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2005-202SAOur Documents \0rdinances \05 \Air Surf Use Agr- Stroud Energy.doc ORDINANCE NO. 2005-2 0� AN ORDINANCE APPROVING AN ASSIGNMENT OF A GAS WELL SURFACE USE AGREEMENT AT THE DENTON MUNICIPAL AIRPORT BETWEEN THE CITY OF DENTON, TEXAS AND DAN A. HUGHES COMPANY AS ASSIGNOR AND STROUD ENERGY, LTD. AS ASSIGNEE; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, Dan A. Hughes Company wishes to assign its interest in that certain Gas Well Surface Use Agreement, as amended, (Assignment) to Stroud Energy, Ltd.; and WHEREAS, the Airport Board has recommended this Assignment be approved by the City Council; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager or his designee is hereby authorized to execute an Assignment of Gas Well Surface Use Agreement between the City of Denton and Dan A. Hughes Company as Assignor and Stroud Energy, Ltd. as Assignee at the Denton Municipal Airport, in substantially the form of the Assignment of Gas Well Surface Use Agreement, which is attached to and made a part of this Ordinance for all purposes. SECTION 2. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the 2lo7'k day of 12005. EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CIT SECRETARY BY: APPROVED AS TO LEGAL FORM: EDWIN M. SNYDER, CITY ATTORNEY BY: �I i ASSIGNMENT OF GAS WELL SURFACE USE AGREEMENT AT DENTON MUNICIPAL AIRPORT DATE: July 15, 2005 ASSIGNOR: Dan A. Hughes Company ASSIGNEE: Stroud Energy, Ltd. LEASE: Date: January 17, 2002 Surface Owner: City of Denton, Texas Operator /Assignor: Dan A. Hughes Company Premises: The property located on the Denton Municipal Airport and identified in the Surface Use Agreement dated January 17, 2002 and the Amended Agreement dated April 29, 2004 and the Amended Agreement dated August 30, 2004, which is made a part of this Assignment for all purposes. Operator /Assignor assigns to Assignee Assignor's interest in the Surface Use Agreement. A. Assignee Agrees To: 1. Assume Operator /Assignor's obligations under the Surface Use Agreement as amended. 2. Accept the premises in their present "as is" condition including those commitments identified in the Letter of Understanding dated July 13, 2005 addressing Well Site Airport #2 -H Well. Said letter is attached as Exhibit A. Should the items not be accurately addressed and approved by Airport Management within the identified time frame, the assigned Surface Use Agreement will be terminated. 3. Complete all obligations of purchase from Operator /Assignor prior to this Assignment becoming effective. Surface Owner consents to this assignment. Surface Owner agrees to notify Operator /Assignor within 30 days of any Assignee default. B. Operator /Assignor agrees that: 1. Operator /Assignor and Assignee will comply with their gas well permit, the gas well ordinance and all other applicable laws and regulations, including without limitation, Section 35.22.15 of Subchapter 22 of the Denton Development Code, which governs the transfer of gas well permits. 2. Operator /Assignor will remain liable on the Surface Use Agreement, as amended, should Assignee default on the Agreement. PREVIOUS ASSIGNMENTS: June 19, 2002 Assignment of the Enexeco, Inc. Oil, Gas and Mineral Lease and Leasehold dated January 17, 2002 between Enexeco, Inc. and the City of Denton to Dan A. Hughes Company. Dan A. Hughes Company, Operator /Assignor U B Dan A. Hughes, Sole Proprietor Zmz Dan A. Hughes Stroud Energy, Ltd., Assignee By: Stroud Energy Management, Ltd., its sole General Partner By: 4Gre '1 Properties, Ltd., its sole General Partner By: . Smith Division Land Manager City of Denton, Texas, Surface Owner Michael A. Conduff Ci ager Attest: Jennifer Walters, City Secretary By: Approved as to Legal Form: Edwin M. Snyder, Interim City Attorney By: Page 2 of 3 STATE OF TEXAS COUNTY OF DLNT�N This instrument was acknowledged before me on the L day of 2005, by Dan A. Hughes, President of Dan A. Hughes Company, a sole propri orshi�f of Dan A. Hughes Company. �Y..P \� [SEA ra °' C I • URST Npy Pubic sane N .6, ttycammisonFx�Nr.s.zom 1tE `ft STATE OF TEXAS COUNTY OF BE4F4:eN Tke¢kA)T U� e dli�4� Notary Public, State of Texas My Commission Expires (or Notary Stamp) This instrument was acknowledged before me on the -Lq!�day of 2005, by Gregory P. Smith, Division Land Manager of Stroud Energy, Ltd, Tex Ns Limited Partnership Company, on behalf of said Company and Stroud Energy Management, Ltd. and Stroud Oil Production, Ltd. j ti LISA KfE04ROW Notary Public [SEAL] — vale ofle 3s My Co:mmissien Ecpires Cuca_ 31, Zr 5 STATE OF TEXAS COUNTY OF DENTON Notary-Public, State of Texas My Commission Expires a� (or Notary Stamp) This instrument was acknowledged before me on the "day of 2005, by Michael A. Conduff, City Manager on behalf the City of Denton, Te as, a i -micipal corporation. „:r "o JANE E. RICHARDSON Notary Public, State o1 Texas [SEA .',` My Commission Expires 7t�r�' Jun e 27, 2009 Notary Public, State of Texas My Commission Expires xas 2% �9 (or Notary Stamp) Page 3 of 3 ppppp� DANA. HU HEs COMPANY Petroleum Exploration And Production July 15, 2005 Stroud Energy, Ltd 210 West 6 °i Street. Suite 500 Fort Worth. TX 76102 Attention: Greg Smith Rc: Assignment of Gas Well Permits from the City of Denton Gentlemen: Dan A. Hughes Company hereby transfers and assigns to Stroud all Gas Well Permits hone the City of Denton. Stroud agrees to be bound by the terms and conditions of the said permits and to comply with the terms and conditions of the City of Denton's Development Code. It is understood and agreed that this transfer does not relieve Hughes from any liability to the City arising out of any activities conducted prior to the transfer. Yours truly, ��..� V. Henry Kremers Land Manager ACCEP,rED AND AGREED to this _ f clay of July, 2005 STROUD E ERG TD 13Y Greg u Division Land Manager P.O. DRAWER 669 • BEEVILLE, TX 78104 -0669 • (361 ) 358 -3752 • GENERAL FAx 362 -2839 • GEOLOGICAL FAx 358 -0598 Exhibit A DANA. HU HES COMPANY Petroleum Exploration And Production July 13, 2005 City of Denton Denton Municipal Airport Mr. Mark Nelson, Director 5000 Airport Rd. Denton, Texas 76207 Re: City of Denton - Airport #2 -H Well Dear Mr. Nelson: As you are aware, Dan A. Hughes Company has reached agreement to sell its production in the Denton County area to Stroud Energy, Ltd. including its lease covering the City of Denton Airport. With regard to the surface location concerning the Dan A. Hughes Company - City of Denton Airport #2 -H well, Hughes and Stroud are aware the current entrance to the location is temporary and the Airport has agreed to allow the entrance to continue to be used in its present location and condition for a period not exceeding 180 days from the date of this letter, in an effort to minimize the traffic on airport property pending a secondary frac of the #2 -H well. Hughes and Stroud hereby agree that promptly after the completion of such secondary frac, but in any event no more than 180 days from the date of this letter, the following actions will be taken: I . The three strand barbed wire fence will be replaced with a permanent security fence. 2. The temporary drainage culvert used to access the location from Westcourt Road will be removed and the drainage ditch will be returned to its original condition. 3. The security fence along Westcourt Road will be returned to its original location and in its original condition. d. The permanent access point to the location will be identified and constructed with ingress and egress from Skylane or Spartan Road. Hughes and Stroud request that if the foregoing accurately expresses the parties' agreement with respect to said temporary entrance, that you so signify by executing and returning to Hughes a counterpart of this letter. Thank you for your help and assistance in this matter. AGREED and ACCEPTED this u ay of July, 2005. CITY of DENTON AIRPORT Mnr Nelson, Director of Airport Operations Sincerely, SE— John Shears Landman AGRUD and ACCEPTED this lay of July, 2005 STROUD ENERGY, LTD. -P' Gr y ith, Lan Managcr P.O. DRAWER 669 • BEEVILLE, TX 78704-0669 • 1361 358 -3752 • GENERAL FAx 362 -2839 • GEOLOGICAL FAx 358 -0598 SAOur Documents \Contracts \02 \Redline Enexco Surface Use Agreement.doc SURFACE USE AGREEMENT CITY OF DENTON AIRPORT This Agreement is made and entered into effective this 17t11 day of January, 2002, by and among ENEXCO, INC. whose address is 3500 Oak Lawn Avenue, Suite 390, Dallas, Texas 75219 (Operator ") and the CITY OF DENTON, TEXAS, a home rule municipal corporation, acting by and through its duly authorized City Manager ("City"); WHEREAS, Operator owns the right to explore the lands described as follows: TRACT 1: The land described in condemnation proceedings identified by Cause No. 3922 filed on November 30, 1943 between the City of Denton and R.M. Evers, et al and subsequently filed in Volume 1675, Page 546 of the Real Property Records of Denton County, Texas, containing 147.26 acres, 2.26 acres of which is in a public road, in the William Wilburn Survey, Abstract Number 1419. TRACT 2: The land described in that Warranty Deed dated December 23, 1943 between P.T. Underwood and wife Jimmie Underwood and the City of Denton recorded in Volume 304, Page 503 of the Real Property Records of Denton County, Texas, containing 74.94 acres, 1.75 acres of which is in a public road, in the Thomas Toby Survey, Abstract Number 1285. TRACT 3 The land described in that Warranty Deed dated January 18, 1944 between Mrs. Ellen Pearl Corbin, a widow, Hugh C. Corbin and wife, Sue Lou Corbin, John S. Corbin, Alice Corbin Brown and husband W.O. Brown, Grace Corbin, a feme sole, Georgia Corbin, a feme sole, James E. Corbin and wife, Johnnie Corbin, Mrs. Gertie Corbin Hurst and husband, G.E. Hurst, and the City of Denton, recorded in Volume 305, Page 216 of the Real Property Records of Denton County, Texas, containing 331.94 acres, 2.61 acres of which is in a public road, in the Wm. Smith Survey, Abstract Number 1188, and the Wm. Neill Survey, Abstract Number 970. Denton County, Texas ( "the Lands ") for oil and gas operations; and WHEREAS, Operator and City desire to enter into an agreement regarding Operator's use of the Lands for its proposed oil and gas operations thereon in connection with Operator's wells to be located at a surface location and drilled to a projected vertical depth pursuant to the Oil, Gas and Mineral Lease of the City of Denton Airport (the "Well "). NOW, THEREFORE, in consideration of the premises and the covenants set forth below, Operator and City agree as follows: 1. In connection with the Well, and pursuant to the terms and Provisions herein after contained, Operator shall have the right: (a) to construct and use a drilling pad location and related drilling and circulation pits on the Land on which such Well is to be situated (the "Site ") for the purposes of drilling for, equipping, operating and producing oil, gas and other minerals from the Well (including, but not limited to, the installation and maintenance of a tank battery, heater treater, separator, and other equipment on the drilling pad); and (b) to install flowlines and pipelines to and from the Site; to install electric poles on the Site. 2. Drilling Operations. For purposes of this Agreement, the drilling pad shall be constructed in the approximate dimensions and configuration depicted on a gas well development plat as approved by the City. No well shall be drilled within 500 feet of any structure on the land without the written consent of the City Manager or his designee. During drilling operations, the perimeter of the drill site shall be fenced by Operator at its sole expense with a fence sufficient to turn livestock; thereafter, in the event of production, said fence shall be maintained around the perimeter of the well site and tank battery area actually utilized by Operator. Operator shall use only the entrances and roadways for entering upon and leaving the land and will use only the routes in going upon, over or about the land as are designated by City in writing for Operator's use in accessing the drill site. Operator shall access the Site directly from Airport Road, and that Operator shall construct roads to the Site as depicted on the gas well development plat approved by the City. Operator shall maintain all roads, existing or new, used by Operator in good repair free of rocks and ruts to the reasonable satisfaction of City. Annual maintenance must include, as a minimum, addition of at least two inches of caliche and motor grading. Operator will construct diversion terraces as may be reasonably necessary to prevent soil erosion. Use of roads shall be confined to lease operations and to the use of the City and Surface tenants. Operator shall never obtain or assist anyone to obtain or have designated a public road across the land. Operator may open new roads only upon written concurrence of City noted upon a survey plat of the road showing its location and a legally sufficient centerline description. All new roads shall be straight and parallel to survey lines to the extent the terrain permits. No interior gate or opening in the fence shall be constructed so as to access any other part of the Land from the Site or rectangular area described in this paragraph without City's consent. All travel shall be confined to roads and no off -road travel is permitted unless written percussion is obtained from the Airport Manager and the property restored to the same condition. 3. Refineries prohibited. Operator is prohibited from constructing an oil or gas refinery or a plant for cleaning up gas or removing H2S on the leased premised Page 2 without first obtaining a separate written lease agreement with City. The location of separators, dehydrators and compressors shall not be considered as plants. 4. Compensation. An annual rental for a 40 x 40 well site (16,000 square feet) at $.05 per square foot for any well sites located on the west side of the lands or at $.08 per square foot for any well sites located on the east side of the lands shall be paid to the City as compensation for the use of the surface. This annual rental shall be adjusted every two years according to the Consumer Price Index. The annual rental payment shall be payable to the City of Denton prior to the start of construction of each well site and on each year anniversary thereafter until the well is abandoned and plugged. 5. No water wells may be drilled on the property 6. Notification. Operator shall notify City at least 3 days, exclusive of Saturdays, Sundays and legal holidays, prior to commencement of all exploration, drilling, highline or pipeline construction operations on the land, specifying the approximate date of commencement, and the nature and location of the operations. No facilities required for any operation permitted under this lease shall be commenced, placed, erected or constructed until City and Operator have conferred and mutually selected the site or sites for location of the facilities, taking into consideration the use of the land for airport operations. 7. Pipelines and Flowlines. Prior to constructing pipelines and flowlines on the Lands, Operator shall consult with City so that the pipelines and flowlines shall be located, insofar as reasonably practical, to cause minimum interference with City's surface operations and use of the land. Pipelines and flowlines shall be limited to natural gas transported through such pipeline to natural gas produced under the terms of the lease from the leased premises. Operator agrees that all flowlines and gas sales pipelines shall be constructed as near as practical to public right of ways and shall be buried to a depth as the City determines or as may be required under applicable laws including FAA rules and reeulations A plot plan showing proposed pipelines shall be filed with the Director of the Airport. "As built" plans shall be filed with the Director of the Airport on completion. Operator shall place pipelines and flowlines with the ingress easements to the well sites and shall obtain an easement from the City. Compensation for the easement shall be $10 /rod (16 feet). Operator shall remove pipelines or flowlines after the well is abandoned or shall make the pipelines and flowlines dormant as requested by the City. 8. Abandonment of Wells. At Operator's cost, Operator agrees to conduct a gammaray neutron log survey from the surface to the bottom of the surface casing of any well drilled on leased premises by Operator in order to assist City in determining whether water sands have been encountered to such depths. Operator shall provide Page 3 City or City with a copy of such log and, without any warranty whatsoever, Operator's opinion as to whether such log indicates water bearing sands and if so, the location or depth thereof. Prior to abandoning a well, Operator agrees to give City prior notice of such intended plugging and City shall have twenty (20) days after notice within which to elect to take over such well for completion as a water well. If City elects to take over same, Operator shall plug such well to the depth designated by City and thereafter City shall own such well together with the obligation to plug the remaining, unplugged portion of such well when City abandons same. City agrees to execute the appropriate forms required by the Railroad Commission of Texas and other regulatory authority in order to transfer operations and ownership of, as well as liability for, such well to City. In the event City declines to take over such well, then Operator shall promptly plug same. At each stage of Operator's operations, Operator will maintain the site of operations in a neat, orderly, safe condition, free of litter and free of all objects not reasonably necessary to the operation: Upon abandonment of any site, operation or road, Operator will notify and confer with City, and except to the extent City waives, in writing, Operator's obligation to do so, the site or road will be cleaned, all mounds will be leveled, and all pits, pit liners will be removed at the appropriate time and all pits, ruts and other excavations (after being allowed to dry out) will be filled, leveled and smoothed, all caliche will be removed from the site or road will be seeded with grass of City's choice and otherwise returned, as nearly as practical to its natural state, all within a reasonable time. 9. Penalties. In the event Operator fails or refuses to pay City for penalties, claims, surface use or damages, as required under this lease, within 30 days after same are due, then Operator shall be required to provide City with security in the form of cash in the sum of $10,000.00 payable to City which sum may thereafter be applied by City toward Operator's obligations for past unpaid, as well as future compensation for penalties, claims, surface usage and damages and on each occasion that City applies all or a part of said security deposit toward unpaid penalties, claims or compensation, Operator agrees to restore such security deposit to $10,000.00. If Operator fails to make such $10,000.00 security deposit and/or maintain same, within 20 days after notice from City to tender same, then this lease shall terminate. City shall have a first lien against the leasehold interest of Operator therein to secure City under the terms of this lease and further this lease shall constitute a Security Agreement sufficient to satisfy the Uniform Commercial Code of Texas to establish a security interest in this leasehold estate for the benefit of City to secure them in the event of default by City. Until such time as Operator breaches its obligation to timely perform under this lease, City agrees that all production and revenue attributable to the working interest hereunder shall be temporarily exempt from this lien. Upon notice to City of Operator's breach of this or any other provision of this lease, which breach constitutes an accrued but unpaid claim owned by Operator to City, then said temporary exemption shall be lifted and this security interest and lien shall thereafter attach to all production and revenue attributable to the working interest under this lease. Page 4 10. Preferential Right to Sell. As part of the consideration for this lease, Operator covenants and agrees that the owner of the surface estate shall have a first preferential right to sell City or its contractors or assignees, at the same price and terms Operator can obtain elsewhere, any water, sand, gravel or caliche or any one of them, which Operator or any of its successors, assigns, agents or independent contractors might need incidental to any exploration or development operations on leased premises. 11. Place of Payment. All payments, compensation and damages which may be due and payable to City shall be payable to the City to the City Manager, 215 E. McKinney, Denton, Texas 76201. Payment shall identify if the payment is for the bonus, the royalty, delay rental, shut in rental, or annual rental payment for the well site. 12. Environmental. As used in this lease, the term "Hazardous Materials" means any substance defined or identified as a hazardous, extra hazardous or toxic substance, waste, or material under any applicable federal, state, or local statute or regulation. "Remedial Work" is defined as any site investigation or monitoring, any cleanup, containment, remedial removal, or restoration work performed in response to any federal, state or local government authority or private attorney general action, or pursuant to any federal, state or local statute, rule regulation or other laws. Operator agrees (1) to remove from the leased premises, if, as and when required by law, any Hazardous Materials placed or released thereon by Operator, (2) to perform remedial work where the need therefore arises in connection with Operator's operations or activities on the leased premises, and (3) to comply in all respects with all federal, state and local governmental laws and regulations governing operations by Operator and remedial work on or associated with the leased premises. Such remedial work shall be performed by one or more contractors selected by Operator and approved in advance by City and under the supervision of a consulting engineer selected by Operator and approved in advance by City. All costs and expenses of remedial work made necessary by Operator's operations shall be paid by Operator, including, without limitation, the charges of such contractors and/or the consulting engineer and City's reasonable attorneys' fees and costs incurred in connection with the monitoring or review of remedial work. If Operator shall fail to timely commence or cause to be commenced, or fail to diligently prosecute to completion, such remedial work, City may, but shall not be required to, cause such remedial work to be performed. Operator promises to notify City of any claim or other action by any governmental agency or other third party involving the actual or alleged existence of hazardous materials on the leased premises or on City's adjoining property and to provide City with copies of (1) any notice of any release of Hazardous Materials given to Operator pursuant to any law or regulation and (2) any report of and response to any such incident. Operator agrees to indemnify, pay and protect, defend and save City harmless from all claims, liabilities, fees and expenses of any kind that arise from the actual or alleged presence or release any Hazardous Material in connection with Operator's operators on the leased premises. This indemnification shall include costs in connection with any remedial work when performed by City or any third party in response to any federal, state or local governmental authority, laws or regulations, due and payable upon demand therefore by City. Page 5 13. Notices. Operator agrees to designate in writing the name of the person or persons to be present from time to time on said premises as current operations are being conducted, with whom City may resolve any claim for use, injury and damage to airport operators surface area or improvements on said premises occasioned by or arising from Operator's operations or other activity on the said premises. In regard to notice of surface use, the City affected by such operations shall be entitled to prior notice of such operations. Either party hereto may from time to time designate in writing a different address or agent. The following persons are designated as each party's initial agent: To City: City Manager Attn: Airport 215 E. McKinney Denton, Texas 76201 To Operator: C. Noell Rather Ralph E. Rather Enexco, Inc. 3500 Oak Lawn, Suite 390, LB #15 Dallas, Texas 75219 14. Second/Tertiary Operations. Operator is denied the right and privilege of injecting any substances into the subsurface for secondary or tertiary recovery operations unless allowed under the gas well permit. 15. Memorandum of Agreements. Operator and City agree to execute a Memorandum of this Agreement in the form attached as Exhibit "A" hereto, which may be recorded in the records of Denton County, Texas. 16. Assignment. This Agreement shall remain in effect for so long as the oil and gas leases owned by Operator on the Lands are in force and effect, and be binding upon and shall inure to the benefit of the parties hereto, their respective heirs, personal representatives, successors and assigns. 17. Indemnification. Operator shall indemnify and hold harmless and defend City and City's officers, agents and employees from all suits, actions, claims, damages, personal injuries, accidental death, property damage, losses, and expense of any character whatsoever including attorney's fees brought for or on account of any injuries or damages received or sustained by any person or persons or property, on account of any negligent act of Operator, Operator's officers, agents and employees whether such negligent act was the sole proximate cause of the injury or damage or a proximate cause jointly and concurrently with Operator or Operator's employees, agents or subcontractors' negligence, in the execution, supervision and operations Page 6 growing out of or in any way connected with this Agreement and Operator will be required to pay any judgment, with costs, which may be obtained against City or any of their officers, agents or employees, including attorney's fees. 18. Insurance. Operator shall file evidence in the form of a certificate of insurance with the City Secretary for the City of Denton, acceptable to the City Attorney, that it has obtained liability insurance in accordance with the Oil and Gas Mineral Lease, City's Gas Well Ordinance and with the City of Denton as an additional insured and covering its operations on the Lands. Operator shall also file evidence in the form of a certificate of insurance with the City Secretary for the City of Denton, acceptable to the City Attorney, that its workers' compensation and general liability coverage includes in its provisions a waiver of any rights of subrogation as against the City of Denton, Texas in accordance with the City's Oil and Gas Regulations. 19. Operator shall follow FAA rules and regulations prior to the commencement of drilling operations under this agreement. Operator shall file a aeronautical study request form (Form 7460) before commencing drilling operations and shall obtain all prior consents, approvals or waiver of FAA regulations. Operator shall indemnify and hold City harmless for any FAA orders requiring Operator to cease operations. 20. This agreement shall be construed under the laws of the State of Texas, without reference to conflict of law principles which would require the application of the law of another jurisdiction, and exclusive venue shall be in Denton County, Texas for any claims lawsuits or actions in connection with this Agreement. 21. In the event of any conflict between the parties hereto such that either party brings or commences any legal action or proceeding related to this license, including but not limited to, any action pursuant to the provisions of the Texas Uniform Declaratory Judgments Act (Tex. Civ. Prac. & Rem. Code § 37.001, et seq., as amended), the parties hereto agree to waive any and all rights to recovery of attorneys fees to which the prevailing party might otherwise be entitled. 22. This Agreement shall never be construed to constitute the parties hereto as partners or joint venturers, or to create a relationship of principal- agent, employer - employee, trustee beneficiary, an association for business or profit, or any other relationship, legal or equitable, among the parties hereto. In all respects, each party shall be responsible for its own conduct in connection with the subject matter of this Agreement as though it were an independent contractor, free from all control and direction of the others. 23. This Agreement may be executed in multiple counterparts, each of which when taken together shall constitute but one and the same instrument, but none of which shall be Page 7 effective until and unless executed by all parties named herein. Additionally, this Agreement may also be executed in multiple originals, any one of which, when fully executed as herein provided, shall be effective for all purposes. `When fully executed as herein provided, the terms and conditions of this Agreement shall be binding upon, and inure to the benefit of, the parties hereto, their heirs, successors and assigns. 24. EXECUTED by each party hereto as of the date indicated beside its signature, to be effective for all purposes as of the Effective date. Date: l- 1'"1 —�� ATTEST: BY Jenni r Walters, City Secretary Date: i -- 1-1-- (>')- APPROVED AS TO LEGAL FORM: BY: 1--, Herbert L. Proukj, City Attorney City: Michael A. Cond ty Manager CITY OF DENTON, TEXAS Operator: By: Noel Page 8 ACKNOWLEDGMENTS STATE OF TEXAS § COUNTY OF DENTON § Before me, the undersigned authority, on this day personally appeared Michael A. Conduff, CITY MANAGER OF THE CITY OF DENTON, TEXAS, known to me to be the person and official whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of said City, and for title purposes and consideration therein expressed, and in the capacity therein stated. Notary Public, State of Texas STATE OF TEXAS § COUNTY OF DENTON § The foregoing instrument was acknowledged before me on i - 1'7 — 2002 by, on behalf of the corporation. r �-- �v'"'Oe� CHRISTINE A. DICK Notary Public, State of Texas Notary Public State of Texas Comm. Expires 3- 2 -2005 Page 9 ACKNOWLEDGMENTS STATE OF TEXAS § COUNTY OF DENTON § Before me, the undersigned authority, on this day personally appeared C. Noell Rather, PRESIDENT OF ENEXCO, INC., known to me to be the person and official whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of said Operator, and for title purposes and consideration therein expressed, and in the capacity therein stated. Notary Public, State of Texas STATE OF TEXAS § COUNTY OF DENTON § The foregoing instrument was acknowledged before me on 1- 1`1-0� 2002 by, on behalf of the corporation. 0'�00 CHRISTINE A. DICK Notary Public State or rcx= Comm Exvrr- 3 -2 -2005 Notary Public, State of Texas Page 10 EXHIBIT "A" to Surface Use Agreement dated effective L- i'1 -off between and the CITY OF DENTON, TEXAS MEMORANDUM OF SURFACE USE AGREEMENT The Memorandum is being executed for the purpose of giving notice of the existence of that certain Surface Use Agreement dated effective of even date entered into by and between Enexco, Inc. (as "Operator ") and the CITY OF DENTON, TEXAS (as "City ") regarding Operator's use of the lands owned by City located in Denton County, Texas, to wit: (the "Land ") for Operator's oil and gas operations on such lands. Dated effective this — day of 2002. ATTEST: a Jenni r Walters, City Secretary APPROVED AS TO FORM: Herb Prouty, Ci Attomey OPERATOR: By: C� Noell Rather, President CITY OF DENTON, TEXAS Page 11 04/29/2004 09:32 FAX 3813822839 HUGHES X002 t4 'ar 50 a• This Amaudment to the Surface I lee Agreement City of Denton Airport of January 17 2002 ("Amendment to the Ag ,.anent') is made and entered into Effective Date s provided below by and among 11 io DAN A. HUMM COMPANY, whose aduiteas is a P.O. Drawer 669, Beeville, Tex. • 7810440669 (Opetateij and the CITY OF DENT01 1, TEXAS, a home rule municipal corporation, soft by and through its duly authorize d City Manager ("Surfaca Ownee' ) . WFIEFJ S, Operator and SurEi, ' Owner desire to enter into an amendment to the abo, e mentioned agreement regarding 1perator's use of the Lands for its proposed oil and g is operations thereon in conneatl : i with Operator's gas well operations on the Airpc rt Property. NOW, T! 1 MWOM in oonsid,. lation of the premises and the covenants act forth belo, r, Operator and Surface Owner arat to amend their agreement to add these addition ti provisions as follows: 1, Compensation. An annual , :ntal thr a 200' X 300' well site of $.05 per square fo )t for wells located on the we. 1 side of the lands or T.08 per square foot for proper y located on the east side oft] - lands shall be paid to the City as compenufm for ti $ use of the surfsae. Addiliol ral compensation will be required for the road scones a each well site. This comps -isation will be determined once the access road .s established. The same rate liar square foot used for the well site will be used n calculating the access road 113e compensation. The annual rental shall be adjuat, d ovary two yam xcording tk - the Consumer Price Index_ The annual rental shall 1 e payable to the City of Denur, upon the start of construction of each well site and e n each year anttiversary therea n err until the well is abandoned. 2. Assignment This amendtnc :it to the agreement shall remain in effect for so long is the oil and gas leases owtral by Operator on the Lands are in force and effect, and ],a binding upon and shall inure a the beaefii of the parties hereto, their respective heb s, personal representatives, su- -:esson and assigns. Surface Owner has the right 'o comet to mch assignment, :•i ich consent will not be unreasonably withheld_ 3. This amendment to the agro-nent shall be construed under tho two of the State ,f Texas, without reference a. - conflict of law principles which would require t c application of the law of anoiler jurisdiction, and exclusive venue Shalt be in Dent+ •n County, Texas for aq% claims lawsuits or aetloes In congtggga with tub is Aereeme n Zd Wdffi:10 tW 6? ' +dt1 6SZ2--64£ 016: 'ON Wd T- And+?i i u° }uaQ: WOLlj 04/29/2004 09:39 FAX 3813822839 ..� HUGHES � 3J003 4. In the event of any conflict 1, swan the parties hereto such that either party brings , it cotnmcmo w any legal acdor ,r proceeding related to this license, including but n )t limited to, any action pursui-nt to the provisions of the Tens Uniform Declarw. y dudgmeztts Act (Tex. Civ. V--ic. & Rem. Code § 37.001, et seq., as amended), ti e parties hereto agree to waivt .toy and all rights to recovery of attorneys fees to whit h the prevailing party might of t•,>rwisc be entitled. S. This amendment to the W, most shall never be construed to constitute the parti, s hereto u partners or joint - aturers, or to create a relationship of principal -ager arnployer employee, trustee 1,cneficiary, an association for business or profit, or ar Y other relationship, legal or o i citable, among the parties hereto. In all respects, ear h Party shall be responsible for , is own conduct in eonaaction with the subject matter i f this Agrmmetd as though It an iadepandmrt ovntraotor. f= fmm all control ar i direction of the others. 6. This amendment to the agrerniant may be executed in multiple counterparts, each ( f Which when taken together s) lal l constitute but one And the some instrument, but not c of which shall be effective l ntil and unless executed by all parties named heteh .. Additionally, this Agreemoni may also be eaecuMl in multiple originals, any one t f which, whit fully executed as herein provided, shall be effective for all purpose `When fully executed as her. nt provided, the terms and renditions of this Agteemei .t shall be binding upon, and mute to the bearefit of the parties hereto, their heir , Successors and assigns. E-3MCUTED by each pan-, hereto to be effective as of the later date of th e aelntowledgtaent for each pan ly (the `affective Date"). s. �1• Ina .rrt P„ ' •. ss s •a• £d WOS:L@ VOM 6Z 'Jdtl GB& -64g 6x+6: 73N )O!U '4JOddiN L-I-L dQ: iJ(RU 04/29/2004 09;33 FAX 3810822859 HUGHES \ [a 004 DAN A. HUGHES By; / Dan Alley BuIIhes, J Attorney in Fact i (J Dan A. Hughes P.O. Dnwor 669, Beeville, Texas 78104 -0669 Date: 9d WUiS:LO MW 6Z "-IdFJ 6871 -6K 006: 'ON XUA 1aod -Ill, .a'iuM: WOW 04/27 /2004 08:49 FAX 8613822K HUGHES T. TO BY A•1285 0-110094 :I 100' f "T :I 270' try W. N E I L A - 9 7 0 — SURVEY LINE —• —•— FENCE LINE ROAD -- - - - - -- LEASE LINE H A R D 1 N A - 1 6 5 6 IZ007 Enlargement of Well -Sol as Area Proposed F_ x -- —�— Entrance x i 100 I E 1 1 Dan A. Hughes Company Site Plan Plat City of Denton Airport #2 -H X O 16{/0' 1 I x- �E 270' -* :I f :I H A R D 1 N A - 1 6 5 6 IZ007 Enlargement of Well -Sol as Area Proposed F_ x -- —�— Entrance x i 100 I E 1 1 Dan A. Hughes Company Site Plan Plat City of Denton Airport #2 -H X O 16{/0' 1 I x- �E 270' -* I AMENDMENT TO SURFACE USE AGREEMENT CITY OF DENTON AIRPORT This Amendment to the Surface Use Agreement City of Denton Airport of January 17`h, 2002 ( "Amendment to the Agreement ") is made and entered into effective this 30`h day of August, 2004 by and among the DAN A. HUGHES COMPANY, whose address is a P.O. Drawer 669, Beeville, Texas 78104 -0669 (Operator ") and the CITY OF DENTON, TEXAS, a home rule municipal corporation, acting by and through its duly authorized City Manager ( "Surface Owner "); WHEREAS, Operator and Surface Owner desire to enter into an amendment to the above mentioned agreement regarding Operator's use of the Lands for its proposed oil and gas operations thereon in connection with Operator's gas well operations on the Airport Property. NOW, THEREFORE, in consideration of the premises and the covenants set forth below, Operator and Surface Owner agree to amend their agreement to add these additional provisions as follows: 1. An annual lease at the rate of $0.08000 cents per square foot for a tract of land totaling 35,629.94 square feet, which is $2850.40 payable annually to be used for a gas collection pipeline. Attachment A, a survey of the leased premise from Alliance Area Surveying, identifies the proposed tract of land. A survey showing the corrected 15 -foot width of property lease will be provided no later than 30 days after the signing of this Surface Use Agreement Amendment. Such payment for land to be payable upon completion of construction and each year anniversary thereafter until gas pipeline removal. Operator shall remit the payments required in this paragraph payable to the City of Denton, the Surface Owner. 2. An annual payment of $10.00 per rod for a total of 87.81 rods (1404.95 feet), which is $878.10 for the right of way to lay a gas collection pipeline on Airport property. Attachment A, a survey of the leased premise from Alliance Area Surveying, identifies the proposed tract of land. A survey showing the corrected 15 -foot width of property lease will be provided no later than 30 days after the signing of this Surface Use Agreement Amendment. Such payment for pipelines to be payable upon completion of construction and each year anniversary thereafter until removal. Operator shall remit the payments required in this paragraph payable to the City of Denton, the Surface Owner. 3. An annual lease at the rate of $0.08000 cents per square foot for a tract of land totaling 200' x 400' well site or 80,000 square feet, which is $6400.00 payable annually. Attachment B, a survey of the leased premise from Alliance Area Surveying, identifies the proposed tract of land. A survey showing the corrected dimensions of the property lease will be provided no later than 30 days after the signing of this Surface Use Agreement Amendment. Such payment for land to be payable upon signing of this Surface Use Agreement and each year anniversary thereafter until the well is abandoned and plugged. Operator shall remit the payments required in this paragraph payable to the City of Denton, the Surface Owner. 4. This amendment to the agreement shall be construed under the laws of the State of Texas, without reference to conflict of law principles which would require the application of the law of another jurisdiction, and exclusive venue shall be in Denton County, Texas for any claims lawsuits or actions in connection with this Agreement. 5. In the event of any conflict between the parties hereto such that either party brings or commences any legal action or proceeding related to this license, including but not limited to, any action pursuant to the provisions of the Texas Uniform Declaratory Judgments Act (Tex. Civ. Prac. & Rem. Code § 37.001, et seq., as amended), the parties hereto agree to waive any and all rights to recovery of attorneys fees to which the prevailing party might otherwise be entitled. 6. This amendment to the agreement shall never be construed to constitute the parties hereto as partners or joint venturers, or to create a relationship of principal- agent, employer - employee, trustee beneficiary, an association for business or profit, or any other relationship, legal or equitable, among the parties hereto. In all respects, each party shall be responsible for its own conduct in connection with, the subject matter of this Agreement as though it were an independent contractor, free from all control and direction of the others. 7. This amendment to the agreement may be executed in multiple counterparts, each of which when taken together shall constitute but one and the same instrument, but none of which shall be effective until and unless executed by all parties named herein. Additionally, this Agreement may also be executed in multiple originals, any one of which, when fully executed as herein provided, shall be effective for all purposes. `When fully executed as herein provided, the terms and conditions of this Agreement shall be binding upon, and inure to the benefit of, the parties hereto, their heirs, successors and assigns. 8. EXECUTED by each party hereto as of the date indicated beside its signature, to be effective for all purposes as of the Effective date. TEST: a� �kmfer alters, City Secretary Date: APPROV � S TO F RM: l� Herbert L. P uty, Oty Attorney Surface Owner: Jo ortu Assistant City Manager CI Y OF EJ; TEXAS Operator: Ord'II�, A I'M ON P.O. Drawer 669, Beeville, Texas 78104 -0669 STATE OF TEXAS BEE COUNTYOF Bw6� Before me, }{FTRCk,Ne- UNc , the undersigned notary public, on this day personally appeared of haINJ rparatierr- ✓ known to me; proved to me on the oath of ; or proved to me through his/her current {description of identification card or other document issued by the federal government or any state government that contains the photograph and signature of the acknowledging person 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 consideration therein expressed. Given under my hand and seal of office this 30th day of August, 2004. } w' KATHERINE A. YOUNG NOTAAy PUBLIC STATE OF TEXAS ., My commission Expires 11 -18 -2004 o ary Public .>.. _ j MEMORANDUM OF SECOND AMENDMENT TO SURFACE USE AGREEMENT The Memorandum is being executed for the purpose of giving notice of the existence of that certain Surface Use Agreement dated effective of even date entered into by and between, whose address is (as "Operator ") and the CITY OF DENTON, TEXAS (as "Surface Owner ") regarding Operator's use of the lands owned by Surface Owner located in Denton County, Texas, to wit: (the "Land ") for Operator's oil and gas operations on such lands. Dated effective this, August 30, 2004. Surface Owner: Jo Fortune Assistant City Manager CITY OF DENTON, TEXAS ATTEST: Je Walter City Secretary APPROVED AS TO FORM: Herb Prouty, City Attorney GAS PIT )INE EASEMENT EXHIBIT DEN1..1 MUNICIPAL AIRPORT 1.636 ACRES FIELD NOTES to all that certain tract of lane situated in the WILLIAM NEIL SURVEY, Abstract No. 970, in the City of Denton, Denton County, Texas and being a part of Lot 1, Block 1, Southeast Airport Addition, on addition in the City of Denton cecording to the plot thereof recorded in Cabinet G. page 295 of the Plot Records of Denton County, Texas, and o part of o tract of land now owned by the City of Denton Municipal Airport; the subject tract being more particularly described as follows: BEGINNING at the intersection of the South US of said Lot 1 and o 25' building line as shown on said Plat, from which the Southeast corner �f said Lot 1 bears North 89 degrees 43 minutes 03 .*.ends East of a distance of 25.01 feet; THENCE South 68 degrees 43 minutes 03 seconds West with the South lino thereof o distance of 30.01 feet; THENCE North OD degrees 06 minutcs 03 seconds West parallel with and 30.00 feel West of said building line a distance of 1405.57 feet of Inc beginning of a tangent curve to the left having a radius of 215.00 feet, a chord bearing and distance of North 02 degrees 23 minutes 20. seconds West, 17.16 feet and o Celia Cagle of 04 degrees 34 minutes 23 seconds; THENCE along said curve pa; allN with and 30.00 17.16 feel; feet West of said building line on arc distance of THEN THENCE North 89 degrees 39 minutes 14 seconds West parallel with and 30.00 feet South of a 80' access and utility easement as shown on sad Plat a distance of 438.14 feet to the East line of 0 60' access, drainage and utility ....meal as shown on said Plot; THENCE North 00 degrees 20 minutes 46 seconds East with the East line thereof a distance of 516.42 feet to the Northwest comer of the norein described easement: THENCE South 89 degrees 39 minutes 14 seconds East a distance of 30.00 fool to the Northerly most Northeast Connor of the herein descrbud easement; THENCE South 00 degrees 20 minutes 46 seconds West a distance of 486,42 feet to the South line of sold 80' Access and Utility Easement; THENCE South 89 degrees 39 minutes 14 seconds East with the South line thereof 0 distance of 434.06 feet to the intersection of said S-UU: line with sold building line at the beginning of a non— Wngcnt curve to the right having a radius of 245.00 feet, a chord bearing and distance of South 05 degrees 37 minutes 30 seconds East, 47.16 feet and a delta angle of 11 degrees 02 minutes 44 seconds; THENCE along said Curve end said building fine an arc distance of 47.23 feet; THENCE South 00 degree, 06 minutes 03 seconds East with Bald building line a distance of 1404.95 test to the PUCE OF PrGINNING and encloa;ng 1.638 acre. of land, more or less. CERTIFICATION: I hereby certify that 1 have ccnductcd an accurate on the ground survey of the premises depicted hereon and described in the legal description attached hereto and that the findings and results of said survey are true sad --meet to the best of my knowledge and belief and that the size, type and location of the permanent improvements One cs shown, and that said survey correctly shows the location of all alleys, streets, rights —ot —way, and eosemer;s of record of which the undersigned has been advised effecting the subject premises according to the descriptions of record, and that except as shown there are no— V,sible encroachments, visible overlaps, visib.e conflicts or visible protrusions. J.E. THOMP60N II I R.L'.C.S. No 4857 `oat. SURVEY NOT VALID H J.E. TkOMPSONki o P.O. BOX 507 KRUM, TX 76249 940- 462 -6723 OFFICE 940 -462 -3660 FAX 114 -B MAIN STREET GAINESVILLE, TX 76240 940 - 665 -9105 OFFICE 940 - 665 -9106 FAX ALLIANCE tAREA URVEYING GAS PIPELP- lEASEMENT EXHIBIT DENTON JNICIPAL AIRPORT 1.636 ACRES 5 89'39'14 "E 30.00' i a 1 v w 3 DENTON m o MUNICIPAL I v 'op AIRPORT IN N o b ,o I Z - ✓+- - ._ _- -- L= 47.23' I 50 I-CCss , -rnrt'. 'e = -r,., S 8r 39'14 "E 434.06' R =245.00' CH= 505'37'30 "E 47.16' N 89'39'14 "W 438 DELTA= 11-02'44" 1 5 .4 L= 17.16' R= 215.00' O ,� s�RVEY 0 I y lCH= NO2'23'20 "W 17.16' lio DELTA= 04'34'23" p11S11�PC , o- _. o J 1b�6 Hp \i0,� �o R nASTK : C A LOT 1, BLOCK 1 c SOUTHEAST WRPORT ADDITION CABINET G, PAGE 295 °. I A n S 88'43' N I OI 0 m_ 0 w ni I AI O A � 1 1 'II I1, P.O. BOX 507 KRUM, TX 76249 940- 482 -6723 OFFICE 940- 482 -3680 FAX 114 -B MAIN STREET GAINESVILLE, TX 7624( 940- 665 -9105 OFFICE 940 - 665 -9106 FAX 25" eultom0 I.mE + LLIANCE AREA URVEYING 0 I 1 , I 1" =200' , I I I 5 SURVEY NOT VALID% H J ^•�' �se tip,, H -E i'FIOIMPSON 0 S 88'43' N I OI 0 m_ 0 w ni I AI O A � 1 1 'II I1, P.O. BOX 507 KRUM, TX 76249 940- 482 -6723 OFFICE 940- 482 -3680 FAX 114 -B MAIN STREET GAINESVILLE, TX 7624( 940- 665 -9105 OFFICE 940 - 665 -9106 FAX 25" eultom0 I.mE + LLIANCE AREA URVEYING 0 6Z&A-c( A�gTRA � ��gtRAC'T Q`11�7 V l O °ENTON ar ,y l 4" •�+, W SM1TR �o v l8� � Ic J � �D T N�1R 6c�U AstRA 40 ACRE �ocarar; LEASE An. WWI H -; Sr- h o _t8S RA��UN�ZS 673 A 1 r' =1000' 3- \3AC0� ,to I I I certify this plat to be true and correct to the beet of my knowledge. Data P.O. BOX 507 ALLIANCE KRUK tat .76249 AREA 940 - 462 -672a OMCE URVEYING 940-- 482 -3680 FAX- Operator. Dan A. Hughes Company 114 -8 CAIN . EIS,,, Loose Nome k Well Number: Airport 'D' GAINESVUE, TX 7824( Elegy tlon: 632 940 -685 -9105 OFFICE Nearest Town in Count), t Mile West of Denton, Texas 940 -665 -9108 FAX VU a -h. uuss xaa, -It I-- -.._ .. Z�H 'd ILf39 –ZBb A3"1�Od QIAtiQ eSS�OI t•D OT F cr, T 'J .T I �i 0 rA )ENTON MUNICIPAL AIRY ')RT #G.U. #I- -H & CENTRAL FACILITY SITE LAYOUT I I LOT 1, BLOCK 1 I I SOUTHEAST AIRPORT ADDITION CABINET G; PAGE 295 LINE HEATERS PROPOSED - WELL HEAD ts J RESERVE I ` L PIT I o ° 1 u GUY ANCHOR CM.)—\ U I ry' I TANK BATTERY I l�l I 11 — 60' rna0 EAS MENT LOFIU OHI;— ..— ..20"Yi.E_� EXfJIF1Z; QFtAV I II I II I III II I I II II I I I II i I I I I - i li 0 119:0 ]k P.O. BOX 507 +ALtLUNCE ERUM. TX 76249 ,Ej 940- 482 -6723' OFFICE RVEiING 940 -462 =3680 FAX:.. JOH NiJbfBER:0208 114 —H MAIN STREET DATE: 8 -9- GAINESVEURE TX 78240 DRAWN BY: IHCl �_ o00 940- 665 - 9105.. OFFICE CHECI{ED BY: JET 940 -666 -9106 FAX "I I R_P_L_S. IJF.T fk I'd IL89 -ZBb A3-I-iOd QIAHO ell :OT b0 Ll 2nU to OIL AND GAS DIVISION ORDER PLEASE RETURN TO: Stroud Energy, Ltd. Attn: Division Orders — Lia Bowers 801 Cherry Street, Suite 3800 /Unit 19 Ft. Worth, TX 76102 Date: June 26, 2006 The undersigned severally and not jointly certifies it is the legal owner of the interest set out below of all the oil, gas and related liquid hydrocarbons produced from the property described below: Operator: STROUD ENERGY, LTD. Property Name: City of Denton Airport #3 -H County: Denton State: Texas Legal Description: 138.54 acres, more or less, located in the WM Smith Survey, A -1 188 and WM Neil Survey, A -970 Property No.: 43710.017 Effective: May 13, 2006 Owner No.: 7217 Owner Name: City of Denton Owner Tax I.D. /Social Security No.: 75- 6000514 Type of Interest: RI Decimal Interest: .25000000 THIS AGREEMENT DOES NOT AMEND ANY LEASE OR OPERATING AGREEMENT BETWEEN THE INTEREST OWNERS AND THE LESSEE OR OPERATOR OR ANY OTHER CONTRACTS FOR THE PURCHASE OF OIL OR GAS. The following provisions apply to each interest owner ( "Owner ") who executed this agreement: iriF TERMS OF SALE: The undersigned will be paid in accordance with the division of interest set out above. The payor shall pay all parties at the price agreed to by the operator for oil, gas and related hydrocarbons to be sold pursuant to this division order. Purchaser shall compute quantity and make corrections for gravity and temperature and make deductions for impurities. PAYMENT: From the effective date, payment is to be made monthly by payor's check, based on the division of interest, (1) for oil and its products within sixty (60) days after the end of the calendar month in which oil production is sold; and (2) for gas and its products within (90) days after the end of the calendar month in which gas production is sold, from the property listed above, less taxes required by law to be deducted and remitted by payor as purchaser. Payments of less than $100.00 may be accrued before disbursement until the total amount equals $100.00 or more, or until 12 months' proceeds accumulate, whichever comes first. However, the payor may hold accumulated proceeds of less than $10.00 until production ceases or the payor's responsibility for making payment for production ceases, whichever occurs first. Payee agrees to refund to payor any amounts attributable to an interest or part of an interest that payee does not own. �r.LiI -illy` xffixiktx Rxxsrx inxde�y rlLoxt�c7effh; such xlteisfomcatxotfeseat ida�riotgc hrmwtoa �iro#ad xat x,>axa�reg 7E�s7c�r7G8d[Rri(BWt�c f4xcY,7f�1Ga1r1r x�z vk ft 3c tix��§t�lfix+�scfrxaatis s�+les a� xxxhios muAa}� a�asr�x DISPUTE; WITHHOLDING OF FUNDS: If a suit is filed that affects the interest of the owner, written notice shall be given to payor by the owner together with a copy of the complaint or petition filed. In the event of a claim or dispute that affects title to the division of interest credited herein, payor is authorized to withhold payments accruing to such interest, without interest unless otherwise required by applicable statute, until the claim or dispute is settled. TERMINATION: Termination of this agreement is effective on the first day of the month that begins after the 30'^ day after the date written notice of termination is received by either party. NOTICES: The owner agrees to notify payor in writing of any change in the division of interest, including changes of interest contingent on payment of money or expiration of time. No change of interest is binding on payor until the recorded copy of the instrument of change or documents satisfactorily evidencing such change are furnished to payor at the time the change occurs. Any change shall be made effective on the first day of the month following receipt of such notice by payor. Any correspondence regarding this agreement shall be furnished to the addresses listed unless otherwise advised by either party. In addition to the legal rights provided by the terms and provisions of this division order, an owner may have certain statutory rights under the laws of this state. Witnesses Ja>i,u ,cvd� Si nature of Interest Owner Interest Owner's Address: 215 E. McKinney Denton, TX 76201 Interest Owner Tax ID /SS# 75- 6000514 ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: Failure to furnish your Social Security /Tax I.D. number will result in withholding tax in accordance with federal law, and any tax withheld will not be refundable by payor. RETURN ORIGINAL TO STROUD ENERGY, LTD., Attn: Division Orders - Lia Bowers, 801 CHERRY STREET, SUITE 3800 /UNIT 19, FT. WORTH, TX 76102. F "ISTROUD ENERGY, LTD., RANGE RESOURCES SHALL REMAIN RESPONSIBLE FOR ALL OBLIGATIONS UNDER ITS LEASE AND OTHER AGREEMENTS WITH THE CITY OF DENTON.