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2006-173 S:\Our Documents\Ordinances\06\Stroud Energy First Amendmentdoc ORDINANCE NO. 20(){';-/73 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 WeIl4H; 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 I. 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 #4H at the Denton Municipal Airport under the Lease. Page I of2 S:\Our Documents\Ordinances\06\Stroud Energy First Amendment.doc 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. tit PASSED AND APPROVED this the 20 -day of JilIlL- ,2006. @a~~L~! ATTEST: JENNIFER WALTERS, CITY SECRETARY APPRO D AS T LEGAL FORM: EDWIN M. SNYDER, CITY ATTORNEY BY 1ltJillq Page 2 of2 S:\Our Documents\Contracts\06\Stroud Energy First Amendment.doc FIRST AMENDMENT TO MODIFICATION, CLARIFICATION & RATIFICATION OF OIL, GAS & MINERAL LEASE STATE OF TEXAS s s s K:NOW 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 501 0 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, ~td. 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 (I) 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 Exhiqit "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 S:\Qur 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 We1l4H". 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 20flt day of June 2006. LESSOR CITY OF DENTON ATTEST: JENNIFER WALTERS, CITY SECRETARY By~~J~91cw-> Page 2 S:\Our Documents\Contracts\06\Stroud Energy First Amendment.doc APPROVED AS TO LEGAL FORM: EDWIN M. SNYDER, CITY ATTORNEY BY: LESSEE STROUD ENERGY, LTD. By: Stroud Energy Management, GP, LLC G~~I p-, 7/ ~ B,,~I' Gregor P. Smith Division Land Manager STATE OF TEXAS COUNTY OF DENTON This instrument was acknowledged before me on this the 20iflay of (mAt / , 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. ~"\\\~'~""" $....00;:.- {1~~~} .... ....':~:\\~~~ ',I"f,M\\"'" JANE E. RICHARDSON Notary Public. State of ~exas My Commission ExpIres JUne 27, 2009 9/ e. fidwu(brL y Public in and for the State of Texas STATE OF TEXAS COUNTY OF DeNTON TA R...,Ui ~-r 1't.. This instrument was acknowledged before me on this the'Zr.: day of ~ 2006 by Gregory P. Smith, the Division Land Manager of Stroud Energy Manage ent GP, LLC, a Texas limited liability company, General Partner of Stroud Energy, Ltd., a Texas limited partnership, on behalf of said partnership. . . ~ Usa K Morrow ":!f!JA Notary Public. Slale ofTexas rt~..!' My commission Expires: '\i;;;"i'l/ December 31. 2009 ~,,!!...'" Cv ublic in and for the State of Texas .?n~ 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-16l0 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 ai, 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: 31.1 07 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 SOlO, Page 858 of the Deed Records of Denton County, Texas. A C. HADDEN 'vi SHIT>\ ease Tr. 3 A-1188 I I I \./. NEIL A-970 ::r: -, "\.; J BACON -, I. HAHBREE A 94 \ J. HCDDNI'.LD A-873 ~ -' w -, ,..