A. Each applicant requesting the approval of an exploratory area shall have the contractual or proprietary right and authority to drill for oil and gas under the surface of at least seventy five percent (75%) of the area of the real property in the city described and included in any exploratory area. The council may require the applicant to prove any such authority by submitting a lease agreement or evidence of ownership thereof.
B. In order to determine the proper boundaries of any exploratory area, the council may employ such engineers or consultants as it deems necessary to advise the council in such matter, and the cost of such services shall be paid by the city.
C. The council, in consultation with the applicant, shall determine the nature and probable extent of the exploratory area. Having determined the probable extent of the exploratory area, the council shall delineate and describe the approved exploratory area.
D. The council, as a condition to granting its approval, may require each applicant or permittee to pool all real property which it controls within the exploratory area as approved. After such pool is created, the property included therein shall thereafter be referred to as the "pooled area" or the "community lease". The applicant shall not be required to obtain leases or contractual rights to explore all of the real property within such exploratory area, but the applicant shall agree, in writing, that the owners of any oil and gas rights within the exploratory area may join in any leasing arrangement covering the pooled area or any community lease for the production of oil and gas from the exploratory area. The owners of oil and gas rights within the exploratory area shall have the right to join in any such lease and to share in the rental or royalty payments for oil and gas produced from the approved exploratory area. The shares of royalty to be paid shall be computed on the same basis as that of the average of the real property owners, by surface area, who have by lease or other document agreed to the drilling for and production of oil and gas by the applicant from the subsurface of the exploratory area.
E. The owner of any oil and gas rights within the exploratory area shall be granted the right to join in any such pooled area or community lease on the basis set forth in this section. The permittee or lessee shall accept the owner of such rights into the pooled area or community lease as provided in this section upon receiving written notice that such owner will join in and become a part of such pooled area or community lease covering the exploratory area and upon the execution of the same form of lease executed by other owners provided the oil and gas rights are appurtenant to real property included in the exploratory area. The owners of oil and gas rights within the exploratory area may join such pooled area or community lease and be included in the right to receive his pro rata share of oil and gas royalty the same as if he joined such lease by giving notice to the permittee at any time after the exploratory area is approved; provided, however, such owner shall waive any right to oil and gas royalties, rentals, or proceeds on or for any and all production from the exploratory area up to the first day of the following month after the time such notice is given to the permittee, unless such notice is given to the permittee within five (5) years of the effective date of the first council permit issued in the exploratory area. The permittee shall be required to impound the oil and gas royalty for all property within the exploratory area (in which the permittee does not have a contractual or proprietary right to drill for oil and gas beneath the surface) for a period of five (5) years from and after the effective date of the said first council permit and, during such five (5) year period, to pay such royalty, as they are entitled, to the owners of oil and gas rights who give written notice and execute the same form of lease or agreement executed by other owners. Upon the expiration of five (5) years from the effective date of the said first council permit, the permittee shall distribute the remainder of the funds impounded to the owners of oil and gas rights who have executed the lease in the same manner as shares of royalty are apportioned. No such owner of oil and gas rights shall be entitled to a council permit or the right to drill an oil and gas well because he has failed to join any community lease or pooled area or because he does not participate in an oil and gas royalty from real property located within the exploratory area.
F. The pooling or unitizing of oil and gas rights within the exploratory area as between owners, lessees, or others having rights therein may be made a condition to the approval of the exploratory area.
G. The council may modify the restrictions and conditions required by section 10-5-308 of this article and this section and impose such other conditions as it may deem necessary to carry out the purpose and intention of these sections and to fairly and equitably protect the oil and gas rights of the owners in any exploratory area.
H. Upon the receipt of an application for the approval of an exploratory area, the council shall set such application for a hearing not sooner than sixty (60) days and not later than ninety (90) days after the filing of such application and shall refer such application to the city manager for study and investigation. The city manager, not later than ten (10) days before the hearing by the council, shall file a report upon his study and investigation with the council and with the city clerk. The council, at the request of the city manager, or on its own motion, may retain engineers, geologists, or other persons to assist the city manager in his study and investigation. Notice of the hearing shall be given by publication in the official newspaper by two (2) publications not more than thirty (30) days nor less than ten (10) days prior to the date of such hearing and by mailing a written notice of such hearing to the applicant.
I. In its action upon the application, if the council shall find that the boundaries of the proposed exploratory area include all of the subsurface portion of real property in which there is likely to be found deposits of oil and gas from a probable single pool, the council shall approve the boundaries of the proposed exploratory area, or, if such boundaries can be modified to justify such a finding, the council shall approve the boundaries of the exploratory area as modified. In all other cases, the council shall disapprove the boundaries. (Ord. 79-O-1720, eff. 2-15-1979)