HomeMy WebLinkAbout2007-137s*\our documents\ordinances\07\cross timbers -endeavor enerm/Am -
ORDINANCE NO. ,W 9r 1,,?
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE A OIL AND GAS
LEASE WITH ENDEAVOR ENERGY FOR 19.45 ACRES OF CROSS TIMBERS PARK
SITUATED IN THE N. BRITTON SURVEY, ABSTRACT NO. 51, IN THE CITY OF DENTON,
DENTON COUNTY, TEXAS, AND RELATED DOCUMENTS; PROVIDING SEVERABILITY
AND AN EFFECTIVE DATE.
WHEREAS, the City Council of the City of Denton has heretofore determined that it is
advisable to lease, for oil and gas purposes, certain real property located at Cross Timbers Park,
Denton, Texas; and
WHEREAS, the City desires to authorize the City Manager to execute the lease with
Endeavor Energy for an oil and gas lease; NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. Incorporation of Preamble. The above and foregoing preamble is incorporated
into the body of this Ordinance as if copied herein in its entirety.
SECTION 2. The City Manager or his designee is hereby authorized to execute an oil and
gas lease agreement between the City of Denton and Endeavor Energy, and related documents, which
are attached hereto and incorporated herein by reference.
SECTION 3. If any section, article, paragraph, sentence, clause, phrase or word in this
Ordinance or application thereof to any person or circumstance is held invalid or unconstitutional by
a Court of competent jurisdiction, such holding shall not affect the validity of the remaining portions '
of this Ordinance, and the City Council hereby declares it would have passed such remaining ,
portions of this Ordinance despite such invalidity, which remaining portions shall remain in full
force and effect.
a
SECTION 4. This ordinance shall become effective immediately upon its passage and
approval.
PASSED AND APPROVED this the ay of 2007.
PERRY R. McNEILL, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
APPRO D AS O LEGAL FORM:
EDWIN M. SNYDER, CITY ATTORNEY
Page 2
NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON,
YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFOR-
MATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE
PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S
LICENSE NUMBER.
OIL AND GAS LEASE
This Oil and Gas Lease (this "Lease') is made on 3 , 2007 between
THE Crry OF DENTON, TExAs (hereafter called "Lessor,'D whether one or more), whose
address is 215 E. McKinney St., Denton, Texas 76201 and ENDEAVOR ENERGY
RESOURCES, L.P., whose address is 110 N. Marienfeld Suite 200, Midland, Texas
79M (hereafter called "Lessee").
1. Grant In consideration of One Thousand and no/100s dollars ($1000.00)
per mineral acre and other good and valuable consideration in hand paid, Lessor grants
and leases exclusively unto Lessee the following described land (the "Land") in Denton
County, Texas, for the sole purpose of exploring under, drilling under, and to produce,
save, treat, process, store, and transport oil and gas and other products manufactured from
oil and gas produced from the Land:
19.4 Acres as more particularly described on Exhibit "A" attached hereto
and made part hereof.
2. Primary Term. This Lease is for a term of one (1) Year from this date
(called "Primary Term") and as long thereafter as oil or gas is produced from the Land in
paying quantities.
3. Surface Use Prohibited/Protection of Public Lands. There is hereby
excepted and reserved to LESSOR the full use of the land covered hereby and all rights
with respect to the surface and subsurface thereof for any and all purposes and all miner-
als except those expressly leased herein and only to the extent herein leased to LESSEE.
LESSOR reserves and excepts from this Lease all of the surface of the land described in
paragraph 1, and LESSEE agrees that it will not conduct drilling operations or any other
operations or activities of any nature on the surface of such Land. Lessee its agents, con-
tractors, heirs, successors or assigns shall have no rights of ingress or egress upon the sur-
face of the Land and herein waives any rights to any implied easement to use the surface
of the Land. Unless this Lease specifically provides for the conduct of seismic opera-
tions, Lessee is prohibited from using the surface of the Land for any purpose, but Lessee
may engage in directional or horizontal drilling activities beneath the Land that are con-
ducted on the surface of other lands. Any directional or horizontal drilling must penetrate
the Land sufficiently below the surface as to not interfere with the present or future use of
the surface of the Land for public park use, and in no event may the directional or hori-
zontal drilling penetrate the Land less than 200 feet below the surface. A directional or
horizontal well drilled under this provision shall be considered to be located on the Land.
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Lessee's surface locations for wells affecting this Lease shall not enter the surface within
500 feet of the Land.
4. Minerals Covered. This Lease covers only oil and gas. The term `oil and
gas" means oil, gas, and other liquid and gaseous hydrocarbons produced through a well
bore.
S. Royalty.
(a) As royalties, Lessee agrees:
(1) To deliver free of cost to Lessor at the wells or to the credit
of Lessor at the pipeline to which the wells may be connected, twenty five percent 2
(the "Royalty Percentage") of all oil and other liquid hydrocarbons produced and saved
from the Land. At Lessor's option, which may be exercised from time to time, Lessee
shall pay to Lessor the same part of the market value at the well of oil and other liquid
hydrocarbons of like grade and gravity prevailing on the day the oil and other hydrocar-
bons are run from the Lease in the general area in which the Land is located.
(2) To pay to Lessor:
(i) On gas produced from the Land and sold by
Lessee or used on or off the Land and to which the following subparagraphs (ii) and (iii)
do not apply, the Royalty Percentage of the market value at the point of sale, use, or other
disposition.
(ii) On gas produced from the Land that is
processed in a processing plant in which Lessee or an affiliate of Lessee has a direct or
indirect interest, the higher of the Royalty Percentage of the market value of the gas at the
inlet to the processing plant, or the Royalty Percentage of the market value of all
processed liquids saved from the gas at the plant plus the Royalty Percentage of the mar-
ket value of all residue gas at the point of sale, use, or other disposition.
(iii) On gas produced from the Land that is
processed in facilities other than a processing plant in which Lessee or an affiliate of Les-
see has a direct or indirect interest, the Royalty Percentage of the market value at the
plant of all processed liquids credited to the account of Lessee and attributable to the gas
plus the Royalty Percentage of the market value of all residue gas at the point of sale, use,
or other disposition.
(b) If gas produced from the Land is sold by Lessee pursuant to an
arms -length contract with a purchaser that is not an affiliate of Lessee, and for a term no
longer than that which is usual and customary in the industry at the time the contract is
made, then the market value of the gas sold pursuant to the contract shall be the total
proceeds received by Lessee in the sale, subject to the provisions of paragraph 5(c) be-
low.
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(c) The market value of gas will be determined at the specified loca-
tion by reference to the gross heating value (measured in British thermal units) and quali-
ty of the gas. The market value used in the calculation of oil and gas royalty will never be
less than the total proceeds received by Lessee in connection with the sale, use, or other
disposition the oil or gas produced or sold. For purposes of this paragraph, if Lessee rece-
ives from a purchaser of oil or gas any reimbursement for all or any part of severance or
production taxes, or if Lessee realizes proceeds of production after deduction for any ex-
pense of production, gathering, dehydration, separation, compression, transportation,
treatment, processing, storage, or marketing, then the reimbursement or the deductions
will be added to the total proceeds received by Lessee. Royalty will be payable on oil and
gas produced from the Land and consumed by Lessee on the Land for compression, de-
hydration, fuel, or other use.
(d) Lessor's royalty will never bear, either directly or indirectly, any
part of the costs or expenses of production, separation, gathering, dehydration, compres-
sion, transportation, trucking, processing, treatment, storage, or marketing of the oil or
gas produced from the Land or any part of the costs of construction, operation, or depre-
ciation of any plant or other facilities or equipment used in the handling of oil or gas on
the pooled lands and/or prior to the point of sale. It is understood and agreed between
Lessor and Lessee that this clause shall not be considered surplusage as per the principles
of the Heritage Resources v. Nations Bank, 960 S.W.2d 619 (Tex. 1997) case and shall
be given its full meaning and effect. Notwithstanding anything herein contained to the
contrary, Lessor and Lessee agree that Lessor's royalty on gas (to the extent Lessor has
not elected to take his or her royalty gas in kind) shall bear its proportionate share of
post -production costs associated with such gas to the extent such production costs are in-
curred at a point or points not on the lease premises. In the event Lessee and/or its affili-
ates provide off -lease post -production services the fee attributable to Lessor's royalty gas
shall be the lesser of: 1) the lowest rates charged third parties by Lessee and/or its affili-
ates for similar services or 2) the lowest rate that could otherwise be negotiated under an
arms length agreement with bona -fide third parties for the same services.
(e) Lessor shall be paid the Royalty Percentage of all payments and
other benefits made under any oil or gas sales contract or other arrangement, including
take -or -pay payments and payments received in settlement of disputes; provided that if
Lessor receives a take -or -pay payment or similar payment for gas that has not been pro-
duced, and if the gas is subsequently produced, Lessor will only receive its Royalty Per-
centage of any payments made for make-up gas taken pursuant to the take or -pay provi-
sion or similar provision.
(f) Lessee must disburse or cause to be disbursed to Lessor its royalty
on production from a particular well not later than 90 days after completion of the well,
in the case of an oil well, or after the pipeline connection, in the case of a gas well. The-
reafter, Lessee must disburse or cause to be disbursed to Lessor its royalty on production
by the last day of the second month after the month of production. If not paid when due,
Lessor's royalty will bear interest at the maximum lawful rate from due date until paid,
which amount Lessee agrees to pay. Acceptance by Lessor of royalties that are past due
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will not act as a waiver or estoppel of its right to receive interest due thereon unless Les-
sor expressly so provides in writing signed by Lessor. The royalty payment obligations
under this Lease shall not be affected by any division order or the provisions of the Sec-
tion 91.402 of the Texas Natural Resources Code or any similar statute.
(g) Upon written request by Lessor, Lessee shall tender a full account-
ing as to the payment of royalty to Lessor within 30 days of said request. The format
shall be in the form requested by Lessor. However, if no format is specified Lessee shall
respond in a format that provides Lessor with an accurate depiction of the amount of pro-
duction from the well(s) affecting this Lease for the time period specified and the alloca-
tions of payments to the Lessor along with deductions, if any.
(h) As used in this Lease, "affiliate" means (i) a corporation, joint ven-
ture, partnership, or other entity that owns more than ten percent of the outstanding vot-
ing interest of Lessee or in which Lessee owns more than ten percent of the outstanding
voting interest; or (ii) a corporation, joint venture, partnership, or other entity in which,
together with Lessee, more than ten percent of the outstanding voting interests of both
Lessee and the other corporation, joint venture, partnership, or other entity is owned or
controlled by the same persons or group of persons.
(i) The receipt by Lessee from a purchaser or a pipeline company of
proceeds of production for distribution to Lessor will not result in Lessee acquiring legal
or equitable title to those proceeds, but Lessee will at all time hold the proceeds in trust
for the benefit of Lessor. Notwithstanding the insolvency, bankruptcy, or other business
failure of a purchaser of production from the Land or pipeline company transporting pro-
duction from the Land, Lessee will remain liable for payment to Lessor for, and agrees to
pay Lessor all royalties due Lessor together with interest if not timely paid.
6. Shut-in Royalty, While there is a gas well on this Lease capable of pro-
ducing gas in paying quantities, but gas is not being sold, Lessee shall pay or tender in
advance an annual shut-in royalty of $200.00 per acre leased herein from which gas is not
being sold. The first payment of such sum shall be on or before the first day of the calen-
dar month at the expiration of ninety (90) days from the date the Lease is not maintained
by production, and thereafter subsequent payments may be made at annual intervals.
While shut-in royalty payments are timely and properly paid, this Lease will be held as a
producing lease. The right of Lessee to maintain this Lease in force by payment of shut-in
gas royalty is limited to the period of two years that follow the expiration of the Primary
Term. The obligation of Lessee to pay shut-in royalty is a condition and not a covenant.
The payment or tender of royalty under this paragraph may be made by the check of Les-
see mailed or delivered to the parties entitled thereto on or before the due date.
7. Drilling Obligations/Delay RentaL On or before 180 days from this date,
Lessee agrees to commence the actual drilling of a well on land pooled pursuant to para-
graph 10 below with the Land and thereafter drill it with reasonable diligence and in a
good and workmanlike manner to a depth sufficient to test the Barnett Shale Formation
via horizontal drilling. While drilling the well, if Lessee encounters conditions that render
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further drilling impractical, Lessee may commence a substitute well within 30 days after
abandoning the well. A substitute well that is drilled to the depth and in the manner re-
quired for the first well will satisfy this drilling obligation. If Lessee fails timely to com-
mence the well, or if having commenced the well fails to drill it to the depth and in the
manner required, this Lease will terminate. Lessee may delay the commencement of said
well to the end of the Primary Term by paying to Lessor a one time delay rental in the
amount of $5000.00 before the end of the fast 180 days of this lease. Said delay rental
shall be paid directly to Lessor at the address listed above.
8. Continuous Development.
(a) If, at the expiration of the Primary Term, oil or gas is not being
produced from the Land, but Lessee has commenced the drilling of a well on lands that
will form a proration unit that will include the Land, the Lease will not terminate but will
remain in effect for so long thereafter as operations are carried out with due diligence
with no cessation of more than 60 days, and if the operations result in the production of
oil or gas, the Lease shall remain in force as otherwise provided herein. For the purposes
of this Lease, the term "operations" means operations for any of the following: drilling,
testing, completing, reworking, recompleting, deepening, plugging back, or repairing of a
well in search of or in the endeavor to obtain production of oil or gas.
(b) After the Primary Term, if this Lease is maintained by production
or otherwise, it will remain in force as to all acreage and depths as long as there is no
lapse of more than 180 days between the completion of one well and the commencement
of the actual drilling of another well. The commencement of actual drilling means the
penetration of the surface with a drilling rig capable of drilling to the anticipated total
depth of the well. After a well is commenced, drilling operations must continue with dili-
gence and in a good and workmanlike manner in a good faith effort to reach the antic-
ipated total depth. A well will be deemed to have been completed on the date of the re-
lease of the drilling rig from the drillsite. The permitted time between wells shall be cu-
mulative so that if a well is commenced prior to the date it is required to be commenced,
the number of days prior to the date on which the well should have been commenced
shall be added to the time permitted for the next well.
(c) If at any time the maximum time for the commencement of the ac-
tual drilling of a well expires without the commencement of a well, or upon the expira-
tion of the Primary Tenn if the Lease is not maintained by continuous drilling, this Lease
will terminate except as to the portion of the Land. contained in any proration unit with a
well that is then producing in paying quantities or deemed to be producing in paying
quantities by virtue of payment of shut-in royalties. The Lease will then terminate as to
all depths below the stratigraphic equivalent of the base of the deepest producing forma-
tion on the said proration unit. If production from the said proration unit ceases from any
cause, this Lease will terminate as to the portion of the Land contained therein unless
Lessee commences operations for drilling or reworking on the well from which produc-
tion ceased or on a new well on other lands that would include the Land in the proration
unit within 90 days after the cessation of production, in which case the Lease as to that
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tract will continue in force as long as the operations are prosecuted with no cessation of
more than 60 consecutive days. If the said operations result in production, then this
Lease shall remain in force so long thereafter as there is production from the tract.
(d) As used in this Lease, the term "horizontal well" means a well that
meets the definition of a "horizontal drainhole well" under Statewide Rule 86 of the Rail-
road Commission of Texas, and a "vertical well" is a well that is not a horizontal well. A
proration unit for a vertical well producing from the Barnett Shale formation may not ex-
ceed 40 acres. If field rules are established later that permit obtaining a drilling permit
with less acreage, a proration unit for a vertical well may not exceed the minimum size
permitted. A proration unit for a horizontal well may include the minimum acreage speci-
fied above for a vertical well plus the additional acreage listed in the tables in Rule 86
(For Fields with a Density Rule of 40 Acres or Less) and must comply with the require-
ments of Rule 86 for minimum permitted well density, and if the well is producing from
the Barnett Shale formation, the acreage of a proration unit shall be assigned as if well
density for vertical wells is 40 acres or less. Each proration unit for a vertical well must
be as nearly in the form of a square as is practical with the well in the center of the square
and with the sides of each square running in the cardinal directions. Each proration unit
for a horizontal well must be in the form of a rectangle with the horizontal drainhole be-
ing as nearly as practical along the center line of the long dimension of the rectangle.
9. Pooling. Lessor and Lessee recognize that it may in the interest of each
party for portions of the Land to be pooled with adjacent land to create pooled units for
vertical or horizontal drilling. Lessor and Lessee agree that Lessee has the authority to
pool the Land in the Acme Gas Unit which said unit shall not exceed 640 acres plus 10%
acreage tolerance. Lessee shall pool all of Lessor's Land in said gas unit and shall not
release any portion thereof without Lessor's written consent. Any other proposed unit
will only become effective upon Lessor's consent, which consent will not be unreasona-
bly withheld.
10. Secondary Recovery. Lessee will not implement any repressuring, pres-
sure maintenance, recycling, or secondary recovery operations without the prior written
consent of Lessor.
11. Surface Use. Unless this Lease specifically provides for the conduct of
seismic operations,, Lessee is prohibited from using the surface of the Land for any pur-
pose, but Lessee may engage in directional drilling activities beneath the Land that are
conducted on the surface of other land. Any directional drilling must penetrate the Land
sufficiently below the surface as to not interfere with the present or future use of the sur-
face of the Land for commercial or residential use, and in no event may the directional
drilling penetrate the Land less than 200 feet below the surface. A directional well drilled
under this provision shall be considered to be located on the Land.
12. Assignments. Lessor is granting rights to Lessee that Lessor would not
grant to others. Therefore, prior written approval of Lessor is required for any assignment
or sublease of this Lease, not to be unreasonably withheld. All assignments and subleases
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must require the assignee or sublessee to assume all of Lessee's obligations under this
Lease, but Lessee will remain liable for its obligations regardless of any assignment or
sublease by it. No assignment or sublease will be effective until a certified copy of the
recorded document is furnished to Lessor.
13. Force Majeure. Should Lessee be prevented by reason of Force Majeure
from complying with any express or implied covenant of this Lease (other than a re-
quirement to pay money), from conducting drilling or reworking operations on the Land,
or from producing oil or gas, then while so prevented, that covenant will be suspended;
Lessee will not be liable for damages for failure to comply therewith; this Lease will be
extended so long as Lessee is prevented from conducting drilling or reworking operations
on or from producing oil or gas from the Land; and the time while Lessee is so prevented
will not be counted against Lessee. "Force Majeure" means any Act of God, any federal
or state law, or any rule or regulation of governmental authority, or other similar cause
(other than financial reasons). This paragraph is, however, in all things subject to the li-
mitations of time during which this Lease may be continued in force by the payment of
shut-in gas royalties.
14. No Warranties. Lessor makes no warranty of any kind with respect to
title to the Land. By acceptance of this Lease, Lessee acknowledges that it has been given
full opportunity to investigate and has conducted sufficient investigation to satisfy itself
as to the title to the Land, and Lessee assumes all risk of title failures. If Lessor owns an
interest in the Land less than the entire fee simple estate, then the royalties payable he-
reunder will be reduced proportionately. Lessee, at its option, may discharge any tax,
mortgage, or other lien on the Land, and in the event Lessee does so, Lessee will have the
option of applying the royalties accruing to Lessor toward payment of it.
15. Curing Defaults. Should Lessee at any time fail to comply with its obli-
gations hereunder regarding construction, maintenance, or repair within 30 days after
written notice from Lessor, Lessor will have the right to do or have done whatever is ne-
cessary to fulfill the obligations to its satisfaction, and Lessee shall be liable to Lessor for
the reasonable and necessary expenses thus incurred by Lessor, to be paid within ten days
after Lessor furnishes to Lessee an itemized written statement of the expenses.
16. Notices. All notices will be deemed given and reports will be deemed de-
livered if sent by certified letter, return receipt requested, properly addressed and depo-
sited in the United States Postal Service, postage prepaid, to Lessor and Lessee at the ad-
dresses shown for each party. Any party may designate a new address by proper notice to
the other party or parties.
17. Attorney's Fees. In the event that Lessor is required to employ legal
counsel for the enforcement of any provision of this Lease and prevails, Lessor will be
entitled to recover from Lessee reasonable attorney's fees and expenses incurred by Les-
sor.
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IS. Insurance Requirements. Lessee shall provide or cause to be provided
the insurance described below for each well drilled under the terms of this Lease, such
insurance to continue until the well is abandoned and the site restored. Such insurance
shall provide that Lessor shall be a co-insured, without cost, and that said insurance can
not be canceled or terminated without thirty (30) days prior notice to Lessor and ten (10)
days notice to Lessor for nonpayment of premiums.
a. General Requirements. Indemnification and Express Negligence Pro-
visions. LESSEE shall expressly release and discharge, all claims, demands, actions,
judgments, and executions which it ever had, or now have or may have, or assigns may
have, or claim to have, against the LESSOR, it agents, officers, servants, successors, as-
signs, sponsors, volunteers, or employees, created by, or arising out of personal injuries,
known or unknown, and injuries to property, real or personal, or in any way incidental to
or in connection with the performance of the oil and gas drilling and production per-
formed by the LESSEE under this lease and the LESSEE shall fully defend, protect, in-
demnify, and hold harmless the LESSOR, and/or its departments, agents, officers, ser-
vants, employees, successors, assigns, sponsors, or volunteers from and against each and
every claim, demand, or cause of action and any and all liability, damages, obligations,
judgments, losses, fines, penalties, costs, fees, and expenses incurred in defense of the
LESSOR, and/or its departments, agents, officers, servants, or employees, including,
without limitation, personal injuries and death in connection therewith which may be
made or asserted by LESSEE, its agents, assigns, or any third parties on account of, aris-
ing out of, or in any way incidental to or in connection with the performance of the oil
and gas well drilling and production performed by the LESSEE under this lease and, the
LESSEE agrees to indemnify and hold harmless the LESSOR, and/or its departments,
and/or its officers, agents, servants, employees, successors, assigns, sponsors, or volun-
teers from any liabilities or damages suffered as a result of claims, demands, costs, or
judgments against the LESSOR and/or, it's departments, it's officers, agents, servants, or
employees, created by, or arising out of the acts or omissions of the LESSOR occurring
on the drill site or operation site in the course and scope of inspecting and permitting the
gas wells INCLUDING, BUT NOT LIMITED TO, CLAIMS AND DAMAGES ARIS-
ING IN WHOLE OR IN PART FROM THE NEGLIGENCE OF THE LESSOR OC-
CURRING ON THE DRILL SITE OR OPERATION SITE IN THE COURSE AND
SCOPE OF ITS DUTIES UNDER THIS LEASE.. IT IS UNDERSTOOD AND
AGREED THAT THE INDEMNITY PROVIDED FOR IN THIS SECTION IS AN IN-
DEMNITY EXTENDED BY THE LESSEE TO INDEMNIFY AND PROTECT THE
LESSOR AND/OR ITS DEPARMENTS, AGENTS, OFFICERS, SERVANTS, OR EM-
PLOYEES FROM THE CONSEQUENCES OF THE NEGLIGENCE OF THE CITY OF
DENTON, TEXAS AND/OR ITS DEPARTMENTS, AGENTS, OFFICERS, SER-
VANTS, OR EMPLOYEES, WHETHER THAT NEGLIGENCE IS THE SOLE OR
CONTRIBUTING CAUSE OF THE RESULTANTANT INJURY, DEATH, AND/OR
DAMAGE, BUT NOT IN THE EVENT OF GROSS NEGLIGENCE AND/OR WILL-
FUL MISCONDUCT.
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b. All policies shall be endorsed to read "THIS POLICY WILL NOT BE
CANCELLED OR NON -RENEWED WITHOUT 30 DAYS ADVANCED WRITTEN
NOTICE TO THE LESSOR AND THE CITY EXCEPT WHEN THIS POLICY IS BE-
ING CANCELLED FOR NONPAYMENT OF PREMIUM, IN WHICH CASE 10
DAYS ADVANCE WRITTEN NOTICE IS REQUIRED".
C. Liability policies shall be written by carriers licensed to do business in
Texas and with companies with A: VIII or better rating in accordance with the current
Best Key Rating Guide.
d. Liability policies shall name as "Additional Insured" the city and its offi-
cials, agents, employees, and volunteers.
e. Certificates of insurance must be presented to the City evidencing all co-
verages and endorsements required by Section 35.22.8 of the Denton Development Code
as now written or as further amended, and the acceptance of a certificate without the re-
quired limits and/or coverages shall not be deemed a waiver of these requirements.
f. Claims made policies will not be accepted except for excess policies or
unless otherwise provided by this Article.
g. Required Insurance Coverages.
1. Commercial General Liability Insurance. Coverage should be a
minimum Combined Single Limit of $1,000,000 per occurrence for Bodily
Injury and Property Damage. This coverage must include premises, op-
erations, blowout or explosion, products, completed operations, blanket
contractual liability, underground property damage, broad form property
damage, independent contractors protective liability and personal injury.
2. Environmental Impairment (or Seepage and Pollution) shall be ei-
ther included in the coverage or written as separate coverage. Such cover-
age shall not exclude damage to the lease site. If Environmental Impair-
ment (or Seepage and Pollution) Coverage is written on a "claims made"
basis, the policy must provide that any retroactive date applicable precedes
the effective date of the issuance of the permit. Coverage shall apply to
sudden and non -sudden pollution conditions resulting from the escape or
release of smoke, vapors, fumes, acids, alkalis, toxic chemicals, liquids or
gases, waste material or other irritants, contaminants or pollutants.
3. Automobile Liability Insurance. Minimum Combined Single Lim-
it of $500,000 per occurrence for Bodily Injury and Property Damage.
Such coverage shall include owned, non -owned, and hired vehicles.
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(City of Denton/Cross Timbers Park Lease)lswh;0227071
9:1uur documcnts4onnactv\AT wm timbers park 1w 11jun07 (fmat).doc
4. Worker's Compensation Insurance. In addition to the minimum
statutory requirements, coverage shall include Employer's Liability lim-
its of at least $100,000 for each accident, $100,000 for each employee, and
a $500,000 policy limit for occupational disease, and the insurer agrees to
waive rights of subrogation against the city, its officials, agents, em-
ployees, and volunteers for any work performed for the city by the LES-
SEE.
5. Excess (or Umbrella) Liability Insurance. Minimum limit of
$10,000,000 covering in excess of the preceding insurance policies.
6. Control of Well Insurance.
a. Minimum limit of $5,000,000 per occurrence.
b. Policy shall cover the Cost of controlling a well that is out
of control, Redrilling or Restoration expenses, Seepage and Pollution
Damage. Damage to Property in the LESSEE's Care, Custody, and Con-
trol with a sub -limit of $500,000 may be added.
19. Dispute Resolution. In the event of a dispute under this Lease, the parties
agree to attempt to resolve the dispute through good faith mediation to be held in Denton
County, Texas.
20. Miscellaneous Provisions.
(a) In the event this Lease expires for any reason as to all or any part
of the Land, Lessee shall, within 60 days thereafter, furnish Lessor with a written, record-
able release covering all of the Land or that portion of the Land to be released.
(b) Nothing in this Lease negates the usual implied covenants imposed
upon Lessee.
(c) Lessee will conduct all operations hereunder in compliance with
the rules of the Railroad Commission of Texas and federal and state environmental laws
and regulations. Lessee will give Lessor at least ten days prior notice in writing before
conducting drilling, recompletion, or reworking operations under the Land. Upon request
by Lessor, Lessee shall furnish to Lessor copies of applications to drill, daily drilling re-
ports, well tests, completion reports, plugging records, gas purchase contracts, and pro-
duction reports. Lessor has the right, personally or by representative, at Lessor's risk, of
access to the, derrick floor to observe all operations on all wells drilled on the Land. Les-
sor will have the right to inspect and take samples of all cores and cuttings and witness
the taking of all logs and drill stem tests, and Lessee agrees to furnish Lessor with copies
of all logs and surveys taken promptly after taking them. Lessee will divulge to Lessor
correct information as requested by Lessor as to each well, the production therefrom, and
such technical information as Lessee may acquire. Lessor has the right to be present
Page 10 of 13-On,AND GAS Leese
(City of Denton/Cross Timbers Pak Lcasc)lswh;0227071
sAour dmc atskonnactsW\wow timbers puk lease I1jun07 (f=1).doc
when wells or tanks are gauged and production metered and has the right to examine all
run tickets and to have full information as to production and runs and to receive copies of
all run tickets upon request.
(d) The terra "production" means production in paying quantities. No
obligation of Lessee to pay money under this Lease will be excused or delayed by reason
of Force Majeure. Lessee's obligations to pay money under this Lease are to be per-
formed in Denton County, Texas. Paragraph headings are used in this Lease for conveni-
ence only and are not to be considered in the interpretation or construction of this Lease.
The execution or ratification by Lessor of any division order, gas contract, or any other
document will not alter any provision of this Lease unless the intent to do so is expressly
stated in the document. Lessee agrees to fiunish to Lessor a copy of each title opinion or
report obtained by Lessee that covers all or any part of the Land together with a copy of
each title curative document obtained by Lessee.
(e) Lessor shall have the right to inspect all records of Lessee relating
to this Lease, operations conducted on the Lease, the sale and marketing of production
from the Lease, and the payment of royalties, including the right to audit Lessee's books
insofar as they relate to the foregoing.
(f) Compliance with Drilling Ordinance. Lessee shall, before
drilling any well which contains any of the Land in the well's drilling unit or pooled unit,
comply with the City of Denton's ordinances to include, but not limited to having a final
approved plat.
(g) This Lease is binding upon and for the benefit of Lessor, Lessee,
and thew respective heirs, personal representatives, successors, and assigns.
21. Memorandum of Lease. As evidence of this Lease, Lessor and Lessee
agree in its stead, to enter into and record in the Real Property Records of Denton Coun-
ty, Texas a MEMORANDUM OF LEASE.
Executed on the date first written above.
LESSOR:
CITY OF DENTON, TEXAS, a home rule municipality
GEORGE C. CAMPBELL, CITY MANAGER
Page I of 13-Oa.ANn GAsr.EAsE
(City of Denton/Cross Timbers Park Lease)[swh;022707]
slow doc tslcoot wbWl cron t®bm pstk lease 11jan07 (final).doc
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
In
APPROVED AS TO LEGAL FORM:
ED SNYDER, CITY ATTORNEY
STATE OF TEXAS §
COUNTY OF DENTON §
Before me. a undersigned notary public,
on this day person appIGE GE C. CAMPBELL, the City Manager of the
CITY OF DENTO , who own to me to be the person whose name is subscribed to
the foregoing instrument, and acknowledged to me that*executed that instrument for
the purposes and consideration therein expressed. i�L
my hand and seal of office this day of
2007.
.r.:'tp:••,• JENNIFER K. WALTERS
Notary Public, State of Texas
My Commission Expires
••;rii�;;°'- December 19, 2010
Page 12 of 13-Oa.AND GAS LSAse
(City of Denton/Cross Timbers Park I.ease)lswh;0227071
s:bur d0cumentAC0ntmc"\07\cnM timbers perk lease 11jaa07 (f J).duc '
LESSEE:
ENDEAVOR ENERGY RESOURCES, L.P.
By: ENDEAVOR PETROLEUM, L.L.C.
„n Y6iS GENERAL PARTWER
Member
THE STATE OF TEXAS
C'OTTNTY OF MTDI,ANO
This instrument wa$ acknowle ed before me, 4,(m b )U fVIZA4, a Notary
Public, on this 16t9 day of UA14 , 2007, by Autry C. Stephens, Sole Member of
Endeavor Petroleum, L.L.C., Gen ral P rtner of Endeavor Energy Resources, L.P., on behalf of
said limited partnership.
��tllunuun�„
'x\- '-v? S.
•
CO =
P
OF
Oj .............
N
3fp1
FRAVII'm
�2 rwltim�' m m
W=
1 . P.
Page 13 of 13-OIL AND GAS LEASE
(City of Denton/Cross Timbers Park Lease)[swh;022707]
S:\our documents\contracts\07\cross limbers park lease I Ijun07(linal.doc
EXHIBIT Al
;.(
" Colem�m & Assoc.. Land Surveying
.% -., P.O. lbx 686
lku[on 7fxas 76202
Phoix 19903, 65-8215 Fax (9 U*--%5-98(1l)
Tract 5
City of Denton (Cross Timbers Park)
19.45 Acres
Being a part of the called 114.760 acre tract described in the deed from Charles N. Ryan
et at to Ranch Ventures, LTD recorded in Volume 4372, Page 581 of the Real Property
Records of Denton County, Texas and also being a part of Lot 23 Block E and all of Lot
39, Block 1 of Ryan Ranch Phase 1 as shown by the plat thereof recorded in Cabinet S,
Page 118 of the Plat Records of Denton County, Texas; and being more particularly
described as follows:
BEGINNING for the Northeast comer of the tract being described herein at a %x inch iron
rod found at the East Northeast comer of the 114.760 acre tract on the South line of the
called 69.320 acre tract described in the deed from The Evangelical Lutheran Good
Samaritan Society of Sioux Falls to the City of Denton, Texas recorded in Volume 5224,
Page 2912 of the said Real Property Records of Denton County, Texas and the Northwest
corner of the called 79.519 acres described in the deed from Acme Brick Co. to Endeavor
Energy Resources recorded wider Clerk's File Number 2005-161734 of the said Real
Property Records;
THENCE South 00 Degrees 48 Minutes 30 Seconds East with the East line of the
114.760 acre tract and the West line of the said 79.518 acre tract a distance of 1273.0 feet
to a %a inch iron rod found at the Southwest comer thereof and the Northwest comer of
Oaks of Montecito Phase I as shown by the plat thereof recorded in Cabinet N, Page 54
of the said Plat Records,
THENCE North 89 Degrees 48 Minutes 51 Seconds West across the 114,760 acre tract
passing the East line of said Lot 23 and continuing, in all, a total distance of 620.0 feet to
the West line thereof;
THENCE with the West line of Lot 23 the following 4 calls:
1. Northeasterly with a curve to the left having a radius of 1130.0 feet an are
distance of 426.5 feet (Chord Bearing North 00 Degrees 29 Minutes 40 Seconds
East a distance of 424.0 feet) to the beginning of a curve to the left having a
radius of 1130.0 feet;
2. North 10 Degrees 19 Minutes 04 Seconds West a distance of 342.3 feet to an
angle point therein;
3. North 00 Degrees 07 Minutes 05 Seconds East a distance of 87.00 feet;
4. North 28 Degrees 03 Minutes 30 Seconds East a distance of 373.1 feet to the
South right -of --way Creekdale Drive;
THENCE North 00 Degrees 07 Minutes 04 Seconds East crossing Creekdale Drive a
distance of 60.0 feet to the North right-of-way thereof at the Southwest corner of Lot 39,
Block 1 of said Ryan Ranch Phase I;
THENCE North 21 Degrees 48 Minutes 14 Seconds East with the West line of Lot 39 a
distance of 266.9 feet to an angle point therein;
THENCE North 00 Degrees 35 Minutes 52 Seconds West continuing with the West line
of Lot 39 a distance of 419.1 feet to the Northwest comer thereof;
THENCE North 88 Degrees 35 Minutes 29 Seconds East with the North line of Lot 39 a
distance of 114.51 feet to the Northeast comer thereof on the West line of the called
69.320 acre tract described in the deed from The Evangelical Lutheran Good Samaritan
Society of Sioux Falls to the City of Denton, Texas recorded in Volume 5224, Page 2912
of the said Real Property Records
THENCE South 01 Degrees 49 Minutes 30 Seconds East with the East line of Lot 39
passing the South line thereof and continuing, in all, a total distance of 642.7 feet to a
reentrant comer of the 114.760 acre tract;
THENCE North 88 Degrees 32 Minutes 21 Seconds East with the North line of the
114.760 acre tract a distance of 253.8 feet to the PLACE OF BEGINNING and enclosing
19.45 acres of land.
EXHIBIT A2
N 8l14.5" " E
14.5
z
n�
J
3
a0E0 s -VAWHOM ACRES
�N� n+
li, ��
R194 f
W I
o
Dow
SWARITAH SCOCIEm pf Sioux FALLS.
:KRIMTODAKOTA
.-0 LOT LOT 39. BLOCK 1
�
cW. 1..0 G,t- RYAN RANCH
OF DE ON2
PHASE f
VOL
"LAKE
CAB. ; P, 120
N
FOREST PARK'
PRO.C.T.
J
N 21'48'14" E 266.9'
N 88-32'21" E 253.8'
N 00'07'04" E 60.0'
... _ _ _
N 28'03'30" E 373.1'
0 0
19.455AACRES
o
e<� m
QGt.
0
4 p
Y
CALLED 79.3/9 ACRES
Z
ACHE BO Co.
LOT 23, BLOCK E
RYAN RANCH
I mF
O
THOEAvaR u1c uY REsouacEs
C.F.H. 200:f-1R1734
N 10'19'04" W 342.3'
PHASE I
CAB. S, P. 120
��q�pp
q
X a
N
P.R.D.CT.
c ~toi<
In
R=11307'
L=217. T
Ei
h
CH- N 04'47'56"W 217.4'
D-11'02'16"
R-1130.0'
L-208.8'
CH- N 06'00'48"E 208.5'
D=10'35'13"
�1104
N 89-48'51" W 620.
" • " " —
OAKS OF YOMECITO
/
PHASE 3, SECTION A
CAB. 0. P. 397
TRACT 5
LEASE EXHIBIT
TRACT 5
ACME MEGAUNIT
CITY OF
DENTON
DENTON
COUNTY,
TEXAS
DRAWN:
CF
JOB f: 1375
CHECKED:
WMC
DATE:. 3-23-07
REVISED:
N/A
SCALE: 1" = 300'
N
1 0 600
050 300
MEMORANDUM OF OIL AND GAS LEASE
THE STATE OF TEXAS
COUNTY OF DENTON
WHEREAS, The City Of Denton, Texas, whose address is 215 E. McKinney St., Denton, Texas 76201,
as Lessor (whether one or more), and Endeavor Energy Resources, L.P., whose address is 110 N. Marienfeld,
Su'SuAn 200, Midla d, Texas 79702 (hereinafter called Lessee), have entered into an Oil and Gas Lease dated
2007 (the Lease), and;
WHEREAS, the Lessee and Lessor have mutually agreed not to record the Lease in its entirety in the records
of Denton County. Texas, and instead have agreed to record this Memorandum of Lease;
NOW, THEREFORE, in consideration of the valuable consideration given this date, the receipt and sufficiency
of which is hereby acknowledged, and of the other terms of the lease, duplicate copies of which have been retained
by the parties, Lessor hereby grants, leases, and lets unto the Lessee for the purpose of exploring, drilling,
operating for and producing oil and gas from the following described land in Denton County, Texas:
19.4 Acres as more particularly described on Exhibit "A" attached hereto and made part hereof.
In the County of Denton, State of Texas, containing 19.4 gross acres, more or less (including any interests therein
which Lessor may hereafter acquire by reversion, prescription or otherwise), for the purpose of exploring for,
developing, producing and marketing oil and gas, along with all hydrocarbon and nonhydrocarbon substances
produced in association therewith, produced through a well bore. In addition to the above -described leased
premises, this lease also covers accretions and any small strips or parcels of land now or hereafter owned by
Lessor which are contiguous or adjacent to the above -described leased premises, and, in consideration of the
aforementioned cash bonus, Lessor agrees to execute at Lessee's request any additional or supplemental
instruments for a more complete or accurate description of the land so covered. For the purpose of determining the
amount of any shut-in royalties hereunder, the number of gross acres above specified shall be deemed correct,
whether actually more or less.
All in accordance with the terms and conditions of the Lease, the Lease shall be effective for a term of One
(1) Year from the date of the Lease and as long thereafter as oil or gas or other substances covered thereby are
produced from said land. Should there be any conflict between this Memorandum of Lease and the Lease herein
referred to, then in all cases the Lease shall take precedence.
The provisions hereof shall extend to and be binding upon the heirs, successors and legal representatives
and assigns of the parties hereto.
This instrument may be executed in any number of counterparts,
and shall be binding upon the party or parties so executing, their heirs,
when taken together constituteAut one and the saa instrument.
EXECUTED this5/day of , 2007,
LESSORS:
CITY OF DENTON, TEXAS, a home rule municipality
GEROGE C. CAMPBELL, City Manager
Page 1 of 2 — MEMORANDUM OF OIL AND GAS LEASE
CITY OF DENTON TO ENDEAVOR ENERGY
(City of Denton/Oil & Gas/Cross Timbers.Memo)[amj;062807]
each of which shall be deemed an original
successors and assigns, and all of which
ATTEST:
JENNIFER WALTERS, City Secretary
By: J"'r�)" /' JUA�'�
APPROUD AS T6 LEGAL FORM:
ED SNYDER, City Attorney
By:
ACKNOWLEDGEMENT
STATE OF TEXAS
COUNTY OF DENTgV , §
Bre me, a undersigned notary public, on this day personally
appeared GefoEORGE CAMP ELL, he City Manager of the CITY OF DENTON, who is known to me to be the
person whose name ' subscribed to the foregoing instrument, and acknowledged to me that he executed that
instrument for the purposes and considerations therein expressed.
Given under my hand and seal of office this day of fq , 2007.
E
JENNIFER K. WALTERS Notary Public, State of Texas My Commission Expires December 19, 2010
LESSEE:
ENDEAVOR ENERGY RE RCES, L. P.
BY: ENDEAVOR OL M, L.L. L.
IT'S GENE L R
By:
Printed Name: utr C. Ste he
Capacity: Sole Member
STATE OF TEXAS
%L4^%NI0 do—* 1AL I't"
Not Pubic, to of 'Texas
My xpires:i 9 / /0
COUNTY OF MIDLAND §
Before me, the undersigned notary public, on this day personally appeared
Autry C. Stephens Sole Meaffier of Endeavor Petroleum, L.L.C., General Partner of Endeavor Energy Resources,
L.P., on behalf of said limited partnership, who is known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he/she executed that instrument for the purposes and
considerations therein expressed.
G \ OW11prDup,
jyi(t(dkt3n�2d and seal of office this �lp� da of 2007.
0 .'tP.Av a • 9
Gn Notary Public, S41ate of Texas i
My Commission Expires: 7 3D —o241e
AND UAN LEANS
)ENDEAVOR ENERGY
& Gas/Cross Timbers.Memo)[amj;062807]
EXHIBIT Al
Coleman & Assoc.. Land Surveying
l ,V P.O. Box 76
tk:u:rnu'1'raas i6'202
t'beuc (940}565.821? Fzs (940):,ti&!1800
Tract 5
City of Denton (Cross Timbers Park)
19.45 Acres
Being a part of the called 114.760 acre tract described in the deed from Charles N. Ryan
et al to Ranch Ventures, LTD recorded in Volume 4371. Page 581 of the Real Property
Records of Denton County, Texas and also being a part of Lot 23 Block E and all of Lot
39, Block I of Ryan Ranch Phase 1 as shown by the plat thereof recorded in Cabinet S,
Page 118 of the Plat Records of Denton County, Texas; and being more particularly
described as follows:
BEGINNING for the Northeast comer of the tract being described herein at a V2 inch iron
rod found at the East Northeast comer of the 114.760 acre tract on the South line of the
called 69.320 acre tract described in the deed from The Evangelical Lutheran Good
Samaritan Society of Sioux Falls to the City of Denton, Texas recorded in Volume 5224,
Page 2912 of the said Real Property Records of Denton County, Texas and the Northwest
comer of the called 79.519 acres described in the deed from Acme Brick Co. to Endeavor
Energy Resources recorded trader Clerk's File Number 2005-161734 of the said Real
Property Records;
THENCE South 00 Degrees 48 Minutes 30 Seconds East with the East line of the
114.760 acre tract and the West line of the said 79.518 acre tract a distance of 1273.0 feet
to a'/a inch iron rod found at the Southwest comer thereof and the Northwest comer of
Oaks of Montecito Phase I as shown by the plat thereof recorded in Cabinet N, Page 54
of the said Plat Records,
THENCE North 89 Degrees 48 Minutes 51 Seconds West across the 114.760 acre tract
passing the East line of said Lot 23 and continuing, in all, a total distance of 620.0 feet to
the West lure thereof;
THENCE with the West line of Lot 23 the following 4 calls:
1. Northeasterly with a curve to the left having a radius of 1130.0 feet an arc
distance of 426.5 feet (Chord Bearing North 00 Degrees 29 Minutes 40 Seconds
East a distance of 424.0 feet) to the beginning of a curve to the left having a
radius of 1130.0 feet;
2. North 10 Degrees 19 Minutes 04 Seconds West a distance of 342.3 feet to an
angle point therein;
3. North 00 Degrees 07 Minutes 05 Seconds East a distance of 87.00 feet;
- 4 North 28 Degrees 03-Minutes 30 Seconds East a distance of 373.1 feet to the
South right-of-way Creekdale Drive;
THENCE North 00 Degrees 07 Minutes 04 Seconds East crossing Creekdale Drive a
distance of 60.0 feet to the North right-of-way thereof at the Southwest comer of Lot 39,
Block 1 of said Ryan Ranch Phase 1;
THENCE North 21 Degrees 48 Minutes 14 Seconds East with the West line of Lot 39 a
distance of 266,9 feet to an angle point therein;
THENCE -North 00 Degrees 35 Minutes 52 Seconds West continuing with the West line
of Lot 39 a distance of 419.I feet to the Northwest comer thereof;
THENCE North 88 Degrees 35 Minutes 29 Seconds East with the North line of Lot 39 a
distance of 114.51 feet to the Northeast comer thereof on the West line of the called
69.320 acre tract described in the deed from The Evangelical Lutheran Good Samaritan
Society o f Sioux Falls to the City of Denton, Texas recorded in Volume 5224, Page 2912
of the said Real Property Records
THENCE South 01 Degrees 49 Minutes 30 Seconds East with the East line of Lot 39
passing the South line thereof and continuing, in all, a total distance of 642.7 feet to a
reentrant comer of the 114.760 acre tract;
THENCE North 88 Degrees 32 Minutes 21 Seconds East with the North line of the
114.760 acre tract a distance of 253.8 feet to the PLACE OF BEGINNING and enclosing
19.45 acres of land.
EXHIBIT A2
N 88'3529" E
'w
10 U
o
,N
V
LOT 39. BLOCK 1
1+,
RYAN RANCH
m
PSL PHASE 1
CAB. S,-P,-120—
-- -N—�
P.RD.C.T,
v
N 21'48'14" E 266.W
N OO'OrO4" E 60.0' �
I
1
N 28'03'30' E 373.1'
W
O�
N 10'19'04" W 342.3'
R=1130.0'
L-217.7'
CH- N D4'47'56-W 21
D-11'02'16'—
R-113O.O'
L-208, 5'
CH- N 06'0O'48"E 208.5'
D=10'35'13"
TRACT 5
O
19.45 ACRES
.................................... 0""""""
LOT 23, BLOCK EIS
RYAN RANCH
PHASE 1
CAB. S P. 120
4
P.RO.C.T.
dy5�osf
I\
N 89'48'51" W
LEASE EXHIBIT
TRACT 5
ACME MEGAUNIT
CITY OF
DENTON
DENTON
COUNTY,
TEXAS
DRAWN:
CF
JOB t: 1375
CHECKED:
WMC
DATE: 3-23-07
REVISED:
N/A
SCALE: 1" = 300'
FALLS,
N 88'3221" E 253.8'
T
A
m CALLED 72.519 ACRES
a ACME BRLCK CO.
ENDEAVOR EN T[ 0ROY RESOURCES
C3'x 2003-191734
N
1n
OAKS Or WONrECITO
PHASE 3, SECININ A
CAB. 0, P. 30
1f �A14ip
Cole man i Associates
4�
11 1,
14
P. 0- BOX 688 DENTON. TEXAS 76202
.�
050 94
„"r.,