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HomeMy WebLinkAboutC-349 - Amendment of Contract (Assignment and Transfer)AMENDMENT OF CONTRACT THIS AMENDMENT OF CONTRACT, made and entered ;nto this day of1968, by and between -he CITE' OF NEWPORT BEACH, a municipal corporation, hereinafter called "City", and ARMSTRONG PETROLEUM CORPORATION, hereinafter called "Contractor", pursuant to Resolution No. 6888 adopted by the City Council of "the City of Newport Beach on the 28th day of October , 1968; RECITALS., A. By virtue of an assignment and transfer from Humble Oil & Refining Company, Contractor has become the sole contracting party with the City under a certain contract originally executed under date of November 1, 1943, between the City and D. W. Elliott, which contract was subsequently amended and restated by a document entitled "AMENDMENT OF CONTRACT" dated January 31, 1955, which was approved on behalf of the City by City Council Resolution No. 4300 of the same date. The original contract between the City and D. W. Elliott, together with all subsequent amendments, shall be hereinafter referred to as the "contract". B. City and Contractor wish to further amend the contract by substituting Contractor under the contract in place of Humble Oil & Refining Company and by revising certain provisions of the contract; NOW., THEREFORE, the parties agree as follows. 1. City hereby consents to the transfer of the interest of Humble Oil & Refining Company under the contract to Armstrong Petroleum Corporation and of the substitution of Armstrong Petroleum Corporation as the contracting party under said contract in place of Humble Oil & Refining Company. 2. Contractor, Armstrong Petroleum Corporation, in consideration of the transfer to it of the interest of Humble Oil & Refining Company, agrees to assume all duties, obligations and liabilities of Humble Oil & Refining Company under said contract, f l and further agrees that it shall make no further assigrcent or transfer of said contract, in whole or in part, without =he consent of the City Council. 3. Contractor agrees that it shall not engage in or conduct any form of secondary recovery work in the territory described in the contract without first obtaining the prior approval of the City Council. The City Council shall have absolute dis- cretion in determining whether or not to approve •a request by Contractor to engage in secondary recovery operations. 4. City and Contractor agree to the following amend- ments to the contract, which shall be deemed to be a part thereof; (a) Article III of the contract, entitled "TERM AND TERMINATION", is amended to add the following language to Section 1 after the words "as herein provided"� "The City Council may terminate the contract at such time that less than seven (7) of the existing fourteen (14) operational wells are not in operation and producing, or at such time as the average pro- duction for all operational wells falls below a minimum of seven (7) barrels per well, per day, based upon the annual production." (b) Section 2 of Article III is amended at line 3 on page 3 to provide that the Contractor shall be obligated to give six (6) months written notice of termination to the City in place of ten (10) days written notice of termination. (c) Article V, entitled "DRILL SITES", is amended to add a new Section 3 reading as follows; "Section 3. Contractor agrees that it shall prevent its oil operations from becoming a blight on the community by maintaining the area of the well sites in a clean and orderly manner and by removing any abandoned machinery and equipment. -2 - �Nv (d) Article XXXIII, entitled "PUBLIC LI_ ILITY INSURANCE., BONDS AND FIRE INSURANCE", is amended as follows: (1) Section 1 is amended to increa-se- the dollar amounts of the public liability and property damage insurance from $50,000 to $100,000 for injury to, or death of, one person, and from $100,000 to $300,000 for injury to, or death of, more than one person, and from $25,000 to $100,000 for damages to, or destruction of, property. (2) Section 2 is amended to increase the dollar amount of said bond from $25,000 to $75,000 and to provide that the bond shall guarantee the Contractor's performance of all of the terms and provisions of the Contract, including any additional requirements set forth in this Amendment of Contract, IN WITNESS WHEREOF, the parties hereto have executed this Amendment of Contract as of the day and year first above written. APPROVED AS TO FORM: 164� —Z/> (J TULL a SEYY, City Attorney -3- CITY OF NEWPORT BEACH By May r Attest: ty Clerk CITY G PETROLEUM CORPORATION CONTRACTOR I. De CITY OF NEWPORT BEACH OFFICE OF THE CITY MANAGER SUMMARY OF CITY'S ARMSTRONG PETROLEUM COMPANY LEASE GENERAL INFORMATION Parties to Lease Date of Current Lease City of Newport Beach, Lessor Armstrong Petroleum Company, Lessee October 30, 1968 Lease Duration No. of years: 18 years, 10 months. From: November 1, 1943 To: January 2S, 19g1 ; ' City Council Approval Original Lease: November 1, 1943 Assignment: July 10, 1950 Assignment: July 31, 1953 Amended: February 8, 1954 Amended: January 31, 1955 Assignment: October 28, 1968 Amended: October 28, 1968 Land Location All uplands and tidelands, submerged lands and filled lands owned by the City lying between the southwesterly prolongation of the southeasterly line of 53rd Street, as said 53rd Street is laid out on a map of Ocean Front Tract, Newport Beach, and the westerly boundary line of the City of Newport Beach, and southwesterly of the northeasterly line of Ocean Front, formerly Ocean Avenue is laid out and shown upon said map of Ocean Front, and map of Seashore Colony Tract recorded in Book 7, Page 25 of Miscellaneous Maps, Records of said County. Source of City's Title Approximate Area Tidelands and uplands 15,029,424 square feet Current and Prior Lease Description The original contract was executed on November 1, 1943, between the City and D.W. and Ailleen Elliot. The contract was then assigned to Jergins Oil Company. Jergins Oil Company assigned this interest to Humble Oil and Refining Company, Monterey Oil Company, and Wilmington Associates, Inc. Wilmington Oil Company then assigned their interest to Monterey Oil Company. The contract was amended on February 8, 1954, and January 31, 1955. The contract was assigned to Armstrong Petroleum Company on October 30, 1968. Parcel No. Legal Description Tidelands and uplands as recorded in Book 4, Map 12 of Miscellaneous Maps or Orange County between 54th Street and 61st Street in West Newport, Ocean Tract. ARMSTRONG PETROLEUM COMPANY SUMMARY OF CITY'S ARMSTRONG PETROLEUM COMPANY LEASE Page Two II. LEASE PROVISIONS Purpose Production of crude oil, natural gas and other hydrocarbon substances. Rental Purchase of oil and gas to pay 82 2 % per centun of the consideration for the first 240 barrels per day. That in excess of 240 barrels per day per well the purchaser will pay the following formula: R = P - 36.67x 1 2.5 + .0166677 (P = average amount of oil produced, saved and sold from each well in barrels/ day. Assignability Neither the contractor nor its assigns or successors, can subcontract, sublet, or hypothecate any part of the contract or the work contemplated under the contract. Terms of Default The City shall give written notice of default within 10 days after receiving knowledge of default. Contractor must remedy the default within 20 days of receiving written notice of the default or the City may terminate the contract with the exception of those wells which are completed or those wells which are drilling and not in default. The City Council may terminate the contract when 7 of the 14 operational wells are not in production, or the annual production falls below 7 barrels per well, per day. Taxes Contractor shall pay all valid taxes assessed against any property real or personal used in the execution of this contract. The contractor shall also pay taxes which may be levied in the future against mineral rights, lands, any license, severance production or other tax on oil, gas, or other hydrocarbons. Insurance Public liability and property damage insurance in the amounts of $100, 000 for injury to, or the death of, one person, and $300,000 for injury or death of more than one person, and $100,000 for damages to, or destruction of party. A $75,000 bond must be posted to insure con- tractor's performance of the terms of the contract. The City is held harmless for any suits brought against the City arising from any operations of the Contractor. Maintenance and Repairs At the termination of the contract, the con- tractor must remove all debris, concrete, equip- ment, materials, rubbish from the surface of all premises. The Contractor will retain possession of all equipment so removed.