2003-323FILE REFERENCE FORM 2003-323
X Additional File Exists
Additional File Contains Records Not Public, According to the Public Records Act
Other
FILES Date Initials
Amended b Ordinance No. 2008-131 06/17/08 JR
8:\Our Documen ts\Ordinances\03\Hickory Creek Elec Substaton Oil and Gas Lease Ordinance.doc
ORDINANCE NO. ~TP~' ~ff'~d
AN ORDINANCE ALLOWING THE CITY MANAGER TO EXECUTE AN OIL AND GAS NON-
DRILL SITE/POOLING AGREEMENT AT THE HICKORY CREEK ELECTRIC SUBSTATION
WITH TRIO CONSULTING & MANAGEMENT COMPANY, L.L.C.; 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 Hickory Creek Electric
Substation, 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 Chapter 71 of the Texas Natural Resources Code; and
WHEREAS, the City desires to authorize the City Manager to execute the lease with Trio
Consulting & Management Company, L.L.C for a non-drill site/pooling agreement. 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 is hereby authorized to execute a Non-drill
site/pooling oil and gas lease agreement between the City of Denton and Trio Consulting &
Management Company, L.L.C. in remm for the payment(s) as outlined in Attachment A for the
approximately 3.13 acres at the Hickory Creek Electric Substation.
SECTION 3. If any section, article, paragraph, sentence, clause, phrase or word in this
Ordinance or application thereof to anyperson 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 ANDAPPROVEDthisthe '7~dayof f~(_~ ,2003.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
AP~I~ov~ ~S TO I~EG~L ~O~VI:
HERBERT L. PROUTY, CITY ATTORNEY
EULINE BROCK, MAYOR
2
'~:\Our Documents\Gas Well Deeumenls~Hickory Creek Elee. Substation Pooling AgreementDOC
ATTACHMENT"A"
OIL, GAS AND MINERAL LEASE
NON-DRILL SITE/POOLING AGREEMENT
HICKORY CREEK SUBSTATION, CITY OF DENTON
T~IS,_QIL, GAS AND MINERAL L. EASE (the "Lease") is made this ~ day of
~, 2003 (the "Effective Date '), between The City of Denton, Denton, TeXas, aoting
herein by and through its City Manager, Michael A. Conduff, duly authorized by resolution to
execute this Lease ("LESSOR"), whose address is: 215 East MoKinney, Denton, Texas 76201
and Trio Consulting & Management, L.L.C. ("LESSEE"), whose address is: 703 Bluff Street,
Wichita Falls, Texas 76301,
WITNESSETH:
1. Lea~e of Land. LESSOR in consideration of Three Thousand Thirteen Dollars and
no/100 ($3,013.00), 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:
3.13 acres, more or less, of the S.A. Ventures Survey, A-1315,~being that same
tract described in that certain General Warranty Deed dated July 31, 2000 from
Gordon Meredith, individually and as Executor of the Estate of Alvin Meredith,
Deceased, to the City of Denton, Texas, recorded in Vol. 4647, pg. 3452, Deed
Records of Denton County, Texas.
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, easinghead
gas and their byproducts and such other hydrocarbon substances, carbon dioxide and sulfur as
are necessarily produced with and incidental to the production ofoii and gas, or either of them.
2. Reservation and Surface Use Prohibition. There is hereby excepted and reserved to
LESSOR the ful! 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 except, however, the driveway access use authorized pursuant
to that certain unrecorded letter agreement dated June 17, 2003, entered into by and between
LESSOR and LESSEE, which uses, subject to the terms of such unrecorded letter agreement, are
expressly authorized.
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.
4. Royalty. 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) Twenty-Five percent (25%)
of thc gross production or the market value thereof, at the option of LESSOR, the value
to be determined by (i) the highest posted price, plus premium, if any, offered or paid for
oil, condensate, distillate, or other liquid hydrocarbons, respectively, of a like type and
gravity for tho field where produced and when mn, or (ii) the highest market price offered
or paid for thc field where produced and when mn, or (iii) the gross proceeds of thc 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 mn, free of 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 tho end that all liquid hydrocarbons recoverable from the gas by such
mcans will be recovered. Upon written consent of the royalty owners, the requirement
that gas bo 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 all hydrocarbons and gaseous substances
not defined as oil in subparagraph 4.a. above, produced from any well on the land
(except as provided in this Lease with respect to gas processed in a plant), Twenty-Five
percent (25%) of the gross production or the market value thereof, at thc option of
LESSOR, the value to be based on the highest market pdee 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, twenty-five percent (25%) 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 all substances, including, but not limited to carbon dioxide and sulfur, permitted
to be produced from thc 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 thc 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 market.
e. Accounting and payment to LESSOR of royalties from the production ofoil and gas
fi.om any well shall commence no later than ninety (90) days af~ the date the well
commences first production. Thereafter, ail accountings and payments of royalties shall
be made on or before the last day of the calendar month following the calendar month in
which the production occurred. Should LESSEE at any time fail to make royalty
payments to LESSOR on or before the last day of the third calendar month following the
calendar month in which the production occurred, this Lease shall automatically
terminate unless the payments are made witkin 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 shall 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 LESSOK'S right to receive or recover any and all interest due
under the provisions of this paragraph unless the written acceptance or acknowledgment
by LESSOR to LESSEE expressly so provides. LESSEE shall pay all reasonable
attorney's fees, its court costs and reasonable expenses of litigation incurred by LESSOR
in connection with any lawsuit in which LESSOR is successful in recovering royalties or
interest or in terminating this Lease due to LESSEE'S failure to pay royalties within the
periods set forth above.
f. LESSEE shall use its best efforts to obtain in contracts relating to the sale of gas
produced from the leased premises provisions providing for the adjustment of the price
paid to reflect market fluctuations in gas prices; provided, however, and notwithstanding
anything to the contrary in this lease, LESSOR's royalty on any substance produced
pursuant to this lease shall never be calculated on a value or price which exceeds the
price actually received by LESSEE for the saie of such substance in an arms-length
transaction with a non-affiliated purchaser.
LESSOR'S royalty shall 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 fi.om 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 terrainate,
whether it being during or after the Primary Term (unless released by LESSEE) and it
nevertheless shall 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 fores in this matter, LESSEE shall pay or tender as royalty to the parties who at the
time of sush payment would be entitled to receive royalty hereunder if the well is producing, or
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deposit directly with LESSOR at its address shown herein, a sum equal to Twenty Dollars and
no/100 ($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 shall be on or before the first day of the calendar 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 intervals. LESSEE'S failure to pay or
tender or properly or timely pay or tender such sum as royalty shall render LESSEE liable for the
amount due and shall operate to terminate this Lease automatically.
6. Limit of Shut-In. Notwithstanding anything to the contrary in this Lease, it is expressly
agreed and provided that this Lease cannot and shall 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 fi.om said premises. Units pooled for oil
hereunder shall not exceed forty (40) acres, plus a tolerance of l0 percent (10%) thereof, each in
area, and units pooled for gas hereunder shall not exceed in area 640 acres each plus a toleranee
of ten percent (10%) thereof, provided that should governmental authority having jurisdiction
prescribe 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 erected 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 pooIing 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 ofoi[ or gas from any part
of a pooled unit which includes all or a portion of thc 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 thc pooled unit, such
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operations shall be considered as operations for drilling on or production ofoil 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
ineIuded 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 off and gas, or either of them, produced from the pooled
unit afrer 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
produetiun 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 hereinaiter, 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 drilling 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:
(1) With respect to each well located on the leased land or lands pooled
with any portion of the leased land which is producing oil or being
reworked, and classified as an oil well under the rules and regulations of
the Railroad Commission of Texas: forty (40) acres around each such
well, or if such well is located within a pooled unit designated pursuant to
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paragraph 7 of this lease, all of the leased land which is within such
pooled unit (an "Oil Unit"); and
(2) With respect to each well located on the leased land or lands pooled
with any portion of the leased land which is 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 rules and regulations of
the Raikoad Commission of Texas: one hundred sixty (160) acres around
each such well, or if such well is located within a pooled unit designated
pursuant to paragraph 7 of this lease, all of the leased land which is within
such pooled unit (a "Gas Unit").
b. Each Oil Unit or Gas Unit that is not part of a pooled unit designated pursuant to
paragraph 7 of this lease shall bo in as near the form cfa 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 rule 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 rule or order provides for or permits optional sized tracts or
spacing, thc unit shall be thc smallest tract permitted by the rule or order.
c. If, at the expiration of the Primary Term, LESSEE is engaged in the actual drilling
cfa 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 ali of the land, save and except the Oil Units and Gas Units (as
described in subparagraphs 8.a.(1) and (2) above), that exist as of such time. Upon
expiration of the Primary Term or the cessation of the continuous drilling program set
forth herein, whichever ts later, this Lease shall also terminate as to all depths below each
retained Oil Unit and Gas Unit as to depths below the stmtigraphic equivalent of a depth
of one hundred feet (100') beneath the stratigraphie equivalent of the deepest producing
formation, horizon or zone (whichever is deeper) 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.e. 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
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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 thc
terms of this Lease, LESSEE shall give LESSOR written notice of the date of
commencement. With'm 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 fails 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 fails to remove such property, easing 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
ail other remedies to which LESSOR is entitled under law.
10. Assignment. The rights of either party hereunder may be assigned in whole or in part,
and the provisions hereof shall extend to and bind their respective helm, successors and assigns;
but no change or division in ownership of the land, rentals or royalties, however accomplished,
shall operate to enlarge the obligations or diminish the rights of LESSEE.
11. Tide. 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 Maieure. 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, rule, 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.
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13. Designation of Drilling Units.
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, ail 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 dfilling units affecting the leased land in a fair and
reasonable manner so that the remaining acreage not included in any previous drilling
unit 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 ofpreminms.
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, judgraents, 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 depan'ments, and/or its officers, agents,
servants, employees, anceeasors, assigns, sponsors, or volunteers from any liabilities or damages
suffered as a result of claims, demands, costs, or judgments against the LESSOR and/or, it's
departments, it's officers, agents, servants, or employees, created by, or arising out of the acts or
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omissions of the LESSOR occurring on the drill site or operation site in the course and scope of
inspecting and pennitting the gas wells INCLUDING, BUT NOT LIMITED TO, CLAIMS AND
DAMAGES ARISING IN 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/OK
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 IN/URY, DEATH, AND/OR DAMAGE.
b. All policies shall be endorsed to mad "THIS POLICY WILL NOT BE
CANCELLED OR NON-RENEWED WITHOUT 30 DAYS ADVANCED WRITTEN NOTICE
TO THE LESSOR AND THE CITY 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.
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 Section 35-508 of the Denton Development Code, 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.
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 llabillty and personal injury.
2. Environmental Impairment (or Seepage and Pollution) shall be either
inoluded in the coverage or written as separate coverage. Such coverage shah not
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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 fights 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, Reckilling 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 Activity, 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. No equipment shall be placed on, and no roads shall be built on city property.
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.
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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 produce 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 true meaning of any paragraph,
sentence, clause, phrase, or words herein.
22. Memorandum of Lease. LESSOR and LESSEE agree that a memorandum of lease
shall bo 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. 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 ali 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 WI-IBP, EOF, this instrument is ex~uted on thc date first above written.
CITY OF DENTON, TEXAS - LESSOR
CHAI~L A. CO~DUFF~
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
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APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
STATE OF TEXAS §
COUNTY OF DENTON §
Before me, //ff/~-~/~. ~O/[AD~, the undersigned notary public, on this day
personally appeared MICHAEL A. CON-DUFF the CITY MANAGER of the CITY OF
DENTON, TEXAS, who is known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that she executed that instrument for the purposes
and consideration therein expressed.
Given under my hand and seal of offioe this day of _ .~ , 2003.
No,fy Public
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TRIO CONSULTING & MANAGEMENT, L.L.C.
- LESSEE
STATE OF TEXAS §
WICHITA §
COUNTY OF ~ §
Before me, Brenda d. Reitsm , the undersigned notary public, on this day
personally appeared Steve OuBose , the Vice President - Finance
of Trio Consulting & Management, L.L.C., who is known to me to be the person whose name is
subscribed to thc foregoing instrument, and acknowledged to mc that he/she executed that
instrument for the purposes and consideration therein expressed·
· 17 October
.__;:_qiv&~__~?__~__~.h~_~_~__d s? of of~c~ th,~ day or .2003.
~-_J_'l'?!g~::.: :, - ---~---_-_ ....... J Notary Public
&\Our Documents\Oas Well Documents~hckory Creek Elec. Substation Pooling Agreement.doc
Denton County
Cynthia Mitchell
County Clerk
Denton, TX 762'02
Recorded On: January 06, 2004
Parties: CITY OF DENTON
To
Instrument Number: 2004-1789
As
Memorandum
Billable Pages: 3
Number of Pages: 3
Comment:
Memorandum 18.00
Total Recording: 18.00
** 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: 2004-1789
Receipt Number: 78871
Recorded Date/Time: January 06~ 2004 02:12P
User/Station: J Nations - Cash Station 1
Record and Return To:
CITY OF DENTON
215 E MCKINNEY
DENTON TX 76201
THE STATE OF TEXAS }
COUNTY OF DENTON }
I hereby cerafy that this Instrument was FILED In the Fire Number aequen(;e on the date/time
printed heron, and was duly RECORDED In the Official Records of Denton County, Teaas,
County Clerk
Denton County, Texas
Cityof Denton
City Attorney's Officd
315 E. McKinnev
enton, 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 7th, day of October, 2003, being the effective date hereof, The City of Denton, Denton, Texas
(hereinafter referred to as "Lessor") and Trio Consulting & Management, L.L.C., whose address is 730 Bluff Street,
Wichita Falls, Texas 76301 (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:
Being a 3.13 acres, more or less, of the S.A. Ventures Survey, A-1315, being that same tract described
in that certain General Warranty Deed dated July 31, 2000 fi.om Gordon Meredith, individually and as
Executor of the Estate of Alvin Meredith, Deceased, to the City of Denton, Texas, recorded in Vol.
4647, Pg., 3452, of the Deed Records of Denton County, Texas.
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 October 7, 2006 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 se~e as notice of execution and
existence of a Said Lease and be incorporated herein, and made a part hereof in all 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 Trio Consulting & Management, L.L.C., at the address above.
WITNESS THE EXECUTION HEREOF as of the respective acknowledgment date below.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
STATE OF TEXAS §
COUNTY OF DENTON A ~
appeared [/~lf ['~?lJ.! flf~ (J~(~[(.~-/~ the
who is ~ow to me to be the person whose name is subscribed tdthe foregm~ ~nst~ment, and acknowledged o
that he/she executed that ins~ument for the pu~oses and consideration ~er~expressed.
~[ ',z_ 3;~:5~ ' Ja Printed Name of Notary Public./
the/~nllersigpl~d notar,2_ pgblic, on this day personally
['/Iq! [Pl#-4/[ Il d/L[/ of the City of Denton, Texas,
me