Loading...
HomeMy WebLinkAboutC-4861 - PSA for Oil Field Review, Evaluation, and Modification ProgramAMENDMENT NO. ONE TO PROFESSIONAL SERVICES AGREEMENT WITH NETHERLAND, SEWELL 8, ASSOCIATES, INC. FOR OILFIELD REVIEW, EVALUATION AND MODIFICATION PROGRAM THIS AMENDMENT NO. ONE TO PROFESSIONAL SERVICES AGREEMENT ( "Amendment No. ONE ") is entered into as of this 00T4 day of _MAfLFkF , 2012, by and between the CITY OF NEWPORT BEACH, a California Municipal Corporation ( "City "), and NETHERLAND, SEWELL & ASSOCIATES, INC., a Texas Corporation whose address is 4500 Thanksgiving Tower, 1601 Elm Street, Dallas, Texas 75201 ( "Consultant'), and is made with reference to the following: RECITALS: A. On October 11, 2011, City and Consultant entered into a Professional Services Agreement ( "Agreement') for review, evaluation and modification study services for the Oilfield Review, Evaluation and Modification Program ( "Project'). B. City desires to enter into this Amendment No. ONE to extend the term of the Agreement to October 31, 2012. C. City and Consultant mutually desire to amend the agreement, as provided below. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM Section 1 of the Agreement, shall be amended in its entirety and replaced with the following: The term of the Agreement shall terminate on October 31, 2012, unless terminated earlier as provided for in Agreement. 2. INTEGRATED CONTRACT Except as expressly modified herein, all other provisions, terms, and covenants set forth in the Agreement shall remain unchanged and shall be in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. ONE on the dates written below. APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE Date: = /X /iZ By: 4nl� ( r Aaron C .,HaF City Attorney ATTEST: I� Date: �y B 1 ' Y /ul pm�— Leilani I. Brown City Clerk CITY OF NEWPORT BEACH, A Califor i u cipal corporation Date: Z CONSULTANT:NETHERLAND, SEWELL & ASSOCIATES, INC., a Texas By: C. H. (Scott) Rees III Chairman and Chief Executive Officer Date: i� By: Philip S. Frost Chief Financial Officer NETHERLAND, SEWELL & ASSOCIATES, INC. Page 2 PROFESSIONAL SERVICES AGREEMENT WITH NETHERLAND, SEWELL & ASSOCIATES, INC. FOR OILFIELD REVIEW, EVALUATION AND MODIFICATION PROGRAM THIS AGREEMENT FOR PROFESSIONAL SERVICES ( "Agreement') is made and entered into as of this __ 1±4Way of 00}flk4l- , 2011 by and between the CITY OF NEWPORT BEACH, a California Municipal Corporation ( "City "), and NETHERLAND, SEWELL & ASSOCIATES, INC., a Texas corporation ( "Consultant'), whose address is 4500 Thanksgiving Tower, 1601 Elm Street, Dallas, Texas 75201 and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City is planning to conduct oilfield studies. C. City desires to engage Consultant to perform reviews, evaluations and modification studies of oilfields. (`Project'). D. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. E. The principal member of Consultant for purposes of Project shall be Michael F. Krehel. Jr. F. City has solicited and received a proposal from Consultant, has reviewed the previous experience and evaluated the expertise of Consultant, and desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The term of this Agreement shall commence on the above written date, and shall terminate on March 31, 2012 unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED City and Contractor acknowledge that the above Recitals are true and correct and are hereby incorporated by reference. Consultant shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit A and incorporated herein by reference ( "Work" or "Services "). The City may elect to delete certain tasks of the Scope of Services at its sole discretion. 3. TIME OF PERFORMANCE 3.1 Time is of the essence in the performance of Services under this Agreement and the Services shall be performed to completion in a diligent and timely manner. The failure by Consultant to perform the Services in a diligent and timely manner may result in termination of this Agreement by City. 3.1.1 Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant's reasonable control. However, in the case of any such delay in the Services to be provided for the Project, each party hereby agrees to provide notice to the other party so that all delays can be addressed. 3.2 Consultant shall submit all requests for extensions of time for performance in writing to the Project Administrator not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Consultant's control. 3.3 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under. the circumstances, by either telephone, fax, hand - delivery or mail. 4. COMPENSATION TO CONSULTANT 4.1 City shall pay Consultant for the Services on a time and expense not -to- exceed basis in accordance with the provisions of this Section and the Schedule of Billing Rates attached hereto as Exhibit B and incorporated herein by reference. Consultant's compensation for all Work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed One Hundred Sixty Thousand Dollars and no /100 ($160,000.00) without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City Consultant shall submit monthly invoices to City describing the Work performed the preceding month. Consultant's bills shall include the name of the person who performed the Work, a brief description of the Services performed and /or the specific task in the Scope of Services to which it relates, the date the Services were performed, the number of hours spent on all Work billed on an hourly basis, and a description of any reimbursable expenditures. City shall pay Consultant no later than thirty (30) days after approval of the monthly invoice by City staff. 4.2 City shall reimburse Consultant only for those costs or expenses specifically approved in this Agreement, or specifically approved in writing in advance by City. Unless otherwise approved, such costs shall be limited and include nothing more than the following costs incurred by Consultant: 4.2.1 The actual costs of subconsultants for performance of any of the Services that Consultant agrees to render pursuant to this Agreement, which have been approved in advance by City and awarded in accordance with this Agreement. 4.2.2 Approved reproduction charges. Netherland, Sewell, & Associates, Inc. Page 2 4.2.3 Actual costs and /or other costs and /or payments specifically authorized in advance in writing and incurred by Consultant in the performance of this Agreement. 4.3 Consultant shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any Work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit B 5. PROJECT MANAGER 5.1 Consultant shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Consultant has designated Michael F. Krehel, Jr. to be its Project Manager. Consultant shall not remove or reassign the Project Manager or any personnel listed in Exhibit A or assign any new or replacement personnel to the Project without the prior written consent of City. City's approval shall not be unreasonably withheld with respect to the removal or assignment of non -key personnel. 5.2 Consultant, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of Services upon written request of City. Consultant warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 6. ADMINISTRATION This Agreement will be administered by the Public Works Department. Robert Stein, Assistant City Engineer or his designee, shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or his /her authorized representative shall represent City in all matters pertaining to the Services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES 7.1 In order to assist Consultant in the execution of its responsibilities under this Agreement, City agrees to, where applicable: 7.1.1 Provide access to, and upon request of Consultant, one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Consultant's Work schedule. 7.1.2 Provide blueprinting and other Services through City's reproduction company for bid documents. Consultant will be required to coordinate the required bid documents with City's reproduction company. All other reproduction will be the responsibility of Consultant and as defined above. Netherland, Sewell, & Associates, Inc. Page 3 7.1.3 Provide usable life of facilities criteria and information with regards to new facilities or facilities to be rehabilitated. 8. STANDARD OF CARE 8.1 All of the Services shall be performed by Consultant or under Consultant's supervision. Consultant represents that it possesses the professional and technical personnel required to perform the Services required by this Agreement, and that it will perform all Services in a manner commensurate with community professional standards. All Services shall be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. By delivery of completed Work, Consultant certifies that the Work conforms to the requirements of this Agreement and all applicable federal, state and local laws and the professional standard of care. 8.2 Consultant represents and warrants to City that it has, shall obtain, and shall keep in full force in effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Consultant to practice its profession. 8.3 Consultant shall not be responsible for delay, nor shall Consultant be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Consultant's Work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers and employees (collectively, the "Indemnified Parties) from and against any and all claims for bodily injury, death or damage to property, (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims "), which may arise from or in any manner relate (directly or indirectly) to the negligence, recklessness, or willful misconduct of the Consultant or its principals, officers, agents, employees, vendors, suppliers, subconsultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them. 9.1 Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the sole negligence, active negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Consultant. 9.2 The City shall indemnify and hold harmless Contractor, each person who controls it, and each employee of it and each consultant or contractor engaged by it Netherland, Sewell, & Associates, Inc. Page 4 from and against any and all losses, claims, damages, expenses or liabilities, joint or several, to which they or any of them may become subject (expressly excluding claims for bodily injury, death or damage to property), in connection with the performance of such consulting work or the preparation of such evaluations or the reliance thereon by the City or any other party to which the City discloses, divulges or delivers any work product of Contractor, and the City shall reimburse Contractor and each such person or any legal or other expenses reasonably incurred in connection with investigating for defending any actions, whether or not resulting in any liability, insofar as such losses, claims, damages, expenses, liability or actions arise out of or are based upon such consulting petroleum engineering, geological, geophysical, petrophysical or evaluation work or any reliance thereon; provided, however, nothing herein shall require indemnification or reimbursement for expenses with respect to losses, claims, damages, expenses or liability arising from the gross negligence or willful misconduct of Contractor. 10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the Work are under the control of Consultant, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Consultant or any of Consultant's employees or agents, to be the agents or employees of City. Consultant shall have the responsibility for and control over the means of performing the Work, provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the performance or to exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the Services. 11. COOPERATION Consultant agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the Work to be performed. City agrees to cooperate with the Consultant on the Project. 12. CITY POLICY Consultant shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS Consultant is responsible for keeping the Project Administrator and /or his /her duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. Netherland, Sewell, & Associates, Inc. Page 5 14. INSURANCE 14.1 Without limiting Consultant's indemnification of City, and prior to commencement of Work, Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement, ,policies of insurance of the type and amounts described below and in a form satisfactory to City. 14.2 Proof of Insurance. Consultant shall provide certificates of insurance to City as evidence of the insurance coverage required herein, along with a waiver of subrogation endorsement for workers' compensation. Insurance certificates and endorsement must be approved by City's Risk Manager prior to commencement of performance. Current certification of insurance shall be kept on file with City at all times during the term of this contract. City reserves the right to require complete, certified copies of all required insurance policies, at any time. 14.2.1 Consultant shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property, which may arise from or in connection with the performance of the Work hereunder by Consultant, his agents, representatives, employees or subconsultants. The cost of such insurance shall be included in Consultant's bid. 14.3 Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. 14.4 Coverage Requirements. 14.4.1 Workers' Compensation Coverage. Consultant shall maintain Workers' Compensation Insurance (Statutory Limits) and Employer's Liability Insurance (with limits of at least one million dollars ($1,000,000)) for Consultant's employees in accordance with the laws of the State of California, Section 3700 of the Labor Code In addition, Consultant shall require each subconsultant to similarly maintain Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California, Section 3700 for all of the subconsultant's employees. 14.4.1.1 Any notice of cancellation or non - renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar days (ten (10) calendar days written notice of non - payment of premium) prior to such change. 14.4.1.2 Consultant shall submit to City, along with the certificate of insurance, a Waiver of Subrogation endorsement in favor of City, its officers, agents, employees and volunteers. 14.5 General Liability Coverage. Consultant shall maintain commercial general liability insurance in an amount not less than one million dollars ($1,000,000) per Netherland, Sewell, & Associates, Inc. Page 6 occurrence for bodily injury, personal injury, and property damage, including without limitation, blanket contractual liability. 14.6 Automobile Liability Coverage. Consultant shall maintain automobile insurance covering bodily injury and property damage for all activities of the Consultant arising out of or in connection with Work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit for each accident. 14.7 Professional Liability (Errors & Omissions) Coverage. Consultant shall maintain professional liability insurance that covers the Services to be performed in connection with this Agreement, in the minimum amount of one million dollars ($1,000,000) limit per claim and in the aggregate. 14.8 Other Insurance Provisions or Requirements. 14.8.1 The policies are to contain, or be endorsed to contain, the following provisions 14.8.1.1 Waiver of Subrogation. All insurance coverage maintained or procured pursuant to this agreement shall be endorsed to waive subrogation against City, its elected or appointed officers, agents, officials, employees and volunteers or shall specifically allow Consultant or others providing insurance evidence in compliance with these requirements to waive their right of recovery prior to a loss. Consultant hereby waives its own right of recovery against City, and shall require similar written express waivers and insurance clauses from each of its subconsultants. 14.8.1.2 Enforcement of Contract Provisions. Consultant acknowledges and agrees that any actual or alleged failure on the part of the City to inform Consultant of non - compliance with any requirement imposes no additional obligations on the City nor does it waive any rights hereunder. 14.8.1.3 Requirements not Limiting. Requirements of specific coverage features or limits contained in this Section are not intended as a limitation on coverage, limits or other requirements, or a waiver of any coverage normally provided by any insurance. Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue and is not intended by any party or insured to be all inclusive, or to the exclusion of other coverage, or a waiver of any type. 14.8.1.4 Notice of Cancellation. Consultant agrees to oblige its insurance agent or broker and insurers to provide to City with thirty (30) days notice of cancellation (except for nonpayment for which ten (10) days notice is required) or nonrenewal of coverage for each required coverage. 14.9 Timely Notice of Claims. Consultant shall give City prompt and timely notice of claims made or suits instituted that arise out of or result from Consultant's performance under this Agreement. Netherland, Sewell, & Associates, Inc. Page 7 14.10 Additional Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the Work. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the Services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Consultant, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or joint - venture or syndicate or cotenancy, which shall result in changing the control of Consultant. Control means fifty percent (50 %) or more of the voting power, or twenty - five percent (25 %) or more of the assets of the corporation, partnership or joint- venture. 16. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Consultant. Assignments of any or all rights, duties or obligations of the Consultant under this Agreement will be permitted only with the express written consent of City. Consultant shall not subcontract any portion of the Work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS 17.1 Each and every report, draft, map, record, plan, document and other writing produced (hereinafter "Documents "), prepared or caused to be prepared by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. Consultant shall, at Consultant's expense, provide such Documents to City upon prior written request. Contractor may retain for its archival purposes all of its work papers and copies of all reports, opinions, appraisals, evaluations and determinations made by it. 17.2 Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Consultant will be at City's sole risk and without liability to Consultant. Further, any and all liability arising out of changes made to Consultant's deliverables under this Agreement by City or persons other than Consultant is waived against Consultant and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received from Consultant written consent for such changes. Netherland, Sewell, & Associates, Inc. Page 8 18. CONFIDENTIALITY All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the Services in this Agreement, shall be kept confidential unless City authorizes in writing the release of information. 19. INTELLECTUAL PROPERTY INDEMNITY The Consultant shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement of any United States' letters patent, trademark, or copyright infringement, including costs, contained in Consultant's drawings and specifications provided under this Agreement. 20. RECORDS Consultant shall keep records and invoices in connection with the Work to be performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any Services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Consultant shall allow inspection of all Work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. 21. WITHHOLDINGS City may withhold payment to Consultant of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue Work as a result of such withholding. Consultant shall have an immediate right to appeal to the City Manager or his /her designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 22. ERRORS AND OMISSIONS Inasmuch as uncertainties are inherent in the interpretation of engineering, geological, geophysical and petrophysical data, any determination, computation, estimate, evaluation, classification or categorization made by Contractor will represent only its informed professional judgment based on the data and information obtained by it. Therefore, Contractor shall not be liable for any cost or expense incurred or for any loss or damage sustained (a) as a result of the manner in which such services are in good faith performed by it, (b) as a result of its failure in good faith to perform an ervice or make any determination, computation, classification or categorization, or (c) C a result of the reliance by the City or any other party on any determination, computation, Netherland, Sewell, & Associates, Inc. Page 9 classification or categorization made by Contractor. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS City reserves the right to employ other Consultants in connection with the Project. 23. CONFLICTS OF INTEREST 23.1 The Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the Work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. 23.2 If subject to the Act, Consultant shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Consultant shall indemnify and hold harmless City for any and all claims for damages resulting from Consultant's violation of this Section. 24. NOTICES 24.1 All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first -class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: Attn: Robert Stein Public Works Department City of Newport Beach 3300 Newport Boulevard PO Box 1768 Newport Beach, CA 92658 Phone: 949 - 644 -3322 Fax: 949 - 644 -3318 24.2 All notices, demands, requests or approvals from CITY to Consultant shall be addressed to Consultant at: Attention: Michael F. Krehel, Jr. Netherland, Sewell & Associates, Inc. 1601 Elm Street, Suite 4500 Dallas, TX 7501 Phone: 214 - 969 -5401 Fax: 214- 969 -5411 Netherland, Sewell, & Associates, Inc. Page 10 25. CLAIMS The Consultant and the City expressly agree that in addition to any claims filing requirements set forth in the Contract and Contract documents, the Consultant shall be required to file any claim the Consultant may have against the City in strict conformance with the Tort Claims Act (Government Code sections 900 et seq.). 26. TERMINATION 26.1 In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. 26.2 Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Consultant. In the event of termination under this Section, City shall pay Consultant for Services satisfactorily performed and costs incurred up to the effective date of termination for which Consultant has not been previously paid. On the effective date of termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form, subject to the rights reserved to Contractor in Section 17.1. 27. STANDARD PROVISIONS 27.1 Compliance With all Laws Consultant shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all Work prepared by Consultant shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 27.2 Waiver A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 27.3 Integrated Contract Netherland, Sewell, & Associates, Inc. Page 11 This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 27.4 Conflicts or Inconsistencies In the event there are any conflicts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 27.5 Interpretation The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 27.6 Amendments This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 27.7 Severabilitv If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 27.8 Controlling Law And Venue The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 27.9 Equal Opportunity Employment Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. 27.10 No Attorney's Fees In the event of any dispute or legal action arising under this Agreement, the prevailing party shall not be entitled to attorney's fees. Netherland, Sewell, & Associates, Inc. Page 12 27.11 Counterparts This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the dates written below. APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY Date: mf - 2-7 — f ( By: /// /t--1 ��1-- Aaron C. Harp, City Attorney ATTEST: Date: By Leilam I. Brown, City Clerk CITY OF NEWPORT BEACH, A California municipal corporation Date: _ By: T 1.11l Michael F. Henn, Mayor CONSULTANT: NETHERLAND, SEWELL & ASSOCAITES, INC., a Texas Corpora i 17 Date: 0 W By: ru C. H. Scott) Rees III Chairman and Chief Executive Officer Date: By: Philip S. Frost, Chief Financial Officer Attachments: Exhibit A — Scope of Services Exhibit B — Schedule of Billing Rates Netherland, Sewell, & Associates, Inc. Page 13 EXHIBIT A �(� NETHERLAND, SEWELL ,,,, & ASSOCIATES, INC. WORLDWIDE PETROLEUM CONSULTANTS ENGINEERING • GEOLOGY • GEOPHYSICS • PETROPHYSICS May 27, 2011 SCOPE OF SERVICES A. Data Review and Analysis . 1. Newport Beach Oil Field Resources CHAIRMAN &CEO EXECUTIVECOMMITTEE CH(SCOTI) REES III PSCOTT FROST - DALLAS PRESIDENT &COD J, CARTERHENSQV.JR-HOOSTON DANNYO SIMMONS DpN PAUL SMITH -DALLAS EXECUTNEVP JOSEPHJ. SVELUMAN- DALLAS G LANCE BINDER- THOMAS)TELLA II -DALLS a. We assume that this section is fairly self explanatory in the context of a data gathering trip. Our designated project team will travel onsite to review all of the pertinent oil and gas production data and associated technical reports that have been assembled. We may work with the materials onsite or request that items are duplicated or transmitted digitally for use from our home offices. b. We will also tour the Newport Beach Oil Field and West Newport Oil Company facilities to gain an understanding of the operational methods employed and to. assess the existing production infrastructure and equipment condition. As necessary, we may also request an opportunity to meet with specific City staff members and the current oil field operating staff who are currently involved with managing the assets. c. Our project team will also review the geotechnical reports for the site and surrounding areas, as well as available State of California reporting records. d, We anticipate supplementing our project team with a contract land. and legal firm, PetroLand Services, who has extensive experience in southern California. Petrol-and Services will focus their efforts on reviewing the land lease, property rights, and settlement agreements. They will also study and provide recommendations pertaining to the pass through rights and agreements, easements, and other associated issues. 2. Field Site Visit and Review — This work will be accomplished in conjunction with 1.b. above. 3. Technical Report — After reviewing all of the necessary data and performing our technical analyses, we intend to issue's draft report to include our estimate of current oil and gas reserves along with associated cash flow'projections, future net revenue, and field life. All estimates will be prepared in accordance with the Standards Pertain.irig to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers. We will use standard engineering and geoscience 4500 THANKSGIVING TOWER -1601 ELM STREET• -DALI S, TEXAS 75201 -4754 • PH. 214- 969 -5401 • FAX' 214- 989 -5411 ' 1221 WAAR STREET, SUITE 1200 • HOUSTON, TEXAS 77010 -3072! PH 713 - 654 -4956 • FAX; 713 -654 -4851 NETHERLAND,SEWELL MN 11 & ASSOCIATES, INC. methods that we consider to be appropriate and necessary to estimate proved reserves in accordance with the definitions and guidelines of the U.S. Securities and Exchange Commission (SEC). The report will also include conclusions and recommendations pertaining to ongoing field operations and land lease and legal issues. We anticipate presenting our preliminary findings to City staff representatives as necessary, and will provide a formal report with complete documentation at the conclusion of the study. B. Developing Future Oil/Gas Production Options 1. Recommendations for Future Production and Operations Management a. Newlimproved extraction techniques — We intend to review the present production methodology, which is presumed to be rod pumping, and determine whether this is the most efficient and cost effective artificial lift technique for the existing wells. Alternative technologies that may be explored include electric submersible pump (ESP), progressive cavity pumping (PCP), or gas lift technologies. b. Reconditioning oil wells — Current well completions will be evaluated by reviewing production histories. We intend to evaluate the well productivities to determine whether well inflow is maximized, and may consider additional perforation or stimulation where warranted. We will also review the mechanical integrity of the existing wellbores to determine if remedial operations are required for optimization or regulatory compliance. c. Drilling new wells — Based on our analysis of the in -place and remaining oil reserves, we will make a determination of whether the remaining recoverable reserves can be exploited using the existing well inventory. If necessary, we may recommend additional well drilling or side - tracking of an existing wellbore to access by- passed reserves. d. Water injection well drilling or conversion — Present produced water injection and disposal will be analyzed. If practical, recommendations may be proposed for water injection locations to optimize oil production from the reservoir. If disposal is achieved in intervals other than the primary production zones, these injection volumes and pressures will be reviewed to determine overall performance. e. Other feasible oil extraction methods — These will be addressed in item 1.a. above. f. Gas disposal methods — The current gas contract terms with Hoag Hospital will be reviewed. After our review of current production and subsequent forecasting of future gas production volumes, we will have a better idea of future gas disposal needs. Various solutions will then be evaluated, including: renegotiating the existing Hoag contract beyond the present term, gas injection into the reservoir for pressure maintenance, sale of gas to a local natural gas utility, or electrical generation for onsite power usage. g. Operation of the future field by contract management — The current management and operation of the oil and gas assets will be reviewed. Based on our experience working with a variety of clients with assets of similar size, and also our experience in operating oil and gas properties, we expect to provide recommendations for future asset management and field operation. Various options to consider may include contract management and operation by a third party, city management with contract field operators, joint venture with an industry working interest partner, or outright sale of the assets. h. As with most of our project work, we envision close communication with the City staff throughout the entire process. We will generate a preliminary draft report detailing our analysis and findings for staff review. We also expect to meet with City staff and City Council members, as necessary, to present our final report and recommendations. NETHERLAND,SEWELL & ASSOCIATES, INC. 2. Economic Analysis — In conjunction with our oil and gas reserves analysis, we intend to explore a variety of development options to optimize production and enhance the value of the assets. We will attempt to acquire or generate cost estimates associated with the development scenarios. We anticipate running economic sensitivities to evaluate the financial viability of the various options, in addition to identifying the associated risks therein. 3. Finalize Reports — Our final report will be generated with direction from City staff. Conclusions and recommendations contained within the report will be supported with proper documentation. The report will be structured such that the findings may be used in subsequent project development and implementation documents. 4. Participate in Outreach Meetings — It is our understanding that communication with various outside groups may be required throughout the course of the project. We anticipate meeting with individual City Council members, finance committee, joint focus meetings, and /or the West Newport HOA, as required. Our participation in outreach meetings is intended to provide technical background to support future proposed activities. C. Optional Additional Services 1. The City may request optional services at the conclusion of this project. At that time, we may provide an additional proposal for consulting services related to activities such as: assistance with bid packages for project implementation, assistance with reviewing bids and /or proposals, or potential management and oversight of future development activities. NETHERLAND,SEWELL :.8 ASSOCIATES, INC. SCHEDULE OF RATES Effective April 1, 2011 Domestic Hourly Rate (US$) Senior Engineers, Geologists, Geophysicists, and Petrophysicists 260-355 Staff Engineers, Geologists, Geophysicists, and Petrophysicists 175-255 Engineering, Geological, and Petrophysical Analysts 50- 175 Computer Systems Analysts /Programmers 100-245 Administrative /Support Staff 25-130 Geophysical and Other Workstation Time 35- 95 NSAI reserves the right to change the rates shown above on an annual basis. CERTIFICATE OF INSURANCE CHECKLIST City of Newport Beach This checklist is comprised of requirements as outlined by the City of Newport Beach. * Date Received: 11 -7 -11 Dept. /Contact Received From: Shari Date Completed: 11 -8 -11 Sent to: Shari By: Carol Company /Person required to have certificate: Netherland, Sewell & Associates Type of contract: All other I. GENERAL LIABILITY EFFECTIVE /EXPIRATION DATE: 10/01111 to 10/01/12 A. INSURANCE COMPANY: Travelers Property Casualty Co. B. AM BEST RATING (A- : VII or greater): A +; XV C. ADMITTED Company (Must be California Admitted): Is Company admitted in California? ® Yes ❑ No D. LIMITS (Must be $1M or greater): What is limit provided? 1,000,000 E. ADDITIONAL INSURED ENDORSEMENT— please attach ® Yes ❑ No F. PRODUCTS AND COMPLETED OPERATIONS (Must include): Is it included? (completed Operations status does not apply to Waste Haulers or Recreation) ® Yes ❑ No G. ADDITIONAL INSURED FOR PRODUCTS AND COMPLETED OPERATIONS ENDORSEMENT (completed Operations status does not apply to Waste Haulers) ® Yes ❑ No H. ADDITIONAL INSURED WORDING TO INCLUDE (The City its officers, officials, employees and volunteers): Is it included? ® Yes ❑ No I. PRIMARY & NON - CONTRIBUTORY WORDING (Must be included): Is it included? ® Yes ❑ No J. CAUTION! (Confirm that loss or liability of the named insured is not limited solely by their negligence) Does endorsement include "solely by negligence" wording? ❑ Yes ® No K. ELECTED SCMAF COVERAGE (RECREATION ONLY): ❑ N/A ❑ Yes ❑ No L. NOTICE OF CANCELLATION: ❑ N/A ® Yes ❑ No II. AUTOMOBILE LIABILITY EFFECTIVE /EXPIRATION DATE: 10/01/11 to 10/01/12 A. INSURANCE COMPANY: Travelers Property Casualty Co. B. AM BEST RATING (A-: VII or greater) A +; XV C. ADMITTED COMPANY (Must be California Admitted): Is Company admitted in California? ® Yes ❑ No D. LIMITS (Must be $1M min. BI & PD and $500,000 UM, $2M min for Waste Haulers): What is limits provided? 1,000,000 E LIMITS Waiver of Auto Insurance / Proof of coverage (if individual) (What is limits provided ?) F. PRIMARY & NON - CONTRIBUTORY WORDING (For Waste Haulers only): ❑ N/A ❑ Yes ❑ No G. HIRED AND NON -OWNED AUTO ONLY: ❑ N/A ® Yes ❑ No H. NOTICE OF CANCELLATION: ❑ N/A 0 Yes ❑ No III. WORKERS' COMPENSATION EFFECTIVE /EXPIRATION DATE: 10/01/11 to 10/01/12 A. INSURANCE COMPANY: Standard Fire Insurance Company B. AM BEST RATING (A-: VII or greater): A +; XV C. ADMITTED Company (Must be California Admitted): ® Yes ❑ No D. WORKERS' COMPENSATION LIMIT: Statutory ® Yes ❑ No E. EMPLOYERS' LIABILITY LIMIT (Must be $1M or greater) $500,000 * ** F. WAIVER OF SUBROGATION (To include): Is it included? ® Yes ❑ No G. SIGNED WORKERS' COMPENSATION EXEMPTION FORM: ® N/A ❑ Yes ❑ No H. NOTICE OF CANCELLATION: ❑ N/A ® Yes ❑ No ADDITIONAL COVERAGE'S THAT MAYBE REQUIRED IV. PROFESSIONAL LIABILITY V POLLUTION LIABILITY V BUILDERS RISK ❑ N/A ❑ Yes ❑ No ❑ N/A ❑ Yes ❑ No ❑ N/A ❑ Yes ❑ No HAVE ALL ABOVE REQUIREMENTS BEEN MET? ❑ Yes ❑ No IF NO, WHICH ITEMS NEED TO BE COMPLETED? ** *Per Agents email (11 -9 -11) excess Employers Liability Limits will be covered under the umbrella policy. Approved: 11 -9 -11 Agent of Alliant Insurance Services Date Broker of record for the City of Newport Beach RISK MANAGEMENT APPROVAL REQUIRED (Non- admitted carrier rated less than _ Self Insured Retention or Deductible greater than $ ) ❑ N/A ❑ Yes ❑ No Reason for Risk Management approval /exception /waiver: Approved: Risk Management Date * Subject to the terms of the contract. Rooks, Shari From: Wilson, Mary [Mary.Wilson @bbvacompass.com] Sent: Wednesday, November 09, 2011 9:26 AM To: Rooks, Shari Subject: RE: Newport Beach - Netherland Sewell 5hari, The Umbrella does cover over the Employers Liability coverage Mary Wilson Account Manager BBVA Compass Insurance Agency Tel. 972 - 889 -6067 - Fax 972 - 889 -6094 - mary.wilson@bbvacompass.com Dallas Office — 9101 LBJ Freeway, Ste. 300, Dallas, TX 75243 TX- DA -HZ -H OZ Before you print this message please consider if it is really necessary. Antes de imprimir este messae, par favor comprueba qua as necesario hacerlo. Insurance products are offered through BBVA Compass Insurance Agency, Inc., an affiliate of Compass Bank This email, including any attachments, is for the sole use of the intended recipient and may contain confidential and privileged information. You are hereby notified that any dissemination, distribution, or duplication of the information contained herein by someone other than the intended recipient is strictly prohibited. If you have received this message in error, please notify the sender immediately by reply email and delete the original message from your system. The information contained in this correspondence is provided only from an insurance /risk management perspective. BBVA Compass Insurance Agency, Inc. does not provide legal or tax advice, and the information contained herein is not offered as legal or tax advice. BBVA Compass Insurance Agency, Inc., makes no guaranty with respect to the information contained herein and assumes no liability for loss or damage resulting from errors, omissions or reliance on such information. You should consult your attorney and /or tax advisor for guidance specific to your situation. From: Rooks, Shari [ mailto :SRooks @newportbeachca.gov] Sent: Wednesday, November 09, 2011 11:22 AM To: Wilson, Mary Subject: FW: Newport Beach - Netherland Sewell Mary, Please respond to our broker's request below. Thank you, Shari From: Carol Hart [ mailto :CHart@alliantinsurance.com] Sent: Wednesday, November 09, 20119:08 AM To: Rooks, Shari Subject: Newport Beach - Netherland Sewell Shari, Can you have them confirm that their umbrella policy does include excess Employers Liability? If is the case we will be able to approve this. Carol Hart Account Manager Specialty Group Alliant Insurance Services, Inc. 1301 Dove Street, Suite 200 Newport Beach, CA 92660 (949) 660 -8104 Direct (949) 756 -2713 Fax chartta'Dalliantinsurance.com www.alliantinsurance.com License # OC36861 From: Rooks, Shari [ mailto :SRooks @newportbeachca.gov] Sent: Monday, November 07, 2011 1:35 PM To: Carol Hart Subject: FW: Netherland Sewell Here is their latest. Please let me know if the umbrella she is talking about is OK with you. Thanks, Shari From: Wilson, Mary [ mailto :Mary.Wilson @bbvacompass.com] Sent: Monday, November 07, 2011 12:44 PM To: Rooks, Shari Subject: RE: Netherland Sewell Shari, Attached is the Cert and attachments. Again, as I stated earlier we have a 10,000,000 umbrella that should take care of the requested increased Employers Liability limits. Please advise. Mary Wilson Account Manager BBVA Compass Insurance Agency Tel. 972 - 889 -6067 - Fax 972 - 889 -6094 - marv.wilsonCo).bbvacompass.com Dallas Office — 9101 LBJ Freeway, Ste. 300, Dallas, TX 75243 TX- DA- HZ -HOZ Before you print this message please consider if it is really necessary. Antes de inprimir este mensale, por favor comprueba qua as necesario hacerlo. Insurance products are offered through BBVA Compass Insurance Agency, Inc., an affiliate of Compass Bank This email, including any attachments, is for the sole use of the intended recipient and may contain confidential and privileged information. You are hereby notified that any dissemination, distribution, or duplication of the information contained herein by someone other than the intended recipient is strictly prohibited. If you have received this message in error, please notify the sender immediately by reply email and delete the original message from your system. The information contained in this correspondence is provided only from an insurance /risk management perspective. BBVA Compass Insurance Agency, Inc. does not provide legal or tax advice, and the information contained herein is not offered as legal or tax advice. BBVA Compass Insurance Agency, Inc., makes no guaranty with respect to the information contained herein and assumes no liability for loss or damage resulting from errors, omissions or reliance on such information. You should consult your attorney and /or tax advisor for guidance specific to your situation. From: Rooks, Shari [mailto :SRooks @newportbeachca.gov] Sent: Monday, November 07, 20119:49 AM To: Wilson, Mary Cc: Carol Hart Subject: RE: Netherland Sewell Client #: 1567 22NETH A CORDT. 691bR � ICA II E ®II I!®Q/' B e T ® �tl tlSglY0� NCE DATE(MM /OD/YYY1� CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS; 10/19/2011 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER CONTACT Mary Wilson NAME BBVA Compass Ins. Agency, Inc. PHONE FAX aC, No E.t : 972 889-5067 'M, No): 972 889 -6093 Dallas Office #972 - 889 -6000 A ..Ess: mary.wilson @bbvacompass.com 9101 LBJ Freeway Suite 300 P Dallas, TX 75243 CUSTOMER ID #: X COMMERCIAL GENERAL LIABILITY GIAIMS -MADE �X OCCUR INSURER(S) AFFORDING COVERAGE NAIC # INSURED INSURERA: Travelers Property Casualty Co. 25674 Netherland, Sewell &Associates, Inc. INSURER B: Standard Fire Insurance Company 19070 4500 Thanksgiving Tower INSURER C: Evanston Insurance Company 35378 1601 Elm St. Dallas, TX 75201 -4574 INSURER D : GENERAL AGGREGATE INSURER E INSURER F : COVERAGES CERTIFICATE NUMBER: REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS; EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR LTR TYPE OF INSURANCE DDL NSR UBR D POLICY NUMBER POLICY EFF MMIDDIM POLICY EXP MMIDDIYYYY LIMITS * GENERAL LIABILITY X X 6307214MB77 10/01/2011 10/01/2012 EACH OCCURRENCE $110001000 X COMMERCIAL GENERAL LIABILITY GIAIMS -MADE �X OCCUR OR NTED DAMAGEI Ea occurrence $1,000,000 MEO EXP(Any one person) $10,000 PERSONAL &ADV INJURY $1,000,000 X Primary & NonContrib GENERAL AGGREGATE $2,000,600 GEN'L AGGREGATE LIMIT APPLIES PER: PRODUCTS - COMP /OP ASS $2,000,000 POLICY PRO- LOC $ A AUTOMOBILE LIABILITY ANY AUTO X X BA7214M877 10/01/2011 10/01/2012 COMBINED SINGLE INGLELIMIT $1,000,000 BODILY INJURY (Per person) $ ALL OWNED AUTOS BODILY INJURY (Par accident) $ X SCHEDULED AUTOS HIRED AUTOS PROPERTY DAMAGE (Pa,.addenl) $ X $ NON -OWNED AUTOS A X UMBRELLA LIAB OCCUR X 7111PO93 10/0112011 10/01/2012 EACHOCCURRENCE $10,000,000 AGGREGATE $10,000 000 EXCESS LIAB CLAIMS -MADE DEDUCTIBLE $ $ X RETENTION $ 10,000 B WORKERS COMPENSATION AND EMPLOYERS' LIABILITY ANY PROPRIETOWPARTNER /EXECUTIVEYIN OFFICER/MEMBER EXCLUDED? ® (Mandatary in NH) NIA X UB7214M877 10101/2011 10/01/202 X WC STATU- OTH- T Y I I E.L. EACH ACCIDENT $500,000 E.L. DISEASE- EA EMPLOYEE $500,000 If DESCRIPTION OF OPERATIONS below E.L. DISEASE - POLICY LIMIT $500,000 C Professional IOCPLCD00024 12/31/2010 12/31/2011 Each Claim $2,000,000 Deductible $250,000 DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES (Attach ACORD 101, Additional Remarks Schedule, if more space Is required) Workers' compensation includes all states coverage. Certificate Holder completed to read: City of Newport Beach its elected or appointed officers, agents, (See Attached Descriptions) SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE Gilt of Newport Beach Y P THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. Public Works Dept; Attn: Robert Stein AUTHORIZED REPRESENTATIVE P O Box 1768 Newport Beach, CA 92658 Ava�M1_;V. -.v,_ ©1988 -2009 ACORD CORPORATION. All rights reserved. ACORD 25 (2009109) 1 of 2 The ACORD name and logo are registered marks of ACORD #S795913/M791077 20MLW DESCRIPTIONS (Continued from Page 1) officials, employees and volunteers. Certificate holder is provided 30 Day Notice of Cancelation except for non payment of premium on General Liability, Auto, Liability Workers' Compensation and Umbrella Liability. AMS 25.3 (2009109) 2 of 2 #S795913/M791077 o® o o® o® o o® a= eea711 or volunteer doctor, in providing or failing to provide first aid or "Good Samaritan services" to a person. 2. The following is added to Paragraph 2.a.(1) of SECTION II — WHO IS AN INSURED: Unless you are in the business or occupation of providing professional health care services, Paragraphs (1 )(a), (b), (c) and (d) above do not apply to "bodily injury" arising out of pro- viding or failing to provide first aid or "Good Samaritan services" by any of your "employ- ees" or "volunteer workers ", other than an employed or volunteer doctor. Any of your "employees" or "volunteer workers" providing or failing to provide first aid or "Good Samari- tan services" during their work hours for you will be deemed to be acting within the scope of their employment by you or performing du- ties related to the conduct of your business. 3. The following is added to Paragraph 5. of SECTION III — LIMITS OF INSURANCE: For the purposes of determining the applica- ble Each Occurrence Limit, all related acts or omissions committed by any of your "employ- ees" or "volunteer workers" in providing or failing to provide first aid or "Good Samaritan services" to any one person will be deemed to be one "occurrence ". 4. The following is added to the DEFINITIONS Section: "Good Samaritan services" means any emer- gency medical services for which no compen- sation is demanded or received. G. WHO IS AN INSURED — EMPLOYEES — SU- PERVISORY POSITIONS The following is added to Paragraph 2.a.(1) of SECTION 11— WHO IS AN INSURED: Paragraphs (1)(a), (b) and (c) above do not apply to "bodily Injury" or "personal injury" to a co- "employee".in the course of the co- "employee's" employment by you arising out of work by any of your "employees" who hold a supervisory posi- tion. H. WHO IS AN INSURED — NEWLY ACQUIRED OR FORMED ORGANIZATIONS The following replaces Paragraph 4. of SECTION 11— WHO IS AN INSURED; 4. Any organization you newly acquire or form, other than a partnership or joint venture, of which you are the sole owner COMMERCIAL GENERAL LIABILITY or in which you maintain the majority ownership interest, will qualify as a Named Insured if there is no other insur- ance which provides similar coverage to that organization. However: a. Coverage under this provision is af- forded only: (1) Until the 180th day after you ac- quire or form the organization or the end of the policy period, whichever is earlier, if you do not report such organization in writing to us within 180 days after you acquire or form it; or (2) Until the end of the policy period, when that date is later than 180 days after you acquire or torn such organization, if you report such organization in writing to us within 180. days after you acquire or form it, and we agree in writing that it will continue to be a Named Insured until the end of the policy period; b. Coverage A does not apply to "bodily injury" or "property damage" that oc- curred before you acquired or formed the organization; and c. Coverage B does not apply to "per - sonal injury" or "advertising injury" arising out of an offense committed before you acquired or formed the organization. I. BLANKET ADDITIONAL INSURED — OWNERS, MANAGERS OR LESSORS OF PREMISES The following is added to SECTION 11 — WHO IS AN INSURED: Any person or organization that is a premises owner, manager or lessor Is an insured, but only with respect to liability arising out of the owner- ship, maintenance or use of that part of any prem- ises leased to you. The Insurance provided to such premises owner, manager or lessor does not apply to: a. Any "bodily injury" or "property damage" caused by an "occurrence" that takes place, or "personal injury" or "advertising injury" caused by an offense that is committed, after you cease to be a tenant in that premises; or CG D417 07 08 02008 The Travelers Companies, Inc. Page 3 of 6 Includes the copyrighted material of insurance services office. Inc. with its permission. COMMERCIAL GENERAL LIABILITY b. Structural alterations, new construction or demolition operations performed by br on be- half of such premises owner, manager or les- sor. J. BLANKET ADDITIONAL INSURED — LESSORS OF LEASED EQUIPMENT The following is added to SECTION 11 — WHO IS AN INSURED: Any person or organization that is an equipment lessor is an insured, but only with respect to liabil- ity for "bodily injury", "property damage ", "per- sonal Injury" or "advertising injury" caused, in whole or in part, by your acts or omissions in the maintenance, operation or use by you of equip- ment leased to you by such equipment lessor. The insurance provided to such equipment lessor does not apply to any "bodily injury" or "property damage" caused by an "occurrence" that takes place, or "personal injury" or "advertising injury" caused by an offense that is committed, after the equipment lease expires. K. BLANKET ADDITIONAL INSURED — PERSONS OR ORGANIZATIONS FOR YOUR ONGOING OPERATIONS AS REQUIRED BY WRITTEN CONTRACT OR AGREEMENT The following is added to SECTION If — WHO IS AN INSURED: Any person or organization that is not otherwise an insured under this Coverage Part and that you have agreed in a written contract or agreement to include as an additional insured on this Coverage Part is an insured, but only with respect to liability for "bodily injury" or "property damage" that: a. Is caused by an "occurrence" that takes place after you have signed and executed that con- tractor agreement; and b. Is caused, in whole or in part, by your acts or omissions in the performance of your ongoing operations to which that contract or agree- ment applies or the acts or omissions of any person or organization performing such op- erations on your behalf. The limits of Insurance provided to such insured will be the limits which you agreed to provide in the written contract or agreement, or the limits shown in the Declarations, whichever are less. L. BLANKET ADDITIONAL INSURED — BROAD FORM VENDORS The following is added to SECTION If — WHO IS AN INSURED: Any person or organization that is a vendor and that you have agreed in a written contract or agreement to include as an additional insured on this Coverage Part is an insured, but only with re- spect to liability for "bodily injury" or "property damage" that: a. Is caused by an "occurrence" that takes place after you have signed and executed that con- tract or agreement; and b. Arises out of "your products" which are dis- tributed or sold in the regular course of such vendor's business, The insurance provided to such vendor is subject to the following provisions: a. The limits of insurance provided to such ven- dor will be the limits which you agreed to pro- vide in the written contract or agreement, or the limits shown in the Declarations, which- ever are less. b. The insurance provided to such vendor does not apply to: (1) Any express warranty not authorized by you: (2) Any change in "your products" made by such vendor; (3) Repackaging, unless unpacked solely for the purpose of inspection, demonstration, testing, or the substitution of parts under instructions from the manufacturer, and then repackaged in the original container; (4) Any failure to make such inspections, ad- justments, tests or servicing as vendors agree to perform or normally undertake to perform in the regular course of business, in connection with the distribution or sale of "your products"; (5) Demonstration, installation, servicing or repair operations, except such operations performed at such vendor's premises in connection with the sale of "your prod- ucts "; or (6) "Your products" which, after distribution or sale by you, have been labeled or re- labeled or used as a container, part or in- gredient of any other thing or substance by or on behalf of such vendor. Coverage under this provision does not apply to: a. Any person or organization from whom you - - have acquired "your products ", or any ingre- Page 4 of 6 02008 The Travelers Companies, Inc. CG D417 07 08 Includes the copyrighted material of Insurance services Office, Inc. vrith its permission. client, part or container entering into, accom- panying or containing such products; or b. Any vendor, for which coverage as an addi- tional insured specifically is scheduled by en- dorsement. M. WHO IS AN INSURED — UNNAMED SUBSIDI- ARIES The following is added to SECTION If — WHO IS AN INSURED: Any of your subsidiaries, other than a partnership or joint venture, that is not shown as a Named In- sured in the Declarations is a Named Insured if: a. You maintain an ownership interest of more than 50% in such subsidiary on the first day of the policy period; and b. Such subsidiary is not an insured under simi- lar other insurance. No such subsidiary is an insured for "bodily injury" or "property damage" that occurred, or "personal injury' or "advertising injury" caused by an of- fense committed: a. Before you maintained an ownership interest of more than 50% in such subsidiary; or b. After the date, if any, during the policy period that you no longer maintain an ownership in- terest of more than 50% in such subsidiary. N. WHO IS AN INSURED — LIABILITY FOR CON- DUCT OF UNNAMED PARTNERSHIPS OR JOINT VENTURES The following replaces the last paragraph of SECTION II — WHO IS AN INSURED: No person or organization is an insured with re- spect-to the conduct of any current or past part- nership or joint venture that is not shown as a Named Insured in the berJarations. This para- graph does not apply to any such partnership or joint venture that otherwise qualifies as an in- sured under Section II —Who Is An Insured. O. CONTRACTUAL LIABILITY— RAILROADS 1. The following replaces Paragraph c. of the definition of "insured contract" in the DEFINI- TIONS Section: c. Any easement or license agreement; COMMERCIAL GENERAL LIABILITY P. KNOWLEDGE AND NOTICE OF OCCUR- RENCE OR OFFENSE The following is added to Paragraph 2., Duties In The Event of Occurrence, Offense, Claim or Suit, of SECTION IV — COMMERCIAL GEN- ERAL LIABILITY CONDITIONS: e. The following provisions apply to Paragraph a. above, but only for the purposes of the in- surance provided under this Coverage Part to you or any insured listed in Paragraph 1. or 2. of Section II — Who Is An Insured: (1) Notice to us of such "occurrence" or of- fense must be given as soon as practica- ble only after the "occurrence" or offense is known to you (if you are an individual), any of your partners or members who is an individual (if you are a partnership or joint venture), any of your managers who is an individual (if you are a limited liability company), any of your trustees who is an individual (if you are a trust), any of your "executive officers" or directors (if you are an organization other than a partnership, joint venture, limited liability company or trust) or any "employee" authorized by you to give notice of an "occurrence" or offense. (2) If you are a partnership, joint venture, lim- ited liability company ortrust, and none of your partners; joint venture members, managers or trustees are individuals, no- tice to us of such 'occurrence" or offense must be given as soon as practicable only after the "occurrence" or offense is known by: (a) Any individual who Is: (i) A partner or member of any part- nership or joint venture; (ii) A manager of any limited liability company; (iii) A trustee of any trust; or (iv) An executive officer or director of any other organization; that is your partner, joint venture member, manager or trustee; or 2. Paragraph f.(1) of the definition of "insured (b) Any "employee" authorized by such contract" in the DEFINITIONS Section is de- partnership, joint venture, limited li- leted. ability company, trust or other organl- zation to give notice of an "occur- rence" or offense. CG D417 07 08 02009 The Travelers companies, Inc. Page 5 of 6 Includes the copyrighted material of Insurance Services Office, Inc. with its permission. GUM COMMERCIAL GENERAL LIABILITY (3) Notice to us of such "occurrence" or of- fense will be deemed to be given as soon as practicable if it is given in good faith as soon as practicable to your workers' compensation insurer. This applies only if you subsequently give notice to us of the "occurrence" or offense as soon as prac- ticable after any of the persons described in Paragraphs e. (1) or (2) above discov- ers that the "occurrence" or offense may result in sums to which the insurance provided under this Coverage Part may apply. However, if this policy includes an endorse- ment that provides limited coverage for "bod- ily injury" or "property damage" or pollution costs arising out of a discharge, release or escape of "pollutants" which contains a re- quirement that the discharge, release or es- cape of "pollutants" must be reported to us within a specific number of days after its abrupt commencement, this Paragraph c. does not affect that requirement. Q. UNINTENTIONAL OMISSION The following is added to Paragraph 6., Repre- sentations, of SECTION IV — COMMERCIAL GENERAL LIABILITY CONDITIONS: The unintentional omission of, or unintentional error in, any information provided by you which we relied upon in issuing this policy will not preju- dice your rights under this insurance. However, this provision does not affect our right to collect additional premium or to exercise our rights of cancellation or nonrenewal in accordance with ® applicable insurance laws or regulations. R. BLANKET WAIVER OF SUBROGATION The following is added to Paragraph 8., Transfer Of Rights Of Recovery Against Others To Us, of SECTION IV — COMMERCIAL GENERAL LI- ABILITY CONDITIONS: If the insured has agreed in a contract or agree- ment to waive that insured's right of recovery against any person or organization, we waive our right of recovery against such person or organiza- tion, but only for payments we make because of: a. "Bodily injury" or "property damage" caused by an "occurrence" that takes place; or b. "Personal injury" or "advertising injury" caused by an offense that is committed; subsequent to the execution of the contract or agreement.. Page 6 of 6 © 2008 The Travelers Companies, Inc. CG Dd 17 07 08 Includes the copyrighted material of Insurance Services Office. Inc. with its permission. 1 1�r N COMMERCIAL GENERAL LIABILITY THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. I I i i H I L t , S; � IM This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART The following is added to Paragraph 4. a., Primary Insurance, of SECTION IV — COMMERCIAL GEN- ERAL LIABILITY CONDITIONS: However, if you specifically agree In a written contract or agreement that the insurance afforded to an addi- tional insured under this Coverage Part must apply on a primary basis, or a primary and non - contributory basis, this insurance is primary to other insurance that is available to such additional insured which covers such additional insured as a named insured, and we will not share with that other insurance, provided that: (1) The "bodily injury" or "properly damage" for which coverage is sought is caused by an 'occurrence" that takes place; and (2) The "personal injury" or "advertising injury" for which coverage is sought arises out of an offense that is committed; subsequent to the signing and execution of that con- tract or agreement by you. CG 04 25 07 08 a 2008 The Travelers companies, Inc. Page 1 of 1 WORKERS COMPENSATION AND EMPLOYERS LIABILITY POLICY ENDORSEMENT WC 04 03 06 (01) — POLICY NUMBER: UB7214M877 WAIVER OF OUR RIGHT TO RECOVER FROM OTHERS ENDORSEMENT- CALIFORNIA We have the right to recover our payments from anyone liable for an injury covered by this policy. We will not enforce our right against the person or organization named in the Schedule. (This agreement applies only to the extent that you perform work under a written contract that requires you to obtain this agreement from us.) You must maintain payroll records accurately segregating the remuneration of your employees while engaged in the work described in the Schedule. THE ADDITIONAL PREMIUM FOR THIS ENDORSEMENT SHALL BE % OF THE CALIFORNIA WORKERS' COMPENSATION PREMIUM OTHERWISE DUE ON SUCH REMUNERATION. SCHEDULE PERSON OR ORGANIZATION JOB DESCRIPTION DATE OF ISSUE: 11 07 2011 STASSIGN: POLICY NUMBER: IOCPLCD00024 ENDORSEMENT This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART PRODUCTS /COMPLETED OPERATIONS LIABILITY COVERAGE PART CONTRACTORS POLLUTION LIABILITY COVERAGE PART PROFESSIONAL LIABILITY COVERAGE PART THIS ENDORSEMENT CHANGES THE POLICY PLEASE READ IT CAREFULLY. SCHEDULE Name of Person or Organization: AS PER WRITTEN CONTRACT A. WHO IS AN INSURED (SECTION II) is amended to include as an insured the person or organization shown in the schedule. But only with respect to liability arising out of "your work" for that insured by or for you. B. As respects additional insureds as defined above. This insurance also applies to "bodily injury" or "property damage" arising out of your negligence when the following written contract requirements are applicable: Coverage available under this coverage part shall apply as primary insurance. Any other insurance available to these additional insured's shall apply as excess and not contribute as primary to the insurance afforded by this endorsement. 2. We waive any right of recovery we may have against these additional insured's because of payments we make for injury or damage arising out of "your work" done under a written contract with the additional insured. 3. The tern "insured" is used separately and not collectively, but the inclusion of more than one "insured" shall not increase the limits or coverage provided by this insurance. "Insureds are advised that certificates of insurance should be used only to provide evidence of insurance in lieu of an actual copy of the applicable insurance policy. Certificates should not be used to amend, expand, or otherwise alter the terms of the actual policy." TE- 0054-0404 EWPa CITY OF NEWPORT BEACH 1 �1 C9<wORN`P City Council Staff Report Agenda Item No. 7 October 11, 2011 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Public Works Department Stephen G. Badum, Public Works Director 949 - 644 -3311, sbadum @newportbeachca.gov PREPARED BY: John Kappeler, jkapperler @newportbeachca.gov APPROVED: TITLE: APPROVAL OF PROFESSIONAL SERVICES AGREEMENT WITH NETHERLAND, SEWELL & ASSOCIATES, INC., FOR WEST NEWPORT OIL FIELD REVIEW, EVALUATION AND MODIFICATION PROGRAM ABSTRACT: The City operates an oil field in West Newport. City Council has requested an evaluation of potential changes that could be implemented to improve production. Staff has requested and evaluated consultant proposals and recommends approval of a Professional Services Agreement to analyze and evaluate the City's oil field operation. RECOMMENDATION: Approve a Professional Services Agreement with Netherland, Sewell & Associates, Inc., (NSAI) of Dallas, Texas at a cost not to exceed $160,000, and authorize the Mayor and City Clerk to execute the Agreement. FUNDING REQUIREMENTS: A. Budget Includes Sufficient Funding The current adopted budget for FY 2011 -12 includes sufficient funding for this purchase. It will be expensed to the Tidelands -Oil fund account in the Municipal Operations Department, Account No. 5400 -8080. West Newport Oil Field Review, Evaluation, and Modification Program — Approval of Professional Services Agreement with Netherland, Sewell & Associates October 11, 2011 Page 2 DISCUSSION: The City of Newport Beach owns and operates sixteen circa- 1950's oil wells that produced 30,000 barrels in 2009. Fifteen oil wells are operating today, with one of these wells being used for water injection to increase productivity from the other wells. One well is permanently out of service. The wells are located on two sites along West Coast Highway (see Attachment B). The wells are slant - drilled from the City property into an area under the ocean which is called the West Newport Offshore Oil Field. The wells are operated under the supervision of the City's Municipal Operations Department. Day -to -day operation and management has historically been contracted to a private operator. The City is interested in having an evaluation conducted of the oil field operations to establish the value of the oil reserves along with recommendations for improving oil /gas production and options for managing the oil field. A request for Statement of Qualifications (SOQs) was sent to over 40 consulting firms with four firms subsequently submitting SOQs. These SOQs were reviewed by staff and a Request for Proposals was sent to the four consulting firms. Three proposals were submitted to the City: 1. Ryder Scott Company — Petroleum Consultants 2. Gaffney, Cline & Associates, Inc. (GCA) 3. Netherland, Sewell & Associates, Inc. (NSAI) The proposals were independently rated by three reviewers for each consultant's qualifications, past experience on similar projects and project understanding. The GSA proposal was ranked highest. Staff negotiated with GSA but was initially unable to reach an agreement on the fee for the scope of services. Subsequently after many discussions with all three proposers, staff was finally able to come to an agreement with the second highest ranked firm, NSAI, on a scope of work, cost of services and contract language that met the City's needs. Staff negotiated with NSAI to provide the necessary scope of services for a not -to- exceed fee of $160,000. ENVIRONMENTAL REVIEW: Staff recommends that the City Council find that this action is not subject to the California Environmental Quality Act ( "CEQX) pursuant to Sections 15060(c), (2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) 15060(c), and (3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. 2 West Newport Oil Field Review, Evaluation, and Modification Program —Approval of Professional Services Agreement with Netherland, Sewell & Associates October 11, 2011 Page 3 NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Submitted by: 3aum Director A. Professional Services Agreement B. Location Map 3 PROFESSIONAL SERVICES AGREEMENT WITH NETHERLAND, SEWELL & ASSOCIATES, INC. FOR OILFIELD REVIEW, EVALUATION AND MODIFICATION PROGRAM THIS AGREEMENT FOR PROFESSIONAL SERVICES ( "Agreement') is made and entered into as of this _ day of 2011 by and between the CITY OF NEWPORT BEACH, a California Municipal Corporation ( "City "), and NETHERLAND, SEWELL & ASSOCIATES, INC., a Texas corporation ( "Consultant'), whose address is 4500 Thanksgiving Tower, 1601 Elm Street, Dallas, Texas 75201 and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City is planning to conduct oilfield studies. C. City desires to engage Consultant to perform reviews, evaluations and modification studies of oilfields. ('Project'). D. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. E. The principal member of Consultant for purposes of Project shall be Michael F. Krehel, Jr. F. City has solicited and received a proposal from Consultant, has reviewed the previous experience and evaluated the expertise of Consultant, and desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The term of this Agreement shall commence on the above written date, and shall terminate on March 31, 2012 unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED City and Contractor acknowledge that the above Recitals are true and correct and are hereby incorporated by reference. Consultant shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit A and incorporated herein by reference ( "Work" or "Services "). The City may elect to delete certain tasks of the Scope of Services at its sole discretion. A- K 11ITitxil;i]= :7ri774Ti/_lZEN 3.1 Time is of the essence in the performance of Services under this Agreement and the Services shall be performed to completion in a diligent and timely manner. The failure by Consultant to perform the Services in a diligent and timely manner may result in termination of this Agreement by City. 3.1.1 Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant's reasonable control. However, in the case of any such delay in the Services to be provided for the Project, each party hereby agrees to provide notice to the other party so that all delays can be addressed. 3.2 Consultant shall submit all requests for extensions of time for performance in writing to the Project Administrator not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Consultant's control. 3.3 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under. the circumstances, by either telephone, fax, hand - delivery or mail. 4. COMPENSATION TO CONSULTANT 4.1 City shall pay Consultant for the Services on a time and expense not -to- exceed basis in accordance with the provisions of this Section and the Schedule of Billing Rates attached hereto as Exhibit B and incorporated herein by reference. Consultant's compensation for all Work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed One Hundred Sixty Thousand Dollars and no /100 ($160,000.00) without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City Consultant shall submit monthly invoices to City describing the Work performed the preceding month. Consultant's bills shall include the name of the person who performed the Work, a brief description of the Services performed and /or the specific task in the Scope of Services to which it relates, the date the Services were performed, the number of hours spent on all Work billed on an hourly basis, and a description of any reimbursable expenditures. City shall pay Consultant no later than thirty (30) days after approval of the monthly invoice by City staff. 4.2 City shall reimburse Consultant only for those costs or, expenses specifically approved in this Agreement, or specifically approved in writing in advance by City. Unless otherwise approved, such costs shall be limited and include nothing more than the following costs incurred by Consultant: 4.2.1 The actual costs of subconsultants for performance of any of the Services that Consultant agrees to render pursuant to this Agreement, which have been approved in advance by City and awarded in accordance with this Agreement. 4.2.2 Approved reproduction charges. Netherland, Sewell, & Associates, Inc. Page 2 i 4.2.3 Actual costs and /or other costs and /or payments specifically authorized in advance in writing and incurred by Consultant in the performance of this Agreement. 4.3 Consultant shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any Work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit B 5. PROJECT MANAGER 5.1 Consultant shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Consultant has designated Michael F. Krehel, Jr. to be its Project Manager. Consultant shall not remove or reassign the Project Manager or any personnel listed in Exhibit A or assign any new or replacement personnel to the Project without the prior written consent of City. City's approval shall not be unreasonably withheld with respect to the removal or assignment of non -key personnel. 5.2 Consultant, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of Services upon written request of City. Consultant warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 6. ADMINISTRATION This Agreement will be administered by the Public Works Department. Robert Stein, Assistant City Engineer or his designee, shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or his /her authorized representative shall represent City in all matters pertaining to the Services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES 7.1 In order to assist Consultant in the execution of its responsibilities under this Agreement, City agrees to, where applicable: 7.1.1 Provide access to, and upon request of Consultant, one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Consultant's Work schedule. 7.1.2 Provide blueprinting and other Services through City's reproduction company for bid documents. Consultant will be required to coordinate the required bid documents with City's reproduction company. All other reproduction will be the responsibility of Consultant and as defined above. Netherland, Sewell, & Associates, Inc. Page 3 W 7.1.3 Provide usable life of facilities criteria and information with regards to new facilities or facilities to be rehabilitated. 8. STANDARD OF CARE 8.1 All of the Services shall be performed by Consultant or under Consultant's supervision. Consultant represents that it possesses the professional and technical personnel required to perform the Services required by this Agreement, and that it will perform all Services in a manner commensurate with community professional standards. All Services shall be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. By delivery of completed Work, Consultant certifies that the Work conforms to the requirements of this Agreement and all applicable federal, state and local laws and the professional standard of care. 8.2 Consultant represents and warrants to City that it has, shall obtain, and shall keep in full force in effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Consultant to practice its profession. 8.3 Consultant shall not be responsible for delay, nor shall Consultant be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Consultant's Work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers and employees (collectively, the "Indemnified Parties) from and against any and all claims for bodily injury, death or damage to property, (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims "), which may arise from or in any manner relate (directly or indirectly) to the negligence, recklessness, or willful misconduct of the Consultant or its principals, officers, agents, employees, vendors, suppliers, subconsultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them. 9.1 Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the sole negligence, active negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Consultant. 9.2 The City shall indemnify and hold harmless Contractor, each person who controls it, and each employee of it and each consultant or contractor engaged by it Netherland, Sewell, & Associates, Inc. Page 4 I from and against any and all losses, claims, damages, expenses or liabilities, joint or several, to which they or any of them may become subject (expressly excluding claims for bodily injury, death or damage to property), in connection with the performance of such consulting work or the preparation of such evaluations or the reliance thereon by the City or any other party to which the City discloses, divulges or delivers any work product of Contractor, and the City shall reimburse Contractor and each such person or any legal or other expenses reasonably incurred in connection with investigating for defending any actions, whether or not resulting in any liability, insofar as such losses, claims, damages, expenses; liability or actions arise out of or are based upon such consulting petroleum engineering, geological, geophysical, petrophysical or evaluation work or any reliance thereon; provided, however, nothing herein shall require indemnification or reimbursement for expenses with respect to losses, claims, damages, expenses or liability arising from the gross negligence or willful misconduct of Contractor. 10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the Work are under the control of Consultant, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Consultant or any of Consultant's employees or agents, to be the agents or employees of City. Consultant shall have the responsibility for and control over the means of performing the Work, provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the performance or to exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the Services. 11. COOPERATION Consultant agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the Work to be performed. City agrees to cooperate with the Consultant on the Project. 12. CITY POLICY Consultant shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS Consultant is responsible for keeping the Project Administrator and /or his /her duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. Netherland, Sewell, & Associates, Inc. Page 5 14. INSURANCE 14.1 Without limiting Consultant's indemnification of City, and prior to commencement of Work, Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement, policies of insurance of the type and amounts described below and in a form satisfactory to City. 14.2 Proof of Insurance. Consultant shall provide certificates of insurance to City as evidence of the insurance coverage required herein, along with a waiver of subrogation endorsement for workers' compensation. Insurance certificates and endorsement must be approved by City's Risk Manager prior to commencement of performance. Current certification of insurance shall be kept on file with City at all times during the term of this contract. City reserves the right to require complete, certified copies of all required insurance policies, at any time. 14.2.1 Consultant shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property, which may arise from or in connection with the performance of the Work hereunder by Consultant, his agents, representatives, employees or subconsultants. The cost of such insurance shall be included in Consultant's bid. 14.3 Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of Califomia, with an assigned policyholders' Rating of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. 14.4 Coverage Requirements. 14.4.1 Workers' Compensation Coverage. Consultant shall maintain Workers' Compensation Insurance (Statutory Limits) and Employer's Liability Insurance (with limits of at least one million dollars ($1,000,000)) for Consultant's employees in accordance with the laws of the State of California, Section 3700 of the Labor Code In addition, Consultant shall require each subconsultant to similarly maintain Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California, Section 3700 for all of the subconsultant's employees. 14.4.1.1 Any notice of cancellation or non - renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar days (ten (10) calendar days written notice of non - payment of premium) prior to such change. 14.4.1.2 Consultant shall submit to City, along with the certificate of insurance, a Waiver.of Subrogation endorsement in favor of City, its officers, agents, employees and volunteers. 14.5 General Liability Coverage. Consultant shall maintain commercial general liability insurance in an amount not less than one million dollars ($1,000,000) per Netherland, Sewell, & Associates, Inc. Page 6 N occurrence for bodily injury, personal injury, and property damage, including without limitation, blanket contractual liability. 14.6 Automobile Liability Coverage. Consultant shall maintain automobile insurance covering bodily injury and property damage for all activities of the Consultant arising out of or in connection with Work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit for each accident. 14.7 Professional Liability (Errors & Omissions) Coverage. Consultant shall maintain professional liability insurance that covers the Services to be performed in connection with this Agreement, in the minimum amount of one million dollars ($1,000,000) limit per claim and in the aggregate. 14.8 Other Insurance Provisions or Requirements. 14.8.1 The policies are to contain, or be endorsed to contain, the following provisions 14.8.1.1 Waiver of Subrogation. All insurance coverage maintained or procured pursuant to this agreement shall be endorsed to waive subrogation against City, its elected or appointed officers, agents, officials, employees and volunteers or shall specifically allow Consultant or others providing insurance evidence in compliance with these requirements to waive their right of recovery prior to a loss. Consultant hereby waives its own right of recovery against City, and shall require similar written express waivers and insurance clauses from each of its subconsultants. 14.8.1.2 Enforcement of Contract Provisions. Consultant acknowledges and agrees that any actual or alleged failure on the part of the City to inform Consultant of non - compliance with any requirement imposes no additional obligations on the City nor does it waive any rights hereunder. 14.8.1.3 Requirements not Limiting. Requirements of specific coverage features or limits contained in this Section are not intended as a limitation on coverage, limits or other requirements, or a waiver of any coverage normally provided by any insurance. Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue and is not intended by any party or insured to be all inclusive, or to the exclusion of other coverage, or a waiver of any type. 14.8.1.4 Notice of Cancellation. Consultant agrees to oblige its insurance agent or broker and insurers to provide to City with thirty (30) days notice of cancellation (except for nonpayment for which ten (10) days notice is required) or nonrenewal of coverage for each required coverage. 14.9 Timely Notice of Claims. Consultant shall give City prompt and timely notice of claims made or suits instituted that arise out of or result from Consultant's performance under this Agreement. Netherland, Sewell, & Associates, Inc. Page 7 n 14.10 Additional Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the Work. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the Services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Consultant, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or joint - venture or syndicate or cotenancy, which shall result in changing the control of Consultant. Control means fifty percent (50 %) or more of the voting power, or twenty - five percent (25 %) or more of the assets of the corporation, partnership or joint-venture. 16. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Consultant. Assignments of any or all rights, duties or obligations of the Consultant under this Agreement will be permitted only with the express written consent of City. Consultant shall not subcontract any portion of the Work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS 17.1 Each and every report, draft, map, record, plan, document and other writing produced (hereinafter "Documents'), prepared or caused to be prepared by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. Consultant shall, at Consultant's expense, provide such Documents to City upon prior written request. Contractor may retain for its archival purposes all of its work papers and copies of all reports, opinions, appraisals, evaluations and determinations made by it. 17.2 Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Consultant will be at City's sole risk and without liability to Consultant. Further, any and all liability arising out of changes made to Consultant's deliverables under this Agreement by City or persons other than Consultant is waived against Consultant and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received from Consultant written consent for such changes. Netherland, Sewell, & Associates, Inc. Page 8 18. CONFIDENTIALITY All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the Services in this Agreement, shall be kept confidential unless City authorizes in writing the release of information. 19. INTELLECTUAL PROPERTY INDEMNITY The Consultant shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement of any United States' letters patent, trademark, or copyright infringement, including costs, contained in Consultant's drawings and specifications provided under this Agreement. 20. RECORDS Consultant shall keep records and invoices in connection with the Work to be performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any Services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Consultant shall allow inspection of all Work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. 21. WITHHOLDINGS City may withhold payment to Consultant of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue Work as a result of such withholding. Consultant shall have an immediate right to appeal to the City Manager or his /her designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 22. ERRORS AND OMISSIONS Inasmuch as uncertainties are inherent in the interpretation of engineering, geological, geophysical and petrophysical data, any determination, computation, estimate, evaluation, classification or categorization made by Contractor will represent only its informed professional judgment based on the data and information obtained by it. Therefore, Contractor shall not be liable for any cost or expense incurred or for any loss or damage sustained (a) as a result of the manner in which such services are in good faith performed by it, (b) as a result of its failure in good faith to perform an service or make any determination, computation, classification or categorization, or (c) as a result of the reliance by the City or any other party on any determination, computation, Netherland, Sewell, & Associates, Inc. Page 9 tv classification or categorization made by Contractor. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS City reserves the right to employ other Consultants in connection with the Project. 23. CONFLICTS OF INTEREST 23.1 The Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the Work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. 23.2 If subject to the Act, Consultant shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Consultant shall indemnify and hold harmless City for any and all claims for damages resulting from Consultant's violation of this Section. FZl�1!1509[a]; 9 24.1 All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first -class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: Attn: Robert Stein Public Works Department City of Newport Beach 3300 Newport Boulevard PO Box 1768 Newport Beach, CA 92658 Phone: 949- 644 -3322 Fax: 949 - 644 -3318 24.2 All notices, demands, requests or approvals from CITY to Consultant shall be addressed to Consultant at: Attention: Michael F. Krehel, Jr. Netherland, Sewell & Associates, Inc. 1601 Elm Street, Suite 4500 Dallas, TX 7501 Phone: 214- 969 -5401 Fax: 214- 969 -5411 Netherland, Sewell, & Associates, Inc. Page 10 _y 25. CLAIMS The Consultant and the City expressly agree that in addition to any claims filing requirements set forth in the Contract and Contract documents, the Consultant shall be required to file any claim the Consultant may have against the City in strict conformance with the Tort Claims Act (Government Code sections 900 et seq.). 26. TERMINATION 26.1 In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that parry shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. 26.2 Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Consultant. In the event of termination under this Section, City shall pay Consultant for Services satisfactorily performed and costs incurred up to the effective date of termination for which Consultant has not been previously paid. On the effective date of termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form, subject to the rights reserved to Contractor in Section 17.1. 27. STANDARD PROVISIONS 27.1 Compliance With all Laws Consultant shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all Work prepared by Consultant shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 27.2 Waiver A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 27.3 Integrated Contract Netherland, Sewell, & Associates, Inc. Page 11 Q �r. This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties .hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 27.4 Conflicts or Inconsistencies In the event there are any conflicts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 27.5 Interpretation The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 27.6 Amendments This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 27.7 Severabilitv If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 27.8 Controlling Law And Venue The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 27.9 Equal Opportunity Employment Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. 27.10 No Attorney's Fees In the event of any dispute or legal action arising under this Agreement, the prevailing party shall not be entitled to attorney's fees. Netherland, Sewell, & Associates, Inc. Page 12 t n�f 27.11 Counterparts This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the dates written below. APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY Date: CA / 2 7 f I( CITY OF NEWPORT BEACH, A California municipal corporation Date: By: A C ' By: Aaron C. Harp, �� [���, C� Michael F. Henn, City Attorney Mayor ATTEST: CONSULTANT: NETHERLAND, Date: SEWELL & ASSOCAITES, INC., a Texas Corporation Date: By: By: Leilani I. Brown, C. H. (Scott) Rees III City Clerk Chairman and Chief Executive Officer By: Philip S. Frost, Chief Financial Officer Attachments: Exhibit A — Scope of Services Exhibit B — Schedule of Billing Rates Netherland, Sewell, & Associates; Inc. Page 13 E9� v j _ I r`�, ly �i MINFTHERLAND, SEWELL & ASSOCIATES, INN- W,ORLI)WIDF PETROLEUM CONSULTANTS ENGINEERING • GEOLOGY - GEOPHYSICS • PETROPHYSICS May 27, 2011 SCOPE OF SERVICES A. Data Review and Analysis 1. NO Beach Oil Field Resources CHAIRMAN &CEO E %ECUINECOMMIREE C H(SCOTT) RPES IN R. SCOTTFROST -OALW PRESIDENT&COO J. GAEkRHENSON,JR- HOUSTON OANNYO SIM1AIONS OANPAULSNSH- DALLAS EAECINNEVP JOSEPH J. SMIVAN- OALLAi G LANCE BINDER THOAM JTEOA N.DAUAE a. We assume that this section is fairly self explanatory in the context of a data gathering trip, Our designated project team will travel onsite to review all of the pertinent -oil and gas production data and associated technical reports that have been assembled. We may work with the'tnaterials onsite or request that items are duplicated or transmitted digitally for use from our home offices. b. We will also tour the Newport Beach Oil Field and" West Newport oil -Company facilities to gain an understanding of the operational methods employed and to, assess the existing production infrastructure and equipment condition. As necessary, we may also request an opportunity to meet with specific City staff members and the current. oif field operating staff who are currently involved with managing the assets. c. Our project team will also review the geotechnical reports for the site and surrounding areas, as well' as available "State of California reporting records. d, We anticipate supplementing our project learn with a contract land. and legal firm; Petro Land 'Services, who has extensive experience in southern _California. Petrol-and Services will focus their efforts on reviewing'the land lease, Property rights, and settlement agreements. They Will also study and provide recommendations pertaining to the pass through rights and +agreements, easements, and other` associated issues, 2. Field Site Visit and Review —This work will be accomplished in conjunction with 1.b. above. 3. Technical Report — After reviewing all of the necessary data and performing Our technical analyses, We intend to issue a draft 'report-to" indlude out 2sUmate dl' current oil and gas reserves along With associated Cash floW'projections, future net revenue, and field life. All estimates will be prepared in accordance with the Standards Pertaining to, the Estimating and Auditing of oil 'arid, Gas Reserve's lnfomtatron promulgat -d by the Society of Petroleum Engineers. We will use standard "e"ngir Bering and gedsclen i 4506 THANKSGIVING TOWER.1601 ELM STREET' PAUAS, 1 EXAS. 10zt 1221 LAMAR STREET. SUITE 1200 %HOUSTON, TEXAS 77019 -3072± PH a @� NETHERLANO, SEWELL .S 8 ASSOCIATES, INC. methods that we consider to be appropriate and necessary to estimate proved . reserves in accordance with the definitions and guidelines of the U.S. Securities and Exchange Commission (SEC). The report will also include conclusions and recommendations pertaining to ongoing field operations and land lease and legal issues. We anticipate presenting our preliminary findings to City staff representatives as necessary, and will provide a formal report with complete documentation at the conclusion of the study. B. Developing Future Oil /Gas Production Options 1. Recommendations for Future Production and Operations Management a. Newlimproved extraction techniques — We intend to review the present production methodology, which is presumed to be rod pumping, and determine whether this is the most efficient and cost effective artificial lift technique for the existing wells. Alternative technologies that may be explored include electric submersible pump (ESP), progressive cavity pumping (PCP), or gas lifttechnoiogies. . b. Reconditioning oil wells — Current well completions will be evaluated by reviewing production histories. We intend to evaluate the well productivities to determine whether well inflow is maximized; and may consider additional perforation or stimulation where warranted. We will also review the mechanical integrity of the existing wellbores to determine if remedial operations are required for optimization or regulatory compliance: c. Drilling new wells — Based on our analysis of the in -place and remaining oil reserves,. we will make a determination of whether the remaining recoverable reserves can be exploited using the existing well inventory. If necessary, we may recommend additional well drilling or side-tracking of an existing wellbore to access by- passed reserves. d. Water injection well drilling or conversion — Present produced water injection and disposal will be analyzed. If practical, recommendations may be proposed for water injection locations to optimize oil production from the reservoir. If disposal is achieved in intervals other than the primary production zones, these injection volumes and pressures will be reviewed to determine overall performance. e. Other feasible oil extraction methods — These will be addressed in item 1.a. above. f. Gas disposal methods — The current gas contract terms with Hoag Hospital will be reviewed. After our r @view of current.production and subsequent forecasting of future gais production volumes, we will. have a better idea of future gas disposal needs. Various solutions will then be evaluated, including: renegotiating the existing Hoag contract beyond the present term, gas injection into the reservoir for - pressure maintenance, sale of gas to a local natural gas utility, or electrical generation for onsite power usage. g. Operation of the future field by contract management— The current management and operation of the oil and gas assets will be reviewed. , Based on our experience working with a variety of clients with assets of similar size, and also our experience. In operating oil, and gas properties, we expect to provide recommendations for future asset management and field operation. Various options to consider may include contract management and operation by a third party, city management with contract field operators; joint venture with an industry working interest partner, or outright sale of the assets. h. As with most of our project work; we envision close communication with the. City staff throughout the entire process. We will generate a preliminary draft report detailing our analysis and findings for staff review. We also expect to meet with City staff and City Council - members, as necessary, to present our final report and recommendations. to NETHERLANO,SEWELL HSAN & ASSOCIATES, INC. 2. Economic Analysis — In conjunction with our oil and gas reserves analysis, we intend to explore a variety of development options to optimize production and enhance the value of the assets. We will attempt to acquire of generate cost estimates associated with the development scenarios. We anticipate running economic sensitivities to evaluate the financial viability of the various options, in addition to identifying the associated risks therein. 3. Finalize Reports— Our final report will be generated With direction from City staff. Conclusions and recommendations contained within the report will be supported with proper documentation. The report will be structured such that the findings may be used in subsequent project development and implementation documents. 4. Participate in Outreach Meetings —_It is our understanding that communication with various outside groups may be required throughout the bourse of the project. We anticipate meeting with individual City Council members, finance committee, joint focus meetings, andlor the West Newport HOA, as required. Our participation in outreach meetings is intended to provide technical background to support future proposed activities: C. Optional Additional Services 1. The. City may request optional services at the conclusion of this project, At that time, we. may provide'an additional . proposal for consulting services related to activities such as: assistance with bid packages for project implementation, assistance with reviewing bids and /or proposals, or potential management and oversight of future development activities. i20 n_! NETHERLAND,SEWELL & ASSOCIATES, INC. SCHEDULE OF RATES Effective April 1, 2011 Domestic Hourly Rate (US$) Senior Engineers, Geologists, Geophysicists, and Petrophysicists 260-355 Staff Engineers, Geologists, Geophysicists, and Petrophysicists 175-255 Engineering, Geological, and Petrophysical Analysts 50-175 Computer Systems Analysts /Programmers 100-245 Administrative /Support Staff 25 -130 Geophysical and Other Workstation Time 35- 95 NSAI reserves the right to change the rates shown above on an annual basis. 4 Vz, t � Ai J . TR l 4 S t � Ai J . TR Brown, Le[lani From: Dan Purcell [dan @indexstreet.com] Sent: Monday, October 10, 2011 6:37 PM To: City Clerk's Office Cc: Gardner, Nancy Subject: City Council Consent Calendar: Oil Attachments: Pages from Oil.pdf Follow Up Flag: Follow up Flag Status: Flagged Categories: Leilani Hi Leilani "RECEIVED AFTER AGENDA PRINTED" Ir 1O ju I I intend to request Item 7. APPROVAL OF PROFESSIONAL SERVICES AGREEMENT WITH NETHERLAND, SEWELL & ASSOCIATES, INC., be removed from the Consent Calendar. I will specifically address the SCOPE OF SERVICES DOC PROVIDED BY NETHERLAND, SEWELL & ASSOCIATES, INC. ITEMS A2 AND A4 (Highlighted in the attached doc) I will encourage the Council to be certain the consultant adequately addresses RISKS associated with each of the various options explored. Moreover, I will encourage the Council to direct the consultant to meet with the Tidelands Management Committee and /or the Coastal /Bay Water Quality Citizens Advisory Committee in a PUBLIC MEETING, in addition to the Finance Committee as already specified in the document. Thanks, Dan Purcell Corona del Mar NETHRRLAMP., SEWELL 8 ASSUCtATEs, Md. .v . W..ORLDWIDY PETROLEUM CONSUVANTS ENGINEERING. GEOLOGY I GEOPHYSICS . PETROP.HYSICS May 27, 2011 80QPE OF SERVICES A. Data Review and Analysis . 1. Newport Seach Oil Field Resoirrces CHAIRMAR &CEO EX%C ECOWUEE CH (SCOTT)REESIII P,SCOrTFROST- DALLAS PRMIDPNT &COO J.dPR jR'NENEON,JR HOUSTON DANI&O SHaCHs OANPAVLSWH- DALLAS EYECN,NevP JOSVHJ.SPELWMI OALLh a LANCE B1,40M. THOIJASJTELLA U -CALM a. We assume that this secfion is fairly self explanatory in the context of a data gathering'trip. Our designated project Team will travel ansfte to review ail of th_e perffnent oil and ga's production data and assocfated teohnlcal reports that have beayf .asSeMbled. We may Work with th "e'materials onsite or request that items are tiuplfoaled or'transrnitted digitally for use from our home offices. b. We will also tour the Newport Beach 611 1'..leld and West Newport Oil `Company facilities to gain an understanding of the operational methods employed and tb. assess the existing productiop infrastructure and equipment condition.. As necessary, we may also request an opportunity.to meet wlfh spec'ffc City @taff members and the current oilfield operating staff Who are qurreptiy involved with managjng the assets. c. Our project team will also review the geotechnical reports for the site and surrounding areas, .as welt as available State of California reporting records. d. We anticipate supplementing our project team with a contract land, and legal firm, PetroLand 'Services, who has extensive experience in southern Califotnia, PetroLand Servlces Will focus their efforts on reviewing the land lease,. property'rights, and settlement agreements. They Will also study and provide recommendations pertalning to the pass through tights andagreemehts, easements, and otherassocfaled issues. 2. Field Site Visit and Reviaw � This work Will be odcomplished In conjunction With 1.b, above. 3. Technical Regbrt — After reVieWing all of mthe necessary data and performing oUr teohtifcal analyses, We intend to Issue a draft repbrt'to ind(ude out 2stlmate df ourrent oil and gas reserves along with assdciated bash f16W'projectfoos, future net revenue, and field life. All estimates, will be prepared in acgotdance with the Standards 'pertalping to' the E'stimatlnd and Auditing of Oi) 'arid. Gas Reserves Information pr'onfulgatpd by the Society of Petroleum Engineers. We iNili use standard engineering and geosclance 1221 LAMAR .w' 'EMS 7MQ1 Pdlz, M L1 qp NETHERLAND, SEWELL & ASSOCIATES, INC. methods that we consider to be appropriate and necessary to estimate proved . reserves in accordance . With the definitions and guidelines of the U.S. Securities and Exchange Commission (SEC). The report Will also Include conclusions and recommendations pertaining to ongoing field operations and land lease and legal Issues, We anticipate presenting our prellminary findings to City staff representatives as necessary, and will provide a formal report with complete documentation at the conclusion of the study. B. Developing Future OR/Gas Production Options 1. Recommendations for Future Production and Operations Management a. New /improved extraction techniques — We intend to review the present production methodology, which is presumed to be rod pumping, and determine whether this is the most efficient and. cost effective artificial lift technique for the existing wells. Alternative iechnologles that may be explored include electric submersible pump (ESP), progressive cavity pumping (PCP), or gas ijfttechnologles. b. Reconditioning oil wells — Current well completions will be evaluated by reviewing production histories. We intend to evaluate the well productivities to determine whether well inflow is maximized; and may consider additional perforation or stimulation where warranted. We will also review the mechanical fntegtity of the existing wellbores to determine if remedial operations are required for optimization or regulatory compliance. c. Drilling new wells — Based on our analysis of the In -place and remaining oil reserves;, we will make a determination of whether the remaining recoverable reserves can be exploited using the existing well inventory. If necessary, we may recommend additional well drilling or side- tracking of an existing wellbore to access by- passed reserves. d. Water injection well drilling or conversion — Present produced water injection and disposal will be analyzed. If practical, recommendations may be proposed for water injection locations to optimize oil production from the reservoir. If disposal is achieved in intetvals other than the primary production zones, these Injection volumes and pressures will be reviewed to determine overall performance. e. Other feasible oil extraction methods — These will be addressed in item 1.a. above. f. Gas disposal methods — The current gas contract terms with Hoag Hospital will be reviewed. After our review of mtrrelntproductlon and subsequent forecasting of future gas production Volumes, We will have a better Idea of future gas disposal needs. Various solutions will then be evaluated, including: renegotating the existing Hoag contract beyond the present term, gas injection into the reservoir fo'r pressure maintenance, sale of gas to a local natural gas utility, or electrical generation for onsite power usage. g. Operation of the future field by contract management— The.current management and opera)jon of the oil and gas assets will be reviewed, Based on our axpedence working with a variety of clients with assets of similar size, and also our experience. In operating oil and gas properties, we expect to provide recommendatfons for future asset management and field operation. Various options to consider may Include contract management and operation by a third party, city management with contract field operators; joint venture with an industry working interest partner, or outright sale of the assets. h. As with most of our project work; we envision close communication with the City staff throughout the entire process. We will generate a preliminary draft report detailing our analysis and findings for staff review. We also expect to meet with City staff and City Ceuncfl'members, as necessary, to present our final report and recommendations. 19 ��NETHERLAND, SEWELL & ASSUQIATES, INC. 2. Economic Analysis — In conjunctignziuith our oil and gas teserves analysis, We Intend to.explore _a variety of development options to optimize production and enhance the value of the assets. We will attempt to acgUire or generate boat <esBmates'_associated With the development 500h9rio& We anticipate running economic sensitivities to evaluate the financial viability of the various options, in addition to identifying the assoolafed riaks,ther t(n. 3. Finalize Reports — Our final report will be generated with direction from City staff. Conclusions and recommendetioris contained within the report will be supported with proper documentation. The report will be structured sUgh that the findings may be used in subsequent project development and Implementation documents. 4. Participate in Outreach Meetings —.It Is our understanding that communication With various ,outside groups may be °required tfitotighoo.tthe course of the project Weaitticipate meeting with individual City Council members, finance committee, joint focus meetings, and /or the West Newport HOA, as required. Our participation in outreach meetings is intended to provide technical': background to support future prop'o'sed activities: C. Optional Additional Services 1. The City may request Optional services at the congiuston of this project, At that time, we. may provide en addltlonal proposal for consulting services related to activities such as:'assi §lance with bid packages for project Implementation, assistance with reviewing bids and/or proposals, or potential management and oversight of future development activities. 20 UII 2 ( 6 11 E Agenda Item No. 5 July 26, 2011 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Public Works Department Stephen G. Badum, Public Works Director 949 - 644 -3311, sbadum @newportbeachca.gov PREPARED BY: John Kappeler APPROVED:rz TITLE: WEST NEWPORT OIL FIELD REVIEW, EVALUATION AND MODIFICATION PROGRAM — APPROVAL OF PROFESSIONAL SERVICES WITH NETHERLAND, SEWELL & ASSOCIATES, INC. RECOMMENDATION: Due to the inability of Netherland, Sewell & Associates and the City to come to agreement on the terms of a contract for the proposed Oil Field evaluation work, staff recommends that this item be continued to the September 13, 2011 City Council meeting to provide staff sufficient time to negotiate with the next qualified firm and prepare the necessary Professional Services Agreement. Submitted by: 4 �- j Stephen G. Badum Public Works Director Agensa No. 7 J11y 12, 201 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUN'CiL FRO 1: Public Works Department Stephen G. BaJur, Public Works Director 949 - 644 -33'1, sbadum @newportbeachoa,gov PREPARED BY: John Kappeler APPROV;;D: k; T;T E: VIEST NEW' ORT OIL F!ELO REVIEW, EVALUA 70N AND MODIFICATION PROGRAM — APPROVAL. OF PROFESS IONAL SERVICES WITH NETHERI AND, SEWEL L & ASSOCIATES, INC. RECD ME NATION: Staff recommends that th?s :tern be continued to July 26, 20', ; o provide sfafF suificie.:t time to fi nalize the Proxessonal Services Agree Qrt. Submitted by: Stephen G. Bad Public Works Director Agenda Item No. 8 _ June 28, 2011 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FRONT: Public Works Department Stephen G. Badum, Public Works Director 949 - 644 -3311, sbadum @newportbeachca.gov PREPARED BY: John Kappeler APPROVED: ��- TITLE: WEST NEWPORT OIL FIELD REVIEW, EVALUATION AND MODIFICATION PROGRAM – APPROVAL OF PROFESSIONAL SERVICES WITH NETHERLAND, SEWELL & ASSOCIATES, INC. RECOMMENDATION: Staff recommends that this item be continued to July 12, 2011 to provide staff sufficient time to finalize the Professional Services Agreement. Submitted by: Stephen G Badum ' Public Works Director