2003-287AN ORDINANCE ALLOWING THE NEGOTIATION OF THE BEST BID FOR A CONTRACT
FOR AN OIL AND GAS NON-DRILL SITE/POOLING AGREEMENT AT THE SOUTH LAKE
PARK WITH R. L. ADKINS CORPORATION AND ALLOWING 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 South Lake 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 heating 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 R. L. Adkins
Corporation; and
WHEREAS, R. L. Adkins Corporation desires to enter into lease negotiations for the land at
South Lake 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 I. 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 R. L. Adkins Corporation
in return for the payment(s) as outlined in Attachment A for the approximately 187.33 acres of South
Lake 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
force and effect.
SECTION 4. This ordinance shall become effective immediately upon its passage and
approval.
PASSED AND APPROVED this the day of 2003.
EUL1NE BROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
AP~;;E~AS ,O ~;AL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
2
ATTACHMENT "A"
CITY OF DENTON BID FORM
GAS WELL DEVELOPMENT ON SOl_rrH LAKE PARK
NON-DRILLING/POOLING AGREEMENT
Description of property and lease: The legal description is attached as Exhibit "A" in the lease.
The lease will be a non-drilling/pooling agreement for South Lake Park.
An alternate bid of a portion of South Lakes Park may be considered.
Minimum Standards of the Bid: Please check each item that will be included in the lease.
· A primary term of three (3) years fi.om date of execution.
· A royalty to lessor of 17% of all 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 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. SEE ATTACHMENT 1
· An annual delay rental orS10.00 per acre. (This is a 3 year Paid Up Lease)
· Shut-in payment of $20.00 per acre.
Bonus money as specified by bidder.
187.33 acres X $100/acre~ total bonus money of $18,733.00.
speoLfied in the bid.
For bonus money as
A Development Plat or other drawing showing a drill plan and drill sites that are not
located on South Lake Park must be submitted with this bid. The City reserves the right
to award this bid based on both prico and the most advantageous location of the drilling
locations and sites for pooling purposes. SEE ATTACItMENT 1
· The successful bidder shall pay the cost of the advertisement of the bid.
Bidders shall submit information of the bidder's reputation and quality of the bidder's oil
and gas se~ices 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 the determination of best value. A letter fi'om the
Railroad Commission that the company is in good standing will suffice. SEE
ATTACHMENT 1
The successful bidder shall comply with ail 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.¢itvofdenton, com.
A bidder's conference will be held on Monday, July 28, 2003 at 2:00 p.m. at the City of
Denton Purchasing Office conference room.
An Oil and Gas lease will be negotiated within thirty (30) days atter 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 of oil and gas. The City will consider alternative bids on a portion of the
South Lake Park hinds, 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, evaiuation, 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 fi-om 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
fight.
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 Documents. Bidder
acknowledges that it understands ail terms within the bid documents, which include the
waiver provisions, and that it had the right to consult with counsel regarding ail 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 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 m~commendation of any bid;
2. waiver or deletion of any of the requirements under the Bid Documems 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
fights.
The City reserves the right to waive, delete or amend any oft~vhe~equirements connected with this
bid and to reject any and all bids.
C er tiff ~ation~ of B--Tdder
R,L. Adkins Corporation, by
R.L. Adkins, CEO
ATTACHMENT 1
A ROYALTY RATE PAYABLE TO TUE CITY OF DENTON AT ~
HIGHF~ST PRICE IN ~ AREA IS NOT ECONOMICAI,Ly FEASIBLE
DUE TO LACK OF SURFACE USE ON S. LAKES PARK. ALL WELLS
HAVE TO BE LOCATED FROM OFFSET LOCATIONS AND
DIRECTIONALLY DI~H,I,F~. THE ADDITIONAL RISK AND EXPENSE
PROtq~RITS A HIG~rI~R ROYALTY RATE.
A DEVELOPMENT PLAT IS NOT AVAILABLE AT T~Lq TIME BUT
WILL BE PREPARED IN THE EVENT OF A SUCCESSFUL BID. ILL.
ADKINS CORPORATION HAS A WRITTEN AGREEMENT WITH
ACME BRICK CO. THAT ALLOWS FOR DIRECTIONAL DRILLING
FROM AN AREA IN ~ SOUTI~E~AST PORTION OF ~ ACME
PROPERTY TO TO ACCESS BOTTOM HOLE LOCATIONS ON S.
LAKES 1ARK.
ILL. ADKINS CORPORATION HAS DRILLED AND CASED OVER 20
BARNETT SHALE GAS WELLS IN DENTON COUNTY AND IS IN TUE
PROCESS OF TESTING Ti~.SE WELLS FOR COMMERCIAL
QU~LrFY. WE W~J~ BE CONNECTING WELLS TO ~ S~LES LINE
BEGINNING IN AUGUST 2003. ALL OPERATIONS HAVE BEEN
CONDUCTED 1~ STRICT COM~IJANCE WITH ~ CITY OF
· DENTON'S REGULATIONS. WE WILL PROVIDE A LETTER OF
GOOD STANOING FROM TmC T XAS R r JROAO COM nSSION
R QUn ).