HomeMy WebLinkAbout2006-173S:\Our Documents\0rdinances\06\Stroud Energy First Amendment.doc
ORDINANCE NO..%3
AN ORDINANCE OF THE CITY OF DENTON, TEXAS, AUTHORIZING AN
AMENDMENT TO THAT MODIFICATION, CLARIFICATION AND RATIFICATION OF
OIL AND GAS MINERAL LEASE BETWEEN THE CITY AND STROUD ENERGY, LTD.
TO EXTEND THE TIME PERIOD FOR THE DRILLING OF GAS WELL #4H AT THE
AIRPORT; PROVIDING A SAVINGS CLAUSE AND AN EFFECTIVE DATE.
WHEREAS, Stroud Energy, Ltd. is the Lessee of an Oil, Gas and Mineral Lease of the
City of Denton Airport, dated January 17, 2002 ("Lease") which lease was amended by that
certain Modification, Clarification and Ratification of Oil, Gas and Mineral Lease dated January
16, 2005 as authorized by Ordinance No. 2005-126, to provide for the full development of the
Lease and to create in advance the gas units in anticipation of completion; and
WHEREAS, the Lessee has also executed that certain Surface Use Agreement City of
Denton Airport, as amended, dated January 17, 2002, a Road Damage Remediation Agreement
dated October 25, 2005, and that certain Underground Pipeline Easement Agreement dated April
28, 2006 and certain other agreements to provide for the full development of the lease for Oil and
Gas exploration and production purposes; and
WHEREAS, Stroud Energy, Ltd. has presented three options to the Airport Advisory
Board and Airport Management for the enhanced development of the Lease which includes a
request to extend the current period of 180 days between the date the drilling rig used to drill a
well on the lands is released and the date the actual drilling operations commence to drill Airport
Gas Well 4H; and
WHEREAS, the Airport Advisory Board has recommended that this period of time be
extended to allow more efficient development of the Lease; and
WHEREAS, the City Council deems it in the public interest to amend the Lease to
provide for an extension of the time for the drilling of Gas Well #4H under the Lease; NOW,
THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The findings and recitations contained in the preamble of this ordinance
are incorporated herein by reference.
SECTION 2. The City Manager or his designee is hereby authorized to execute the First
Amendment to that certain Modification, Clarification and Ratification of Oil Gas and Mineral
Lease Agreement and the underlying Lease in substantially the form of the attached First
Amendment, to extend the period of time for the drilling of Gas Well 44H at the Denton
Municipal Airport under the Lease.
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SECTION 3. The City Manager, or his designee, is authorized to exercise all rights and
duties of the City of Denton under the Agreement.
SECTION 4. Save and except as amended hereby, all sentences and sections of the Oil,
Gas and Mineral Lease dated January 17, 2002 as amended by the Modification, Clarification,
and Ratification of Oil and Gas Mineral Lease Agreement dated January 16, 2005 shall remain in
full force and effect.
SECTION 5. This ordinance shall become effective immediately from and after its
adoption and passage.
PASSED AND APPROVED this the z6 day of 12006.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
APPRO D AS T LEGAL FORM:
EDWIN M. SNYDER, CITY ATTORNEY
BY: zg/. e"�t7
(S�' I.0 - f
PERK R. McNEILL, MAYOR
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SAOur Documents\Contracts\06\Stroud Energy First Amendment.doc
FIRST AMENDMENT TO
MODIFICATION, CLARIFICATION & RATIFICATION OF
OIL, GAS & MINERAL LEASE
STATE OF TEXAS §
6 KNOW ALL MEN BY THESE PRESENTS THAT
COUNTY OF DENTON
WHEREAS:
(a) By Oil, Gas and Mineral Lease effective January 17, 2002, a Memorandum of
which is recorded in Volume 5010 at page 858 of the Official Public Records of
Denton County, Texas, The City of Denton leased to Enexco, Inc. the 554.14
acres of lands therein described ("Lands") on the terms and conditions therein set
forth ("Lease"); and
(b) Dan A. Hughes Company succeeded to all the rights of Enexco, Inc. in and to the
Lease, and Stroud Energy, Ltd. was assigned the lease by Dan A. Hughes
Company and has succeeded to all its rights under the Lease; and
(c) Stroud Energy, Ltd. and it's predecessors have drilled and completed horizontal
wells which are producing gas in paying quantities at the City of Denton Airport
on the leased premises; and
(d) The Lease is amended by that certain Modification, Clarification and Ratification
of Oil, Gas and Mineral Lease Agreement dated January 16, 2005; and,
(e) Stroud Energy, Ltd. must initiate drilling on Well 4H no later than August 6,
2006 under the current Lease as amended; and
(f) To allow qualified bidders to submit bids on leasing additional airport property
generally located in the approach zone to Runway 35, which is more fully
described in the attached Exhibit "A" and is made a part of this First Amendment
for all purposes, and to exercise an option that will result in more efficient
development of the mineral rights under the Lease, the time for drilling Gas Well
4H needs to be extended.
NOW, THEREFORE, for the sum of ten ;dollars ($10.00) and other good and valuable
consideration paid to the City as Lessor which is hereby acknowledged and the mutual covenants
and benefits arising hereunder, the City of Denton acting by and through its Interim City
Manager, Howard Martin, duly authorized by ordinance to make this Amendment to the
Modification, Clarification and Ratification of Oil and Gas Mineral Lease, whose address is 215
E. McKinney, Denton, Texas 76201 ("Lessor"), and Stroud Energy, Ltd. whose address is 801
Cherry Street, Suite 3800-Unit 19, Fort Worth, Texas 76102 ("Lessee") have agreed to amend
SAOur Documents\Contracts\06\Stroud Energy First Amendment.doc
the Lease by amending the Modification, Clarification and Ratification of Oil Gas and Mineral
Lease as follows:
1. Section 3 of the Modification Agreement is hereby amended to read as follows: "Section
3. If on or before the date set forth in Section 1, Lessee commences the actual drilling of
another horizontal well on the Lands, then the Lease shall continue in force and effect as
to all of the Lands so long as not more then one hundred eighty (180) days elapse
between the date the drilling rig used to drill a well on the Lands is released and the date
the actual drilling operations commence for a subsequent well on the Lands with a
drilling rig capable of drilling such well to its permitted depth. Provided, however, that
the Lessee shall have 90 days from the date that the City Council enters into a oil, gas and
mineral lease of approximately 38.4 acres of additional Airport property located in the
approach zone to Runway 35 as more fully described in the attached Exhibit "A" to
commence drilling operations on Gas Well 4H".
2. Save and except as amended hereby all the remaining paragraphs sections, sentences and
clauses of the Lease and the Modification, Clarification and Ratification of Oil Gas and
Mineral Lease Agreement shall remain in full force and effect.
For and in consideration of the terms recited herein, Lessor hereby ratifies, adopts and confirms
the Lease as amended as the same as modified herein and does hereby grant, lease and let unto
Lessee the Lands, subject to and in accordance with the terms and provisions of the Lease, as
amended in this agreement.
IN WITNESS WHEREOF, this instrument has been executed by each of the undersigned on the
date such execution is acknowledged, but the same shall be effective for all purposes as of the
20f/2 day of June 2006.
LESSOR
CITY OF DENTON
BY:
HOWARD MARTIN
INTERIM CITY MANAGER
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY: LQ�
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SAOur Documents\Contracts\06\Stroud Energy First Amendment.doc
APPROVED AS TO LEGAL FORM:
EDWIN M. SNYDER, CITY ATTORNEY
LESSEE
STROUD ENERGY, LTD.
By: Stroud Energy Management, GP, LLC
General Partner
By:
Gregor P. Smith
Division Land Manager
STATE OF TEXAS
COUNTY OF DENTON
This instrument was acknowledged before me on this the 201ay of (Tx('i
2006, by Howard Martin as the Interim City Manager of the City of Denton, a municipality
established under the laws of the Texas, on behalf of said City.
`:::�•"•••, JANE E. RICHARDSON
r=`i�` �F�? Notary Public, State of Texas
'�i„' My Commission Expires
STATE OF TEXAS
iT
COUNTY OF P-F �A 77� Pr2A hST
Q%,141 e 66110-talwx
No y Public in and for the State of Texas
4
This instrument was acknowledged before me on this the'�E day of qu4t&
2006 by Gregory P. Smith, the Division Land Manager of Stroud Energy Managergent GP, LLC,
a Texas limited liability company, General Partner of Stroud Energy, Ltd., a Texas limited
partnership, on behalf of said partnership.
K Morro+
teary Public, State of Texas
my Commission Expires:
;y�hN;:`,i pecember V, 2009
in and for the State of Texas
Page 3
Exhibit "A"
DESCRIPTION:
38.4 acres of land, more or less, a part of the James McDonald Survey, A-873, William Neill
Survey, A-970, Isaac Hambree Survey, A-594, and J. W. Kjelberg Survey, A-1610 Denton
County, Texas, and described as follows:
Parcel One: 38.62 acres, more or less, described as Tracts One and Two in that Certified
Copy of Judgment, dated November 4, 1977, in the Case styled City of Denton, Texas vs.
Jane C. Marshall, et al, Trustees of the M. T. Cole Trust No. 1, recorded in Volume 871,
Page 137 of the Deed Records of Denton County, Texas,
Parcel Two: 31.107 acres, more or less, described in that Certified Copy of Judgment,
dated July 7, 1993, in the Case styled City of Denton, Texas vs. M T. Cole Trust No. 1
Through Its Co -Trustees, recorded in Document Number 94-R0071013 of the Deed
Records of Denton County, Texas,
LESS AND EXCEPT. that portion of the above described lands (estimated to be 31.327
acres, more or less) which lies within that certain 331.94 acres, more or less, described as
Tract Three in that certain Memorandum of Oil, Gas and Mineral Lease Agreement,
dated effective January 17, 2002, between City of Denton, Texas and Enexco, Inc., as
recorded in Volume 5010, Page 858 of the Deed Records of Denton County, Texas.
A C iti1ADDEN
W. SMITH
ease Tr. 3
A-1188 W. NEIL
A-970 =
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Parcel 1, Tr.ff'
r 1, To
J BACON
Pa a
I. HAMBREE
J. MCDFINALD w A 94
A-873 Y a