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HomeMy WebLinkAboutCity Council - 1101 RESOLUTION NO 3.101 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH, CALIFORNIA, APPROVING AND AUTHORIZ- ING THE MAKING AND ENTERING INTO OF A CERTAIN AGREEMENT WTI'H THE CORD OIL COMPANY, A NEVADA COR- PORATION. WHEREAS , the Cord Oil Company has presented to the City of Huntington Beach a certain proposal contained in the agreement hereinafter referred to, and WHEREAS , the City Council of the City of Huntington Beach, California , has carefully studied the same and has approved said agreement. NOW THEREFORE, the City Council of the City of Hunting- ton Beach, California, does hereby resolve , determine and declare as follows: Section l: That certain agreement be and the same is hereby approved, and the Mayor and City Council are hereby authorized to execute saidagreement for and on behalf of the City of Huntington Beach, California. Section 2: Said agreement herein referred to is in words and figures as follows: i 1 " Rego. 1101 • AGREEMENT THIS AGREEMENT made and executed in duplicate this 16th day of January . , 195D ,, by and between the CITY OF HUNTINGTON BEACH, a Municipal Corporation, hereinafter referred to as "City" , and the CORD OIL COMPANY, a Nevada Corporation qualified to do business in the State of Calif- ornia , hereinafter referred to as "Operator" ; • WITNESSETH: WHEREAS Operator is the owner of two William Gerard Certificates No. 2, Subdivisions 11 and 12, issued under the Act of Congress of February 10, 1855, (10 Stat. 849) , which entitle theowner thereof to select and locate eighty (80) acres of public land more or less ; and WHEREAS there exists a large body of public land lying within and adjacent to the City of Huntington Beach and oceanward therefrom, which may contain decosits of oil or gas ; and WHEREAS the parties hereto desire to enter into this • Agreement upon all of the terms and provisions hereinafter set forth covering or pertaining to the following described lands: All of the tidelands and submerged lands within the City limits of the City of Huntington Beach, excepting therefrom that certain area covered by an Agreement entered into on the 9th day of May, 1947, by and between the PACIFIC BASIN DEVELOP- MENT CO . , a Nevada Corporation, as First Party, • 2 Reso. 1101 and the CITY OF HUNT INGTON BEACH, a Municipal corporation, as second party; and such other lands as are hereinafter referred to; Provided, however, and further excepting from this agreement that certain land located within the present limits of the City of Huntington Beach described as follows: Beginning with the intersection of the south- westerly extension of the center line of Ninth Street with the line of ordinary high tide of the Pacific Ocean; thence southwesterly along said center line of said Ninth Street as extended, one mile ; thence southeasterly and parallel with the line of ordinary high tide and one mile distant therefrom to the easterly city limits of the City of Huntington Beach; thence northeasterly along the southeasterly limits of said city to the said line of ordinary high tide ; thence north- westerly along the said line of ordinary high tide to point of beginning. NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and other valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the premises and the mutual covenants and ,conditions hereinafter set forth, it is mutually understood and agreed as follows: FIRST : Operator will: (A) Transfer and assign to City said Certificates of Gerard Scrip for the purposes of this Agreement, and to transfer and assign to City from time to time such other Certificates of scrip, either Gerard or other types or kinds as Operator may elect, to be used in the same manner and for the same purposes as the scrip herein described, and subject to the terms and provisions hereof. (B) Pay all of the expenses of locating said Certifi- cates , including all filin;: fees , or any part or portion 3 Res o. 1101 thereof as hereinafter provided , and assist the City in either obtaining a patent to the lands upon which said Certificates or other Certificates are located, or obtain- ing an oil and gas lease from the United States Government upon the lands hereinabove described and referred to , or other or additional lands surrounding or adjacent thereto as may be the subject of lease from the United States Government. (C) Proceed as soon as it shall be possible and pract- ical with the drilling, at its own cost and expense of an oil well or wells upon or into the lands covered by any scrip location provided for herein or United States Oil and Gas Lease , as the contractor for City, at or from such bocation or locations as shall be selected by Oper- ator after first notifying the City as to the location thereof, and will thereafter proceed at its own cost and expense with the diligent production of oil and gas from any commercial producing wells. (D) Make the payments out of the proceeds of pro- duction from wells drilled by Operator as provided in sub- division (A) of THIRD hereof. Operator shall be excused from making any payments hereunder in the event any oil, gas , casing head gasoline, or other hydrocarbon substances produced or manufactured from the lands herein referred to or the proceeds thereof, shall be impounded or the use or disposition thereof otherwise prevented or enjoined. 4 Heso. 1101 (E`) Operator will hold City and its employees and officers harmless of and from any loss , cost, or damage resulting in any manner from Operator's operations under this Agreement , and company will defend with due diligence any action or suit arising hereunder or in connection there- with, including but not in limitation thereof, any action or suit either in law or equity filed against City and Operator, either jointly or severally. Operator may in- stitute and prosecute to final judgment at its election and expense , any and all actions or suits , either in law or in equity, in the name of City as may be necessary or required in the opinion of Operator to protect the interest of the parties in and to this Agreement. SECOND: City will: (A) Within ten (10) daysafter receiving notification from Operator, cause said Certificates of Gerard Scrip or any other scrip to be located upon such portion or portions of the lands the subject matter of this Agreement, as shall hereafter be selected and designated by Operator, and there- after City will cooperate fully in prosecuting said location or locations, and in prosecuting and negotiating for an oil and gas lease from the United States of America on the lands referred to in Subdivision (B) of FIRST hereof, and upon receipt of any such oil and gas lease from the United States of America to promptly execute the same. (B) In the event a lease shall be executed by the I� United States of America with City covering any land upon I 5 Res o. 1101 which scrip shall be located, or in the event said scrip Certificates or any of them shall be withdrawn from filing with the United States of America by mutual agreement of the parties hereto, or in the event the filing and location of said scrip or any scrip should be finally rejected by the United States of America , then in any of said events said Certificates or any of them, shall be promptly trans- ferred and re-assigned by City to Operator, and all scrip and evidence of title attached thereto shall be redelivered to Operator. (C) Authorize, and City does hereby authorize Operator as soon as it deems possible and practical as its contractor, to drill a well or wells for the production of oil and gas �41 upon any land covered by scrip locations, and in the event of an execution of an oil and gas lease by the United States of America to City, to then also drill upon or into such portions of the land so leased to City as Operator shall deem. advisable. Operator is hereby granted the right and is hereby authorized to construct any and all necessary works , structures and improvements as may be necessary, required , or convenient to carry on drilling and pro- duction operations hereunder, and City does hereby grant to Operator any and all easements or right-of-ways as may be necessary, and to use such streets, highways , or other public property belonging to City as may be necessary, required , or convenient for the mutual benefit of the I, 6 Reso. 3101 parties hereto but without substantial interference with any public use, and Operator agrees to do everything possible to minimize any interference. (D) Subject to the provisions hereof, to sell to Operator all royalty oil derived by it from any source at the prevailing; posted market price of the Standard Oil Company of California , Shell Oil Company, Union Oil Com- pany, The Texas Co . , Tide Water Associated Oil Company, and General Petroleum Company in the immediate area or adjacent to the lands covered by this Agreement, for oil of a like kind , gravity, quality, and/or content the day the oil is run into pipe line or storage tanks , after making the customary corrections and deductions for temperature, water, and . other impurities. In the event the said oil companies aforementioned shall have different posted market prices for said area or adjacent thereto, cash settlement of the oil royalty hereunder shall be based on the highest of such prices. In the event there shall be no posted price by the aforesaid oil companies or Operator is unable to sell the oil at any posted price, cash settlement shall be based on the price Operator receives for said oil. No royalty shall be paid on oil used by Operator for operations hereunder. THIRD; This Agreement is intended to be and shall be construed in part as aidrilling and operating agreement by and between the City and Operator, and it is mutually agreed 7 Reso. 1101 as follows: (A) That in consideration of Operator providing said Gerard Certificates and other Certificates as it may elect to provide, and bearing all of the expenses and costs mentioned in this Agreement, Operator shall be the sole and exclusive drilling contractor of City and Operator is hereby given and shall have the exclusive right and privilege to drill for, produce, extract, and remove oil, gas , and other hydrocarbon substances in and from the lands herein referred to , and shall have the exclusive right to enter upon the lands as herein provided for such purposes . Operator shall have the right to retain as its interest all of the production from the wells drilled by Operator, by making payments as follows: (1) By paying to City Sixteen and Two-Thirds percent (16-2/30) of the market price determined as provided in Subdivision (D) of SEC01M HEREOF of all of the production produced and sold from any well '. bottomed within the boundaries of any patented scrip lands and not under lease from the United States of America . (2) By paying to City five percent (516) of the market price determined as provided in Subdivision (D) of SECOND hereof of the production produced from p any well bottomed within the boundaries of any lease obtained from the United States of America covering 8 Reso. 1101 any lands referred to herein and the subject of this • Agreement , and in addition pay to City or to the United States of America as may be agreed the amount of money necessary to pay the royalty provided for in any such lease on the production from wells drilled by Operator on or into the leased area . All payments due by Operator shall be made on or before the 15th day of each month for the preceding calendar month. • Nothing herein contained shall permit or allow Operator to use any scrip or leased lands as a drilling site for the drilling and production of oil or gas from any property not covered by this Agreement , it being the intent hereof that City shall receive the payments herein provided for from all production produced by Operator under the terms and provisions hereof. At City' s option exercised not oftener than once a year upon sixty (60) days previous written notice, Operator shall deliver into City' s tanks adjacent to any receiving or storage tanks of Operator, or at the mount of the well or wells to a pipe line designated or constructed by City, • free of any cost to Operator, in lieu of the payments here- inabove provided to be paid to City, either sixteen and two-thirds percent (16-2/3 ) or five percent (%) of the oil produced by Operator hereunder, as the case may be. (B) The word "oil" and "productions' as used herein, each include oil , gas , and other hydrocarbon substances. • 9 Reso. 1101 (C) No compromise or settlement of any suit or con- tract relating to the tidelands or submerged lands which are the subject matter of this Agreement shall be made or entered into by City without first obtaining the written consent • and approval of Operator. (D) Each of the parties hereby agree to duly execute promptly upon demand of the other, any and all papers, instruments or documents necessary or convenient to the consummation of the program or purpose or purposes con- templated by this Agreement and to make the^.s Agreement fully effective, including applications for oil and gas leasesi scrip selections, notices and permits , and the Mayor or City Attorney of City is hereby authorized to execute any and all such instruments or documents as may be hereinafter required on behalf of the City under the provisions of this Agreement, and to be attested by the City Clerk. (E) The termof this Agreement shall continue for and during a period of twenty-five (25) years from and after the effective date hereof, and so long thereafter as oil, • gas or other hydrocarbon substances is or are produced from the lands referred to herein or hereinabove described. Nothing in this agreement shall prevent scrip selections or 'lease applications from being filed or leases being acquired on tide and submerged land outside the present limits of the City pursuant to the terms of this agreement and in the event such scrip, filings or lease applications are made, or in the event the Agreement between City and 10 Res€. MI Pacific Basin Development Co. shall be cancelled or terminated or not effective as to the land covered thereby, then such land or lands shall be included with and added to the lands specifically described herein for all of the purposes of this Agreement as fully in every respect as though said lands were originally included within the terms of, and described in this Agreement. (F) All personal property including derricks , mater- ials, apparatus, equipment, improvements , tanks , and other usual and necessary drilling and production property attached or affixed to or placed upon land by Operator, or being located thereon, shall be and remain the sole property of Operator, removable by Operator at its discretion during the term of this Agreement or upon the termination thereof for any reason. (G) If any section, sub-section, sentence, clause, or phrase in this Agreement is or may be for any reason held to be void, invalid, or unconstitutional, such decision shall not affect the validity of the remaining portions of this Agreement. The parties hereto do hereby declare that they would have entered into this Agreement and each section, sub-section, sentence, clause and phrase thereof irrespective of the fact that one or more sections, sub- sections, sentences, clauses, or phrases thereof may be declared void, invalid`, or unconstitutional. (H) In the event scrip filings and lease applications are finally determined or adjudicated and as a result thereof 11 Reeo. 1101 are finally rejected by the United States of America and the City does not acquire any of the lands or leases des- cribed in this Agreement, then and in that event this Agree- ment shall be deemed terminated and cancelled. In the event of partial final rejection either of scrip or leases after final determination or adjudication thereof that in so far as the lands in which said rejections are final this Agree- ment shall be deemed terminated and cancelled as to the lands covered by the rejected scrip or leases. (I) This Agreement shall inure to the benefit of and shall be binding upon the parties hereto and their successors and assigns . IN WITNESS WHEREOF the parties hereto have executed this Agreement the day and year first above written by their officers duly authorized and their seals affixed hereto . CITY 3T _EACH By' ATTEST _ 1 ayor • City Cle k CORD OIL COMPANY By President ATT EST Assistant Secretary 12 Reso. 1101 STATE OF CALIFORNIA ) ss COUNTY OF LOS ANGEL.ES ) On this day of �:1950, before me a Notary Public in and for said County and State, personally appeared A. P. SCOTT , known to me to be the President, and EDWARD D. NEUHOFF, known to me to be the Assistant Secretary of the CORD OIL COMPANY, the Cor- poration that executed the within instrument , known to me • to be the persons who executed the within instrument on behalf of the Corporation herein named, and acknowledged to me that such Corporation executed the same. IN WITNESS 'WHEREOF, I have hereunto set my hand and affixed my official seal the day and year first above written. Notary Public in and for said County and State. PASSED AND ADOPTED by the City Council of the City of Huntington Beach, California, at a Regular meeting thereof held on the 16th day of January , 1950. ATTEST : City Clerk • 13 STATE OF CALIFORl'u Reso. llfll IA ) County of Orange ) ss City of Huntington Beach ) I, J. L. HENRICKSEN, the duly elected, qualified and acting City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is five ; that the foregoing Resolution was passed and adopted by the affirmative vote of more than a majority of all the members of said City Council at a regular meeting thereof held on the 16th day of jgMIAU , 1950, by the following vote: AYES : Councilmen: LeBard, Wood, Langenbeck, Greer. NOES: Councilmen: Seabridge. ABSENT Councilmen: None. Cit Clerk and ex-off icio Clerk of the City Council of the City of Huntington Beach, California. 14