HomeMy WebLinkAbout20030887.tiff a WELD COUNTY ATTORNEY'S OFFICE
915 TENTH STREET
P.O. BOX 758
GREELEY, CO 80632
WEBSITE: www.co.weld.co.us
PHONE: (970) 336-7235
FAX: (970) 352-0242
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COLORADO
March 27, 2003
Thomas A. Pool
TAP Energy, LLC
518 17th Street, Suite 1180
Denver, CO 80202
Re: Declaration of Pooling
Dear Mr. Pool:
This letter is in response to your letter dated March 26, 2003, asking that the Board of County
Commissioners of Weld County, Colorado, approve a Declaration of Pooling ("the Declaration"),
signed by you as Manager of TAP Energy LLC, on February 28, 2003. The Declaration covers
properties which are the subject of two oil and gas leases in which Weld County, Colorado, is the
Lessor. Specifically, those properties are: the S/2SW4 of Section 1-3-61 (lease between Weld
County and Pool Oil & Gas LLC, assigned to TAP Energy LLC, and recorded at Reception
Number 2945263), and the NW/4 of Section 12-3-61 (lease between Weld County and Floyd H.
Miller, assigned to TAP Energy LLC, and recorded at Reception Number 2730666).
Please be advised that I do not believe formal approval of the Declaration by the Board of
County Commissioners is necessary. Section 13 of both leases allows for such pooling by the
Lessee when such pooling " . . . facilitate(s) an orderly or uniform well-spacing pattern . . ." It
appears to me that the pooling of these properties accomplishes this goal. I do not read in
Section 13 that the Lessee must seek approval from the Board of County Commissioners prior to
recording the Declaration. I therefore suggest that you record the Declaration as soon as
possible.
Please feel free to call me at (970) 356-4000, ext. 4390, if I may be of any further assistance.
Si erely,
ce T. Barker
Weld County Attorney
pc: Clerk to the Board
2003-0887
Mar 26 03 02: 50p Jon Isaacs 303-3470327 p. 1
TAP Energy LLC
518 17th Street,Suite 1180
Denver,Colorado 80202
303-885-3741
March 26,2003
Mr. Bruce'1'.Barker
Weld County Attorney's Office
P.O.Box 758
Weld County,Colorado 80632
Via Facsimile and Post
/0 i4 s
Re: Declaration ol'Pooling
Copy Enclosed
Dear Mr.Barker:
We are enclosing herewith a copy of the Drilling Title Opinion prepared
by ow Attorney,which among other requirements,directs us to request the approval of
the Weld County Board of Commissioners of our Declaration of Pooling(copy enclosed
note pages 5 and 6).
We have,on February 28`h,forwarded an original of the Declaration of
Pooling for recording in the Weld County Records,but have not as yet had returned the
recorded copy. We will forward the recorded copy when received.
Please obtain the approval of the Weld County Board of Commissioners to
our Declaration of Pooling and advise us of their approval.
We are preparing the site location for drilling,on the Weld County Lease
we have(NW/4, Sec. 12,3N 61W)., and intend to move in and begin drilling March 28-
29th.
Thank you for your assistance in this matter.Please call with any
questions you may have.
�+., very truly.
lerr►1M N7 /�,.
Thomas A. Pool
Manager TAP Energy 1.1.C
Mar 26 03 02: 50p jOM isaacs 303-3470327 p.2
DECLARATION OE POOLING
KNOW ALL MEN BY THESE PR SF.NTS THAT:
WHEREAS,the undersigned parties are the owners of the following Oil and Gas Leases insofar as said
leases cover lands lying within the unit hereinafter designated:
LBASF.#1: LESSOR Weld County,Colorado
LESSEE:Pool OIl&Gas,LLC assigned to TAP Energy LLC
DATED:March 13,2002
RECORDED: #2943263 4/23/2002 Weld Co.,CO
LEASE#2: I.FSSOR: Weld County,Colorado
LESSEE: Floyd H.Miller assigned to TAP Energy LLC
DATED: October 27, 1999 extended to April 27,2003
RECORDED: 112730666 11/03/1999 Weld Co.,CO
and,
WHEREAS,under the provisions of each of said leases,the Lessee is granted the right and power
to pool and combine the lands covered by each of said leases,or any portion or portions thereof.with other
lands for the exploration and development thereof and the production therefrom of oil,gas sod associated
hydrocarbons;and,
NOW, THEREFORE,pursuant to the right and option granted under each and all of the leases and pursuant to the
tumia and provisions thereot the undersigned parties do hereby consolidate and pool the following described lands
situated in Weld County,Colorado,to wit;
Township 3 North,Rance 61 West
Section 1:S/2SW/4
Section 11:N W/4
Containing.240 acres more or less
which lands are described in and covered by the said leases, ban a consolidated and pooled area or trait for the
exploration, development and production of oil, gas and associated hydrocarbons therefrom; and the undersigned
parties execute this instrument as a formal declaration that the leases,insofar as they cover and pertain to the above
described lands,arc hereby combined and pooled under the terms and provisions of each of said leases.
IN Wl'1'NGSS W I IEREOF,this Declaration of Pooling is executed this 28th day of February 2003.
TAP ENE J
By; Ira +may �•' r '/ C Thomas A.Pool
Till • anger, TAP Energy LLC I THOMAS MONROE
NOTARY PUBLIC
STATE OF COLORADO ) STATE OF COLORADO
COUNTY OF �J •
)
On this 7 ' day of i'Ja tG ,2003 , before me the undersigned, a Notary Public in and for
said County and State,personally appeared'l'ho A.Pool,to me personally known to be the Manager of
TAP Energy, LLC, and he acknowledged the ution of the above instrument as his voluntary act and deed as
such officer and as the voluntary act and deed of said company.
Witness my hand and seal the day and year last above written.
My Commission Expires:
-
MyCommisslon Expires Aug.23,20O Noon Public
Mar 26 03 02: 50p Jon Isaacs 303-3470327 p. 3
Thomas F. Tauskey
Attorney at Law
51817th St., #950
Denver,CO 80202
• 303-592-1073
email: ttauslcey@worldnet.attnet
March 24, 2003
Mr. Jim Smith
Smith Oil Properties, Inc.
518 17th St. , Suite 360
Denver, CO 80202
Re: Proposed County #1-12 Well
NE/NW Section 12-3N-61W
weld County, Colorado
DRILLING TITLE OPINION
Dear Mr. Smith:
At your request I conducted a "stand-up" examination of the
records and material described below and based thereon set out
herein my opinion on title for oil and gas drilling purposes
covering the following:
,UBJECT LAND:
Township 3 North, Range 61 West, 6th B M.
Section 12: Northwest Quarter (NW/4)
containing 160 acres, more or less
J4ATERIAL EXAMINED:
1. The records of the clerk and Recorder, Assessor and
Treasurer of Weld County, Colorado were examined by the
undersigned on March 12, 2002 in Greeley, Colorado insofar as
such pertain to the SUBJECT LAND and based on: recorded
instruments shown on the tract index maintained by Transnation
Title Insuranbe Company (and its predecessors) from inception of
records. through July 1, 1991 and on a search of the
Grantor-Grantee index maintained by the Weld County Clerk and
Recorder for the period of time from July 1, 1991 through
February 24, 2003.
2. The oil and gas lease file (Lease LE 0196) maintained in
the office of the Clerk to the Board of Weld County Commissioners
was examined by the undersigned on March 12, 2003 in Greeley,
Colorado.
Mar 26 03 02: 50p jon isaacs 303-3470327 p. 4
I
Smith Oil Properties, Inc.
March 24, 2003
Page 2
MATERIAL EXAMINED: (continued)
3. The records of the Colorado Oil and Gas Conservation
Commission were examined by the undersigned on March 11, 2003 :in
Denver, Colorado insofar as such pertain to orders establishing
drilling and spacing units for oil or gas production from the
SUBJECT LAND (none found) .
PATENT:
An original (Homestead Entry) Patent, without mineral
reservation but subject to reservation of rights of way for
ditches and canals, was issued by the United States of America to
Clarence J. Collier dated June 24, 1919, recorded March 9, 1920
in Book 507 at Page 500 covered the NW/4 of Section 12, Towgship
3 North, Range 61 West (160 acres, m/1) issued under the Act of
May 20, 1862.
FEE TITLE INTERESTS: (*)
surface:
Empire Lake Boating Group, LLC (**)
Oil, Gas and Minerals; (***)
Weld County, a political subdivision of the State of Colorado
Oil, GAS LEASEHOLD:
Royalty Interest: Weld county, Colorado 12.5%
Overriding Royalty IntereAti,: None
Working Interest: TAP Energy LLC 100.0%
(*) Surface interests in the NE/NW of Sec. 12-3N-61W (along
with adjacent land in the SE/SW of Sec. 1-3N-61W) have
been surveyed and subdivided into Parcels A and Parcel B
as shown and described by courses and distances on the
survey'plat for the Hay-Hopkinson Recorded Exemption No.
1221-12-2-RE2295 acknowledged September 14, 1998 recorded
September 29, 1998 at Reception # 2643356 in the records
of the Clerk and Recorder of Weld County. See copy
attached to this opinion.
(**) See TITLE COMMENT AND REQUIREMENT 4 on page 6 below.
(***) The interest of Weld County derives in part from the
reservation in a "Deed from County" dated May 13, 1946,
recorded May 24, 1946 in Book 1179 at Page 448 (Reception
4981171) conveying the SUBJECT LAND and other land,
reserving all oil, gas and other minerals.
Mar 26 03 02: 50p ion Isaacs 303-3470327 p. 5
Smith Oil Properties, Inc:
March 24, 2003
Page 3
OIL AND GAS LEASE:
Date: March 13, 2002
Lessors Weld County, a subdivision of the State of Colorado
acting through its Board of County Commissioners
Lessee: Pool oil & Gas, LLC
Lands: Township 3 Ijorth, Rance 61 West
Section 12: NW/4
Net Acres: 160 net mineral acres
Bonus: $10.00 per mineral acre ($1,600. 00)
Rental: $1.00 per mineral acre per year (t)
Primary Term: Extending to March- 12, 2005
Royalty: 12.5% on oil and gas
Recorded: March 25, 2002 at Reception No. 2938388, and
re-recorded April 23, 2002 at Reception No. 2945263
in the records of Weld County, Colorado
* The lease file maintained by the Clerk of the Board included a
rental receipt for $160.00 dated March 4, 2003 indicating rentals
are paid through March 12, 2004. See further TITLE COMMENT AND
REQUIREMENT S below as to other provisions in the above lease.
ASSIGNMENT OF OIL AV GAS LEASE:
Date: June 11, 2002
Assignor: Pool Oil & Gas LLC,
by Thomas A. Pool, Managing Member
Assignee: TAP Energy, LLC
Interest: 100e of Assignor's right, title and interest in the
above oil and gas lease dated March 13, 2002
covering the NW/4 of Section 12-3N-61W
Approved: By letter dated September 10, 2002 from Glenn Vaad,
Chairman Weld County Board of County Commissioners
Recorded: June 18, 2002 at Reception No. 2961966 in the
records of the Clerk and Recorder of Mold County
Mar 26 03 02: 50p jon isaaos 303-3470327 p. 6
Smith Oil Properties, Inc.
March 24, 2003
Page 4
DECLARATION OF POOLING:
The lease file maintained by the Clerk of the Board included
a Declaration of Pooling dated February 28, 2003 (which is not
recorded in the Clerk and .Recorder's office) executed by TAP
Energy, LLC by which interests under the above oil and gas lease
were pooled with interests in S/2SW/4 of Section 1-3N-61W held
under a lease issued by Weld County dated October 27, 1999 to
form a unit for exploration and production of oil and gas
consisting of 240 acres, more or less. See further, TITLE
COMMENTS AND REQUIREMENT 2 below.
ORDERS OF COLORADO OIL AND GAS CONSERVATION COMMISSION:
As noted under MATERIAL EXAMINED, there currently are no
orders of this regulatory agency which include the SUBJECT LAND
within any field or which otherwise establish drilling and
spacing units for oil and gas. Accordingly, well locations on
the SUBJECT LAND are subject only to state-wide offset well
location regulations (effectively providing for 40 acre well
location spacing) .
DEEDS OF TRUSTS AND MORTGAGES:
By a Deed of Trust dated January 8, 1997 recorded January 9,
1997 at Reception No. 2528489, Randy L. Hay, Nanette M. Hay and
Eade J. Hopkinson conveyed their interests in an undivided 3/4th
interest in the SUBJECT LAND and other land to the Public Trustee
of Weld County for the benefit of Lee D. Thompson to secure
repayment under a Promissory Note of even date in the principal
amount of $299,000.00 with interest at the rate of 9.0% per annum
due and payable on January 1, 2007.
TAXES:
The records of the Weld County Assessor and Treasurer's
offices indicated that real property taxes on surface interests
in the SUBJECT LAND are assessed for 2003 against Empire Lake
Boating Group LI.C with an address of 962 Merganser Lane,
Carlsbad/ CA 92009 as Parcel No. 12221-12-0-00-008. Taxes
assessed for 2002 in the amount of $74.04 have been paid.
EASEMENTS AND RIGHTS OF WAY:
1. Although the following document was not examined, the
MATERIAL EXAMINED indicated that a right-of-way for county roads
30 feet wide, lying on either side of section and township lines
was established by Order of the Weld County Board of County
Commissioners in a document recorded October 14, 1889 in Book 86
at Page 273. Since the western boundary of the SUBJECT LAND also
constitutes a township boundary, it is apparent that such a
county road right-of-way is located on such portion of the
SUBJECT LAND.
Mar 26 03 02: 51p Jon Isaacs 303-3470327 p.7
Smith O11 Properties, Inc.
March 24, 2003
Page 5 •
EASEMENTS AND RIGHTS OP WAYt (continued)
2. The survey plat for Hay-Hopkinson Recorded Exemption No.
1221-12-2-RE2295 acknowledged September 14, 1998 recorded
September 29, 1998 at Reception 42643356 indicates that Weld
County Road #95 is located along the westerly boundary of the
SUBJECT LAND and that a 30 foot wide easement for access to such
road from Parcels A and B (NE/NW of Sec. 12) extends on an
east/west line through the center of the NW/NW of Sec. 12 (see
attached plat) .
TiTLE COMMENTS AND RE0UjfEMENTS:
1. Surface Examinati n: The MATERIAL EXAMINED did not
include a report of a surface examination of the SUBJECT LAND to
reveal whether there are any parties (other than the record title
owners set out herein) in possession thereof or whether there are
any uses other than those noted herein.
Since the SUBJECT LAND is apparently located close to the
Empire Reservoir, in satisfying the following requirement
particular attention should be paid to whether any portion of the
SUBJECT LAND is located within that reservoir or whether any
associated ditch, canal or access road is located thereon.
Requirement: You should cause a detailed surface examination
of the SUBJECT LAND to be conducted by a knowledgeable person and
a report of such examination (indicating all current uses and
parties in possession) should be submitted for review.
2. Record and obtain approval to Qeclaration of Poolinq: As
noted on page 4 above the lease file maintained by the Clerk of
the Weld County Board of Commissioners includes a Declaration of
Pooling dated February 28, 2003 executed by TAP Energy, LLC by
which interests under the above oil and gas lease were pooled
with interests in S/2SW/4 of Section 1-3N-61W to form a unit for
exploration ,and production of oil and gas consisting of 240
acres, more or less.
Such declaration recites it is executed pursuant to rights
granted in the above oil and gas lease. Paragraph 13 on page 4
of the oil and gas lease, captioned "Pooling Clause" provides
that the Lessee may pool interests under the above lease with
other lands
. . . in the same field so as to constitute a spacing unit to
facilitate an orderly or uniform well-spacing pattern or to
comply with any order, rule or regulation of the State or
Federal regulatory or conservation agency having
jurisdiction. "
Mar 26 03 02: 51p jon isaaos 303-3470327 p. 8
Smith Oil Properties, Inc.
March 24, 2003
Page 6
TITLE COMMENTS AND REQUIREMENTS: (Comment 2, continued)
Although the oil and gas lease does not require the Lessee to
obtain approval of any such Declaration of Pooling, requesting
such approval is recommended because the SUBJECT LAND is not
included in any orders of the Colorado Oil and Gas Conservation
Commission establishing well spacing, and because there do not
appear to be any nearby wells so as to constitute a "uniform
well-spacing pattern" .
Further, although paragraph 13 provides further that "Such
pooling shall be accomplished or terminated by filing of record a
declaration of pooling, or declaration of termination of pooling,
and by mailing or tendering a copy to Lessor, or the depository
bank." the MATERIAL EXAMINED indicated such document had not been
recorded in the records of the Clerk and Recorder of Weld County
as of February 24, 2003, the date of county record examination
covered by this title opinion.
Requirement: Either obtain the approval and consent of the
Weld County Board of Commissioners to formation of a 240 acre
unit as set out in the above Declaration of Pooling, or make an
application to, and obtain an order of, the Colorado Oil and Gas
Conservation Commission for a well spacing order conforming to
the above Declaration of Pooling.
3. Unrecorded agreements not reviewed: The interests shown
in this opinion are those appearing as a matter of record as
revealed by the MATERIAL EXAMINED. Although no unrecorded
agreements have been examined, it is my understanding there may
unrecorded agreement(s) such as a participation agreement and/or
operating agreement under which you have or will acquire an
interest in the SUBJECT LAND and operate the captioned well.
Requirement: Advisory only. It is assumed you are
either a party to, or otherwise fully informed of the provisions
of, any and all unrecorded agreements affecting interests in the
SUBJECT LAND!under the above oil and gas lease.
4. Determine legal constitution of Emaire Lake Boating
Group, LLC: Two separate Quitclaim Deeds both dated July 14,
1997 and recorded July 17, 1997 at Reception I's 2558518 and
2558519 cover the SUBJECT LAND and were respectively executed by
the following parties as Grantors: the first deed by Randy L. Hay
and Eade J. Hopkinson (conveying an undivided 1/4 interest) and
the second deed by Randy L. Hay, Nannette M. Hay and Eade J.
Hopkinson (conveying an undivided 3/4 interest) .
Mar 26 03 02: 51p jon Isaacs 303-3470327 p. 8
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Smith Oil Properties, Inc.
March 24, 2003
Page 7 -
TITLE COMMENTS AND REOUIREMENTS: (Comment 4, continued)
Both deeds describe the SUBJECT LAND and other land and refer
to the Grantee as: Empire .Lake Boating Group, LLC with an address
of P.O. Box 7616, Avon CO 81620 without specifying the
jurisdiction (state) in which such LLC was chartered.
The MATERIAL EXAMINED also included a Statement of Authority
pursuant to CRS 38-30-172 for "Empire Lake Boating Group, LLC, a
Colorado limited liability company" which was executed by Eade
Hopkinson on November 11, 1999 and recorded February 7, 2000 at
Reception # 2748235. There is a contradiction with this
document, however, in that it first recites that the entity
(Empire Lake Boating Group LLC) is a limited liability company
established under the law of Colorado but later states such
entity was established under the laws of Arizona.
while there may in fact be two separate limited liability
companies having the same name and established under the
respective laws of such two states, it is assumed the two
Quitclaim Deeds noted first above conveyed interests only to one
entity - being a limited liability company established under
either the law of Colorado or the law of Arizona.
Requirement: Although the above issue relates only to
effective settlement of surface use and damage issues related to
oil and gas exploration arid activities you should inquire as to
the jurisdiction (Arizona or Colorado) under which Empire Lake
Boating Group, LLC is established and request that an amended,
corrected or substitute Statement of Authority be executed and
recorded pursuant to CRS 38-30-172.
5. Observe unusual provisions in Oil and Gas Lease:
Although certain critical terms and provisions of the oil and gas
lease are outlined on page 3 above, the lease provisions are set
out in 31 separate paragraphs over seven (7) legal size pages.
Such provisions should be reviewed as they are unusually
restrictive as to events such as: assignments (see paragraph 9,
requiring the prior written consent of the Lessor of assignments
of all Or part of the land covered by the lease, segregation of
the leased premises into separate leases if only a portion of the
lease is assigned, and notification of all assignments of
undivided percentages); assignments of overriding royalty
(paragraph 10) ; protection from drainage from offset wells (see
paragraph 11); shut-in well (paragraph 16); restrictions on
operations (paragraph 17) ; notification prior to commencement of
operations and bonding for surface damages (paragraphs 18 and
19) ; and extension of the lease term (paragraph 24) .
Requirement: None, advisory only.
Mar 26 03 02: 51p jen isaaos 303-3470327 p. 10
Smith Oil Properties, Inc.
March 24, 2003
Page 8
TITLE COMMENTS AND REQUIREMENTS: (continued)
6. 9btaip surface use or damage agreement and ioinder or
subordination of Lee D Thomason thereto: It is assumed that
prior to entry upon the SUBJECT LAND to conduct oil and gas
exploration activities under the above oil and gas lease you will
contact and attempt to obtain an express agreement from the
surface owner (Empire Lake Boating Group, LLC) providing consent
to such use upon certain terms, conditions and payment 'of an
amount for damages associated with such use.
If such an agreement is reached it should be joined in or
ratified by Lee D. Thompson who should be requested to
subordinate his interest (as holder of the beneficial interest
under the Deed of Trust dated January 8, 1997 recorded January 9,
1997 at Reception No. 2528489 noted above) to the rights granted
the oil and gas lessee under any surface use agreement.
Requirement: As above. See further, the requirements for
notification and filing of a bond prior to commencement of
operations as set out in paragraphs 18 and 19 of the oil and gas
lease.
Subject to the above TITLE COMMENTS AND REQUIREMENTS, title
to oil and gas interests in the SUBJECT LAND as set out above
appear to be marketable.
Very truly yours,
tief���� A- 44
Thomas F. Tauske•
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TFT:33:smith
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