2003-326-o' ' S:\Our D~cuments\Ordinances\03\Airport Open Space Oil Co. Oil and Gas Lease Ordinance Best Bid.doc
ORDINANCE NO.
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 WITH LYNX OIL COMPANY, 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,
Denton, Texas; and
WHEREAS, in compliance with Chapter 71 of the Texas Natural Resources Code (the
"Code") the Citypublished 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 Lynx Oil Company,
Inc.; and
WHEREAS, Lynx Oil Company, Inc. desires to enter into lease negotiations for the land at
the Airport Open Space 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 Lynx Oil Company, Inc. in
return for the payment(s) as outlined in Attachment A for the approximately 96 acres at the Airport
Open Space.
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 APeROVED this the ~ dayof ~c/t/j ,2003.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
AP TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
EULlNE BROCK, MAYOR
It~ 1.
Item 2.
Item 3~
ATTACHMENT "A"
ADDENDUM 1
The bidders need to submit an approved development plat for an adjacent well
that they intend to drill from or a drawing of the adjacent property showing the
general location of the well to the park property.
Best available description of the North Lakes Park property:
North Lakes Park is located at West Windsor Road and North Bonnie Brae and
consists of approximately 353 acres. See the almched Exhibit A for map,
Best available description of the Airport Open Space:
The property begins approximately 200 feet north of the north runway thresh
hold and exteads approxiraately 2,500 feet north. At the northern most point,
the property is 1.750' wide and more or less centered on Masch Branch Rd. At
the southern most point (200' north of the runway) the property is 1,000 feet
wide. The property is generally centered on Masch Branch Road and is in a
trapezoid shape with the southern boundary 1,000 wide, northern boundary
1,750 wide and a total length of 2,500 feet centered on the runway eenterline.
Acknowledgement of receipt of Addendum 1
This form should be signed and returned with your bid.
~:X. Documants and Settings~Bob Cates~Local Settings\Temporary Interact Ffles\ContanLlE5\QgU3U3 SX~Vintage Pmkway
~.%oling Agreememt. doc
OIL, GAS AND MINERAL LEASE
NON-DRHJL SITE/POOLING AGREEMENT
THIS OIL, GAS AND MINERAL LEASE (the "Lease") is made this 1st day of October, 2003
(the "Effective Date"), between The City of Denton, Denton, Texas, acting herein by and
through its City Manager, Mike Conduff, duly authorized by ordinance to execute this Lease
C'LESSOR"), whose address is: 215 East McKinney, Denton, Texas 76201 and Lynx Oil Co.,
Inc. ("LESSEE"), whose address is 4226 1-35 North, Denton, Texas 76207.
WITNESSETH:
1. Lease of Land. LESSOR in consideration of One Thousand Three Hundred and Nine
Dollars and Thirty-eight Cents ($1,309.38), 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:
Legal Description attached as "Exhibit A".
For all purposes of this Lease, said land is estimated to comprise 50% of the mineral interests of
10.475 acres, whether it actuaily comprises more or less.
However, there is expressly excepted bom 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 ofoil 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 ail purposes and ail minerals except those expressly leased herein
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 fi.om the Effective Date (the "Primary Term") and
as long thereafter as oil, gas and other minerals are produced in paying quantities fi.om said land
or land with which said land is pooled hereunder. Drilling shall commence within six (6)
months.
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
run through a separator or similar equipment) 18.75% of the gross production or the market
value thereof received at the wellhead by a bona fide purchaser. 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 nm 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.b. above, produced from any well on the land (except as
provided in this Lease with respect to gas processed in a plant), 18.75% of the gross production
or the market value thereof receivad at the wellhead by a bona fide purchaser
c. As a royalty on any gas processed in a plant, 18.75% of the residue gas and the liquid
hydrocarbons extracted or the market value thereof, at the option of LESSOR.
d. On all 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 18.75% of that produced or saved to be delivered
to LESSOR, received at the wellhead by a bona fide purchaser.
e. Accounting and payment to LESSOR of royalties from the production of oil and gas from
any well shall commence no later than one hundred twenty (120 days at~er the date the well
commences first production. Thereafter, all accountings and payments of royalties shall be made
on or before sixty (60) days following the calendar month in which the production occurred.
Should LESSEE at any time fall to make royalty payments to LESSOR on or before sixty (60)
days following the calendar month in which the production occurred, this Lease shall
automatically 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 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 LESSOR'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 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 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 sale of such substance by a bona fide purchaser..
S. 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 shall be considered that oil and gas is being produced fi.om the land covered by this
Lease. When, at the expiration of the Primary Term or any time or times thereaRer, the Lease is
continued in force in this matter, LESSEE shall pay or tender as royalty to the parties who at the
time of such payment would be entitled to receive royalty hereunder if the well is producing, or
deposit directly with LESSOR at its address shown herein, a sum equal to twenty-five dollars
($25.00) for each gross acre of land subject to this Lease at the time such payment is made. The
fh'st payment of such sum shall be on or before the first day of the calendar month at the
expiration of ninety (90) days fi.om the date the Lease is not otherwise maintained, and thereat~er
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 mount
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 hereinat~er stipulated, when in LESSEE'S judgment it is necessary or
advisable to do so in order to properly 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 10 percent (10°,4) 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
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 fi'om 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 fi.om 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 fi.om 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 trait, 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 fi.om the pooled
unit at~er 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 uni0 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 oftbem, so allocated to the land covered by this lease and included in the
unit just as though such production was fi.om such land. The production from an oil well will be
considered as production fi.om the lease or oil pooled unit from which it is producing and not as
production fi.om a gas pooled unit; and production from a gas well will be considered as
production from the lease or gas pooled unit fi.om which it is producing and not from an oil
pooled unit. The formation of any unit hereunder shail 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 fi.om 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.
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 one hundred twenty (120) days prior to expiration of the
Primary Term and is not, at the expiration of one hundred twenty (120) days at, er 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:
Each well producing oil or being drilled, reworked or completed, and
classified as an oil well under the rules 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 drilled, reworked or completed,
and classified as a gas well under the rules 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 botmdary of the land and the necessity of a legal location of
the well on the unit. Notwithstanding the foregoing, if the Raikoad Commission of
Texas or other authority having jurisdiction, by rule or order prescribes a larger number
of acres for the purposes of seenring the maximum allowable production, each unit shall
be increased in size as necessary to conform to the number of acres prescribed 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 ninety (90) days prior to expiration of the Primary Term and is, at the
expiration of one hundred twenty (120) 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 one hundred twenty (120) 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 ora 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. ff LESSEE, in the conduct of actual drilling operations under this Lease after the
expiration of the Primary Term, commences the actual chilling 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, I.F. SSEE 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 (t0) 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 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 fight at any time during and for one hundred eighty (180) days at~er the
expiration of this Lease to remove all casing. Thereafter, it shall be deemed abandoned to
LESSOR. If LESSEE fails 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. 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 heirs, 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. 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 fi.om any part of the land to which this Lease covers Mess
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. l*oree 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, dot, 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
othenvise 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.. Ifa 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 fi-om 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 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 D4~DEMNITY
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 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 carriers 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 carders 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 ora certificate without the
requked 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
O
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 I.F. SSEE'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 Drilline Activity. Pinelines 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. Pipelines 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. The provisions of this paragraph 16 or any
other terms, provisions and conditions of this Lease shall in no way impair, prevent or prohibit
Lessee's right to drill, complete, equip, rework, maintain and operate a directional, horizontal or
other subsurface wellbore and/or drainhole under the land covered by this Lease.
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 Demon, 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. Comnlianee with Laws: LESSEE shall comply with all applicable rules, 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 Onerations. 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. Cautions and Headinos: 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 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. Entire AereemenL 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
LYNX OIL CO., INC.
BY:
Bob Cat~s, President
STATE OF TEXAS §
COUNTY OF DENTON §
Before me, the undersigned notary public, on this day personally appeared BOB CATES,
PRESIDENT, of LYNX Oil. CO., INC. a Texas corporation, who is known to me to be the
person whose name is subscribed to the foregoing instrument, and acknowledged to me that he
executed that instrument for the purposes and consideration therein expressed and in the capacity
therein stated.
L]
Given under my hand and seal of office this of ~ . 2004.
&\Our Doouments\Gas Woll Documenls\\Vintage Parkway Pooling Agr~om~nLdoc
, ' .... · Exhibit A
2004 000211?4
Denton County
Cynthia Mitchell
County Clerk
Denton, TX 76202
Recorded On: February 19, 2004
Parties: CITY OF DENTON
To
Instrument Number: 2004-21174
As
Lease
Billable Pages: 4
Number of Pages: 4
Comment:
Lease
20.00
Total Recording: 20.00
** 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: 2004-21174
Receipt Number: 88733 .
Recorded Date/Time: February 19, 2004 03:17P
User / Station: F Chenevert - Cash Station 4
Record and Return To:
CiTY OF DENTON
215 E MCKINNEY STREET
DENTON TX 76201
THE STATE OF TEXAS }
COUNTY OF DENTON }
I hereby ~;erafy that this Instrument was FILED In tile File Number sequence on the date/time
printed heron, and was duly RECORDED In the Official Records of Denton County, Texas,
County Clerk
Denton County, Texas
~ity of Denton
City Attorney's Office
215 E. McKinney
Denton, Texas 76201
MEMORANDUM OF OIL, GAS AND MINERAL LEASE
THE STATE OF TEXAS §
COUNTY OF DENTON §
KNOW ALL MEN BY THESE PRESENTS:
That on the 1st, day of October, 2003, being the effective date hereof, The City of Denton, Denton, Texas
(hereinafter referred to as "Lessor") and Lynx Oil Co., Inc., whose address is 4226 1-35 North. Denton, Texas
76207 (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:
Legal Description attached as "Exhibit A".
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 1, 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 serve 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 Lynx Oil Co., Inc., at the address above.
WITNESS THE EXECUTION HEREOF as of the respective acknowledgment date below.
CITY OF DENTON, TEXAS-LESSOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
STATE OF TEXAS §
COUNTY OF DENTON §
Before me, '-~'uane. [xt~nr~tXr~'JlO/~.rJtl~e undersigned notary public, on this day personally
appeared t'~;tJna~l /:}-. eoa~dtolT'q2-~ the (J_l'l~l~l'~t of the City of Denton, Texas,
who is know io me to be the person whose name is subscribed to ~he foregoing instrument, and acknowledged to me
that he/she executed that instrument for the purposes and consideration therein expressed.
Notary ~nblic/' '~"'2 'J [~ ' J
Printed Name ~f Notary Pu-blic~ '
Exhibit A