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HomeMy WebLinkAbout6737 RESOLUTION NO. 6 , 737 A RESOLUTION AMENDING RESOLUTION NO. 6700; AUTHORIZING AN AGREEMENT FOR SALE OF METHANE GAS TO PHF EXPLORATION COMPANY, INC . ; AUTHORIZING THE CITY MANAGER TO EXECUTE AND DELIVER THE AGREEMENT ; AND PRESCRIBING OTHER MATTERS RELATING THERETO. WHEREAS , on November 17 , 1981 , the Board of Directors of the City of Little Rock , Arkansas adopted Resolution No. 6700 which , among other things , authorized a Lease Agreement by and between the City of Little Rock, Arkansas and PHF Exploration Company , Inc. , and further authorized the Mayor and City Clerk to execute and deliver the Lease Agreement for and on behalf of the City; and WHEREAS , as a result of further neogtiations and deliberations by the Board of Directors and staff, the staff recommends that the City enter into an Agreement for Sale of Methane Gas rather than a Lease Agreement , and furthermore, that the City Manager be authorized and directed to execute and deliver the Agreement for Sale of Methane Gas on behalf of the City. NOW, THEREFORE , BE IT RESOLVED by the Board of Directors of the City of Little Rock, Arkansas ; SECTION 1 . That Section 1 of Resolution No. 6700 be amended as follows: Section 1 . That there be , and there is hereby authorized the execution and delivery of an Agreement for Sale of Methane Gas by and between the City of Little Rock , Arkansas and PHF Exploration Company , Inc . , in substantially the form and substantially the content as set out in the attached Exhibit "A " which is included herein as if set out line for line and word for word ; and that the City Manager is hereby authorized and directed to execute and deliver the Agreement for Sale of Methane Gas for and on behalf of the City. SECTION 2 . That Section 2 of Resolution No. 6700 be amended as follows: Section 2 . That the City Manager be and he is hereby authorized and directed, for and on behalf of the City , to do all things , execute all instruments and otherwise take all action necessary to the realization of the City ' s obligations under the Agreement for Sale of Methane Gas. SECTION 3 . That this Resolution shall be in full force and effect from and after its passage and approval . PASSED: February 10 , 1982 . APPROVED: MAYOR --- ATTEST: City Jerk 6(- 11" (SEAL) 2 EXHIBIT A AGREEMENT FOR SALE OF METHAINIE GAS This agreement made and entered into this day of , 1981 , by and between the CITY OF LITTLE ROCK, ARKANSAS (hereinafter called "Seller") , and PHF EXPLORATION COMPANY, INC. (hereinafter called "Buyer") ; W I T N E S S E T H: 1. Seller, for and in consideration of the sum of Ten Dollars ($10 .00) and other good and valuable consideration, receipt of which is hereby acknowledged, and of the covenants and agreements of Buyer hereinafter contained, does hereby sell and convey all of the methane gas (CH4) , located on the following described property situated in Pulaski County, Arkansas, to-wit: That part of the following described property to a depth not to exceed 500 ft. of the E 1/2 of the NW 1/4 of Section 9 , Township 1 South , Range 12 West less and except that part of the SE 1/4 of the NW 1/4 lying South of a line parallel to and 1 ,050 feet North of the South line of said SE 1/4 of said NW 1/4 and further excepting a tract described as starting at the NE corner of the NE 1/4 of the NW 1/4 Section 9 , Township 1 South, Range 12 West; thence S 03 degrees 12 ' W 316 feet along the East line of said NE 1/4 of the NW 1/4; thence S 62 degrees 28 ' W 284 feet along the North line of the Texas Eastern Transmission Corporation' s right of way; thence N 89 degrees 23 ' W 1060 feet to the West line of the NE 1/4 of the NW 1/4; thence N 3 degrees 09 ' E 450 feet along the West line of said Northeast Quarter (NE 1/4) of the NW 1/4; thence S 89 degrees 23 ' E 1305 feet along the North line of said NE 1/4 of the NW 1/4 to the point of beginning, containing 35 .12 acres; Being a part of the same land conveyed to Grantor as Parcel 5 , by Deed from Aluminum Company of America, dated May 5 , 1969 , recorded in the Circuit Court, Pulaski County, Arkansas, Deed Book 2076 , Page 155 . Seller specifically reserves all the right, title and interest in and to all oil , gas, sulphur and other hydrocarbons and minerals (whether or not similar to those mentioned) , and all rights associated with the exploration, development and production of said minerals, excluding methane gas (CH4) on said property to a depth of 500 ft. Seller specifically reserves all oil , gas, sulphur , methane gas (CH4) and all other hydrocarbons and minerals (whether or not similar to those mentioned) and all rights associated with the exploration, development and production of said minerals, lying below a depth of 500 ft. located on said property. 2. BUYER'S RIGHT OF ENTRY. Buyer shall have the exclusive right to enter upon the property for the purpose of exploring, drilling, operating, producing and saving said methane gas (CH4) for a primary term of five (5) years and as long thereafter as methane gas (CH4) is produced from said premises in commercialably marketable quantities or driling operations are continuously prosecuted as hereinafter provided. "Drilling operations" includes 1 preparation of drilling site, commencing the drilling of a new well, the reworking, deepening or plugging back of a well or hole or other operations conducted in an effort to obtain or reestablish production of methane gas ; and drilling operations shall be considered to be "continuously prosecuted" if not more than 60 days shall elapse between the completion or abandonment of one well or hole and the commencement of drilling operations on another well or hole. If at the expiration of the primary term of this agreement, oil or gas is not being produced from the premises but Buyer is then engaged in drilling operations, this agreement shall continue in force so long as drilling operations are continuously prosecuted; and if production of methane gas results from any such drilling operations, Buyer ' s right of entry upon the property shall continue in force so long as methane gas shall be produced from the premises. If , after the expiration of the primary term of this agreement, production on the premises should cease , this agreement shall not terminate if Buyer is then prosecuting drilling operations, or within 60 days after each such cessation of production commences drilling operations, and this agreement shall remain in force so long as such operations are continuously prosecuted, and if production results therefrom, then as long thereafter as methane gas is produced from the premises. 3 . PURCHASE PRICE. Buyer shall pay, free of costs, to Seller three-sixteeths (3/16) during the first year of production, and one-fourth (1/4) for each year thereafter , of the gross proceeds received from the sale of methane gas (CH4) at the point of delivery to the final commercial distribution point for all methane gas (CH4) produced from the premises. The Buyer agrees to exercise its best efforts to obtain a sale price for all methane gas (CH4) sold pursuant to this agreement which is in the best interests of and maximum mutual benefit to the Seller and Buyer . It is the intention of the Seller and Buyer that the sale price negotiated for all methane gas (CH4) sold pursuant to this agreement will be reasonably comparable to the market price of methane gas (CH4) produced and sold at comparable facilities in the State of Arkansas and adjacent states. The City Manager or his designated representative shall have the privilege of access to any negotiations for the sale of methane gas (CH4) by PHF Exploration Company, Inc. Buyer shall make payments hereunder monthly, beginning on the first day of the first full month after commencement of production during the primary term of the agreement and any extension hereof, or at such other time or times as may be mutually agreed upon by the Seller and the Buyer. 4 . ANNUAL PAYMENTS. If operations for drilling of a well for methane gas are not commenced on said land on or before one year from the date hereof , this agreement shall terminate as to both parties, unless the Buyer shall on or before that date pay or tender to the Seller the sum of ($500 .00) Five Hundred Dollars which shall operate as an option payment and cover the privilege of deferring the commencement of operations for drilling for a period of one year. In like manner , upon like payment or tenders, the commencement of operations for drilling may be further deferred for like periods successively, but in no event beyond the primary term of five years. 5 . INTEREST PROPORTION. If the Seller owns a lesser interest in the above described land than the entire and undivided mineral estate conveyed herein, then the royalties and payments herein provided for shall be paid the said Seller only in proportion which its interest bears to the whole and undivided mineral estate. There shall be no 2 relationship between the amount of payments paid hereunder and the amount of royalties which may be paid on production. 6 . ASSIGNMENT. If the estate of either party hereto is assigned, and the privileges of assigning in whole or in part is hereby expressly allowed subject to the Seller ' s consent to any assignment by the Buyer which consent shall not be unreasonably withheld, the covenants hereof shall extend to their heirs, executors, administrators, successors or assigns, but no change in the ownership of the land or the minerals in and under the same or assignment of payments or royalties shall be binding on Buyer unless Buyer shall have been furnished ninety ( 90 ) days before payment hereunder of such payments or royalties, with certified copies of recorded instruments showing evidence of title; and it is hereby agreed that in the event this agreement shall be assigned as to a part or as to part of the land and the assignee or assignees of such part or parts shall fail or make default in the payment of the proportionate part of the payments due from him or them, such default shall not operate to defeat or affect this agreement insofar as it covers any part or parts of said land upon which Buyer or any assignee of Buyer shall make due payment of said payment. If six or more parties become entitled to payments or royalties hereunder , Buyer may withhold payment thereof unless and until furnished with a recordable instrument executed by all of such parties designating an agent to receive payment for all. 7 . SURRENDER OR CANCELLATION. Buyer may at any time surrunder or cancel this agreement in whole or in part, upon (30) days written notice to the Seller, by delivering or mailing such notice of cancellation or release to the Seller, or by placing such release of record in the proper county. In case this agreement is surrendered or cancelled as to only a portion of the acreage covered thereby, then all payments and liabilities thereafter accruing under the terms of this agreement as to the portion cancelled shall cease, and any payments thereafter paid may be apportioned on an acreage basis. As to the portion of the acreage not released, the terms and provisions of this agreement shall continue and remain in full force and effect for all purposes. Provided, however, that if Buyer shall at any time during the term of the agreement, or any extension hereof, determine that methane gas cannot be produced on the premises in commercialably marketable quantities, the Buyer shall within 60 days of such determination deliver to Seller its written notice of intent to terminate and surrender the agreement not later than 30 days thereafter. 8. USE OF PROPERTY. Buyer shall have the right to use , free of cost, water found on said land for its operations except water from wells of Seller. When required by the Seller , the Buyer shall bury its pipelines below plow depth. No well shall be drilled nearer than 200 feet to any house or barn or other structure on said premises as of the date of this lease without the written consent of the Seller. All processing plants, scrubbing units, condensing units, separators, compressors, and all other plants, equipment, structures and machinery used in the production, development and marketing of the methane gas produced from said land, if necessary, shall be placed at a single location on the surface of said property acceptable to Seller, and shall not cover an area in excess of (2) acres. Buyer shall not later than one year after the expiration of this agreement enter upon the property and remove all machinery, plants, fixtures, equipment, and other structures placed on said premises, including the withdrawal and removal of all casing. 3 9. SURFACE DAMAGE. Buyer shall pay reasonable damages for injury to the surface estate, by reason of its operations and use of the surface estate in the development, production or marketing of the methane gas, or , upon surrender , cancellation or termination of this agreement, at the option of Buyer, shall restore the surface of the property to the condition in which it existed prior to the commencement of operations thereon. 10 . WARRANTY OF TITLE. Seller hereby warrants and agrees to defend the title to the land herein described and agrees that the Buyer, may, at its option, after ten (10) days written notice to the Seller, pay or discharge in whole or in part any taxes, encumbrances, or other liens existing, levied or assessed against the above described lands, and in the event Buyer exercises such option, it shall be subrogated to the rights of any holder or holders thereof and may reimburse itself by applying any royalty or payments accruing hereunder to the amount of any such encumbrance, tax or other lien paid by Buyer. 11 . ACOUISITION. Upon ten (10) days written notice to Seller, Buyer hereby is given the right, subject to Seller' s right of first refusal , to acquire for its own benefit, deeds , leases, or assignments covering any interest or claim in the premises which Buyer or any other party contends is outstanding and not covered hereby and even though such outstanding interest or claim be invalid or adverse to Seller. In the event the validity of this contract be disputed by Seller or by any other person, then, for the period such dispute remains undisposed of: Buyer shall be relieved of all obligations hereunder to explore or develop the premises; all royalties or other payments which would otherwise accrue shall be suspended for such period; and this agreement automatically shall be extended for an additional period equal to the duration of such period. 12. BOOKS AND RECORDS. The Buyer shall upon three (3) days notice from Seller make available for inspection by Seller or its agents all books and records of account pertaining to Buyer ' s operations on the premises. 13 . ADJACENT AND CONTIGUOUS PROPERTY Seller covenants and agrees that during the primary term of the agreement or during any extension hereof, it will not lease, contract with, or otherwise grant to any other person or persons the right or privilege of engaging in the exploration, development or drilling for methane gas to a depth of less than 500 feet, on or within 500 feet of the premises. 14 . CERTIFICATE OF SAFE CONDITION. Buyer covenants and agrees to maintain the premises and to conduct its operations thereon in a safe manner and to provide to the Seller semiannually the certificate of an engineer licensed by the State of Arkansas that he has inspected the premises and found the same to be maintained and operated in said safe condition. 15 . HOLD HARMLESS. Buyer covenants and agrees to indemnify and hold harmless the Seller for all damages, claims and causes of action arising from Buyer ' s use and occupation of the premises. Provided further that in the event this agreement is subsequently determined to be invalid, unenforceable or the like by a court of competent jurisdiction, Seller shall not be liable for any claims or causes of action of whatsoever kind or nature arising from the performance or partial performance of this contract by Buyer. 4 16 . FEDERAL AND STATE REGULATIONS: All provisions hereof, express or implied, shall be subject to all Federal and State laws and the orders, rules and regulations of all governmental agencies administering the same, and this agreement shall not in any way be terminated wholly or partially, nor shall the Buyer be liable in damages for failure to comply with any of the express or implied provisions hereof if such failure accords with any such laws, orders, rules or regulations. 17 . EQUAL OPPORTUNITY EMPLOYER. Buyer affirms that is an equal opportunity employer and that it does not discriminate on the basis of race, sex, creed or national origin. 18. BINDING EFFECT. This contract all its terms, conditions and stipulations shall extend to and be binding on all successors in title of said Seller or Buyer. IN WITNESS WHEREOF, the parties have caused this agreement to be duly executed as of the day and year first above written. CITY OF LITTLE ROCK, ARKANSAS SELLER By ATTEST: By: City Clerk PHF EXPLORATION COMPANY, INC. BUYER By ATTEST: BY WILLIAM B. PUTNAM BUYER ACKNOWLEDGEMENT STATE OF ARKANSAS) ) ss COUNTY OF PULAS KI) On this day of , 19_, before me the undersigned Notary Public, duly commissioned, qualified and acting, within and for said County and State, appeared in person the within-named and , to me personally well known, who stated that they were the Mayor and Clerk of the City of Little Rock, Arkansas, a city of the First Class and were duly authorized in their respective capacities to execute the foregoing instrument for and in the name and behalf of said city, and further stated and acknowledged 5 that they had so signed, executed and delivered said foregoing instrument for the consideration, uses and purposes therein mentioned and set forth . In testimony whereof, I have hereunto set my hand and official seal this day of , 19_. Notary Public My Commission Expires : 6 ACKNOWLEDGEMENT ' ` STATE OF ARKANSAS) ss COUNTY OF PULASKI ) On this day of , 19_, before me the undersigned Notary Public, duly commissioned, qualified and acting, within and for said County and State, appeared in person the within-named and , to me personally well known, who stated that they were the and of the PHF Exploration Co. , Inc. , an Arkansas Corporation, and were duly authorized in their respective capacities to execute the foregoing instrument for and in the name and behalf of said Corporation, and further stated and acknowledged that they had so signed, executed and delivered said foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. In testimony whereof, I have hereunto set my hand and official seal this day of , 19 . Notary Public My Commission Expires : ACKNOWLEDGEMENT STATE OF ARKANSAS ) SS COUNTY OF PULASKI ) On this day before me, the undersigned Notary Public, duly commissioned, qualified and acting within and for said County and State, appeared in person the within named William B. Putnam, known to me to be the person whose name is subscribed to the within instrument and acknowledged that he had executed the same for the purposes therein contained. In testimony whereof, I have hereunto set my hand and official seal this _ day of , 19 . Notary Public My Commission Expires : 7