessor owns an
interest in said land less than the entire mineral estate royalties and rentals or other payments
herein to be paid or delivered to Lessor shall be reduced proportionately and all outstanding
royalties shall be deducted from those herein provided.
6. CESSATION OF PRODUCTION AND CONTINUOUS OPERATIONS:After discovery
and production of oil, gas or other liquid hydrocarbons on the leased premises,and after the
expiration of the primary term of this lease, if production thereof should cease from any cause, _
this lease shall not terminate if Lessee commences operations for drilling or reworking an existing
or new well within sixty (60) days thereafter. If at the expiration of the primary term Lessee is
then engaged in any drilling or reworking operations thereon or shall have completed a dry hole
thereon within sixty(60)days prior to the end of the primary term,this lease shall remain in force
so long as operations on said well or for the drilling or reworking of any well are prosecuted with
no cessation of more than sixty(60)consecutive days,and if they result in the production of oil
gas or other liquid hydrocarbons,this lease shall remain in force as hereinabove provided so
long thereafter as oil,gas or other liquid hydrocarbons is produced from said land,or on acreage
pooled therewith (if so provided for in this lease). In the event, and during such period of time,
this lease is being continued in effect under the provisions of this paragraph,Lessee upon written
request of Lessor shall render to Lessor weekly reports of all operations begun, conducted or
terminated by lessee upon the leased premises, including, but not limited to, daily progress
information regarding each well until oil, gas or other liquid hydrocarbons are produced and
royalties paid thereon, or until the lease is surrendered to Lessor. Reworking operations
hereunder shall be deemed to be commenced when the first work is commenced and prosecuted
i
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Cii and Gas Lease Page 6
City of Beaumont
'ivith reasonable diligence and drilling operations on a new well shall be deemed to be
ccmmenced on the date when the well is spudded in with a rig capable of reaching the permitted
cepth.
9. PARTIAL SURRENDER: Should any part of this lease be pooled, as provided in
:aragraph 22 hereof,with an adjoining tract of land during the primary term of this lease and a
,bell actually drilled on said unit,then Lessee shall reasonably develop the acreage hereunder.
I 7i complying with this provision, it is agreed that in the event more than 180 days elapses
-etween the completion of the unit well and the commencement of actual drilling operations on
7.e next unit well Lessee shall upon written demand of Lessor forthwith execute and place of
record in the county of which such land is located a release of all the premises covered by this
:ease save and except that Lessee may retain under the terms hereof the minimum number of
a:res as provided in paragraph 22. To comply with the requirement of"commencement of actual
c-iiling operations" as'used herein Lessee shall have a drilling rig capable of drilling to the
permitted depth on the location of the well and on a unit designated of record. Shall Lessee fail
c refuse to place of record in the proper county the necessary release of lease as required
herein Lessor shall have the right to recover from Lessee all reasonable and necessary expenses
cf obtaining and filing such release including attorneys fees and costs of court.
10. OFFSET OBLIGATIONS: After discovery of oil,gas,or other liquid hydrocarbons
L:on the leased premises, in addition to the other provisions of this lease, Lessee agrees to
c_nduct such further operations as a reasonably prudent operator would do under the same or
s_-;iiar circumstances in order to reasonably develop the leased premises. In the event a well
cr wells producing oil in paying quantities should be brought in on adjoining lands within six
h_ndred sixty (660) feet from the leased premises, or draining the leased premises, or in the
e'.ent a well or wells producing gas in paying quantities should be brought in on adjoining lands _
K min one thousand three hundred twenty(1,320)feet from the leased premises,or draining'the
le=ased premises,Lessee agrees to commence actual drilling operations on the leased premises
c`an offset well within one hundred twenty(120)days from the date production commences from
s=ad well or wells and Lessee receives all necessary permission from the Lessor and other
c:vernmental autnorAies having jurisdiction over the surface and mineral use of the leased
p emises. In lieu of drilling such well or wells, Lessee may, at Lessee's option, pay Lessor, as
=:npensatory royalty, a sum equal to the royalty which would be payable under this lease on
the volume of production from a well or wells on other lands or covered by this lease had same
been produced hereunder. Notwithstanding anything to the contrary herein contained, Lessee
stall not be obligated to drill such well or wells or to pay such compensatory royalty if Lessee
already has a producing well on these leased premises which may reasonably be held to provide
drainage protection.
11. DAMAGES: Lessee will bury and maintain all pipelines a minimum of forty-eight
{� !inches below the surface of the ground. Lessee will pay to Lessor actual damages to timber,
to :fops, to improvements and to the surface of the leased lands suffered by Lessor and any
te-ant of Lessor caused by or arising out of operations under this lease. Pits and excavations
mare during drilling operations will be filled by Lessee and the surface restored, as nearly as
reasonably possible,to its original condition;and if Lessee shall fail to do so,the cost to Lessor
cf s-ich filling and restoration shall be paid by Lessee,Lessee's obligations under this paragraph
s~ail be in addition to,and shall not in any way modify or diminish its obligations under any other
paragraph thereof.
12. SURRENDER: Except as herein otherwise provided, Lessee may, at anytime,
i
Oil and Gas Lease Page 7
City of Beaumont
execute and deliver to Lessor,a release covering any portion of the above described premises,
and thereby surrender the lease to such portion, and be relieved of all obligations as to the
acreage surrendered;provided,however,nothing herein contained shall be construed to relieve
the Lessee of any obligations or payment already then assumed or incurred.
13. REMOVAL OF LESSEE'S PROPERTY: Lessee shall have the duty,during or within
one hundred twenty (120) days after the expiration of this lease, to remove all property and
fixtures placed by Lessee on the leased premises,including the right to draw and remove casing;
Property and fixtures not removed within such one hundred twenty(120)days period will become
the property of the Lessor, except that if Lessor requires that any of such property be removed.
Lessee shall remove the same property,or in the event Lessee fails to do so,Lessor may remove
the same at the sole cost, risk and expense of Lessee.
14. TERMINATION: Any well or wells shall be abandoned in accordance with all rules
and regulations of the railroad Commission of the state of Texas and any other environmental
or regulatory governmental body having jurisdiction thereof. All Pipelines shall be removed and
the surface restored and leveled.
Any pipeline, pits or other excavations shall be dug using the two-step method as
understood in the pipeline business. Upon abandonment top soil shall be placed on the surface
to its original depth.
Any ground contamination caused by Lessee shall be corrected within a reasonable time
to conform with then existing environmental rules and regulations.
15. FORCE MAJEURE: The covenants and agreements herein expressed or implied
in this agreement shall be subject to all valid 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 it such failure is the
result of any such law, order, rule or regulation. If after tha primary term, from such cause,
Lessee is prevented from conducting drilling or reworking operations on,or producing oil or gas
from the leased premises, the time while Lessee is so prevented shall not be counted against
Lessee,and this lease shall be extended for a period of time equal to that during which Lessee
is so prevented from conducting such drilling or reworking operations on,or producing oil or gas =
from the leased premises, notwithstanding any other provision thereof. Similarly,when drilling
or other operations are delayed or interrupted by storm, flood, or other Acts of God, fire,war,
rebellion, insurrection,riot,strikes,differences with workmen,or failure of carrier to transport or
furnish facilities for transportation,or as a result of some order, requisition, or necessity of the
government,the time of such delay or interruption shall not be counted against Lessee,anything
in this lease to the contrary notwithstanding,and in such event this lease shall be extended for
a period of time equal;to that during which such Lessee is so prevented from conducting drilling
or reworking operations on,or producing oil or gas from such leased premises,notwithstanding
any other provision hereof. Lessee shall within thirty(30)days after receiving notice of any such
Federal or State law, executive order, rule or regulations, act or event contemplated under this
section, notify Lessor thereof and advise Lessor of the effect of such upon this lease. Lessee
shall similarly notify Lessor promptly of the termination thereof. Provided,however,the provisions
of this paragraph shall in no way abridge the right of Lessor to receive,or relieve Lessee of the
obligation to pay,any minimum sums herein described and provided. Anything to the contrary
notwithstanding,this lease shall not be suspended by reason of this paragraph for longer than
i
Oil and Gas Lease Page 8
City of Beaumont
one year per occurrence.
16. BREACH OF TERMS: Except as herein otherwise provided, the material breach
by Lessee of any obligation arising hereunder shall not work a forfeiture or a termination of this
lease or cause a termination or reversion of the estate hereby created nor be grounds for
cancellation hereof in whole or in part unless Lessor has first given to Lessee notice in writing
specifying the particulars in which, in the opinion of Lessor, Lessee has failed or beached this
lease,and unless Lessee (if Lessee, in fact,be in default in the particulars specified)shall fail to
proceed within thirty(30)days after receipt of such notice to comply with the obligations of said
lease specified in said notice. If Lessee be of the opinion that it is not in default in the particulars
specified) shall fail to proceed within thirty(30)days after receipt of such notice to comply with
the obligations of said lease specified in said notice. If Lessee be of the opinion that it is not in
default in the particulars specified, Lessee shall reply to Lessor in writing within thirty (30) days
of the receipt of such notice by Lessor,specifying how, in the opinion of Lessee, Lessee is not
in breach of this lease. If Lessor brings suits to compel performance of,or to recover for breach
of any covenant or condition herein contained, or for declaratory relief, and prevails therein,
Lessee agrees to pay to Lessor reasonable attorney and consultant fees in addition to the
amount of judgment and costs.
17. WELL INFORMATION/INSPECTION: Lessee shall furnish Lessor with true copies
of each application and report made by Lessee to the governmental cuthority asserting
jurisdiction pertaining to operations on the leased premises or on land pooled therewith
simultaneously with Lessee's filing of each application and report with such governmental
authority. Lessee shall promptly furnish Lessor with final and complete copies of all logs and
electrical surveys run in;each well located on the leased premises or on land pooled therewith, -
showing formations encountered and the identification of such formations as determined by
Lessee or Lessee's geologists or paleontologists. Lessee shall promptly furnish Lessor with
copies of daily drilling reports,core analyses and paleontological reports when available and all
other technical information readily available with Lessor deems necessary to be informed of the
condition and status of all wells drilled, reworked, recompleted or otherwise operated on the
leased premises or on land poled;herewith. Lessor shall have the right,personally or through
any agent or representative authorized by lessor,at Lessor's risk,to have derrick floor,well site
and logging truck or trailer privileges during operations on the leased premises or on land pooled
therewith. Upon written request,lessee shall promptly furnish Lessor with full information on the -
metering of production and production runs, together with full information regarding the
calculation of all royalties payable under this lease.
18. ASSIGNMENT: The rights of Lessee hereunder may be assigned only with the
written consent of Lessor. The rights of Lessor hereunder may be assigned as to all or any part
of the land or as to any minerals thereunder,and the provisions hereof shall extend to the heirs;
successors and assigns,but no change or division in ownership of the lands,rentals or royalties,
however accomplished,shall operate to enlarge the obligation or diminish the rights of Lessee.
Likewise, no change in ownership of the leasehold rights hereby conveyed, however
accomplished,shall operate to enlarge the obligations or diminish the rights of Lessor hereunder.
No sale or assignment by either parry hereto shall be binding on the other party until such other
party or an authorized agent thereof shall be furnished with a certified copy of recorded
instrument evidencing same.
Oil and Gas Lease Page 9
City of Beaumont
19. LIABILITY FOR DAMAGES: It is agreed that the terms and provisions of this
agreement shall insure to and be binding upon the respective successors,heirs,and assigns of
Lessor and Lessee. Notwithstanding that this lease may be assigned in whole or in part, it is
understood and agreed that the Lessee, both the original Lessee and such assignees shall
nevertheless be jointly and severally liable to Lessor,their heirs,successors,and assigns,for all
damages to the surface and subsurface of the lands covered hereby,for any and all pollution .
caused by operations hereunder, for the non-compliance with all Federal, State or other
governmental or regulatory body's or agency's laws,rules and regulations,either now in effect
or hereinafter enacted or promulgated, and also without limitation by enumeration, any and all
other causes of such action which may be asserted against Lessor,their heirs,successors,and
assigns,for acts or omissions caused by operations hereunder by any Lessee,and in connection
with all of these, Lessee and all such assignees shall be obligated to indemnify and hold
harmless the Lessor,their heirs, successors and assigns.
20. PAYMENTS, NOTICES ETC.: All payments of monies payable to Lessor under
the terms and provisions hereof may be paid or tendered to Lessor or to the credit of Lessor in
that bank set forth in Paragraph 3 of this lease,which bank and its successors shall continue as
the depository for all monies payable hereunder,regardless of changes in ownership of said land
or said minimum royalties, unless and until Lessor shall execute and deliver to Lessee a
recordable instrument naming and designating another and different bank for such payments or
tenders. 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 said payments, Lessee shall immediately notify
Lessor thereof and shall not be held in default for failure to make such payment or tender until
thirty (30) days after Lessor shall deliver to Lessee a proper recordable instrument naming
another bank to receive such payment or tender. Any notices,reports,maps,logs, requests or
any other communications herein provided to be made to Lessor by Lessee shall be made to
Any notices of communications specified in this lease to be given to Lessee by Lessor be given
to
21. SECTION HEADINGS: Paragraph and section headings and titles are for
convenience only,and do not represent interpretation or intent of the substance of the terms and
provisions of this agreement.
22. The leased premises may only be pooled with a well located on land other than
land leased from this lease if a minimum one-half(1/2)of such unit shall consist of land from this
lease. Further,no such unit shall consist of more than the minimum number of acreage required
by the Railroad Commission of Texas,or any governmental authority having jurisdiction thereof,
necessary for a full production allowable for such well. Any unit must be designated in writing
and filed for record in Jefferson County Texas, before the actual drilling of the well is begun.
No unit once designated shall be altered or amended by the Lessee without written permission
of the Lessor first obtained.
23. Lessee shall abandon any well or wells on lands covered by this lease within 120
days after such well ceases to produce or at such time as that part of this lease containing such
well or wells terminates, whichever is the earlier date.
Oil and Gas Lease Page 10
City of Beaumont
24. Notwithstanding anything to the contrary herein contained, this lease is granted
without warranty of title of any kind whatsoever,expressed or implied. The Lessor's warranty of
title herein is limited to the refund to Lessee of the original per acre bonus paid for each mineral
acre on which title fails. This shall be the only recourse against the Lessor in the event of any
failure of title.
26. Wherever the term"Lessor is used it shall mean the named"Lessor,its successors,
or assigns." Wherever the term"Lessee"is used, it shall mean its "successors, heirs, devisees
or assigns."
Witness our hands on the date first above written.
CITY OF BEAUMONT
By:
Lessor
By:
Lessee
THE STATE OF TEXAS? X -
COUNTY OF JEFFERSON f
This instrument was acknowledged before me on the day of
1991, by
for the City of Beaumont, acting in said capacity.
My Commission Expires: By.
Notary Public-State of Texas
By:
Print or Stamp Name of Notary
d
�—u-
t .- i'
zt o Beau ont
July 10, 1991
ADDENDUM NO. 1
OIL,GAS,AND MINERAL LEASE FOR VARIOUS
PROPERTIES OWNED BY THE CITY OF BEAUMONT.
Bid No. B-6-91-46
Bid Opening Date: Monday,July 15 1991 2.00 p.m.
Please be advised of the following changes to the above referenced specifications:
AMEND PARAGRAPH 22 as follows-
At the expiration of the primary term and after all continuous development operations have
ceased, this lease shall terminate as to all depths 100 feet below the deepest depth drilled in any unit
containing all or part of the above described lands. Lessor reserves the right of ingress and egress
through all formations for the purpose of drilling to and producing oil or gas from the formations which
may revert to lessor and the right to use as much of said surface as is necessary for the drilling for,
production of and storage of oil and gas from such formations.
It is understood and agreed that this lease shall provide for pooling of all or none of the herein
described lands if this lease covers 250.00 acres or less, and shall pool at least one-half of the herein
described lands if th;s lease covers over 250.00 acres.
HOWEVER,after the expiration of the primary term,and after the discovery and production of
oil, gas or other liquid hydrocarbons in paying quantities on the leased premises, Lessee shall
reasonably develop the acreage retained hereunder, and in complying with this provision, it is agreed '
that in the event more than one hundred eighty 0 80)days elapse between the completion of one well
and the commencement of actual drilling operations on the next well, Lessee shall upon vvritt en
demand of Lessors, forthwith execute and deliver to the Lessors, or of record in the county in
which said land is located, a release of all the premises covered by this lease, save and except that
Lessee may retain under the terms hereof not more than forty(40)acres surrounding each producing
oil well or oil well then being reworked;not more than one hundred sixty(160)acres surrounding each
producing gas well,shut-in gas well,gas well then being reworked,or the acres included in any pooled
gas unit capable of producing from a depth of less than nine thousand feet(9,000')subsurface;or not
more than three hundred twenty (320) acres surrounding each producing gas well, shut-in gas well,
gas well then being reworked, or the acres included in any pooled gas unit capable of producing from
a depth of nine thousand feet (9,000') or more but less than twelve thousand feet (12,000')
subsurface;or not more than six hundred forty(640)acres surrounding each producing gas well,shut-
in gas well, gas well then being reworked, or the acres included in any pooled gas unit capable of I
producing from a depth of twelve thousand feet(12,000')or more subsurface;each such tract(except
the tracts in pooled gas units, if any), to be centered by said well,to be in as nearly a square form as
is reasonably possible, unless otherwise agreed to by Lessors, provided that if at any time the
foregoing arises,the Railroad Commission of Texas or any government authority asserting jurisdiction
PURCHASING P.O. 130X 3827 13F,AUMONT, TEXAS 77704 PHONE(;09)880-3720 F.,X (409)880-3747
I-
I
ADDENDUM NO. 1 July 10, 1991
OIL,GAS,AND MINERAL LEASE FOR VARIOUS
PROPERTIES OWNED BY THE CITY OF BEAUMONT
Page 2
has prescribed a spacing pattern for the orderly development of the field or allocates a producing
allowable for a well with acreage content as a factor which is in greater than or less than the above-
described acreage,this lease shall remain in force and effect as to the tract or tracts of land designated
by Lessee in the manner herein provided containing the maximum number of acres so prescribed or
allocated and in effect at the time,such tracts around each such well and in each pooled gas unit being
hereinafter referred to as"well tracts".
ALSO AMEND PARAGRAPH 4(xi)as follows:
Notwithstanding any provisions of Paragraph 4 of this lease to the contrary, it is specifically
agreed that no gathering, dehydration, compression, separating, processing, treating and marketing
or other charges of any kind either directly or indirectly to make the gas ready for sale or use except
transportation, shall be assessed against the royalty interest of the Lessor resulting from the sale or
use of minerals produced from.the land covered by this lease or from land pooled therewith. In regard
to transportation costs and expenses, Lessee may not, either directly or indirectly, charge Lessor's
royalty for any costs or expenses of transportation where such gas is sold at the wellhead. Where gas
is sold off the premises,Lessee may deduct from the gross proceeds received for the sale of such gas,
a reasonable transportation fee or expense so long as the resulting price for such gas,after deduction
for a reasonable transportation fee, is greater than the then prevailing price being paid for gas at the
wellhead in the field. Said prevailing price shall be defined as that price published in the first issue of
each month of"Natural Gas Weekly" under the heading"Gas Price Report"for"Texas Gulf Coast,On
Shore, Spot Wellhead". Upon written request by Lessor, Lessee shall furnish a quote of the then
current"Natural Gas Weekly" publication and any documents supporting the transportation cr:arges.
Lessee will make all reasonabi,3 efforts to obtain•tie highest prices for gas sales.
If you have any questions, please contact me.
`Sincerely,
Brenda Beadle
Purchasing Manager
BB/sm