2003-344S:\Our Doeuments\Ordinances\03~Airport Open Space Ordinance.doc
ORDINANCE NO. ~'~'~ ~.~-,.~4~7/
AN ORDINANCE ALLOWING THE CITY MANAGER TO EXECUTE A NON-DRILL
SITE/POOLING AGREEMENT WITH LYNX OIL COMPANY, INC. FOR 96 ACRES OF THE
AIRPORT OPEN SPACE; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, The City Council of the City of Denton has heretofore determined that it is
advisable to enter into a non-drill site/pooling agreement for 96 acres of the Airport Open Space; 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 pubhshed 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, the City desires to authorize the City Manager to execute the lease with Lynx
Oil Company, Inc.for a non-drill site/pooling agreement for 96 acres of the Airport Open Space,
Attachment A, incorporated, herein, for all purposes. 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 Lynx Oil Company, Inc. for
a non-drill site/pooling agreement for 96 acres of the Airport Open Space as shown on Attachement
A, incorporated, herein, for all purposes.
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.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
HERBERT L. PROUTY, CITY ATTORNEY
EULINE BROCK, MAYOR
2
S:\Our Documents\Gas Well DocumentsLMrport Open Space Pooling Agreement.doc
OIL, GAS AND MINERAL LEASE
NON-DRILL SITE/POOLING AGREEMENT
THAIS OIL, GAS AND MINERAL LEASE (the "Lease") is made this ,,~/~5~-day of
~. 2003 (the "Effective Date"), between The City of Denton, Denton, Texas, acting
herein by and through its City Manager, duly authorized by resolution to execute this Lease
("LESSOR"), whose address is: 215 East McKinney, Denton, Texas 76201 and Lynx Oil Co.,
Inc. ("LESSEE"), whose address is: 4226 t-35 North Denton, Texas 76207
WITNESSETH:
1. Lease of Land. LESSOR in consideration of Nine Thousand and Six Hundred Dollars
($9,600.00), in hand paid, of the royalties herein provided, and of the agreements of LESSEE
herein contained, hereby leases and lets exclusively unto LESSEE for the purpose of a non-drill
site/pooling agreement for investigating, exploring, prospecting, drilling and mining for and
producing oil, gas and all associated minerals, to produce, save, take care of, treat, transport and
own said products, the following described land in Denton County, Texas, to-wit:
Airport Open Space Legal Description: See attached Exhibit A.
For all purposes of this Lease, said land is estimated to comprise 96 acres, whether it actually
comprises more or less.
However, there is expressly excepted from this Lease and reserved to LESSOR, its successors
and assigns, all vanadium, uranium, plutonium, thorium, fissionable minerals and all other
minerals of every kind and character in, on and under the land, except only oil, gas, casinghead
gas and their byproducts and such other hydrocarbon substances, carbon dioxide and sulfur as
are necessarily produced with and incidental to the production of oil and gas, or either of them.
2. Reservation and Surface Use Prohibition. There is hereby excepted and reserved to
LESSOR the full use of the land covered hereby and all rights with respect to the surface and
subsurface thereof for any and all purposes and all minerals except those expressly leased for
pooling purposes and only to the extent herein leased to LESSEE. LESSOR reserves and
excepts from this Lease all of the surface of the land described in paragraph 1, and LESSEE
agrees that it will not conduct drilling operations or any other operations or activities of any
nature on the surface of such land.
3. Primary Term: This is a paid up lease and subject to the other provisions here contained,
this Lease shall be for a term of three (3) years from the Effective Date (the "Primary Term") and
as long thereafter as oil, gas and other minerals are produced in paying quantities from said land
or land with which said land is pooled hereunder.
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 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.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, received 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 the royalty percentage of
that produced or saved to be delivered to LESSOR, free of all costs, or, at the option of
LESSOR, which may be exercised from time to time, LESSEE shall account to LESSOR
for the royalty percentage of the market value thereof, which market value shall be
deemed to be the greater of (i) the highest market price of each product for the same
month in which the product is produced, or (ii) the average gross sale price of each
product for the same m
e. Accounting and payment to LESSOR of royalties from the production of oil and
gas from any well shall commence no later than one hundred and twenty (120) days after
the date the well commences first production. Thereafter, all 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 within forty-five (45) 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
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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.
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 from the land, nor any part of the costs of
constructing, operating or depreciating any plant or other facilities or equipment for processing
or treating oil or gas produced from the land.
5. Shut-In Gas. If LESSEE drills a well on land which the LESSOR has permitted to be
pooled herewith, which well is capable of producing gas but such well is not being produced, and
this Lease is not being maintained otherwise as provided herein, this Lease shall not terminate,
whether it being during or after the Primary Term (unless released by LESSEE) and it
nevertheless 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 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 $25.00 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 from said premises. Units pooled for oil
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production from the lease or gas pooled unit from which it is producing and not from an oil
pooled unit. The formation of any unit hereunder shall not have the effect of changing the
ownership of any shut-in production royalty which may become payable under this lease. If this
lease now or hereafter covers separate tracts, no pooling or unitization of royalty interest as
between any such separate tracts is intended or shall be implied or result merely from the
inclusion of such separate tracts within this lease, but LESSEE shall nevertheless have the right
to pool as provided above with consequent allocation of production as above provided. As used
in this paragraph 7, the words "separate tract" mean any tract with royalty ownership differing,
now or hereinafter, either as to parties or amounts from that as to any other part of the leased
premises.
8. Termination.
a. If, at the expiration of the Primary Term, LESSEE is not engaged in the actual
drilling of a well under the terms of this Lease or if LESSEE has completed or abandoned
a well on the land within thirty (30) days prior to expiration of the Primary Term and is
not, at the expiration of ninety (90) days after the date or completion or abandonment of
the well, engaged in the actual 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 reworked, and classified as an oil well
under the roles and regulations of the Railroad Commission of Texas,
together with forty (40) acres around each such well (an "Oil Unit").
Each well producing gas (or capable of producing gas with all shut-in royalty
having been paid thereon) or being reworked, and classified as a gas well under
the roles and regulations of the Railroad Commission of Texas, together with the
one hundred sixty (160) acres around each such well (a "Gas Unit").
b. Each Oil Unit or Gas Unit shall be in as near the form of a square as reasonably
practicable considering the boundary of the land and the necessity of a legal location of
the well on the unit. Notwithstanding the foregoing, if the Railroad Commission of
Texas or other authority having jurisdiction, by rule or order prescribes a larger or a
number of acres for the purposes of securing the maximum allowable production, each
unit shall be increased in size as necessary to conform to the number of acres prescribed
by the role or order.
c. If, at the expiration of the Primary Term, LESSEE is engaged in the actual drilling
of a well under the terms of this Lease or if LESSEE has completed or abandoned a well
on the land within thirty (30) days prior to expiration of the Primary Term and is, at the
expiration of ninety (90) days after completion or abandonment of the well, engaged in
the actual drilling of another well under the terms of this Lease this Lease shall not
terminate so long as LESSEE pursues the drilling of the well with reasonable diligence to
completion or abandonment and so long as LESSEE commences the actual drilling of
additional and successive wells under the terms of this Lease at intervals not exceeding
ninety (90) days between completion of a well as a producer or dry hole and
commencement of actual drilling of the next well under the terms of this Lease. If and
when LESSEE fails to commence the actual drilling of a well within the applicable
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interval (or within the extended time provided in subparagraph 8.d. below, this Lease
shall then terminate to all of the land, save and except the Oil Units and Gas Units
provided in subparagraph 8.a. above. Upon expiration of the Primary Term or the
cessation of the continuous drilling program set forth herein, whichever is later, this
Lease shall also terminate as to all depths below each unit retained as to depths below a
depth of one hundred feet (100') beneath the deepest producing horizon or zone for each
unit.
d. If LESSEE, in the conduct of actual drilling operations under this Lease after the
expiration of the Primary Term, commences the actual drilling of any next succeeding
well within less than the ninety (90) day time interval specified in subparagraph 8.c. and
thus speeds up the development of the land, LESSEE shall have credit in time for the
accelerated development and may, in the conduct of subsequent actual drilling
operations, take advantage of the credit in time on a cumulative basis and thus extend the
time for the commencement of actual drilling of any subsequent well or wells required to
be drilled under the provisions of this Lease in order to prevent termination of this Lease.
Within ten (10) days of the commencement of the actual drilling of each well under the
terms of this Lease, LESSEE shall give LESSOR written notice of the date of
commencement. Within ten (10) days after the completion or abandonment of each well
under the terms of this Lease, LESSEE shall give LESSOR written notice of the date of
completion or abandonment and also of the time credit, if any claimed by LESSEE as a
result of having commenced the actual drilling of the well within less than the required
interval. If LESSEE 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, 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 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
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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 Ma.]eure: 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.
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, 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 ail 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.
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
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departments, agents, officers, servants, employees, successors, assigns, sponsors, or volunteers
from and against each and every claim, demand, or cause of action and any and all liability,
damages, obligations, judgments, losses, fines, penalties, costs, fees, and expenses incurred in
defense of the LESSOR, and/or its departments, agents, officers, servants, or employees,
including, without limitation, personal injuries and death in connection therewith which may be
made or asserted by LESSEE, its agents, assigns, or any third parties on account of, arising out
of, or in any way incidental to or in connection with the performance of the oil and gas well
drilling and production performed by the LESSEE under this lease and, the LESSEE agrees to
indemnify and hold harmless the LESSOR, and/or its departments, and/or its officers, agents,
servants, employees, successors, assigns, sponsors, or volunteers from any liabilities or damages
suffered as a result of claims, demands, costs, or judgments against the LESSOR and/or, its
departments, it's officers, agents, servants, or employees, created by, or arising out of the acts or
omissions of the LESSOR occurring on the drill site or operation site in the course and scope of
inspecting and permitting the gas wells INCLUDING, BUT NOT LIMITED TO, CLAIMS AND
DAMAGES ARISING 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/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 mad "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 carriers that have a financial rating comparable to carriers licensed to
do business in Texas approved by the City.
d. Liability policies shall name as "Additional Insured" the city and its officials,
agents, employees, and volunteers.
e. Certificates of insurance must be presented to the City evidencing all coverages
and endorsements required by this Section 35-508, and the acceptance of a certificate without the
required limits and/or coverages shall not be deemed a waiver of these requirements.
f. Claims made policies will not be accepted except for excess policies or unless
otherwise provided by this Article.
g. Required Insurance Coverages
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1. Commercial General Liability Insurance. Coverage should be a minimum
Combined Single Limit of $1,000,000 per occurrence for Bodily Injury and
Property Damage. This coverage must include premises, operations, blowout or
explosion, products, completed operations, blanket contractual liability,
underground property damage, broad form property damage, independent
contractors protective liability and personal injury.
2. Environmental Impairment (or Seepage and Pollution) shall be either
included in the coverage or written as separate coverage. Such coverage shall not
exclude damage to the lease site. If Environmental Impairment (or Seepage and
Pollution) Coverage is written on a "claims made" basis, the policy must provide
that any retroactive date applicable precedes the effective date of the issuance of
the permit. Coverage shall apply to sudden and non-sudden pollution conditions
resulting from the escape or release of smoke, vapors, fumes, acids, alkalis, toxic
chemicals, liquids or gases, waste material or other irritants, contaminants or
pollutants.
3. Automobile Liability Insurance. Minimum Combined Single Limit of
$500,000 per occurrence for Bodily Injury and Property Damage. Such coverage
shall include owned, non-owned, and hired vehicles.
4. Worker's Compensation Insurance. In addition to the minimum statutory
requirements, coverage shall include Employer's Liability limits of at least
$100,000 for each accident, $100,000 for each employee, and a $500,000 policy
limit for occupational disease, and the insurer agrees to waive rights of
subrogation against the city, its officials, agents, employees, and volunteers for
any work performed for the city by the LESSEE.
5. Excess (or Umbrella) Liability Insurance. Minimum limit of $10,000,000
covering in excess of the preceding insurance policies.
6. Control of Well Insurance.
a. Minimum limit of $5,000,000 per occurrence.
b. Policy shall cover the Cost of controlling a well that is out of
control, Redrilling or Restoration expenses, Seepage and Pollution Damage.
Damage to Property in the LESSEE's Care, Custody, and Control with a sub-limit
of $500,000 may be added.
15. Offset Well Requirement. In the event a well or wells producing oil and gas in any
quantities that should be brought in by LESSEE or any other LESSEE on adjacent lands and
within 330 feet of the land or lands pooled, by permission of LESSOR, with such lands, LESSEE
agrees to drill such offset wells as a reasonably prudent LESSEE would drill under the same or
similar circumstances.
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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. 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. in no
way limit or impair lessee's right to drill a directional or horizontal drainhole or well bore under
the above described land.
17. Limits on Drilling. LESSEE shall not drill a well on adjacent properties during the
months of November to April, without the consent of the Director of Airports, which consent
shall not be unreasonably withheld.
18. Compliance 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.
19. 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.
20. Water: LESSEE shall not use any water in, on, or under the above-described land.
21. Diligent~ Good Faith Operations. Each well drilled under this Lease shall be drilled
with reasonable diligence and in good faith and in a good and workmanlike manner in a bona
fide attempt to product oil, gas and associated minerals therefrom.
22. 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.
23. 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.
24. FAA Rules and Regulations. No drilling activity or any other activity shall be
conducted on any portion of the above described land in contravention of any Federal Aviation
Administration ("FAA") rule or regulation or which interferes with any future expansion plan for
runways or taxiways. LESSEE shall make inquiry with the proper officials of the FAA and
obtain all necessary approvals, consents or waivers prior to the location of any drill site on the
subject property to verify compliance with all applicable FAA roles or regulations. LESSEE
shall provide LESSOR with copies of all waivers or other documentation issued by the FAA
indicating approval of well site locations or any other operations prior to the commencement of
operations.
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25. Subordination and Stipulations Required by FAA. This Lease recognizes that the
Denton Municipal Airport was acquired and developed with aid and/or grant of land from the
United States. Copies of such grants are available for review at the office of the City Manager in
Denton. These grants include a number of obligations and commitments to the general and
flying public, to the State of Texas, and to the United States. In addition to the above general
obligations and commitments, this Lease is subject and subordinate to and is controlled by all the
provisions, stipulations, covenants, and agreements in that certain indenture by and between the
United States of America and the LESSOR and it is understood that the LESSEE agrees to abide
by and enforce all of the provisions, stipulations, covenants, and agreements incorporated in the
foregoing instrument the same as if set out in full herein. This Lease is subject to approval by
the FAA and shall be effective only as of the date of such approval. The following agreements
and understandings are specifically enumerated to comply with FAA stipulations:
a. It is further especially agreed by the parties hereto that no structures or obstructions,
temporary or otherwise, shall be erected which will be in violation of the Federal Aviation
Regulations Part 77 (Criteria for Determining Obstructions to Air Navigation), unless otherwise
approved in writing by the FAA.
b. Without the prior specific approval of the FAA no surface operations shall be conducted
upon any of the lands covered by this Lease closer than the distances set forth in the sub-
paragraph above, or within the safety areas of said improvements, including ingress and egress of
vehicular traffic.
c. It is specifically understood and agreed that the LESSEE and its successors and assigns
shall give to the City of Denton and the FAA, notice in writing of the location of any
contemplated well and the route of ingress and egress to such well adjacent to the Airport Open
Space and that if neither the FAA nor the City of Denton objects to said location within a period
of thirty (30) days from the receipt of written notice thereof, the said LESSEE and its successors
and assigns may proceed to drill the well at the location specified in said notice, provided same
does not contravene other provisions of this Lease or the further restrictions and obligations
imposed by the City of Denton.
d. This written notice shall not relieve the LESSEE from obligation for filing a Notice of
Proposed Construction or Alteration, FAA Form 7460-1, if required by Federal Aviation
Regulations, Part 77, Subpart B.
e. Also it is agreed, that in the event a well is drilled on the land within the Pooling Unit,
then such drilling operations shall be prosecuted continuously, with due diligence, until same
results in production or a dry hole. All temporary structures used in such drilling operations
shall be painted and lighted in such a manner as prescribed by the FAA, and further provided that
no permanent structures of any kind used in the development, production or transportation of oil,
gas and other minerals shall be placed on the above described land in such manner as to interfere
with or introduce hazard to the operation of the aimraft.
f. Further, it is agreed that in the event any drilling operations for oil, gas, or other minerals
result in production, LESSEE at its own expense shall immediately remove all temporary
structures and place all semi-permanent or permanent equipment in such manner as will not
interfere with or introduce any hazard to the operation of the aircraft. In event such drilling
operations result in a dry hole, then LESSEE shall at its own expense immediately remove all
temporary structures used in such landing operation and level the area so that it may be safely
used for landing or taxiing aircraft.
g. LESSEE shall not interfere with the access roads to the City of Denton Airport, and shall
not interfere with any other person or agency having a lawful right to use the above-described
land.
h. During time of war or national emergency, LESSOR shall have the right to use the airport
open space or any part thereof to the United States Government for military or naval use, and if a
lease is executed with the United States Government, the provisions of this Lease insofar as they
are inconsistent with the provisions of the Lease to the Government, shall be suspended.
25. Entire Agreement. This Lease states the entire contract between the parties, and no
representation or promise, verbal or written, on behalf of either party shall be binding unless
contained herein; and this Lease shall be binding upon each party executing the same, regardless
of whether or not executed by all owners of the above described land or by all persons above
named as "LESSOR", and, notwithstanding the inclusion above of other names as "LESSOR",
this term as used in this Lease shall mean and refer only to such parties as execute this Lease and
their successors in interest.
1N WITNESS WHEREOF, this instrument is executed on the date first above written.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
- 12-
CORPORATION
Lynx Oil Co., Inc.
42261-35 North
Denton, Texas 76207
STATE OF TEXAS §
COUNTYOF DENTON §
Before me, the undersigned notary public, on this day personally appeared Bob Cates, the
President of Lynx Oil Co., Inc. who is known to me to be the person whose name is subscribed
to the foregoing instrument, and acknowledged to me that he/she executed that instrument for the
purposes and consideration therein expressed.
Givenundermyhandandsealofofficethis~] dayof ~l~(29fh)~,.l .2003.
-13-
EXHIBIT "A"
PROPERTY MAP DATA TABLE
Denton Municipal Airport
Map
Reference #
Acres
Recording
Information Interest
Federal Agreement
4-A
0.48
V857, P.523
D.R.D.C.T.
Fee Simple Released from B.A. Weaver. FAA
Grant: 7-48-0067-03 (10-5-77).
4-B
6.09
V.857, P.523
D.R.D.C.T.
Fee Simple Released from B.A. Weaver. FAA
Grant: 7-48-0067-03 (10-5-77).
.69
V.859, P.20
D.R.D.C.T.
Fee Simple Released from May Barbara Dixon.
FAA Grant: 7-48-0067-03 (10-5-77).
6-A
8.1
V.871, P.132
D.R.D.C.T.
Fee Simple
Released from John B. Davis.
Condemnation No. 8903.
FAA Grant: 7-48-0067-03 (11-4-77).
6-B
2.62
V.871, P.132
D.R.D.C.T.
Fee Simple
Released from John B. Davis.
Condemnation No. 8903.
FAA Grant: 7-48-0067-02 (11-4-77).
6-C
14.68
V.871, P.132
D.R.D.C.T.
Fee Simple
Released from John B. Davis.
Condemnation No. 8903.
FAA Grant: 7-48-0067-02 (11-4-77).
7-A
11.44
V.871, P.142
D.R.D.C.T.
Fee Simple
Released from W.T. Evers estate.
Condemnation No. 8904.
FAA Grant: 7-48-0067-03 (11-4-77).
7-B
19.97
V.871, P.142
D.R.D.C.T.
Fee Simple
Released from W.T. Evers estate.
Condemnation No. 8904.
FAA Grant: 7~48-0067-03 (11-4-77).
Recording
Map Reference # Acres Information
Interest
Federal Agreement
7-C 6.31 V.871, P.142
D.R.D.C.T.
Fee Simple
Released from W.T. Evers estate.
Condemnation No. 8904.
FAA Grant: 7-48-0067-03 (11-4-77).
10 16.17 94-R0071011
R.P.R.D.C.T.
Fee Simple
Released from Ed Wolski et al
Condemnation No. CV 92-00521-B
FAA Grant: 3-48-0067-07-94 (7-7-93).
11 9.67 94-R0071012
R.P.R.D.C.T.
Fee Simple
Released from John & Margaret Porter
Condemnation No. CV 92-00522-C
FAA Grant: 3-48-0067-07-94 (7-7-93).
Legal description on file in the City Secretary's office.
S:\Our Documents\Gas Well Documents\Airport Open Space EXHIBIT A.doc ~
City of Denton
City Attorney's Office
215 E.McKinney
Denton, TX 76201
MEMORANDUM OF OIL, GAS AND MINERAL LEASE
THE STATE OF TEXAS §
COUNTY OF DENTON §
KNOW ALL MEN BY THESE PRESENTS:
That on the 21st, day of October, 2003, being the effective date hereof, The City of Denton, Denton, Texas
(hereinafter referred to as "Lessor") and Lynx Oil Company, 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 fight 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 21, 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 ail term and provisions as set forth in Said Lease. A copy of Said Lease can be found in the business
files of Lynx Oil Company, Inc., at the address above.
WITNESS THE EXECUTION HEREOF as of the respective acknowledgment date below.
CITY OF_..I).F-~ON, TEXAS-LESSOR
City Manager
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
STATE OF TEXAS §
COUNTY OF DENTON /Q~,~l §~c.~ J.~/
Beforell/iqen,/ [ ~.~ /"~.'~-~4~1[, thq~ur)dersigged nota~ public, on this day personally
appeared ]t'~,'t~t ~{~ the ~?~ ~/~/~ of the City of Denton, Texas,
who is ~ow to me to' be the person ~hose name is subscribed to/the fdregoing~ns~ument, and acknowledged to me
that he/she executed ~at instrument for the pu~oses and consideration ~ereig~xpressed.~~~
3]~ [~i MY COMMISSION EX.IRES il Printed Name 0f N~ta~ ~c' '
EXHIBIT "A"
PROPERTY MAP DATA TABLE
Denton Municipal Airport
Map
Reference #
Acres
Recording
Information Interest
Federal Agreement
4-A
0.48
V857, P.523
D.R.D.C.T.
Fee Simple Released from B.A. Weaver. FAA
Grant: 7-48-0067-03 (10-5-77).
4-B
6.09
V.857, P.523
D.R.D.C.T.
Fee Simple Released from B.A. Weaver. FAA
Grant: 7-48-0067-03 (10-5-77).
.69
V.859, P.20
D.R.D.C.T.
Fee Simple
Released from May Barbara Dixon.
FAA Grant: 7-48-0067-03 (10-5-77).
6-A
8.1
V.871, P.132
D.R.D.C.T.
Fee Simple
Released from John B. Davis.
Condenmation No. 8903.
FAA Grant: 7-48-0067-03 (11-4-77).
6-B
2.62
V.871, P.132
D.R.D.C.T.
Fee Simple
Released from John B. Davis.
Condemnation No. 8903.
FAA Grant: 7-48-0067-02 (11-4-77).
6-C
14.68
V.871, P.132
D.R.D.C.T.
Fee Simple
Released from John B. Davis.
Condemnation No. 8903.
FAA_ Grant: 7-48-0067-02 (1 I-4-77).
7-A
11.44
V.871, P.142
D.R.D.C.T.
Fee Simple
Released from W.T. Evers estate.
Condemnation No. 8904.
FAA Grant: 7-48-0067-03 (11-4-77).
7-B
19.97
V.871, P.142
D.R.D.C.T.
Fee Simple
Released from W.T. Evers estate.
Condemnation No. 8904.
FAA Grant: 7-48-0067-03 (I 1-4-77).
Recording
Map Reference # Acres Information
Interest
Federal Agreement
7-C 6.31 V.871, P.142
D.R.D.C.T.
Fee Simple
Released from W.T. Evers estate.
Condemnation No. 8904.
FAA Grant: 7-48-0067-03 (11-4-77).
10 16.17 94-R0071011
R.P.R.D.C.T.
Fee Simple
Released from Ed Wolski et al
Condemnation No. CV 92-00521-B
FAA Grant: 3-48-0067-07-94 (7-7-93).
11 9.67 94-R0071012
R.P.R.D.C.T.
Fee Simple
Released from John & Margaret Porter
Condemnation No. CV 92-00522-C
FAA Grant: 3-48-0067-07-94 (7-7-93).
Legal description on file in the City Secretary's office.
S:\Our Documents\Gas Well Documents\Airport Open Space EXHIBIT A.doc .
Denton County
Cynthia Mitchell
County Clerk
Denton, TX 76202
Recorded On: January 06, 2004
Parties: CITY OF DENTON
To
Instrument Number: 2004-1797
As
Memorandum
Billable Pages: 5
Number of Pages: 5
Comment:
Memorandum 22.00
Total Recording: 22.00
** 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: 2004-1797
Receipt Number: 78876
. Recorded Date/Time: January 06, 2004 02:14P
User / Station: J Nations - Cash Station
I~ecord and Return To:
{~ITY OF DENTON
215 E MCKINNEY
DENTON TX 76201
THE STATE OF TEXAS }
COUNTY OF DENTON }
I hereby ceilny that this Instrument was FILED In the 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