HomeMy WebLinkAbout24-63 Approving an Oil and Gas Lease Kerr-Mcgee Oil & Gas Onshore LP 06-12-2024RESOLUTION 24-63
A RESOLUTION OF THE BOARD OF TRUSTEES OF THE TOWN OF
FIRESTONE, COLORADO, APPROVING Al OIL AND GAS LEASE
BETWEEN THE TOWN OF FIRESTONE AND KERIZ-MCGEF, OIL &
GAS ONSHORE LP
WHEREAS, the Town of Firestone ("Town") is the owner of certain lands consisting of
approximately 0.257 acres as more specifically set forth in the attached Oil and Gas Lease and
Addendum thereto (collectively, the "Lease") between the 'Fawn, as lessor, and Kerr-McGee Oil
& Gas Onshore LP ("Kerr-McGee") as lessee-, and
WHEREA S, Kerr-McGee has expressed an interest in leasing said lands from the Town
for subsurface oil and gas exploration for in initial to of three (_3 ) years) in exchange for
royalty payments to the Town of 20% of the production, and
WHERFAS, the Board of Trustees finds that it is in the best interests of the To-wn to
enter into the Lease with Kerr-McGee.
NOW, THERFFORE, BE IT RESOLVED BY THE BOARD OF TRUSTEES OFTHE
TOWN OF FIRESTONE, COLORADO:
The Lease between the Town of Firestone and Kerr-McGee is authorized and approved in
substantially the same form as the copy attached hereto and made a part of this resolution and the
Mayor is authorized to execute the Lease on behalf of the Town.
INTRODUCED, READ AND ADOPTED thisIZ. day of June, 2024.
TT ,OF FlIEWSTONE, COLORADO
FraA- A. Junell 'Mayor Pro Terern
ALL
onzalez, Town Clerk
APPROVED AS TO ORM-
Attomey
rnxsn 89-mNud-ui> (Pr¢ dwers) Revised VI 7
OIL AND GAS LEASE
THIS AGREEMENT made arid entered into thisday of jy&d� t tae and between cr v of I er ica g, with an atf rc ss ofa
Buchanan Avenue. EQ., ABox 100 Firestone O 80520, Lessor (whether one or more), and Kerr-McGee +C it & Gas (inshore LP, with an address of
1099 l cr, Street, Suite 700. Denver, Colorado 0202. Lessee,
`l T NESSETH:
That Lessor. for ,aid in consideration offen and no/l00 Dollars ($10, 0), they receipt and sufficiency of which are hereby acknowledged, and the
covenants and agreements hereinafter contained. does hereby grant; demise, lease and let unto Lessee, exclusively, and its successors and assigns, the
following described land for the purpose co'carrying on geological. logical. geophysical and other exploratory work. including core drilling and the investigating..
exploring, prospecting, drilling, mining, operating for, producing and saving ofoil. liquid hydrocarbons, gas, gaga condensate, gas distillate, casinghead
gas, casingbeaad gasoline coal here methan e; Baas and all ruiner gases and their constituent parts. other minerals and substances produced in connection with
tail nand gals operations hereunder. or as aLey-product of oil said gas. (collectively and/or individually hereinafter referred to as "Leased Substances**) and
the exclusive right of injecting gals, air, waters, brine and other fluids and substances into the subsurface strata, together with all rights m7w ay, casement-,-,
and use of the surface as is necessary or convenient for such operations and for laying pipe lines, flow lines, and other underground lines to gather, remove
or otherwise transport the Leased Substances, telephone and other communication lines, building tanks. power houses, stations, ponds. roadways Ind
other fixtures or structures for producing„treating, :storing and caring for such products, and any and all other rights and privileges necessary. incident to
or convenient in the economical or efficient operation of :said land; or lands pooled therewith or adjacent thereto. together with any reversionary rights
therein or rights hereafter vested in Lessor, said tract ofland being situated in the, County of Aeld, State of Colorado, and described as follows. to -wit:
Township North Range 67 "test 6" P.M.
Section 7: These lands previously platted as Lots 1 - 8 of Block 3,and Lots 6,and 38-39 of Block 6, all in vacated
Harney Townsite, per Flat recorded at Reception No. 163619, situated in the 1 2 W insofar as they fie within the
area now platted as Outtlot A of St. gain Ranch subdivision Filing 1
SEE THE ADDENDUM DU ATTACHED HERETO AND INCORPORATED HEREIN BY THISREFERENCE.
together with all submerged lands. accretion, and strips a Ijacert or contiguous thereto and owned or claimed by Lessoor.'which lard shall., for the purpose
ofcalculating the amount ofany -money payment permitted or required by the terms of this lease. be considered as containing 0.257 acres, whither
there is more or less.
TO HAVF::ANI TO HOLD the same, subject to the provisions herein contained. for a terns of "Three ( ) years from this date(hereafter called
-Primary Term") and as -long thereafter as Leased Substances are being or may be produced from said leased premises., whether or not in paying quantities,
or operation for the drilling or production thereat` are continued it, hereinafter provided. This is a paid -up lease and Lessee shall have no obligation to
make annual retire] payments to Lessor over and above the' consideration stated above and the: production royalty payments described below.
In consideration of these premises, it is hereby annually agreed as follows:
I; Royalties can the Leased Substances produced and saved hereunder shall be paid by Lessee to Lessner as follows: (a) For oil and other liquid
hydrocarbon: separated at Lessee's separator facilities. the royaht shall be T enty Pereent t f% l of such production. payable to Lessor as hereinafter
provided, less a' proportionate part ofad valorem taxes and productisrfr severance or other excise twxes and the actual costs incurred by Lessee in delivering,
treating or otherwise marketing :such oil or rather liquid hydrocarbons. provided that lessee shall have the continuing right to :sell sub production to itself
car can affiliate at the: wellhead market price then prevailing in the same field (or if there is no such pries; then prevailing in the: same fiend. theca in the
nearest f old in which there is such a prevailing price) forproduction of similar grade aind gravity: and (b) forges, ;gaas condensate. gas distillate, eaa,singhe:ad
Baas, casingheaad gasoline. coal fled methane gas anti all other gaases and their constituent parts, either minerals ankh all other substances covered hatch), the
royalty shall be Twenty Percent j 2 % )of the net proceeds realized by Lessee from the sale thereof. after deducting from Lessor's share a proportionate
amount of all Bost -production costs, including but not limited it) sad valorem taxes, gross productiO t taxes, and severance taxes, or other excise taxes,
gathering and transportation casts from the wellhead to the point ofscale, as well as the actual costs of eornpressing, treading, dehydrating. purifying,
delivering. processing or otherwise putting such gas or other substances into marketable condition, provided that. Lessee ,hall have the continuing right
to sell such production to itselfor an affiliate at the prevailing wellhead market price paid for production ol'sirnilaar quality in the same field (or ifthere
is no such price then prevailing in the same field, then in the nearest field in which there is such as prevailing price) pursuant to comparable purchase
contracts entered into on the same or nearest preceding data: as the date on which Lessee commences its purchases hereunder, Lessor shall not he entitled
to any royalty on any Leased Substances used by°;Lessee on or off the leased premises or for that portion of tire Leased Substances used as fact or lost
clue to shrinkage, flaring, venting, line loss or otherwise.
2. Notwithstanding any of the prior provisions of this lease to the contrary, Lessee shall have free use of the. Leased Substances., water, gravel,
and other materials from the: leased premises. except domestic or irrigation water front Lessor's wells and tanks, for all operations hereunder:
3. All to payments under this lease shall be paid or tendered to lessor or its successors in currency. by check or by draft by deposit in the
U.S. 'Mail addressed to Lessor at the last address known to Lessee, which shall constitute proper payment,
4, It is expressly agreed that if Lessee shall commence operations for the drilling ol` a well at any time while this lease is in force this lease shall
remain in force and its term shall continue for so long as such operations are prosecuted and; if"production results therefrom, whether or not in paying
quantities, then so long as such production may continue: If, after tire expiration of'the Primary Term of"this lease, production on the leased premises
shall permanently cease from any cause. then in the event this lease is not otherwise being maintained it force it shall nevertheless remain in force if
Lessee resurnc s or commences operations for the drilling or reworking of a well within one () year from the date of such cessation, and this lease shall
remain in force and effect during the prosecution of such operations and if production results therefrom, their as long as such production continues or the
well or wells are capable of producing, whether or not in paying quantities ;Lessee shall be deemed to have commenced operations by actual drilling or
by, any act necessary fear and in preparation of actual drilling operations. including by way of example but not incited to racking application for required
permits (whether required by local government or state or federal regulatory, agencies), site survey and preparation, and the construction of access routes
to the: proposed well site (whcaher or not such routes are located on the leased premises), Operations shall also include: all activities designed to obtain..
enhance. deliver or market production from the leased premises, or lands pooled therewith, including by way ofexample, but not incited to reworking„
deepening, plugging back, treating. stimulating, refitting, installing equipment. construction cif facilities related to transporting, treating arid marketing o
Leased Substances. contracting fear the marketing and salt; of Leased Substances, and construction of water disposal facilities acid removal of water,
5: If after tic: Primary 'Ferri, one; or more wells on the leased premises or lands pooled or unitized therewith are capable of producing Leased
Substances„ but such well or wells are either shut in or production therefrom is not being sold by Lessee; such well or wells shall nevertheless be
deemed to be producing for the purpose or maintaining this lease If for as period of 120 consecutive days such well or wells are shut in or production
therefrom is not sold by Lessee, then Lessee shall pay an aggregate shut-in royalty often dollars per acre Then covered by this lease, The payment nt shall
be made to Lessor cart or before the first anniversary date ofthe lease following the end of the 120-clay' period and thereafter on or before each anniversary
while the well or wells are shut in or production therefrom is not; being sold by Lessee: provided that of this lease is otherwise being maintained by
operations under this lease, or if production is being soled by Lessee from another well or wells on the leased premises or lands pooled or unitized
therewith, no shut-in royalty shall be due until the: first anniversary date of the lease following the end of the: 120-day'ptriod after the end
of the period next following the cessation of such operations or production, as the case may be. Lessee's failure to properly pay shut-in royalty shall
render Lessee liable for the amount due, but shall not operate to terminate this lease.
6. Where,required by Lessor in writing, Lessee shall bury all pipelines below ordinary plow depth in cultivated land and shall pay for damage
caused by its operations to growing crops on said land. Lessee shall be under no obligation to pay for additional damage of any kind or nature caused by
Lessee's operations on the leased premises or for operations on lands pooled therewith or adjacent thereto, and Lessor hereby waives any and all claims
and releases Lessee for any such additional damage. Lessee shall have the right, but shall not be obligated, at any time, either before or after expiration
of this lease, to remove all fixtures and other property placed by Lessee on the leased premises, including the right to draw and remove all casing. Lessee
agrees, upon the completion of any test as a dry hole or upon the abandonment of any producing well, to restore the premises to their original contour as
near as practicable. Any structures and facilities placed on the leased premises by Lessee for operations hereunder and any well or wells on the leased
premises drilled or used for the injection of salt water, fluids or other substances may also be used for Lessee's operation on other lands in the same area,
The right to so use such facilities may be continued beyond the term of this lease by payment to Lessor of the sum of One Hundred Dollars ($100.00) per
year payable on the anniversary date of this lease first ensuing after the termination of this lease and annually thereafter on or before such anniversary
date, provided however that a delay or default in such payment shall not act to terminate Lessee's continuing rights as provided hereby.
7. Lessee, at its option is hereby given the right and power at any time and from time to time as a recurring right, either before or after production,
as to all or any part of the leased premises and as to any one or more of the formations hereunder, to pool or unitize the leasehold estate and the mineral
estate covered by this lease with other land, lease or leases for the production of the Leased Substances, whether one or more, or for the injection of fluids
or other substances, when in Lessee's judgment it is necessary or advisable to do so, and irrespective of whether authority similar to this exists with
respect to such other land, lease or leases. Likewise, units previously formed to include formations not producing oil or gas, may be reformed to exclude
such non -producing formations. The forming or reforming of any unit may be accomplished by Lessee executing and filing of record a declaration of
such pooling, unitization or reformation, which declaration shall describe the unit. Provided, however, the absence of such recorded declaration shall not
affect the continued validity of this lease or the creation of a unit by established operations and/or the payment of royalties on a unit basis. Any unit may
include land upon which a well has theretofore been completed or upon which operations for drilling have theretofore been commenced. Production,
drilling or reworking operations or a well shut in anywhere on a unit which includes all or part of this lease shall be treated as if it were production,
drilling or reworking operations or a well shut in under this lease. In lieu of the royalties elsewhere herein specified, Lessor shall receive on production
from the unit so pooled royalties only on the portion of production allocated to this lease. Such allocation shall be that proportion of the unit production
that the total number of surface acres covered by this lease and included in the unit bears to the total number of surface acres in such unit. In addition to
the foregoing, Lessee shall have the right to unitize, pool, or combine all or any part of the leased premises as to one or more of the formations thereunder
with other lands by entering into a cooperative or unit plan of development or operation approved by any governmental authority and, from time to time,
with like approval, to modify, change or terminate any such plan or agreement and, in such event the terms, conditions and provisions of this lease shall
be deemed modified to conform to the terms, conditions, and provisions of such approved cooperative or unit plan of development or operation and,
particularly, all drilling and development requirements of this lease, express or implied, shall be satisfied by compliance with the drilling and development
requirements of such plan or agreement, and this lease shall not terminate or expire while such plan or agreement remains in force and in effect. If the
leased premises or any part thereof, shall hereafter be operated under any such cooperative or unit plan of development or operation whereby the
production therefrom is allocated to different portions of the land covered by said plan, then the production allocated to any particular tract of land shall,
for the purpose of computing the royalties to be paid hereunder to Lessor, be regarded as having been produced from the particular tract of land to which
it is allocated and not to any other tract of land, and the royalty payments to be made hereunder to Lessor shall be based upon production only as so
allocated. Lessee shall not be required to obtain Lessor's consent to any cooperative or unit plan of development or operation adopted by Lessee and
approved by any governmental agency.
8. The rights of either party hereunder may be assigned or conveyed in whole or in part and the provisions hereof shall extend to their heirs,
successors and assigns, but no change or division in the ownership of the land or the right to receive royalties, however accomplished, shall operate or be
construed so as to enlarge or increase the obligations or burdens of Lessee, 6r diminish its rights. Specifically, but not by way of limitation of the
foregoing, Lessee shall not be required to offset wells on separate tracts into which the land covered by this lease may hereafter be divided, or to furnish
separate measuring or receiving tanks. Notwithstanding any actual or constructive knowledge of or notice to Lessee, no change in the ownership of said
land or the right to receive royalties hereunder, or any interest therein, however accomplished, shall be binding on Lessee until thirty (30) days after
Lessee has been furnished with written notice thereof, together with the supporting information hereinafter referred to, by the party claiming as the result
of such change in ownership or interest. Such notice shall be supported by original or certified copies of all recorded documents and other instruments
or proceedings necessary in Lessee's opinion to establish the ownership of the claiming party. If at any time two or more parties are entitled to shut-in
royalties hereunder, Lessee may pay or tender such shut-in royalties to such parties either jointly or separately in proportion to the interest which each
owns. At such time as any part of Lessor's interest covered by this lease is conveyed ortransferred to two or more parties, Lessee may at its sole discretion
and option require Lessor to appoint an agent for all purposes of this lease, including receiving payments and notices. Any payments or notices, or other
obligations required by Lessee under this lease, made to such agent shall constitute payment or notice, or complete satisfaction of any other obligation,
to any party taking or acquiring an interest in this lease by or through Lessor.
9. No litigation shall be initiated by Lessor for damages, forfeiture or cancellation with respect to any breach or default by Lessee hereunder, for
aperiod of at least 90 days after Lessor has given Lessee written notice fully describing the breach or default; and then only if Lessee fails to substantially
remedy the breach or default within such period. In the event any matter is litigated and there is a final judicial determination that a breach or default has
occurred, this lease shall not be forfeited or cancelled in whole or in part unless and until Lessee is given a reasonable time after said judicial determination
to remedy the breach or default and Lessee fails to substantially do so. In the event any matter is litigated, the prevailing party shall be entitled to recover
or be awarded all reasonable attorney fees, costs and expenses.
10. If Lessor owns less than the full mineral estate in all or any part,of the leased premises, the royalties payable hereunder for any well on any part
of the leased premises or lands pooled therewith shall be reduced to the proportion that Lessor's interest in such part of the leased premises bears to the
full mineral estate in such part of the leased premises. To the extent any royalties or other payment attributable to the mineral estate covered by this lease
is payable to someone other than Lessor, or in the event of any improper payment of such royalties or other payment to Lessor, regardless of the cause or
reason for the same, Lessee shall be entitled to recover from Lessor, in full, any such improper payment. In the event any improperpayment, or portion
thereof, arises out of any misrepresentation or omission by Lessor, Lessor shall indemnify and hold Lessee harmless for and against any claim arising out
of such improper payment, including any judgment penalty, interest, attorney fees, expenses and costs incurred by Lessee in defending or settling any
suclf claim. —Any -amounts owed by Lessee to Lessor under this -provision may; -in addition to other legal or -equitable remedies, berecoveredby_Lcsse�
by deducting the same from any royalties or other payment thereafter due to Lessor.
11, Lessee may, at anytime and from time to time, deliver to Lessor or file of record a written release of this lease as to a full or undivided interest
in all or any portion of the area covered by this lease or any depths or zones thereunder, and shall thereupon be relieved of all obligations thereafter arising
with respect to the interest so released. If Lessee releases less than all of the interest or area covered hereby, Lessee's obligations shall be proportionately
reduced in accordance with the net acreage interest retained hereunder, provided however, that any rights granted to Lessee by this lease, including the
rights -of -way and easements, and the right to penetrate any and all depths and formations underlying the lands described herein, shall continue to the
extent necessary for the efficient and convenient operation of the interest retained by Lessee.
12, Lessee's obligations under this lease, whether express or implied, shall be subject to all applicable laws, rules, regulations and orders of any
governmental authority having jurisdiction, including restrictions on the drilling and production of wells, and regulation of the transportation of oil, gas
and other substances covered hereby. When drilling, reworking, production or other operations are prevented or delayed, whether before or after the
expiration of the Primary Term, by such laws, rates, regulations or orders, orby inability to obtain necessary permits, equipment services, material, water,
electricity, fuel, access or easements, or by fire, flood, adverse weather conditions, war, sabotage, rebellion, insurrection, riot, strike or labor disputes, or
by inability to obtain a satisfactory market for production or failure of purchasers or carriers to take or transport such production, or by any other cause
not reasonably within Lessee's control, this lease shall not terminate because of such prevention or delay, and the period of such prevention or delay shall
be added to the term hereof. Lessee shall not be liable for breach of any provisions or implied covenants of this lease when drilling, production or other
operations are so prevented or delayed.
13, Lessor hereby warrants and agrees to defend the title to the land above described and agrees that Lessee shall have tile right, at any time to
redeem for Lessor, by payment, env mortgage, taxes or other liens on the above described find in the event of default or payment by Lessor and Lessee
shall be subrogated to the rights of the holder thereof and Lessor hereby agrees that any such payments made by lesseeforLessor may, at Lessee's
option, be deducted from any amounts of money which may become due or payable to Lessor under the terms of this lewse.
14. In the absence of any other condition which may extend this Lease beyond its Primary; Term. Lessor hereby grants to Lessee, its successors and
assigns, the right and option to extend the Primary Terin of this lease, as to part or all of the lands covered hereby, for an additional period of
( 2 ) years by payment to Lessor of an additional bonus in the same amount per net mineral acre as paid for the initial bonus, tendered to Lessor at tile
last known address of Lessee on or before the expiration of the initial Primary Term, Should Lessee, or its successors or assigns, exercise its option to
extend the primary Tenn of this lease. then this lease and all its provisions shall remain in full force and effect as to the lands to which the extended
Primary'renit applies,
15, In the event that Lessor during the Primary term ofthis lease or any extension thereof receives a bona fide offer. which Lessor is willing to
accept. from any third party offering to purchase trorn Lessor a lease covering any or all of the Leased Substances and covering all or a portion ofthe
leased premises, with the third party lease becoming effective on or after tire termination of this lease, Lessor hereb-y agrees to submit to Lessee a complete
copy of such offer. including the proposed third party, lease form. Lessee, for a period of fifteen (15) days alter receipt of a copy of the third party, offer
and lease, shall have the prior and preferred right and option to purchase as It from Lessor on all or part of the interest covered by the third party offer
at the price and according to the ternis and conditions specified in such offer, Lessee shall be deemed to have received a copy ofauch offer from Lessor
five (5) business days after mailing by Lessor, excluding the date of loading, as evidenced by the prisoners, All third party (iffers made up to arid including
the last day of the Primary'lerni of this lease, or any extensions thereoll shall be subject to the right and option granted to Lessee by this section, Should
Lessee elect to exercise its right and option as herein provided. Lessee shall notify Lessor in writing on or before the end of such fifteen (15) day period,
Notice to Lessor of l,essee*s election shall be delivered or sent to Lessor h-v tiny means, including personal delivery. U.S, Mail, facsimile or electronic
mail, provided that if such notice of acceptance is sent by U,S. Mail. the notice shall be effective upon deposit in the U �,S, Mail. postage paid. Lessee
shall therealler furnish to Lessor a new lease. effective upon the termination of this lease, and collection draft consistent with the terms and conditions
thereof. Such draft shall be sutpect only to approval of title according to the terms thereof' Upon receipt of the new lease and draft Lessor shall promptly
execute said lease and return same along with the endorsed draft to Lessee's representative or through Lessor's bank of record for payment.
16, Notwithstanding anything herein contained, this Lease is as "iVo Urface Occupancy" Oil and Gas Lease unless agreed upon by the
owner of the surface of tile leased lands. It is agreed and understood that Lessee, its successors or assigns shall not conduct any drilling or
completion operations or locate any production facilities on the surface of the leased lands. Lessee is granted the right to drill and operate
directional or horizontal wells through and under said lands, irrespective of the bottom hole location of said wells. to this end, Lessor herein
grants to Lessee a subsurface easement for all purposes associated with such horizontal or directional well or wells regardless of whether or not
Lessor benefits directly or indirectly from said well or wells.
17, This lease and all of its terms and conditions shall be binding upon Lessor and Lessee, told their heirs, successors and assigns, Should any one
or more of the parties above named as Lessor fail to execute this lease, it shall nevertheless be binding upon all Lessors whose signatures are affixed
hereto, Notwithstanding anything contained he to the contrary. it is expressly understood and agreed that any payment or payments made by Lessee
to the owner of any interest subject to this lease shall be sufficient payment hereunder as to such interest notwithstanding the joinder herein ofthe spouse
of any such party as a part), Lessor for the purpose of waiving homestead, dower or inchoate righ
ts of inheritance, if aim. Should any provision of this
lease or portion thereof be deemed unenforceable by a court of law, this lease shall remain in full force and effect as to all other provisions and parts
thereof, end to the extent necessary this lease shall be modified to permit the enforcement of this lease in its entirety
I& This lease maybe executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one
and. the same instrument.
IN, WITNESS WHEREOF, we sign this as of the day mid ycr first above written,
"' 1110�/
Town of Firestone
STATE OF—Ldargd—o)
COUN , ry OF ss
ACKNOWLEDGMENT
The foregoing instrument was acknowledged before me this 1_1;� day of A4 ............. 202 by
WitnCSS Toy hand arid official sea]. Mellssa Can -an**
NOTARY PUSUC
STATE OF COLORADO
NOTARY ID 20184007447
W COMMlMON EXPIRES August 1, ]X2�6
Notary Public
(SEAL)
Address: My Commission Expires: s/1
ADDENDUM TO OIL AND GAS LEASE
This Addendum to Oil and Gas Lease is attached to and made part of that certain Oil and Gas
Lease dated June 12, 2024, between Town of Firestone, Lessor, and Kerr-McGee Oil & Gas
Onshore LP, Lessee, (the "Lease").
In the event of conflict between the terms of this Addendum to Oil and Gas Lease and the printed
form of Oil and Gas Lease, the terms of this Addendum shall control.
19. Improper Payment. The following language in paragraph 10 of the Lease is hereby
deleted:
". . . In the event any improper payment, or portion thereof, arises out of any
misrepresentation or omission by Lessor, Lessor shall to the extent permitted by law
indemnify and hold Lessee harmless for and against any claim arising out of such improper
payment, including any judgment, penalty, interest, attorney fees, expenses and costs
incurred by Lessee in defending or settling any such claim...."
20. Title Warranty. Lessor does not warrant or defend title, except that Lessor warrants that
title has not previously been conveyed by, through or under Lessor, except for leases that
have terminated.
TOWN OF FIRESTONE
1 A2