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CONTRACT K-1314-93: A CONTRACT BY AND BETWEEN THE CITY OF NORMAN, OKLAHOMA, AND BARON EXPLORATION COMPANY FOR THE LEASE OF 160 ACRES OF MINERAL RIGHTS TO ALLOW DRILLING OPERATIONS ON PROPERTY LOCATED IN SECTION 18, TOWNSHIP 8 NORTH, RANGE 2 WEST OF CLEVELAND COUNTY OKLAHOMA, SOUTHWEST OF THE WASTEWATER TREATMENT PLANT ALONG THE SOUTH CANADIAN RIVER FOR A PERIOD OF THREE YEARS.
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BACKGROUND: The City of Norman owns 340 acres, more or less depending on the alignment of the Canadian River, South of State Highway 9 and East of Jenkins Avenue. The City also owns all of the mineral rights for this property. Currently, the City of Norman leases a portion of the property for the operation of a sand mine and the City uses a portion for the City's compost facility.
In July 2006, the City of Norman entered into a lease for drilling of an oil and gas well on this property. That lease was with Hughes Oil Company ("Hughes"). Though the City had a lease with Hughes, Hughes never drilled a well, and the lease expired. The term of the lease with Hughes was for three years with Hughes agreeing to pay a 3/16 royalty to the City of Norman.
Subsequent to the expiration of the lease with Hughes, City staff began to take steps to determine if there was any interest among oil and gas companies to lease the same area for a well. David Woods, Oil and Gas Inspector for the City of Norman, spoke with several oil companies operating in the Oklahoma City Metro Area about the possibility of leasing the City property. After determining that there was interest, the City of Norman advertised for lease proposals in the Norman Transcript on October 5th and 12th, 2013. The Baron Exploration Company ("Baron") submitted the only proposal. The bid documents included a lease prepared with help from the Oklahoma City law firm of Elias, Books, Brown and Nelson who specialize in oil and gas law. The City Council met on October 22, 2013 and November 5, 2013 to discuss ...
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