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2004-108S:\Our Decument s\Ordinances\O4'uMack Park Gas Lease Ordinance Best Bid.doc ORDINANCE NO. ~'~04-//~¢ AN ORDINANCE ALLOWING THE NEGOTIATION OF THE BEST BID FOR A CONTRACT FOR AN OIL AND GAS NON-DRILL SITE/POOLING AGREEMENT AT MACK PARK WITH HEP OIL COMPANY, LTD. AND Al I .OWING THE CITY MANAGER TO EXECUTE A LEASE AS LONG AS THE LEASE IS IN SUBSTANTIALLY THE SAME FORM AS THE CITY'S STANDARD LEASE; AND PROVIDING 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 Mack Park, Denton, Texas; and WHEREAS, in compliance with Chapter 71 of the Texas Natural Resoumes Code (the "Code") the City published notice of its intention to lease such real property for oil and gas purposes once a week for three consecutive weeks in a newspaper with general cimulation and published in Denton County, Texas; and WHEREAS, in compliance with the Code, the City Council of the City of Denton held a public hearing under Chapter 26 of the Texas Parks and Wildlife Code and Chapter 71 of the Texas Natural Resources Code; and WHEREAS, Pursuant to the Code, the City of Denton desires to negotiate the lease of the property for oil and gas well development with the best bidder submitted by HEP Oil Company, Ltd.; and WHEREAS, HEP Oil Company, Ltd. desires to enter into lease negotiations for the land at Mack Park for a non-drill site/pooling agreement for oil and gas well development and after negotiation, to enter into a lease for the land for oil and gas well development and to agree to pay to the City the agreed upon amounts; and WHEREAS, after negotiation the City desires to authorize the City Manager to execute the lease as long as the lease is in substantially the same form as the City's standard lease agreement for non-drill site/pooling agreements. 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 are hereby authorized to negotiate a non-drill site/pooling oil and gas lease agreement between the City of Denton and HEP Oil Company, Ltd in return for the payment(s) as outlined in Attachment A for the approximately acres of Mack Park. 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 of this Ordinance, and the City Council hereby declares it would have passed such remaining portions of this Ordinance despite such invalidity, which rema'ming portions shall remain in full force and effect. SECTION 4. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the ~>l-/~ day of _/'/~t,t~.~ ,2004. EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY APPR~gED A S~TO ~G~L FORM: HERBERT L. PROUTY, CITY ATTORNEY ,,% EXHIBIT "A" CITY OF DENTON BID FORlVI GAS WELL DEVELOPMENT ON MACK PARK PROPERTY NON-DRll J,ING/POOI,ING AGREEMENT Description of property and lease: The lease will be a non-drilllng/pooling agre~nont for the renewing Parks Mack Park An alt~ate bid of a portion of the Park may be considered. Minimum Standards of the Bid: Please chock each item that will be included in the lease. .one .(Jne 1) ~ A prlmary t~m of not more th~ years from date of execution. )~ ACx>mmcnccmcntofI)rillingClansetodrillwithinthe ~ : ~ :l primary term. Include a proposal for a continuous development afarr initial well establishes production o Aroyaltyto lessor oil and gas produced ~om said land. Thc royalty to be paid at thc highest price in the area, A statement by the Lessee that thc royalty to be paid the City is equal, to the highest price paid by the Leesee to any mln~ral owmx in Denton, County; and that if tho Lessee pays a mineral owner in Denton County, Texas a higher royalty percentage during the tr, m~ of this lease, the Lessee shall inOlTaSe the royalty paid to the City so as to equal this higher ~mount. Ail annllai delay rilD. tal of $ per acre. (This is a 3 year Paid Up Lease) Shut-in payment of $1 On nO Vet acre. Bonus money as specified by bidder. ii a~l acresX$ 500.00 = total bonus money bonus money as specified in the bid. I5_.010.50 ' For A D ~velopmcmt Plat o r oth~r d tawing s hewing a d rill p lan and d rill sites t hat a re n et locatedon South ~ack Park must be submitted with this bid. The City reserves the right to award this bid based on both price and the most advantageous location of the drilllnglocationsandsitesforpoolingpurposes.(See attached Hap & Proposed Unit.) The successful bidder shall pay the cost of the adver'dsement of the bid. -8- Bidders shall submit infomaation of the bidder's reputation and quality of the bidder's oil and gas services including but not limited to thc bidder's financial ability to provide the oil and gas services, safety record, compliance history and any other relevant information that the bidder submits to the city for tho dete,,,in~tion of best value. A letter from the l~ ~ilroad Commi.~fion that the company is in good standing will suffice. The successful bidder shall comply with all requirements in the Code of Ordinances for the City of Denton, Texas. A copy may bo obtained in the City Secretary's office or on the City ofDenton's wobsite, www.cityofdenton.com. A bidder's conference will be held on F ebraary 2 5, 2004 at 10:00 a.m. at the City of Denton Scawice Center Conference Room, 901-A Texas Street, Denton, Texas 76209. ~ An Oil and Gas lease will be negotiated within thirty (30) days after the successful bidder is selected. City shall allow the successful bidder to pool the lease, thc land or minerals included in the lease, or any part of these with any other land, leases, minerals estates or parts of any of these to roma a drilling or spacing unit for the exploration, development, and production of oil and gas. The City will consider aRernative bids on a portion of the Park lands, described, herein. By submitting a bid, each bidder agrees to waive and does hereby waive any claim the bidder h~.~ or may have against the City of Denton, Texas, and the City's respective employees and representatives for the award of attorney fees, arising out of or in connection with the administration, evaluation, or re.~oommendation of any bid, waiver of any requirements under the Bid Documents, or the Contract Documents, acceptance or rejection of any bids, and award of the Bid. By submitting a bid, the bidder specifically waives any fight to recover or be paid attorney's fees from the City of Denton, Texas, or any of the City's employees and representatives under any of the provisions of the Texas Uniform Declaratory Judgments Act (Texas Civil Practice and Remedies Code, Section 37.001, et. seq., as amended). The bidder agrees that this is the intentional relinquishment of a presently existing known dght. By execution and submission of this Bid, the Bidder hereby represents and warrants to thc City of Denton that the Bidder has read and understands the Bid Documents and the Contract Decrements and this Bid is made in accordance with the Bid Documents. Bidder acknowledges that it unders~tauds all terms within the bid documents, which include the waiver provisions, and that it had the fight to consult with counsel regarding all of the above documents. By ~bmitting a bid, each bidder agrees to waive and does hereby waive any claim the bidder has or may have agai~ the City of Denton, Texa~ and the City's employees, agea~ts and o/~5ce~, ar/dug out ofoz/n anyway connected w/th the following: 1. the admini.~tion, evaluation or recommendation of any bid; 2. · waiv~ or deletion of any o £ the requirements under the B id Docm-aents or the Contract Documents; 3. acceptance or rejection of any bids; and 4. award of/he Bid or Lease. By submitting a bid, the bidder acknowledges that the biddex understands all terms of the bidding documents and consents to the bi&tlng process and the possibility of a negative assessment. By submitting a bid, the bidder acknowledges and agrees that there was and is no disparity of bargaining power between the bidder and the City of Denton, Texas. The bidder agrees that ~ is the intentional rolinqu/.~hment of the above Hated presently existing fights. The City reserves tho right to waive, delete or amend any of the requirements connected with this bid and to reject auy and all bids. ~~ %----~edificati~'n~of~lidd~ Kenne~ah R. Couch Title: Agent HEP 0IL COHPANY, LTD. Company -10- -'ountains of Denton Apartments Mack South ,.gas ~g sites Gas sites