2004-110'.,j:\Our D~umefits\Ordinances\04kAixpor t Open Space Park Gas Lease Best Bid.doc
ORDINANCE NO. d[~04--//~
AN ORDINANCE ALLOWING THE NEGOTIATION OF THE BEST BID FOR A CONTRACT
FOR AN OIL AND GAS NON-DRILL SITE/POOLING AGREEMENT AT THE AIRPORT
OPEN SPACE PARK WITH ENEXCO, INC. AND ALLOWING THE CITY MANAGER TO
EXECUTE THE 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 the Airport Open Space
Park, Denton, Texas; and
WHEREAS, in compliance with Chapter 71 of the Texas Natural Resources 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 circulation 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 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 Enexco, Inc.; and
WHEREAS, Enexco, Inc. desires to enter into lease negotiations for the land at the Airport
Open Space 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 Enexco, Inc. in return for
the payment(s) as outlined in Attachment A for the approximately 42 acres at the Airport Open
Space 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
portions of this Ordinance despite such invalidity, which remaining portions shall remain in full
'l
force and effect.
SECTION 4. This ordinance shall become effective immediately upon its passage and
approval.
PASSED AND APPROVED this the 3~ day of /~./ , 2004.
EULINE BROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
2
EXHIBIT "A"
CITY OF DENTON BID FORM
GAS WELL DEVELOPMENT ON AIRPORT PARK PROPERTY ,
NON-DRILL. IN GfPO OLING AGREEMENT
Description of property and lease: The lease will be a non-drilling/pooling agreement for the
following Parks
Airport Park
An alternate bid of a portion of the Park may be considered.
Minimum Standards of thc Bid: Please check each item that will be included in thc lease.
primary term 0fnot more than three (3) years fi.om date of execution.
· ,,~ A Commencement of Dfilling Clause to drill within the first 6 months.
Include a proposal for a continuous development after initial well establishes production
rate..
7c~ A.royalty to lessor 1/5
oil and gas produced from said land.
The royalty to be paid at the highest price in the area. A statement by the Lessee that the
royalty to be paid the City is equal to the highest price paid by the Lessee tq any mineral
owner in Denton, County; and that if the Lessee pays a mineral owner in Denton County,
Texas a higher royalty percentage during thc term of this lease, the Lessee shall increase
the royalty paid to 'the City so as t0 equal this higher amount.
X~ An annual delay rental of $ 10. O0 per acre..(This is a 3 year Paid Up Lease)
Shut-in payment of $20.00 per acre·
Bonus money as specified by bidder.
42 acres X $ 200.00 = total bonus money
bonus money as specified in the bid.
$8,400.00 For
A Development P lat'o r other drawing showing a d rill p lan and d rill sites t hat are not
located on AIRPORT Pa~k 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
drilhng locations and sites for pooling purposes.
The successful bidder shall pay thc cost of the advertisement of the bid.
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Bidders shall submit information of the bidder's reputation and quality of the bidder's oil
and gas services including but not limited to the bidder's financial ability to provide the
oil and gas servicesi safety record, compliance history and any other relevant information
that the bidder submits to the city for the determination of best value. A letter from the
Railroad Commission that the company is in good standing will .suffice. (see attached letter)
The successful bidder shall comply with all requirements in the Code of Ordinances for
the City of Denton, Texas. A copy may be obtained in the City Secretary's office or on
the City ofDenton's website, www.cityofdenton.com.
A bidder's conference will be held onFebruary25, 2004 at 10:00 a.m. at the City of-
Denton Service Center Conference Room, 901-B Texas Street, Denton, Texas 76209.
l~v~ 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, the 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 form a drilling or spacing unit for the 'exploration, development, and
production ofoil and gas. The City will consider alternative 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 has 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 recommendation 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 right to recover or be paid attorney's fees from the City of Denton, Texas, or
any of the City's empIoyees 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 th/s is the intentional relinquishment of a presently existing known
right.
By execution and submission of this Bid, the Bidder hereby represents and warrants to
the City of Denton that the Bidder I/as read and understands the Bid Documents and the
Contract Documents and this Bid is made in accordance with the Bid Documents. Bidder
acknowledges that it Understands all terms within the bid documents, which include the
waiver provisions, and that it had the right to consult, with counsel regarding all of the
above documents.
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By submitting a bid, each bidde~ agrees to waive and does hereby waive any claim the
bidder has or may have against the City of Denton, Texas and the City's employees,
agents and officers, arising out of or in any way connected with the following:
1. the administration, evaluation or recommendation of any bid;
waiver or deletion of any o f thc requirements under the B id Documents or the
Contract Documents;
3. acceptance or rejection of any bids; and
4. award of the Bid or Lease.
By submitting a bid, the bidder aCknoWledges that the bidder understands all terms of the bidding
documents and consents to the bidding 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 this is the intentional relinquishment of the above listed presently existing
rights.
The City reserves the right to waive, delete or amend any of the requirem~th this
bid and to reject any and ail bids. ~/~' ~c~'~~
c. '
Title: PRESIDENT
ENEXCO, INC.
Company
3131 TURTLE CREEK #1210
DALLAS, TX 75219
OILAiND GAS.LEASE BID INSTRUCTIONS
The City of Denton intends to lease property for oil and gas development only, as
described below:
Airport Open Space
Airport Park
This lease is for a non-drill site/pooling agreement for Airport Open Space Property or
Airport Park
Said lease shall be awarded, at the discretion of the City Council, to the highest and best
bidder submitting a bid in accordance with terms as outlined below:
It is. the intention of the Council to award the lease to the highest and best bidder
submitting a bid at such public hearing on March 23, 2004; provided that, if in the judgment of
the Council the bids submitted' do not represent the fair value of such lease, :the Council will
reject all bids, No bids will be considered unless submitted at said hearing. The Council reserves
the right to reject any and all bids for such lease. However, should any bid 'be accepted, such
lease Shall be executed upon a form acceptable to the Council and the Lessee-therein and shall
provide: The Council shall determine the highest and best bidder according to the terms
submitted for the mineral lease, the reputation and quality Of the bidder's oil and gas' services
including but not limited to the 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 consideration.
for a primary term of not more than three (3) years from date of execution. Drilling shall
commence in 6 months. Continuous drilling shall be required.
2. for a royalty to be paid Lessor 1/5
said land;
of all oil and gas produced from
o
a statement by the Lessee that the royalty to be paid the City is equal to the highest p~ce
paid by the Lessee to any mineral owner in Denton, County; and that if the Lessee pays a
mineral owner in Denton County, Texas a higher royalty percentage during the term of
this lease, the Lessee shall increase the royalty paid to the City so as to equal this higher
amount.
for an annual delay rental of not less than
Paid Up Lease);
$10.00
per acre. (This is a 3 year
$20.00
for a shut-in payment of not less than per acre;
for bonus money as specified in the bid.and with the minimum to be $ 200.OOper acre;
and
the following provisions:
'Lessee agrees and obligates itself to restore the surface of ail land that might be
damaged by its operation hereunder as nearly as possible to its original conditions
as s eon a s it has fin/shed with t he u se o f t he a rea w here such damages occur.
Lessee must further agree to indemnify Lessor against any and all claims upon the
part of third persons for damages or injuries of any kind or character that might
arise fi:om the Lessee's operations hereunder,
Bo
Lessor 'prohibits the surface disPosal of salt water or oil field waste on the
hereinabove described tract of land.
The use Of potable water from the leased:premises for water flooding or
'secondary recovery is expressly prohibited and the use of such water is restricted
solely to ordinary exploration and production activities.
Lessee must conform to all ordinances regulating oil and gas drilling contained in
the Code of the City of Denton, Texas.
Ingress and egress to drill sites shall not b e allowed through the Airport Open
Space.
Lessee must satisfy themselves as to title and acquire all necessary abstracts and
other title information solely at their own expense; the lease form shall Contain no
general warranty of title by Lessor.
A Development Plat or other drawing showing the drill plan and drill sites must
be submitted with the bid. Additional gas well sites may be available on the west
side of the airport property subject to the approval by ttie City. The City reserves
the right to award this bid based on both price and the most advantageous location
of the drilling locations and sites.
An Oil and Gas Non-Drill Site/Pooling Agreement will be negotiated within thirty
(30) days after the successful bidder is selected. The oil and gas lease must be
approved by thc City Council.
I. The successful bidder shall pay the bid advertisement cost.
K. The City shall allow the successful bidder to pool the lease, the land or minerals
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included in thp lease, or any part of these with any other land, leases, minerals
estates or parts of any of these to form a drilling or spacing unit for the
exploration, development, and production of oil and ga~. Any such arrangement
will prohibit surface use of the Airport Open Space.
By submitting a bid, each bidder agrees to waive and does hereby waive any
claim the bidder has or may have against the City of Denton, Texas, and the
City's respective employees and representatives for the award o f attorney fees,
arising out of or in connection with the admin/stration, evaluation, or
recommendation 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 right to
recover or be paid attomey's fees from the City of Denton, Texas, or any of the
City's employees and representatives under any of the p revisions o fthe Texas
Unifonn Declaratory Judgments Act (Texas Civil Practice and Kemedies Code,
Section 37.001, et. seq., as amended).
Th6 bidder agrees that this is the intentional relinquishment of a presently existing
known right.
By execution and submission Of this Bid, the. Bidder hereby represents and
warrants to the City of Denton' that the Bidder has read and understands the Bid
Documents and the Contract Documents and this Bid is made in accordance with
the Bid D0cuments~ Bidder acknowledges that it understands all terms within the
bid documents, which include the waiver provisions, and that it had the right to
consult with counsel regarding all of the above documents.
By submitting a bid, each bidder, agrees to waive and does hereby waive any
claim the bidder has or may have against the City ofDentqn, Texas and the City's
employees, agents and officers, arising out of or in any way connected with the
following:
I. the administration, evaluation or recommendation of any bid;
waiver or deletion of any of the requirements under the Bid Documents or
the Cent/act Documents;
3. acceptance or rejection of any bids; and
4. award of the Bid or Lease.
By submitting a bid, the bidder acknowledges that the bidder understands ail
terms of the bidding documents and consents to the bidding process and the
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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 this is the intentional relinquishment of the above listed
presently existing rights.
N. The City reserves the right to waive, delete or amend any of the requirements
connected with this bid.
O. Bids shall be received by the Purchasing Agent, City of Denton Service Center,
90lB Texas Street, Denton, Texas 76209 on March 9, 2004 at 2:00 p.m.. Any bid
received after the specified time of 2:00 p.m. will not be considered.
P. Bids shall be submitted on the City of Denton Bid Form. The bidder may attach
as many additional pages as they deem necessary.
Bidders may contact the City of Denton, Tom Shaw, Director of Purchasing
Agent, City of Denton Service Center, 901-B Texas Street, Denton, Texas .76209
at (940) 349-7100, for clarifications and questions. A bidder's conference will be
held onFebmary 25, 2004 at 10:00 p.m. at the City of Denton Service Center
· Conference Room, 901-A Texas Street, Denton, Texas 76209.
~:\Our Documents\Gas Well Documents\04~Enexco Gas Well Bid Pooling Agreement.doc
OIL, GAS AND MINERAL LEASE
NON-DRILL SITE/POOLING AGREEMENT
THIS OIL, GAS AND MINERAL LEASE (the "Lease") is made this ~,,c~ day of
.~. _~.o 2004 (the "Effective Date"), between The City of Denton, Denton, Texas, acting
herein by and through its City Manager, Michael A. Conduff, duly authorized by resolution to
execute this Lease ("LESSOR"), whose address is: 215 East McKinney, Denton, Texas 76201
and Enexco, Inc. ("LESSEE"), whose address is: 3131 Turtle Creek, Suite 1210, Dallas,
Texas .Zip Code 75219
WITNESSETH:
1. Lease of Land. LESSOR in consideration of Eight thousand Four hundred and
00/100 Dollars ($ 8,400.00 ), in hand paid, of the royalties herein provided, and
of the agreements of LESSEE herein contained, hereby leases and lets exclusively unto LESSEE
for the purpose of a non-drill site/pooling agreement for investigating, exploring, prospecting,
drilling and mining for and producing oil, gas and all associated minerals, to produce, save, take
care of, treat, transport and own said products, the following described land in Denton County,
Texas, to-wit:
Airport Open Space Legal Description:
BEGINNING 300.0 feet North 2 degrees 12 minutes west and 100.0 feet north 22 degrees 40
minutes west of the northwest comer of a 10.154 acre tract conveyed to Floyd Cook by J.
Newton Rayzor in deed recorded in Volume 475, Page 530 of the Deed Records of Denton
County, Texas, said comer being in the east line of paved County Airport Road.
THENCE along the east line of said road north 22 degrees 40 minutes west a distance of 912.50
feet to iron pin for comer;
THENCE south 86 degrees 10 minutes east a distance of 730.00 feet to iron pin for comer;
THENCE south 3 degrees 50 minutes west a distance of 117.00 feet to iron pin for comer;
THENCE south 63 degrees 36 minutes east a distance of 1695.75 feet to iron pin for P.C. of
curve to right;
THENCE along arc of curve (having a central angle of 64 degrees 22 minutes; a radius of 346.40
feet, a tangent of 218.00 feet and a long chord of 369.01 feet) a distance of 409.35 feet to iron
pin for P.T. of curve;
THENCE south 0 degrees 46 minutes west a distance of 671.81 feet to iron pin for comer in the
North line of Farm Road No. 1515;
THENCE north 89 degrees 14 minutes west along said Farm Road a distance of 597.00 feet to
iron pin for comer;
THENCE north 0 degrees 46 minutes east a distance of 350.00 feet to iron pin for P.C. of curve
to left;
THENCE along arc of curve (having a central angle of 76 degrees 14 minutes, a radius of 318.65
feet, tangent of 250.00 feet, and a long chord of 393.36 feet) a distance of 423.97 feet to iron pin
P.T. of curve;
THENCE north 75 degrees 28 minutes west a distance of 559.60 feet to iron pin for comer;
THENCE north 60 degrees 59 minutes west a distance of 640.00 feet to iron pin for comer;
THENCE south 67 degrees 24 minutes west a distance of 150.00 feet to iron pin for comer, the
place of beginning, containing 41.629 acres of land.
For all purposes of this Lease, said land is estimated to comprise 41.629 acres, whether it
actually comprises more or less.
See drawing (Attachment A).
However, there is expressly excepted from this Lease and reserved to LESSOR, its successors
and assigns, all vanadium, uranium, plutonium, thorium, fissionable minerals and all other
minerals of every kind and character in, on and under the land, except only oil, gas, casinghead
gas and their byproducts and such other hydrocarbon substances, carbon dioxide and sulfur as
are necessarily produced with and incidental to the production of oil and gas, or either of them.
2. Reservation and Surface Use Prohibition. 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 minerals except those expressly leased for
pooling purposes 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.
3. Primary Term: This is a paid up lease and subject to the other provisions here contained,
this Lease shall be for a term of three (3) years from the Effective Date (the "Primary Term") and
as long thereafter as oil, gas and other minerals are produced in paying quantities from said land
or land with which said land is pooled hereunder. Lessee agrees to commence operations on an
initial well within one hundred eighty (180) days from the effective date of this lease.
4. Royalt,y: As royalty, LESSEE covenants and agrees to pay:
a. As a royalty on oil (including all hydrocarbons produced in liquid form at the
mouth of the well and also condensate, distillate, and other liquid hydrocarbons recovered
from oil or gas mn through a separator or similar equipment)__l/5 of the gross
production or the market value thereof, at the option of LESSOR, the value to be
gravity for the field where produced and when run, or (ii) the highest market price offered
or paid for the field where produced and when run, or (iii) the gross proceeds of the sale
whichever is greater. LESSEE agrees that before any gas produced from the land is sold,
used or processed in a plant, it will be run, free or cost to the parties entitled to royalties,
through an adequate oil and gas separator of conventional type or other equipment at least
as efficient to the end that all liquid hydrocarbons recoverable from the gas by such
means will be recovered. Upon written consent of the royalty owners, the requirement
that gas be run through a separator or other equipment may be waived upon terms and
conditions as prescribed by them.
b. As a royalty on any gas, which is defined as ail hydrocarbons and gaseous substances
not defined as oil in subparagraph 4.b. above, produced from any well on the land
(except as provided in this Lease with respect to gas processed in a plant), 1/5 of
the gross production or the market value thereof, at the option of LESSOR, the value to
be based on the highest market price paid or offered to a third party LESSEE under a gas
purchase agreement negotiated at arms' length for gas of comparable quality and quantity
in the general area where produced and when run, or the gross price paid or offered to the
producer, whichever is greater.
c. As a royalty on any gas processed in a plant, 1/5 of the residue gas and the
liquid hydrocarbons extracted or the market value thereof, at the option of LESSOR. The
royalty percentage shall be applied to 100% of the total plant production of residue gas
attributable to gas produced from this Lease, and on 50% or that percent accruing to
LESSEE, whichever is greater, of the total plant production of liquid hydrocarbons
attributable to the gas produced from this Lease; except if liquid hydrocarbons are
recovered from gas processed in a plant in which LESSEE or an affiliate owns an
interest, then the royalty percentage for liquid hydrocarbons shall be 50% or the highest
percent accruing to a third party processing gas through the plant under a processing
agreement negotiated at arms' length. The respective royalties on residue gas and on
liquid hydrocarbons shall be determined by (i) the highest market price paid or offered
for any gas (or liquid hydrocarbons) of a comparable quality in the general area or (ii) the
gross price paid or offered for such residual gas, or the weighted average gross selling
price for the respective grades of liquid hydrocarbons, F.O.B. the plant in which the gas
is processed, whichever is greater.
d. On ail substances, including, but not limited to carbon dioxide and sulfur, permitted
to be produced from the land by virtue of this Lease, and products, except liquid
hydrocarbons, produced or manufactured from gas, and for which no royalty is otherwise
specified in this Lease, LESSOR shall have and be entitled to the royalty percentage of
that produced or saved to be delivered to LESSOR, free of all costs, or, at the option of
LESSOR, which may be exercised from time to time, LESSEE shall account to LESSOR
for the royalty percentage of the market value thereof, which market value shall be
deemed to be the greater of (i) the highest market price of each product for the same
month in which the product is produced, or (ii) the average gross sale price of each
product for the same m
e. Accounting and payment to LESSOR of royalties from the production of oil and
gas from any well shall commence no later than ninety (90) days after the date the well
commences first production. Thereafter, ail accountings and payments of royalties shail
be made on or before the last day of the caiendar month following the calendar month in
which the production occurred. Should LESSEE at any time fail to make royaity
payments to LESSOR on or before the last day of the third calendar month following the
caiendar month in which the production occurred, this Lease shail automaticaily
terminate unless the payments are made within thirty (30) days after written notice is
given to LESSEE. Any royalties provided for in this Lease which are not paid to
LESSOR within the applicable time periods specified in this paragraph shail accrue
interest at the same rate as judgments under the laws of the State of Texas from due date
until paid. Acceptance by LESSOR of royalties which are past due shall not act as a
waiver or estoppel of LESSOR'S right to receive or recover any and ail interest due
under the provisions of this paragraph unless the written acceptance or acknowledgment
by LESSOR to LESSEE expressly so provides. LESSEE shall pay ail reasonable
attorney's fees incurred by LESSOR in connection with any lawsuit in which LESSOR is
successful in recovering royaities or interest or in terminating this Lease due to
LESSEE'S failure to pay royaities within the periods set forth above.
LESSOR'S royalty shail never bear, either directly or indirectly, any part of the costs or
expenses of producing, gathering, dehydrating, compressing, transporting, manufacturing,
processing, treating or marketing of the oil or gas from the land, nor any part of the costs of
constructing, operating or depreciating any plant or other facilities or equipment for processing
or treating oil or gas produced from the land.
5. Shut-In Gas. If LESSEE drills a well on land which the LESSOR has permitted to be
pooled herewith, which well is capable of producing gas but such well is not being produced, and
this Lease is not being maintained otherwise as provided herein, this Lease shall not terminate,
whether it being during or after the Primary Term (unless released by LESSEE) and it
nevertheless shail be considered that oil and gas is being produced from the land covered by this
Lease. When, at the expiration of the Primary Term or any time or times thereafter, the Lease is
continued in force in this matter, LESSEE shail pay or tender as royalty to the parties who at the
time of such payment would be entitled to receive royaity hereunder if the well is producing, or
deposit directly with LESSOR at its address shown herein, a sum equal to $20.00 for
each gross acre of land subject to this Lease at the time such payment is made. The first payment
of such sum shail be on or before the first day of the caiendar month at the expiration of ninety
(90) days from the date the Lease is not otherwise maintained, and thereafter subsequent
payments may be made at annual intervais. LESSEE'S failure to pay or tender or properly or
timely pay or tender such sum as royaity shail render LESSEE liable for the amount due and
shail operate to terminate this Lease automaticaily.
6. Limit of Shut-In: Notwithstanding anything to the contrary in this Lease, it is expressly
agreed and provided that this Lease cannot and shail not be extended beyond the Primary Term
by reason of the shut-in well provisions of Paragraph 5 for any single period of more than two
(2) consecutive years or more than three (3) years in the aggregate.
7. Pooling: Subject To the reservations and surface use prohibitions of paragraph 2 of this
Lease, LESSEE, at its option, is hereby given the right and Power to pool or combine the acreage
covered by this lease or any portion thereof as to oil and gas, or either of them, with any other
land covered by this lease, and/or with any other land, lease or leases in the immediate vicinity
thereof to the extent hereinafter stipulated, when in LESSEE'S judgment it is necessary or
advisable to do so in order to properly to explore, or to develop and operate said leased premises
in compliance with the spacing rules of the Railroad Commission of Texas, or other lawful
authority, or when to do so would, in the judgment of LESSEE, promote the conservation of oil
and gas in and under and that may be produced from said premises. Units pooled for oil
hereunder shall not exceed forty (40) acres, plus a tolerance of 10 percent (10%) thereof, each in
area, and units pooled for gas hereunder shall not exceed in area 640 acres each plus a tolerance
of ten percent (10%) thereof, provided that should governmental authority having jurisdiction
proscribe the creation of units larger than those specified, for the drilling or operation of a well at
a regular location or for obtaining maximum allowable from any well to be drilled, drilling or
already drilled, units thereafter created may conform in size with those prescribed by
governmental regulations. LESSEE under the provisions hereof, may pool or combine acreage
covered by this lease or any portion thereof as above provided as to oil in any one or more strata
and as to gas in any one or more strata. The units formed by pooling as to any stratum or strata
need not conform in size or area with the unit or units in to which the lease is pooled or
combined as to any other stratum or strata, and oil units need not conform as to area with gas
units. The pooling in one or more instances shall not exhaust the rights of the LESSEE
hereunder to pool this lease or portions thereof into other units. LESSEE shall file for record in
the appropriate records of the county in which the leased premises are situated an instrument
describing and designating the pooled acreage as a pooled unit; and upon such recordation of the
unit shall be effective as to all parties hereto, their heirs, successors, and assigns, irrespective of
whether or not the unit is likewise effective as to all other owners of surface mineral, royalty or
other rights in land included in such unit. LESSEE may at its election exercise its pooling option
before or after commencing operations for or completing an oil or gas well on the leased
premises, and the pooled unit may include but is not required to include, land or leases upon
which a well capable of producing oil or gas in paying quantities has theretofore been completed
or upon which operations for the drilling of a well for oil and gas have theretofore been
commenced. In the event of operations for drilling on or production of oil or gas from any part
of a pooled unit which includes all or a portion of the land covered by this lease, regardless of
whether such operations for drilling were commenced or such production was secured before or
after the execution of this instrument or the instrument designating the pooled unit, such
operations shall be considered as operations for drilling on or production of oil or gas from land
covered by this lease whether or not the well or wells be located on the premises covered by this
lease and such event operations for drilling shall be deemed to have been commenced on said
land within the meaning of paragraph 8 of this lease; and the entire acreage constituting such unit
or units, as to oil and gas, or either of them, as herein provided, shall be treated for all purposes,
except the payment of royalties on production from the pooled unit, as if the same were included
in this lease. For the purpose of computing the royalties to which owners of royalties and
payments out of production and each of them shall be entitled on production of oil and gas, or
either of them, from the pooled unit, there shall be allocated to the land covered by this lease and
included in said unit (or to each separate tract within the unit if this lease covers separate tracts
within the unit) a pro rata portion of the oil and gas, or either of them, produced from the pooled
unit after deducting that used for operations on the pooled unit. Such allocations shall be on an
acreage basis--that is to say, there shall be allocated to the acreage covered by this lease and
included in the pooled unit (or to each separate tract within the unit if this lease covers separate
tracts within the unit) that pro rata portion of the oil and gas, or either of them, produced from
the pooled unit which the number of surface acres covered by this lease (or in each such separate
tract) and included in the pooled unit bears to the total number of surface acres included in the
pooled unit. Royalties hereunder shall be computed on the portion of such production, whether it
be oil and gas, or either of them, so allocated to the land covered by this lease and included in the
unit just as though such production was from such land. The production from an oil well will be
considered as production from the lease or oil pooled unit from which it is producing and not as
production from a gas pooled unit; and production from a gas well will be considered as
production from the lease or gas pooled unit from which it is producing and not from an oil
pooled unit. The formation of any unit hereunder shall not have the effect of changing the
ownership of any shut-in production royalty which may become payable under this lease. If this
lease now or hereafter covers separate tracts, no pooling or unitization of royalty interest as
between any such separate tracts is intended or shall be implied or result merely from the
inclusion of such separate tracts within this lease, but LESSEE shall nevertheless have the right
to pool as provided above with consequent allocation of production as above provided. As used
in this paragraph 7, the words "separate tract" mean any tract with royalty ownership differing,
now or hereinafter, either as to parties or amounts from that as to any other part of the leased
premises.
8. Termination.
a. If, at the expiration of the Primary Term, LESSEE is not engaged in the actual
drilling of a well under the terms of this Lease or if LESSEE has completed or abandoned
a well on the land within thirty (30) days prior to expiration of the Primary Term and is
not, at the expiration of ninety (90) days after the date or completion or abandonment of
the well, engaged in the actual chilling of another well under the terms of this Lease, this
Lease shall then terminate as to all of the land, save and except the following:
Each well producing oil or being reworked, and classified as an oil well
under the roles and regulations of the Railroad Commission of Texas,
together with forty (40) acres around each such well (an "Oil Unit").
Each well producing gas (or capable of producing gas with all shut-in royalty
having been paid thereon) or being reworked, and classified as a gas well under
the roles and regulations of the Railroad Commission of Texas, together with the
one hundred sixty (160) acres around each such well (a "Gas Unit").
b. Each Oil Unit or Gas Unit shall be in as near the form of a square as reasonably
practicable considering the boundary of the land and the necessity of a legal location of
the well on the unit. Notwithstanding the foregoing, if the Railroad Commission of
Texas or other authority having jurisdiction, by role or order prescribes a larger or a
smaller number of acres for the purposes of securing the maximum allowable production,
each unit shall be increased or decreased in size as necessary to conform to the number of
acres prescribed by the rule or order, but if the role or order provides for or permits
optional sized tracts or spacing, the unit shall be the smallest tract permitted by the rule or
order.
c. If, at the expiration of the Primary Term, LESSEE is engaged in the actual drilling
of a well under the terms of this Lease or if LESSEE has completed or abandoned a
well on the land within thirty (30) days prior to expiration of the Primary Term and is,
at the expiration of ninety (90) days after completion or abandonment of the well,
engaged in the actual drilling of another well under the terms of this Lease this Lease
shall not terminate so long as LESSEE pursues the drilling of the well with
reasonable diligence to completion or abandonment and so long as LESSEE
commences the actual drilling of additional and successive wells under the terms of
this Lease at intervals not exceeding ninety (90) days between completion of a well as
a producer or dry hole and commencement of actual drilling of the next well under
the terms of this Lease. If and when LESSEE fails to commence the actual drilling of
a well within the applicable interval (or within the extended time provided in
subparagraph 8.d. below, this Lease shall then terminate to all of the land, save and
except the Oil Units and Gas Units provided in subparagraph 8.a. above. Upon
expiration of the Primary Term or the cessation of the continuous drilling program set
forth herein, whichever is later, this Lease shall also terminate as to all depths below
each unit retained as to depths below a depth of one hundred feet (100') beneath the
deepest producing horizon or zone for each unit.
d. If LESSEE, in the conduct of actual drilling operations under this Lease after the
expiration of the Primary Term, commences the actual drilling of any next succeeding
well within less than the ninety (90) day time interval specified in subparagraph 8.c. and
thus speeds up the development of the land, LESSEE shall have credit in time for the
accelerated development and may, in the conduct of subsequent actual drilling
operations, take advantage of the credit in time on a cumulative basis and thus extend the
time for the commencement of actual drilling of any subsequent well or wells required to
be drilled under the provisions of this Lease in order to prevent termination of this Lease.
Within ten (10) days of the commencement of the actual drilling of each well under the
terms of this Lease, LESSEE shall give LESSOR written notice of the date of
commencement. Within ten (10) days after the completion or abandonment of each well
under the terms of this Lease, LESSEE shall give LESSOR written notice of the date of
completion or abandonment and also of the time credit, if any claimed by LESSEE as a
result of having commenced the actual drilling of the well within less than the required
interval. If LESSEE falls to timely so notify LESSOR in any of these respects, LESSEE
shall not be entitled to any credit in time for accelerated development. Nothing contained
in this paragraph shall relieve LESSEE of any offset obligation arising by implication or
under the terms of this Lease, but any well drilled by LESSEE to satisfy an offset
obligation will entitle LESSEE to the privileges of this paragraph.
9. Removal of Equipment. Subject to the surface use prohibitions of paragraph 2,
LESSEE shall have the right at any time during and for one hundred eighty (180) days after the
expiration of this Lease to remove all casing. Thereafter, it shall be deemed abandoned to
LESSOR. If LESSEE falls to remove such property, casing and fixtures within such 180 day
period, at Lessor's option, ownership of the same will vest in LESSOR, LESSOR'S successors
and assigns or LESSOR, at its option, may require the removal of said equipment in addition to
all other remedies to which LESSOR is entitled under law.
10. Assignment. LESSEE shall not assign this lease without the written consent of
LESSOR. The assignment of this Lease by LESSEE, or any successor LESSEE, shall not relieve
LESSEE, or any such successor, from its obligations hereunder. LESSOR may, unless it agrees
to the contrary, look to LESSEE and/or any successor of LESSEE for performance of any one or
more of such obligations
11. Title. LESSOR does not warrant or agree to defend the title of the lands covered hereby.
LESSEE takes this Lease without warranty of title either express or implied. If LESSOR owns
an interest in the oil, gas and minerals leased hereby less than the entire fee simple estate, then
the royalties, or other monies accruing from any part of the land to which this Lease covers less
than such full interest shall be paid to LESSOR only in the proportion which LESSOR'S interest
therein, if any, bears to the whole and undivided fee simple mineral estate therein. It is the sole
responsibility of LESSEE to determine the LESSOR's mineral interest. The bonus payment paid
for this Lease shall be deemed to be final if no title problems are submitted for resolution within
ninety (90) days of the Effective Date.
12. Force Majeure: When drilling, production or other operations under the terms of this
Lease or land pooled with such land, or any part thereof are prevented, delayed or interrupted by
fire, storm, flood, war, rebellion, insurrection, sabotage, riot, strike, or as a result of some law,
order, role, regulation or necessity of governmental authority, either State or Federal, the Lease
shall nevertheless continue in full force and effect and be extended for the period such drilling,
production and other operations are so prevented, delayed or interrupted. LESSEE shall not be
liable for breach of any express or implied covenants of this Lease when drilling, production or
other operations are so prevented, delayed or interrupted, except that nothing in this paragraph 12
shall be construed to suspend the payment of delay rentals, shut-in royalty or any other amount
otherwise required to maintain this Lease in effect.
13. Designation of Gas Unit.
a. Upon completion of the first well as a producer of oil and/or gas in paying
quantities (whether the first or a subsequent well drilled), LESSEE shall designate an
approximately sized drilling unit around said first producing well, all out of the above
described property, by filing a written designation in the Deed Records of Denton County
Texas and shall provide LESSOR with a copy of such unit designation.
b.. If a second well is completed as a producer of gas in paying quantities, LESSEE
shall again designate an approximately sized drilling unit around said second producing
well, all out of the above described property, by filing a written designation in the Deed
Records of Denton County, Texas and shall provide LESSOR with a copy of such unit
designation. LESSEE shall designate all drilling units in a fair and reasonable manner so
that the remaining acreage not included in the drilling units is capable of being drilled or
pooled with other lands.
All designations of units as provided in this paragraph 13 shall be in accordance with and subject
to the provisions of paragraph 8 above.
14. Indemnifications and Insurance. 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 Provisions.
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, assigns, 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 performed by the LESSEE under this lease and the
LESSEE shall fully defend, protect, indemnify, and hold harmless the LESSOR, and/or its
departments, agents, officers, servants, 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, arising 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 volunteers from any liabilities or damages
suffered as a result of claims, demands, costs, or judgments against the LESSOR and/or, its
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 ARISING 1N WHOLE OR IN PART FROM THE NEGLIGENCE OF THE
LESSOR OCCURRING 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 INDEMNITY
EXTENDED BY THE LESSEE TO INDEMNIFY AND PROTECT THE LESSOR AND/OR
ITS DEPARMENTS, AGENTS, OFFICERS, SERVANTS, OR EMPLOYEES FROM THE
CONSEQUENCES OF THE NEGLIGENCE OF THE CITY OF DENTON, TEXAS AND/OR
ITS DEPARTMENTS, AGENTS, OFFICERS, SERVANTS, OR EMPLOYEES, WHETHER
THAT NEGLIGENCE IS THE SOLE OR CONTRIBUTING CAUSE OF THE
RESULTANTANT INJURY, DEATH, AND/OR DAMAGE.
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 OWNER AND THE C1TY EXCEPT WHEN THIS POLICY IS BEING CANCELLED
FOR NONPAYMENT OF PREMIUM, IN WHICH CASE 10 DAYS ADVANCE WRITTEN
NOTICE IS REQUIRED".
c. Liability policies shall be written by carders licensed to do business in Texas and
with companies with A: VIII or better rating in accordance with the current Best Key Rating
Guide, or with nonadmitted carriers that have a financial rating comparable to carders licensed to
do business in Texas approved by the City.
d. Liability policies shall name as "Additional Insured" the city and its officials,
agents, employees, and volunteers.
e. Certificates of insurance must be presented to the City evidencing all coverages
and endorsements required by this Section 35-508,~and the acceptance of a certificate without the
required 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, operations, 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 either
included in the coverage or written as separate coverage. Such coverage shall not
exclude damage to the lease site. If Environmental Impairment (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 Limit of
$500,000 per occurrence for Bodily Injury and Property Damage. Such coverage
shall include owned, non-owned, and hired vehicles.
4. Worker's Compensation Insurance. In addition to the minimum statutory
requirements, coverage shall include Employer's Liability limits 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, employees, and volunteers for
any work performed for the city by the LESSEE.
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 Control with a sub-limit
of $500,000 may be added.
15. Offset Well Requirement. In the event a well or wells producing oil and gas in any
quantities that should be brought in by LESSEE or any other LESSEE on adjacent lands and
within 330 feet of the land or lands pooled, by permission of LESSOR, with such lands, LESSEE
agrees to drill such offset wells as a reasonably prudent LESSEE would drill under the same or
similar circumstances.
16. Location of Drilling Activit¥~ Pipelines and Equipment: No drilling activity shall be
conducted on and no pipelines, equipment or other structures shall be placed on or under any
pavement, concrete or asphalt or any other improved surface area situated on the above described
land. The location of any pipelines installed by LESSEE shall be approved in advance by
LESSOR, shall not be located on the lands covered by this Lease, and shall be situated along
routes that least interfere with LESSOR's existing or future use of the surface. No equipment or
roads shall be built on city property.
When required by LESSOR, LESSEE will bury all pipelines at a depth of six feet (6'), and the
location of wells shall comply with Chapter 29, Fire Code, of the Code of Ordinances of the City
of Denton, as amended, and all other applicable laws; provided, however, in no event will any
such activities or operations be conducted on the surface of the lands covered by this Lease.
17. Compliance with Laws: LESSEE shall comply with all applicable roles, regulations,
ordinances, statutes and other laws in connection with any drilling, producing or other operations
under the terms of this Lease, including, without limitation, the oil and gas well regulations of
the City of Denton.
18. Lease Assignment: The assignment of this Lease by LESSEE, or any successor
LESSEE, shall not relieve LESSEE, or any such successor, from its obligations hereunder.
LESSOR may, unless it agrees to the contrary, look to the LESSEE and/or any successor of
LESSEE for performance of any one or more of such obligations.
19. Water: LESSEE shall not use any water in, on, or under the above-described land.
20. Diligent~ Good Faith Operations. Each well drilled under this Lease shall be drilled
with reasonable diligence and in good faith and in a good and workmanlike manner in a bona
fide attempt to product oil, gas and associated minerals therefrom.
21. Captions and Headings: The captions and headings in this Lease are for convenience
only and shall not modify, change, amend, alter, or affect the tree meaning of any paragraph,
sentence, clause, phrase, or words herein.
22. Memorandum of Lease. LESSOR and LESSEE agree that a memorandum of lease
shall be filed of record in the Official Records of Denton County, Texas, evidencing this Lease
and the provisions contained in such memorandum to the parties hereto, the land covered by the
Lease, the term of the Lease and notice provisions informing the public of the existence of the
Lease.
23. FAA Rules and Regulations. No drilling activity or any other activity shall be
conducted on any portion of the above described land in contravention of any Federal Aviation
Administration ("FAA") role or regulation or which interferes with any future expansion plan for
runways or taxiways. LESSEE shall make inquiry with the proper officials of the FAA and
obtain all necessary approvals, consents or waivers prior to the location of any drill site on the
subject property to verify compliance with all applicable FAA roles or regulations. LESSEE
shall provide LESSOR with copies of all waivers or other documentation issued by the FAA
indicating approval of well site locations or any other operations prior to the commencement of
operations.
24. Subordination and Stipulations Required by FAA. This Lease recognizes that the
Denton Municipal Airport was acquired and developed with aid and/or grant of land from the
United States. Copies of such grants are available for review at the office of the City Manager in
Denton. These grants include a number of obligations and commitments to the general and
flying public, to the State of Texas, and to the United States. In addition to the above general
obligations and commitments, this Lease is subject and subordinate to and is controlled by all the
provisions, stipulations, covenants, and agreements in that certain indenture by and between the
United States of America and the LESSOR and it is understood that the LESSEE agrees to abide
by and enforce all of the provisions, stipulations, covenants, and agreements incorporated in the
foregoing instrument the same as if set out in full herein. This Lease is subject to approval by
the FAA and shall be effective only as of the date of such approval. The following agreements
and understandings are specifically enumerated to comply with FAA stipulations:
a. It is further especially agreed by the parties hereto that no structures or obstructions,
temporary or otherwise, shall be erected which will be in violation of the Federal Aviation
Regulations Part 77 (Criteria for Determining Obstructions to Air Navigation), unless otherwise
approved in writing by the FAA.
b. Without the prior specific approval of the FAA no surface operations shall be conducted
upon any of the lands covered by this Lease closer than the distances set forth in the sub-
paragraph above, or within the safety areas of said improvements, including ingress and egress of
vehicular traffic.
c. It is specifically understood and agreed that the LESSEE and its successors and assigns
shall give to the City of Denton and the FAA, notice in writing of the location of any
contemplated well and the route of ingress and egress to such well adjacent to the Airport Open
Space and that if neither the FAA nor the City of Denton objects to said location within a period
of thirty (30) days from the receipt of written notice thereof, the said LESSEE and its successors
and assigns may proceed to drill the well at the location specified in said notice, provided same
does not contravene other provisions of this Lease or the further restrictions and obligations
imposed by the City of Denton.
d. This written notice shall not relieve the LESSEE from obligation for filing a Notice of
Proposed Construction or Alteration, FAA Form 7460-1, if required by Federal Aviation
Regulations, Part 77, Subpart B.
e. Also it is agreed, that in the event a well is drilled on the land within the Pooling Unit,
then such drilling operations shall be prosecuted continuously, with due diligence, until same
results in production or a dry hole. All temporary structures used in such drilling operations
shall be painted and lighted in such a manner as proscribed by the FAA, and further provided that
no permanent structures of any kind used in the development, production or transportation of oil,
gas and other minerals shall be placed on the above described land in such manner as to interfere
with or introduce hazard to the operation of the aircraft.
f. Further, it is agreed that in the event any drilling operations for oil, gas, or other minerals
result in production, LESSEE at its own expense shall immediately remove all temporary
structures and place all semi-permanent or permanent equipment in such manner as will not
interfere with or introduce any hazard to the operation of the aircraft. In event such drilling
operations result in a dry hole, then LESSEE shall at its own expense immediately remove all
temporary structures used in such landing operation and level the area so that it may be safely
used for landing or taxiing aircraft.
g. LESSEE shall not interfere with the access roads to the City of Denton Airport, and shall
not interfere with any other person or agency having a lawful right to use the above-described
land.
h. During time of war or national emergency, LESSOR shall have the right to use the airport
open space or any part thereof to the United States Government for military or naval use, and if a
lease is executed with the United States Government, the provisions of this Lease insofar as they
are inconsistent with the provisions of the Lease to the Government, shall be suspended.
25. Entire Agreement. This Lease states the entire contract between the parties, and no
representation or promise, verbal or written, on behalf of either party shall be binding unless
contained herein; and this Lease shall be binding upon each party executing the same, regardless
of whether or not executed by all owners of the above described land or by all persons above
named as "LESSOR", and, notwithstanding the inclusion above of other names as "LESSOR",
this term as used in this Lease shall mean and refer only to such parties as execute this Lease and
their successors in interest.
IN WITNESS WHEREOF, this instrument is executed on the date first above written.
CITY OF DENTON, TEXAS - LESSOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
CORPORATION
BY: ~//~ ~
C. I~oell Rat~er, President
ENEXCO, INC.
3131 Turtle Creek #1210
Dallas, TX 75219
STATE OF TEXAS §
COUNTYOF DENTON §
Before me, the undersigned notary public, on this day personally appeared C. Noel
Rather, the President of Enexco, Inc. 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 consideration therein expressed.
Given under my hand and seal of office this ~q~day of t~t ,.m~'J .2004.
Notary Public
ATTACHMENT "A"
-A-IB~-I'-. LZ85
;._T. -T'OB¥ SI_IR.
I - ~roo
70 2D04 00089317
Denton County
Cynthia Mitchell
County Clerk
Denton, TX 76202
Recorded On: July 07, 2004
Parties: CITY OF DENTON
To
Instrument Number: 2004-89317
As
Memorandum
Billable Pages: 3
Number of Pages: 3
Comment:
Memorandum 1~,00
Total Recording: t8.00
** Examined and Charged as Follows: **
************ THIS PAGE IS PART OF THE INSTRUMENT ************
Any provision herein which restricts the Sale, Rental or use of the described REAL PROPERTY
because of color or race is invalid and unenforceable under federal law,
File Information:
Document Number: 2004-89317
Receipt Number: 122571
Recorded Date/Time: July 07, 2004 02:18P
User / Station: B Gibbs - Cash Station 1
Record and Return To:
CITY OF DENTON
215 E MCKINNEY
DENTON TX 76201
THE STATE OF TEXAS }
COUNTY OF DENTON }
County Clerk
Denton County, Texas
City pf Denton
City A~torney's Office
215 E. McKinney
Denton, TX 76201
MEMORANDUM OF OIL, GAS AND MINERAL LEASE
THE STATE OF TEXAS §
COUNTY OF DENTON §
KNOW ALL MEN BY THESE PRESENTS:
That on the 8th, day of June, 2004, being the effective date hereof, The City of Denton, Denton, Texas
(hereinafter referred to as "Lessor") and Enexco, Inc.., whose address is 3131 Turtle Creek, Suite 1210, Dallas,
Texas 75219 (hereinafter referred to as "Lessee"), entered into an Oil, Gas and Mineral Lease (hereinafter
referenced as "Said Lease") covering the following described land (hereinafter referred to as "Subject Land")
situated in Denton County, Texas, to-wit:
BEGINNING 300.0 feet North 2 degrees 12 minutes west and 100.0 feet north 22 degrees 40 minutes west
of the northwest comer of a 10.154 acre tract conveyed to Floyd Cook by J. Newton Rayzor in deed recorded in
Volume 475, Page 530 of the Deed Records of Denton County, Texas, said comer being in the east line of paved
County Airport Road.
THENCE along the east line of said road north 22 degrees 40 minutes west a distance of 912.50 feet to iron
pin for comer;
THENCE south 86 degrees 10 minutes east a distance of 730.00 feet to iron pin for comer;
THENCE south 3 degrees 50 minutes west a distance of 117.00 feet to iron pin for comer;
THENCE south 63 degrees 36 minutes east a distance of 1695.75 feet to iron pin for P.C. of curve to right;
THENCE along arc of curve (having a central angle of 64 degrees 22 minutes; a radius of 346.40 feet, a
tangent of 218.00 feet and a long chord of 369.01 feet) a distance of 409.35 feet to iron pin for P.T. of curve;
THENCE south 0 degrees 46 minutes west a distance of 671.81 feet to iron pin for comer in the North line
of Farm Road No. 1515;
comer;
THENCE north 89 degrees 14 minutes west along said Farm Road a distance of 597.00 feet to iron pin for
THENCE noFth 0 degrees 46 minutes east a distance of 350.00 feet to iron pin for P.C. of curve to left;
THENCE along arc of curve (having a central angle of 76 degrees 14 minutes, a radius of 318.65 feet,
tangent of 250.00 feet, and a long chord of 393.36 feet) a distance of 423.97 feet to iron pin P.T. of curve;
THENCE north 75 degrees 28 minutes west a distance of 559.60 feet to iron pin for comer;
THENCE north 60 degrees 59 minutes west a distance of 640.00 feet to iron pin for comer;
THENCE south 67 degrees 24 minutes west a distance of 150.00 feet to iron pin for comer, the place of
beginning, containing 41.629 acres of land.
Reference to said deed is hereby made for a complete description of the lands covered hereby and for all
purposes.
For the exclusive right for investigating, exploring, prospecting, drilling and mining for and producing oil, gas
and all other minerals, conducting exploration, geologic and geophysical surveys and other related oil and gas
operations on and under Subject Land. The Said Lease shall extend until June 8, 2007 and as long thereafter as oil,
gas or other minerals is produced from Subject Land or lands with which Subject Land are pooled therewith.
The execution of this Memorandum of Oil, Gas and Mineral Lease, shall serve as notice of execution and
existence of a Said Lease and be incorporated herein, and made a part hereof in ail respects. This memorandum shall
be subject to all term and provisions as set forth in Said Lease. A copy of Said Lease can be found in the business
files of Enexco, Inc., at the address above.
WITNESS THE EXECUTION HEREOF as of the respective acknowledgment date below.
CITY OF DENTON, TEXAS-LESSOR
~. Cond~ff ~'~
City Manager
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FO~:
HE~ERT L. PROUTY, CITY ATTO~Y
STATE OF TEXAS §
COUNTY OF DENTON §
Before me, the undersigned notary public, on this day personally
appeared ~t~hca, [ I~. O..t~ndo'f"te th~ C i ~"-~ I-Y~a_na a,,.f of the City of Denton, Texas,
who is know to me to be the person whose name is subscribed to~ the foregoing instrument, and acknowledged to me
that he/she executed that ins~a'ument for the purposes and consideration therein expressed.
N~.t.t~,Public , ~/ ~ "' / ~
Printed Name of Not~ry Public d