COUNCIL COMMUNICATION

DATE 06-17-02	SUBJECT: FINAL READING OF ORDINANCE NO. 2002-O-123 Authorizing the City Manager to enter into and execute an oil and gas lease between the City of Laredo, as Lessor and Pogo Producing Company, as Lessee, upon approximately 3.7 acres of City-owned land, within a 40-acre drilling unit, and including the following boundaries: the Eastern boundary of Columbia Street to the West; 50 feet North of the North boundary of Columbia Street to the North; the South boundary of Pecos Street to the South; and the original Laredo City Limits to the East, as reflected on the plat attached hereto as Exhibit “A”, for a primary term of 3 years, and so long thereafter an oil, gas and other minerals are produced from said land or lands with which said land is pooled thereunder. In exchange for this lease, Lessee shall pay to Lessor, a 25% royalty payment on all oil and gas produced from said land, and in addition, Lessee shall tender to Lessor a signing bonus in the amount of $1,000.00 upon execution of the lease.
INITIATED BY: Cynthia Collazo Asst. City Manager		STAFF SOURCE: Erasmo Villarreal CD Director
PREVIOUS COUNCIL ACTION: On June 3, 2002, the City Council introduced this Ordinance.
BACKGROUND: The City Manager is seeking authorization from the City to enter into and execute a lease between the City of Laredo, as Lessor and Pogo Producing Company, as Lessee upon approximately 3.7 acres of City-owned land within and including the following boundaries: the Eastern boundary of Columbia Street to the West; 50 feet of North of the North boundary of Columbia Street to the North; the South boundary of Pecos Street to the South; and the original Laredo City Limits to the East, as reflected on the plat attached hereto as Exhibit “A”, for a primary term of 3 years, and so long thereafter an oil, gas and other minerals are produced from said land or lands with which said land is pooled thereunder. In exchange for this lease, Lessee shall pay to Lessor a 25% royalty payment on all oil and gas produced from said land, and in addition, Lessee shall tender to Lessor a signing bonus of $1,000.00 upon execution of the lease. The approval of the execution of the lease is deemed to be in the best interest of the citizens of the City of Laredo.
FINANCIAL IMPACT: A $1,000.00 lease signing bonus, plus a 25% royalty payment on all oil and gas produced.
COMMITTEE RECOMMENDATION: N/A		STAFF RECOMMENDATION: Recommends approval of Ordinance.

ORDINANCE NO. 2002-O-123

AUTHORIZING THE CITY MANAGER TO ENTER INTO AND EXECUTE AN OIL AND GAS LEASE BETWEEN THE CITY OF LAREDO AS LESSOR AND POGO PRODUCING COMPANY, AS LESSEE, UPON APPROXIMATELY 3.7 ACRES OF CITY-OWNED LAND, WITHIN A 40-ACRE DRILLING UNIT, AND INCLUDING THE FOLLOWING BOUNDARIES: THE EASTERN BOUNDARY OF COLUMBIA STREET TO THE WEST; 50 FEET NORTH OF THE NORTH BOUNDARY OF COLUMBIA STREET TO THE NORTH; THE SOUTH BOUNDARY OF PECOS STREET TO THE SOUTH; AND THE ORIGINAL LAREDO CITY LIMITS TO EAST, AS REFLECTED ON THE PLAT ATTACHED HERETO AS EXHIIBIT “A”, FOR A PRIMARY TERM OF 3 YEARS, AND SO LONG THEREAFTER AN OIL, GAS, AND OTHER MINERALS ARE PRODUCED FROM SAID LAND OR LANDS WITH WHICH SAID LAND IS POOLED THEREUNDER. IN EXCHANGE FOR THIS LEASE, LESSEE SHAL PAY TO LESSOR, A 25% ROYALTY PAYMENT ON ALL OIL AND GAS PRODUCED FROM SAID LAND, AND IN ADDITION, LESSEE SHALL TENDER TO LESSOR A SIGNING BONUS IN THE AMOUNT OF $1,000.00 UPON EXECUTION OF THE LEASE.

WHEREAS, the City Manager seeks authorization from the City Council to enter into and execute an oil and gas lease between the City of Laredo, as Lessor and Pogo Producing Company, as Lessee, upon approximately 3.7 acres of City-owned land, within a 40-acre drilling unit, and including the following boundaries: the Eastern boundary of Columbia Street to the West; 50 feet North of the North boundary of Columbia Street to the North; the South boundary of Pecos Street to the South; and the original Laredo City Limits to the East, as reflected on the plat attached hereto as Exhibit “A”, for a primary term of 3 years, and so long thereafter an oil, gas, or other minerals are produced from said land or lands with which said land is pooled thereunder; and,

WHEREAS, in exchange for this lease, Lessee shall pay to Lessor a 25% royalty payment on all oil and gas produced from said land, and in addition, Lessee shall tender to Lessor a signing bonus in the amount of $1,000.00 upon execution of the lease; and,

WHEREAS, the approval of the execution of this lease is deemed to be in the best interest of the citizens of the City of Laredo.

NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LAREDO THAT:

Section 1: Authorizing the City Manager to enter into and execute an oil and gas lease between the City of Laredo, as Lessor and Pogo Producing Company, as Lessee, upon approximately 3.7 acres of City-owned land, within a 40-acre drilling unit, and including the following boundaries: the Eastern boundary of Columbia Street to the West, 50 feet North of the North boundary of Columbia Street to the North, the South boundary of Pecos Street to the South, and the original Laredo City Limits to the East, as reflected on the plat attached hereto as Exhibit “A”, for a primary term of 3 years, and so long thereafter an oil, gas, and other minerals are produced from said land or lands with which said land is pooled thereunder.

Section 2: In exchange for the lease, Lessee shall pay to Lessor a 25% royalty payment on all oil and gas produced from said land, and in addition, Lessee shall tender to Lessor a signing bonus in the amount of $1,000.00 upon execution of the lease

Section 3: This Ordinance shall become effective upon passage thereof.

PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF LAREDO on this the ______ day of _____________, 2002.

_______________________

ELIZABETH G. FLORES

Mayor

ATTEST:

_______________________

GUSTAVO GUEVARA

City Secretary

APPROVED AS TO FORM:

JAIME L. FLORES

City Attorney

By: ___________________________

ANTHONY C. McGETTRICK

Assistance City Attorney