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MEMORANDUM OF OIL AND GAS LEASE
STATE OF TEXAS §
§ KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF TARRANT §
BE IT REMEMBERED that on the I� day of , 2008, a Paid Up
Oil and Gas Lease was made and entered into by and between t e CITY OF FORT WORTH, a
home rule municipal corporation of the State of Texas, c/o Director, Department of
Engineering, 1000 Throckmorton Street, Fort Worth, Texas 76102, hereinafter called
"(LESSOR)"; and CHESAPEAKE EXPLORATION, L.L.C., an Oklahoma limited liability
corporation, P.O. Box 18496, Oklahoma City, Oklahoma 73154, hereinafter called
("LESSEE"), where LESSOR hereby grants, leases and lets exclusively to LESSEE for the
purpose of exploring for, developing, producing and marketing oil and gas, together with any
liquid or gaseous substances produced in association therewith, from the following described
land situated in Tarrant County, Texas, to-wit:
SEE EXHIBIT "A"ATTACHED HERETO AND MADE A PART HEREOF
Subject to the other provisions therein contained, said lease provides for a primary term
of two (2) years, from the date thereof, and as long thereafter as oil or gas or other substances
covered therein are produced in paying quantities from the leased premises or from lands pooled
therewith, or this lease is otherwise maintained in effect pursuant to the provisions therein.
An Executed copy of said Oil and Gas Lease is in the possession of LESSEE at its
address indicated above.
Executed this the Irday of , 2008.
LESSOR: LESSEE:
CITY OF FORT WORTH CHESAPEAKE EXPLORATION, L.L.C.,
An Oklahoma limited liability corporation
By: &'AA KJ6 � zT By: Cl . Merritt
Title: Assistant City Manager Its: Land Manager lA R
ATTEST:
_ 1
Contract vAuthorization
City Secreta —21 OM 10
Date
APPROVED AS TO FORM AND LEGALITY:
By.
Assis City Atto ey
Date:
OFFICIAL RECORD
CITY SECRETARY
1 FT.WORTH, TX
ACKNOWLEDGEMENTS
THE STATE OF TEXAS §
COUNTY OF a §
BEFORE ME, ee-p-Q-- the undersigned notary public, on
this day personally appeared !E , known to me to be the person whose
name is subscribed to the foregoing instrument and acknowledged, that (s)he has executed the
same for the purposes and consideration therein expressed.
GIVEN under my hand and seal of office this JDA day ofd ,
2008.
Notary Public, State of Texas
My Commission Expires: p,7—,g6—a0//
Commission Number: Dob 7
_
HETT!E LANE
MY CGPdwIISSIGN EXPIRES
JUIV 23,2011
STATE OF OKLAHOMA §
COUNTY OF OKLAHOMA §
This instrument was acknowledged before me this of , 2008,
by Cliff J. Merritt as Land Manager of Chesapeake Exploration, L.L.C. on behad of said
corporation.
Notary ublic, State of Oklahoma
J 1Ail
My Commission Expirei: =
XP U11
Commission Number:
OF Ot' .•
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RECORDRETARYTH, TX
2
EXHIBIT "A"
(Sandy Lane Park)
Tract l:
A 26.5 acre tract of land, out of the David Hitson Survey, Abstract Number 665, as described in that
certain Warranty Deed, recorded in Volume 4374 at Page 729, described by metes and bounds as follows:
COMMENCING at the NE corner of said Tract 3; thence South 2 deg. 59 minutes West a distance of
300.4'; thence West a distance of 300.0' to the place of BEGINNING:
THENCE South a distance of 300.0' to an iron;
THENCE East a distance of 291.02' to an iron in the East line of said Tract 3;
THENCE South 0 deg. 17 min. West along the East line of said Tract 3 a distance of 606.18' to an iron;
THENCE North 88 deg. 41 min. West 450' North of and parallel to the south line of the McKee property
(which is also the centerline of Meadowbrook Drive) a distance of 1,403.3' to an iron 30' east of the
center line of Sandy Lane;
THENCE North 1 deg. 15 min. East 30' east of and parallel to the west line of said McKee property
(which is also center line of Sandy Lane)a distance of 874.32' to an iron ;
THENCE East 300' South of and parallel to the north line of the McKee property a distance of 1,095.6' to
an iron also the place of beginning and containing 26.5 acres of land more or less.
Tract 2:
A 2.2 acre tract of land, being part of the David Hitson Survey, Abstract Number 665, as described in that
Certain Warranty Deed, Recorded in Volume 4364, Page 104 Deed Records, Tarrant County, Texas,
Tarrant County, Texas, described by metes and bounds as follows:
COMMENCING at the NE corner of said tract 3;Thence South 2 deg. 59 min. West 300.4 feet to the
place of BEGINNING;
THENCE continuing South 2 deg. 59 min West a distance of 164.58 feet to an iron;
THENCE South 0 deg. 17 min. West a distance of 139.2 feet to an iron;
THENCE West a distance of 291.02 feet to an iron;
THENCE North a distance of 300 feet to an iron:
THENCE East a distance of 300 feet to an iron also the PLACE OF BEGINNING and containing 2.2
acres of land, more or less.
OFFICIAL RECORD
CITY SECRETARY
FT.WORTH, TX
3
City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION: Approved on 7/29/2008
DATE: Tuesday, July 29, 2008
LOG NAME: 30SANDY LANE PK REFERENCE NO.: L-14611
SUBJECT:
Authorize Execution of a Lease Agreement with Chesapeake Exploration, LLC, with a Bonus
Amount of $602,700.00 and a Twenty-Five Percent Royalty for Natural Gas Drilling under Sandy
Lane Park Located at 2001 Sandy Lane Drive
RECOMMENDATION:
It is recommended that the City Council authorize execution of a lease agreement with Chesapeake
Exploration, LLC, with a bonus amount of $602,700.00 and a twenty-five percent royalty for natural gas
drilling under 28.7 acres, more or less, of City-owned properties located in Tarrant County, Texas, known as
Sandy Lane Park located at 2001 Sandy Lane Drive for a two-year primary term.
DISCUSSION:
On April 29, 2008, (M&C L-14521) Fort Worth City Council authorized the conversion of dedicated
parkland known as Sandy Lane Park for the purpose of subsurface drilling and extraction of natural gas.
On February 19, 2008, (M&C L-14472) Fort Worth City Council authorized City staff to advertise a request
for proposals from private companies to drill for natural gas under 5,422 estimated mineral acres of City-
owned properties, including 500 acres of miscellaneous parcels and right-of-way. Sandy Lane Park is
located at 2001 Sandy Lane Drive. Acceptance of this lease agreement will reduce the approved 500
miscellaneous mineral acres of City-owned parcels by 28.7 net mineral acres, more or less.
A request for bid proposals (RFP) for Sandy Lane Park was advertised for three consecutive weeks in the
Fort Worth Star-Telegram, published on May 9, May 15, and May 22, 2008.
The following sealed bid for the gas lease was received and opened on May 29, 2008:
Bidder Lease Bonus/Acre Total Lease Bonus Percent Royalty
Chesapeake Exploration, LLC $21,000.00 $602,700.00 25
The bid received was evaluated by staff and the City's mineral asset management consultant, JPMorgan
Chase. In addition to the lease bonus rate and royalties paid to the City, the bidder's drilling plan,
reputation, financial status, project team and compliance history were also evaluated.
In accordance with the First Amendment to City Secretary Contract No. 29698, Alternative Assets Agency
Account Agreement with JPMorgan Chase and the City, JPMorgan Chase will serve as the depository of
the lease bonus revenue until the City requests wire transfer of the funds. The net transfer to the City from
JPMorgan Chase is estimated to be $572,565.00, more or less.
The City has established a Minority Women Business Enterprise (M/WBE) participation goal of three
percent on City-owned property of 40 acres or more without an investment goal. On leases of City-owned
http://apps.cfwnet.org/council_packet/Reports/mc_print.asp 9/12/2008
Page 2 of 2
property of 700 acres or more, the City has established an option of either a three percent M/WBE goal or
the inclusion of an M/WBE investor. This lease is less than 40 acres therefore no M/WBE participation goal
is required.
Revenues received from this lease will be administered in accordance with the current City Council Policy
on Gas Well Revenues.
The Property is located in COUNCIL DISTRICT 5, Mapsco 80C.
FISCAL INFORMATIONICERTIFICATION:
The Finance Director certifies that the Engineering Department is responsible for the collection and deposit
of funds from this agreement.
TO Fund/Account/Centers FROM Fund/Account/Centers
C282 446100 801929990100 $602,700.00 C282 VARIOUS 801929990100 $30,135.00
Submitted for City Manager's Office by: Fernando Costa (8476)
Originating Department Head: A. Douglas Rademaker (6157)
Additional Information Contact: Jean Petr (8367)
http://apps.cfwnet.org/council_packet/Reports/mc_print.asp 9/12/2008