2018-094 Parks Gas Well FundsDate: July 27, 2018 Report No. 2018-094
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
The purpose of this report is to provide the City Council with details regarding the City’s parks
gas wells.
BACKGROUND:
During the July 17th Council meeting there were questions asked about gas wells producing
royalties in the City’s parks. This report will provide a detailed explanation of the parks gas
wells, their location, mineral interest rates, and revenue.
DISCUSSION:
Denton has six gas well pad sites consisting of 14 well heads that provide revenue to city parks.
All gas well pad sites are located off of park land and use horizontal drilling to access minerals
below the parks. The appropriable fund balance as of September 30, 2017 is $104,371. Attached
is a financial statement as of 9-30-17 for the Parks Gas Well Fund and includes the FY 2018-19
Proposed Budget.
The royalty percentage for the wells ranges from 18.75% to 25% however the city does not
receive that amount in payments. Each well head has a pooling agreement in which the rights of
many different mineral owners are combined into pools large enough to extract minerals. The
City is paid royalties based on the net revenue interest (NRI) which is calculated by dividing the
number of acres the City has by the total number of acres in the pool then multiplying by the
royalty percentage. The table below outlines the well’s name, associated park, royalty percent,
and NRI.
Parks Gas Wells Location and Royalty Rates
Name Park Royalty % NRI
Acme 1H Lake Forrest/Wiggly Field/Cross Timbers 25% .03354489
Acme 2H Lake Forrest/Wiggly Field/Cross Timbers 25% .03354489
Acme 3H Lake Forrest/Wiggly Field/Cross Timbers 25% .03354489
Acme 4H Lake Forrest/Wiggly Field/Cross Timbers 25% .03354489
Meredith 1 Lake Forrest/Wiggly Field/Cross Timbers 25% .01548882
Parks Unit 1H North Lakes Park 21% .14862463
Parks Unit 2H North Lakes Park 21% .14862463
Underwood Breen 1H Airport Open 20% .02539863
Underwood Breen 2H Airport Open 20% .02539863
Rayzor West 12H-1 Airport Open 22.5% .00664086
Rayzor West 12H-2 Airport Open 22.5% .00664086
Rayzor West 12H-3 Airport Open 22.5% .00664086
Rayzor West 12H-4 Airport Open 22.5% .00664086
Denton CJW 1 Vintage Open Space 18.75% .00208743
Date: July 27, 2018 Report No. 2018-094
The Acme and Meredith pad sites are located to the southeast of Lake Forrest Park. The Parks
Unit pad site is across from Fire Station 5 on the west side of N. Bonnie Brae St. The
Underwood Breen 1H and 2H pad sites are located off of Airport Rd. just east of the Airport. The
Rayzor West 12H pad site is located off of Airport Rd. behind ReaderLink and the Denton CJW
1 pad site is located north of 2449 (Vintage Blvd.) and west of I-35W.
Please do not hesitate to contact me if you have any further questions about the city’s park’s gas
well royalties.
ATTACHMENTS:
Parks Gas Well Financial Statement
STAFF CONTACT:
Antonio Puente, Jr., Director of Finance
(940)-349-7283
Antonio.Puente@cityofdenton.com
City of Denton
Parks Gas Well Fund1
Schedule of Revenues & Expenditures
For the Period Ended September 30, 2016
FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19
DESCRIPTION ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL BUDGET PROPOSED
REVENUES:
Royalties2 50,339$ 431,734$ 472,236$ 218,782$ 163,409$ 321,937$ 172,268$ 99,308$ 97,726$ 50,000$ 29,200$
Interest Income - 2,257 2,645 3,471 1,080 173 1,340 1,047 1,072 1,000 800
Transfer from Other Gas Well Fund - 1,205,046 - - - - - - - - -
Total Revenues 50,339$ 1,639,037$ 474,881$ 222,253$ 164,489$ 322,110$ 173,608$ 100,355$ 98,798$ 51,000$ 30,000$
EXPENDITURES:
Transfer to Capital Projects - Water Park Slide Replacement -$ 350,000$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Transfer to Capital Projects - Senior Center Land Purchase - 150,000 - - - - - - - - -
Transfer to Capital Projects - North Lakes Soccer Fields - 850,000 - - - - - - - - -
Transfer to Capital Projects - Mack Park Property purchase - - 53,000 - - - - - - - -
Transfer to Capital Projects - North Lakes Bleachers - - - 15,000 - - - - - - -
Transfer to Capital Projects - Mack & Milam Park Land Purchase - - - 90,000 - - - - - - -
Transfer to Capital Projects - Mack Park Score Boards - - - 10,000 - - - - - - -
Transfer to Capital Projects - Water Park Shade Covering - - - 15,000 - - - - - - -
Transfer to Capital Projects - Adult Soccer Field - - - 95,000 - - - - - - -
Transfer to Capital Projects - Water Park River Pump - - - 15,000 - - - - - - -
Transfer to Capital Projects - Evers Park Irrigation - - - 60,000 - - - - - - -
Transfer to Capital Projects - Quaker Town Park Irrigation - - - 50,000 - - - - - - -
Transfer to Capital Projects - North Lakes Property Purchase - - - - 500,000 - - - - - -
Transfer to Capital Projects - Golf Driving Range Improvements - - - - 197,999 - - - - - -
Transfer to Capital Projects - Adult Soccer Field - - - - 100,000 - - - - - -
Transfer to Capital Projects - Water Park Concession Stand - - - - - 45,500 - - - - -
Transfer to Capital Projects - Denia Athletic Fields - - - - - 40,000 - - - - -
Transfer to Capital Projects - Vela Soccer Complex - - - - - 55,000 200,000 150,000 100,000 - -
Transfer to Capital Projects - American Legion Hall Renovation - - - - - - - - - 100,000 -
Transfer to Capital Projects - Softball Fields and North Dog Park - - - - - - - - - - 50,000
Total Expenditures -$ 1,350,000$ 53,000$ 350,000$ 797,999$ 140,500$ 200,000$ 150,000$ 100,000$ 100,000$ 50,000$
Net Income (Loss)50,339$ 289,037$ 421,881$ (127,747)$ (633,510)$ 181,610$ (26,392)$ (49,645)$ (1,202)$ (49,000)$ (20,000)$
Beginning Unreserved Fund Balance -$ 50,339$ 339,376$ 761,257$ 633,510$ -$ 181,610$ 155,218$ 105,573$ 104,371$ 55,371$
Ending Unreserved Fund Balance 50,339$ 339,376$ 761,257$ 633,510$ -$ 181,610$ 155,218$ 105,573$ 104,371$ 55,371$ 35,371$
1State law restricts the use of these revenues for parks expenses only. In addition, State law prohibits the use of park surface to parks purposes only. As such, there are no gas wells drilled directly on park land.
2Royalties from gas pooling agreements associated with the following parks: Airport Open Space Park, North Lakes Park, Vintage, Lake Forrest Park, Wiggly Field, and Cross Timbers Park.