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HomeMy WebLinkAboutContract 31325OIL AND GAS LEASE THE STATE OF TEXAS § COUNTY OF TARRANT § �DITY SECR1=TARY I CONTRACT NO. THIS AGREEMENT ("Lease") is made and entered into as of the date herein specified by and between- CITY OF FORT WORTH, a home rule municipal corporation of the State of Texas located within Tarrant, Denton, and Wise Counties, Texas, (hereinafter referred to as "Lessor"), and, DALE RESOURCES, L.L.C. (hereinafter referred to as "Lessee") WITNESSETH: 1. GRANTING CLAUSE Lessor, in consideration of a cash bonus in hand paid, of the royalties herein provided, and of the agreements of Lessee hereinafter contained, hereby grants, leases, and lets exclusively unto Lessee for the sole purpose of investigating, exploring, drilling, operating, and producing oil and/or gas from the land leased hereunder, together with any liquid or gaseous substances produced in association with oil and gas, the following described land situated in the City of Fort Worth, Texas described in Exhibit "A" attached hereto (the "leased premises"). All mineral substances and mineral rights other than oil and gas (and all other liquid or gaseous minerals produced in association with oil or gas) are expressly reserved to Lessor and excepted from this Lease. These reserved mineral rights include, but are not limited to, the rights to lignite, coal and sulfur not produced as a component of oil and gas. For the purpose of determining the amount of any bonus or other payment hereunder, said leased premises shall be deemed to contain 702.65 acres, whether actually containing more or less. 2. Subject to the other provisions herein contained, this Lease shall be for a term of two (2) years from the date of the notarial acknowledgment of Lessor's execution of this instrument (hereinafter called "primary term") and so long thereafter as oil, gas or other minerals granted herein are produced from the leased premises or lands pooled therewith, in paying quantities, or drilling operations are in progress thereon as hereinafter provided, and the royalties are paid as provided herein. 3. DELAY RENTALS If actual drilling is not commenced on the leased premises or on any lands pooled therewith on or before twelve (12) months from the date of this Lease, this Lease shall automatically terminate, unless on or before such anniversary date Lessee shall pay to Lessor or to the credit of Lessor, the sum of Seventeen --------------- 0 •^„� 02-16-05A�'9:35 REVD CFwCit} F w'� evc a Thousand Five Hundred S=xty Six and twenty five cents ($17,566.25) (hereinafter called "rental") which shall cover the privilege of deferring commencement of drilling operations for a period of twelve (12) months. In like manner, and upon like payments annually, the commencement of drilling operations may be further deferred for successive periods of twelve (12) months each during the primary term. The payment of rentals may be made by the check of Lessee delivered to Lessor on or before such date of payment. If the rental is not paid on or before the date it is due, then this Lease will automatically terminate. Upon termination, Lessee shall prepare, execute and deliver to Lessor a recordable release covering the leased premises in accordance with this Lease. Lessee may at any time or times execute and deliver to Lessor, a release or releases of this Lease as to all or any part of the leased premises, and thereby be relieved of all obligations as to the released land or interest, except for the mineral royalty obligation in Section 4N, indemnification obligations described in Section 16 and the plugging obligations of this Lease. If a portion of the lands covered by this Lease is released, the rentals and shut- in royalty payments computed in accordance therewith shall be reduced by the proportion that the number of surface acres within such released portion bears to the total number of surface acres which were covered by this Lease immediately prior to such release. The bonus paid hereunder is consideration for this Lease and not rental for a period. 4. ROYALTIES Lessee shall pay to Lessor the following royalties, which shall be free of all costs of any kind, including, but not limited to, costs of gathering, production, transportation, treating, compression, dehydration, processing, marketing, trucking or other expense, directly or indirectly incurred by Lessee, whether as a direct charge or a reduced price or otherwise. In this regard, Lessee agrees to bear one hundred percent (100%) of all costs and expenses incurred in rendering hydrocarbons produced on or from the leased premises marketable and delivering the same into the purchaser's pipeline for immediate transportation to an end user or storage facility. Additionally, said royalties shall never bear, either directly or indirectly, under any circumstances, the costs or expenses (including depreciation) to construct, repair, renovate or operate any pipeline, plant, or other facilities or equipment used in connection with the treating, separation, extraction, gathering, processing, refining, compression, transporting, manufacturing or marketing of hydrocarbons produced from the leased premises or lands pooled therewith. A. On oil, gas (including flared gas) and casinghead gas, together with any other liquid or gaseous hydrocarbons recovered by Lease operations (such as in drips or separators) twenty-five percent (25%) of the proceeds of the sale or of the market value thereof, whichever is higher. Such proceeds of oil, gas and casinghead gas, together with any other liquid or gaseous hydrocarbons recovered by Lease 2 CFW City of FW Gateway Park Iease Rev Clea operations, is to be delivered free of cost at the well or to the credit of the Lessor into pipelines, gathering lines, barges or other facilities to which the wells and tanks on the property may be connected. Lessor shall always have the right, at any time and from time to time, upon reasonable written notice to Lessee, to take Lessor's s" are of oil, gas and processed liquids in kind. Lessor may elect to take Lessor's gas in kind at the well, or at the point of delivery where Lessee delivers Lessee's gas to any third party. If gas is processed, Lessor may elect to take Lessor's share of the residue gas attributable to production from the leased premises, at the same point of delivery where Lessee receives its share of residue gas or has its share of residue gas delivered to a third party. Lessor may elect to have its royalty share of processed liquids stored in tanks at the plant or delivered into pipelines on the same basis as Lessee's share of liquids is stored or delivered. Lessor shall reimburse Lessee for all reasonable costs incurred by Lessee in installing, operating or maintaining additional facilities necessary for Lessor's royalty gas and processed liquids to be separately metered, accounted for, and delivered to a third party, but Lessor shall not be charged for any expense in the production, gathering, dehydration, separation, compression, transportation, treatment, processing or storage of Lessor's share of gas and processed liquids. B. On products, twenty-five percent (25%) of the gross market value or proceeds of sale thereof, whichever is higher. C. On residue gas or gas remaining after separation, extraction or processing operations, twenty-five percent (25%) of the proceeds of sale or of the market value thereof, whichever is higher. D. For purposes of this Paragraph 4, the term "market value" shall mean for gas and products therefrom (i) the gross price at which gas or products therefrom are sold pursuant to a Gas Contract, as defined below, that is ratified by Lessor according to Paragraph G below or (ii) if not sold pursuant to a Gas Contract, as defined below, ratified by Lessor and Lessee, the highest gross price reasonably obtainable for the quantity of gas or products available for sale, through good faith negotiations for gas or products produced from the leased premises at the place where such gas or product is available for sale on the date of such a contract with adequate provisions for redetermination of price at intervals of no less frequency than one (1) year to ensure that the production is being sold for no less than the current market price. Included within the definition of "Market Value" as used herein is the presumption that Gas Contracts that are ratified by Lessor are arms -length contracts with purchasers who are not affiliates of Lessee. An "affiliate" includes, but is not limited to, the parent company or a subsidiary of Lessee, a ccrporation or other entity having common ownership with Lessee, a partner or joint venturer of Lessee with respect to the ownership or operation of the processing plant, a corporation or other entity in which Lessee owns a ten percent or greater interest, or any individual, corporation or other entity that owns a ten percent or greater interest in Lessee. In no event shall "market value" ever be less than the amount actually received by the Lessee for the sale of hydrocarbons. 3 CFW City of FW Gatew4y Park Lease Rev clea E. This Lease is intended to cover only oil and gas, but some other substances (including helium and sulphur) may be produced necessarily with and incidental to the production of oil or gas from the leased premises; and, in such event, this Lease shall also cover all such other substances so produced. On all such substances so produced under and by virtue of the terms of this Lease, Lessor shall receive a royalty of twenty-five percent (25%) of all such substances so produced and saved, same to be delivered to Lessor, free of all costs; or, at Lessor's election, Lessor's twenty-five percent (25%) of such substances shall be sold by Lessee with Lessee's portion of such substances and at the same profit realized by Lessee for its portion of such substances. F. All royalties hereinabove provided shall be payable in cash (unless Lessor elects to take such royalty oil or gas in kind) to Lessor within sixty (60) days following the first commercial sale of production and thereafter no more than thirty (30) days after the end of the month following the month during which production takes place. Subject to the provisions of Paragraph 10 of this Lease concerning shut-in wells, royalties shall be paid to Lessor by Lessee and/or its assigns or by the product purchaser for oil and/or gas. Upon the failure of any party to pay Lessor the royalty as provided in this paragraph, Lessor may, at Lessor's option, elect to terminate this Lease by sending written notice to Lessee. Lessee shall then have thirty (30) days from the date of service of such written notice in which to avoid tennination of this Lease by making or causing to be made the proper royalty payment or payments that should have been paid. If such royalty payment is not made on or before the expiration of the 30 -day period, or wrirten approval is not obtained from Lessor to defer such payment, Lessor may elect to terminate this Lease by filing a Notice of Termination with the County Clerk in the county where the leased premises are located. The effective date of said termination shall be the date said Notice of Termination is filed with the said County Clerk. G. Lessee agrees that it will not enter into any contract for the sale, delivery, transporting or processing of gas produced from the leased premises which shall extend more than two (2) years from the effective date of such sales contract unless such contract has adequate provisions for redetermination of price at intervals of no less frequency than one (1) year to ensure that production from this Lease is not being sold for less than the then current market value. At least thirty (30) days prior to the delivery or the execution of any contract for the sale, delivery, transporting or processing of gas produced from the leased premises, Lessee shall provide Lessor with a complete copy of each proposed contract for the purchase, transportation and/or processing of such gas that Lessee intends to execute (each a "Gas Contract"), whereupon, Lessor shall have fifteen (15) days within which to either ratify such Gas Contract or notify Lesseein writing that it does not approve of such Gas Contract, including a statement of the reasons that Lessor does not approve of such Gas Contract (Lessor's failure to respond within the fifteen (15) days either by ratification or by written notice that it does not approve of the proposed Gas 4 CFW City of FW Gateway Park Lease Rev ciea Contract shall be deemed to be Lessor's ratification of such Gas Contract). If Lessor ratifies the Gas Contract, Lessor shall be deemed bound by the terms of such Gas Contract (and, at Lessee's option, Lessor shall execute such Gas Contract as a party thereto) and the gas or products therefrom sold pursuant to such Gas Contract shall be deemed sold at market value based on the gross price stated therein. Lessee shall not amend or modify any material terms of a Gas Contract ratified by Lessor without the prior written consent of Lessor. If Lessor does not approve of a Gas Contract, Lessee shall consult with Lessor in an effort to agree to the terms of the proposed Gas Contract, and if the other party or parties to the Gas Contract agree to the changes or modifications to the Gas Contract which are proposed by Lessor in order for Lessor to ratify such Gas Contract, then Lessor shall be deemed to have ratified such Gas Contract (and, at Lessee's option, Lessor shall execute such Gas Contract as amended and modified, as a party thereto). If Lessor and Lessee cannot agree on the terms of a Gas Contract that are acceptable to the other party or parties thereto, Lessee may elect to execute such Gas Contract and sell, deliver, transport and process gas according to the terms thereof, subject to the other terms of this Paragraph 4 concerning the payment of Lessor's royalty on gas and products there from, including the right of Lessor to take its share of gas in kind. In the event Lessor elects to take and separately dispose of its royalty share of gas, the parties shall enter into a mutually acceptable balancing agreement providing for (a) the right of an under produced party to make up an imbalance by taking up to 150 percent of its share of production and (b) and obligation to settle any imbalance remaining after depletion in cash, based on the proceeds received by the overproduced party when the imbalance was created, or if the overproduced party's gas was used but not sold, based on the market value of the gas when imbalance was created. H. In the event Lessee enters into a gas purchase contract which contains what is commonly referred to as a "take or pay provision" (such provision meaning that the gas purchaser agrees to take delivery of a specified minimum volume or quantity of gas over a specified term at a specified price or to make minimum periodic payments to the producer for gas not taken by the purchaser) and the purchaser under such gas purchase contract makes payment to Lessee by virtue of such purchaser's failure to take delivery of such minimum volume or quantity of gas, then Lessor shall be entitled to twenty-five percent (25%) of all such sums paid to Lessee or producer under the "pay" provisions of such gas purchase contract. Such royalty payments shall be due and owing to Lessor within thirty (30) days after the receipt of such payments by Lessee. If the gas purchaser "makes up" such gas within the period called for in the ;as contract and Lessee is required to give such purchaser a credit for gas previously paid for but not taken, then Lessor shall not be entitled to royalty on such "make up" gas. If Lessee is not producing any quantities of gas from the leased premises but is receiving payments under the "pay" portion of such "take or pay" gas purchase contract provision, such payments shall not relieve 5 CFW City of FW GateHaAPtak 4ease Rev clew Lessee of the duty to make shut-in royalty payments if Lessee desires to continue this Lease, but such "take or pay" royalty payments shall be applied as a credit against any shut-in royalty obligation of the Lessee. Lessor shall be a third -party beneficiary of any gas purchase contract and/or transportation agreement entered into between Lessee and any purchaser and/or transporter of Lessor's gas, irrespective of any provision of said contracts to the contrary, and such gas purchase contract and/or transportation agreement will expressly so provide. Further, Lessor shall be entitled to twenty-five percent (25%) of the value of any benefits obtained by or granted to Lessee from any gas purchaser and/or transporter for the amendment, modification, extension, alteration, consolidation, transfer, cancellation or settlement of any gas purchase contract and/or transportation agreement. I. Lessee agrees that before any gas produced from the leased premises is used or sold off the leased premises, it will be run, free of cost to Lessor, through an adequate oil and gas separator of a conventional type or equipment at least as efficient, to the end that all liquid hydrocarbons recoverable from the gas by such means will be recovered and Lessor properly compensated therefor. J. Any payment of royalty or shut-in gas royalty hereunder paid to Lessor in excess of the amount actually due to the Lessor shall nevertheless become the property of the Lessor if Lessee does not make written request to Lessor for reimbursement within one (1) year from the date that Lessor received the erroneous payment, it being agreed and expressly understood between the parties hereto that Lessor is not the collecting agent for any other royalty owner under the lands covered hereby, and a determination of the name, interest ownership and whereabouts of any person entitled to any payment whatsoever under the terns hereof shall be the sole responsibility of Lessee. It is further expressly agreed and understood that: (i) this provision shall in no way diminish the obligation of Lessee to make full and punctual payments of all amounts due to Lessor or to any other person under the terms and provisions of this Lease, and (ii) any overpayments made to the Lessor under any provisions of this Lease shall not be entitled to be offset against future amounts payable to parties hereunder. K. The terms -)f this Lease may not be amended by any division order and the signing of a division order by any mineral owner may not be made a prerequisite to payment of royalty hereunder. L. Oil, gas or products may not be sold to a subsidiary or affiliate of Lessee as defined herein without the Lessor's prior written permission. M. Lessee shall pay Lessor royalty on all gas produced from a well on the leased premises and sold or used off the leased premises, regardless of whether or not such gas is produced to the credit of Lessee or sold under a contract executed by or binding on Lessee. Should gas be sold under a sales contract not binding on Lessee, Lessor's royalty will be calculated based on the highest price paid for any of the gas produced from the well from which such gas is produced. In no event will the price paid Lessor for Lessor's share of gas be less than the price paid Lessee for Lessee's share of gas. 0 W City of FW Gateway Park lease Rev clea N. Notwithstanding anything contained herein to the contrary, Lessor shall receive a minimum royalty during the first 18 months of this Lease equal to $1,200,000.00 payable as hereinafter provided. If, at the end of the sixth month of this Lease, Lessor has not received at least $1,200,000.00 from the royalties payable to Lessor pursuant to Sub -paragraphs 4A., 4B., 4C., 4E. and 4H., then, commencing with the seventh month of this Lease, and continuing for each month thereafter until Lessor has received a total of $1,200,000.00 fl.om the sum of (i) all royalties paid to Lessor pursuant to Sub -paragraphs 4A., 4B., 4C., 4E. and 4H. since inception of this Lease and (ii) the additional royalty provided for in this Sub -paragraph 4N. Lessee shall tender to Lessor an amount equal the lesser of (x) the difference between $100,000.00 and the amount received by Lessor during that month as royalties pursuant Sub- paragraphs 4A., 4B., 4C., 4E. and 4H. of this lease, and (y) the difference between (a) $1,200,000.00 and (b) the sum of all of the royalties received by Lessor pursuant to Sub -paragraphs 4A., 4B., 4C., 4E. and 4H. hereof plus the additional royalties paid pursuant to this Paragraph 4N. All minimum royalty payments shall be paid by the Lessee to the Lessor on or before the 25`1' of each month. 5. POOLING Lessee, upon the prior written consent of Lessor which shall not be unreasonably withheld, is hereby given the right 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, lease or leases in the immediate vicinity thereof to the extent hereinafter stipulated, when it is necessary or advisable to do so in order to properly explore, or develop, produce and operate said leased premises in compliance with the spacing rules of the appropriate lawful authority, or when to do so would promote the conservation of oil and gas in and under and that may be produced from said premises. In the absence of field rules, units pooled for oil and gas hereunder shall not exceed 40 acres each in area, provided that should governmental authority having jurisdiction prescribe the creation of units larger than those specified (including, for example, for a horizontal well), for the drilling or operations of a well at a regular location or for obtaining maximum allowable from any well to be drilled, drilling or already drilled, units thereafter created may conform in size with those prescribed by governmental regulations. Lessee, under the provisions hereof, may pool or combine acreage covered by this Lease or any portion thereof as above provided as to oil in any one or more strata and as to gas in any one or more strata. The units formed by pooling as to any stratum or strata need not conform in size or area with the unit or units into which the Lease is pooled or combined as to any other stratum or strata, and oil units need not conform as to area with gas units. The pooling in one or more instances shall not exhaust the rights of the Lessee hereunder to pool this Lease or portions thereof into other units. Lessee shall file for record in the appropriate records of the county in which the leased premises are situated an instrument describing the pooled acreage as a pooled unit. In this regaLese CFW Citv of FAVRev dea shall provide Lessor with a copy of any and all documents filed with any regulatory authority or recorded in the records of any county within thirty (30) days of filing such documents. Upon the recordation of the unit in the county records and the timely furnishing of the copies required herein to Lessor the unit shall be effective as to all parties hereto, their heirs, successors, and assigns, irrespective of whether or not the unit is likewise effective as to all other owners of surface, mineral, royalty or other rights in land included in such unit. Lessee may at its election exercise its pooling option before or after commencing operations for or completing an oil or gas well on the leased premises, and the pooled unit may include, but it is not required to include, land or leases upon which a well capable of producing oil or gas in paying quantities has theretofore been completed or upon which operations for the drilling of a well for oil or gas have theretofore been commenced. In the event of operations for drilling on or production of oil or gas from any part of a pooled unit which includes all or a portion of the land covered by this Lease, such operations shall be considered as operations for drilling on or production of oil and gas from land covered by this Lease whether or not the well or wells be located on the premises covered by this Lease and in such event operations for drilling shall be deemed to have been commenced on said land within the meaning of this Lease. For the purpose oz computing the royalties to which owners of royalties and payments out of production and each of theta shall be entitled on production of oil and gas, or either of them, there shall be allocated to the land covered by this Lease and included in said unit (or to each separate tract within the unit if this Lease covers separate tracts within the unit) a pro rata portion of the oil and gas, or either of them, produced from the pooled unit. Royalties hereunder shall be computed on the portion of such production, whether it be on oil and gas, or either of them, so allocated to the land covered by this Lease and included in the unit just as though such production were from such land. The production from an oil well will be considered as production from this Lease or oil pooled unit from which it is producing and not as production from a gas pooled unit; and production from a gas well will be considered as production from this 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 delay rental or 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 provided above. As used in this paragraph, the words "separate tract" mean any tract with royalty ownership differing, now or hereafter, either as to parties or amounts, from that as to any other part of the leased premises. Notwithstanding anything to the contrary therinabove, no unit may be formed that is comprised than less than 50% acreage of the leased premises. 6. 8 CFW City of FW Gateway Park Lease Rev Clea DRILLING COMMITMENT AND CONTINUOUS DRILLING OF WELLS Upon the completion of any well as a well capable of producing oil or gas in paying quantities or as a dry hole (completion being the release of the completion rig, in no event being more than ninety (90) days following release of the drilling rig, or if the well is a dry hole, the release of the drilling rig), Lessee shall, within ninety (90) days thereafter, commence the drilling of another well or wells on the leased premises (commencement being the actual spudding of the succeeding well), or, if it be within the primary term, Lessee shall commence or resume the payment of delay rentals for all acreage not otherwise being maintained under the provisions of this Lease, within ninety (90) days from the date of completion and abandonment of said dry hole or holes or the cessation of production. Failure to commence such additional well or wells within the time herein provided, or failure to resume the payment of delay rentals within the time herein provided, shall terminate this Lease ipso facto as to all lands except those included within the surface boundaries of any governmental proration unit otherwise being maintained under the provisions of this Lease. Nothing herein shall be construed to limit or modify Lessee's obligation to drill any offset wells provided for herein. If at the expiration of the primary term, Lessee is then engaged in drilling operations or shall have completed a dry hole or a producing well on the leased premises within ninety (90) days prior to the end of the primary term, the Lease shall remain in force so long as Lessee conducts a continuous drilling program in which the drilling of additional wells is prosecuted with no more than ninety (90) days between the abandonment. of a well as a dry hole or the completion of such well as a commercial producer and the commencement of actual drilling operations for an additional well. At such time as said continuous drilling program ceases, the provisions of Paragraph 7 will be applicable. 7. RETAINED ACREAGE A. Vertical Wells At the expiration of the primary term of this Lease or upon the termination of the continuous drilling program set forth in Paragraph 6, each non -horizontal well drilled hereon capable of producing in paying quantities will hold only forty (40) acres for any formation from the surface to the base of the Barnett Shale formation. As to depths below the base of the Barnett Shale Formation, the proration unit shall be the minimum size necessary to obtain the maximum production allowable. If the proration unit for a well completed below the base of the Barnett Shale Formation is larger than 40 acres, the well may maintain the Lease as to formations above the base of the Barnett Shale Formation as to not more than 40 acres. All other acreage except that included in a proration unit or pooled unit as described above will cease to be covered by this Lease and will be released. To the extent possible, each such proration unit will be in the shape of a square, with the bottom of the well in the center. Further, it is understood and agreed 9 CFW City of FW Gateway Park Lease Rev clew that Lessee shall earn depths as to each proration unit or pooled unit only from the surface down a depth which is the stratigraphic equivalent to a depth of one hundred feet (100') below the deepest producing formation in such well which is capable of producing oil and gas in paying quantities at the expiration of the primary term of this Lease or upon the termination of the continuous drilling program set forth in Paragraph 6. This Lease will terminate at such time as to all depths below such depths as to each respective proration unit or pooled unit. If production should thereafter cease as to acreage included in a proration unit or pooled unit, this Lease will terminate as to such acreage unless Lessee commences reworking or additional drilling operations on such acreage within ninety (90) days thereafter and continues such reworking or additional drilling operations until commercial production is restored thereon, provided that if riore than ninety (90) days elapse between the abandonment of such well as a dry hole and the commencement of actual drilling operations for an additional well, or more than ninety (90) days pass since the commencement of reworking operations without the restoration of commercial production, this Lease shall terminate as to the applicable proration unit or pooled unit. At any time or times that this Lease terminates as to all or any portion of the acreage of the leased premises, Lessee shall promptly execute and record in the office of the County Clerk in the County where the leased premises are located, a proper release of such terminated acreage and shall furnish executed counterparts of each such release to Lessor at the address shown in Paragraph 19 hereof. B. Horizontal Wells It is expressly understood and agreed that, subject to the other terms, provisions and limitations contained in this Lease, Lessee shall have the right to drill "horizontal wells" under the leased premises, or lands pooled therewith. The term "horizontal well" or "horizontally drilled well" shall mean any well that is drilled with one or more horizontal drainholes having a horizontal drainhole displacement of at least five hundred eighty-five (585) feet. For the purposes of further defining the term "horizontal wells" and "horizontally drilled" reference is made to the definitions contained within Statewide Rule 86, as promulgated by the Railroad Commission of Texas, which definitions are incorporated herein for all purposes. In the event of any partial termination of the Lease as provided in Paragraph 7A, then, with regard to a well which is a horizontal well or a horizontally drilled well, Lessee shall be entitled to retain all sands and horizons at al! depths from the surface down to a depth which is the stratigraphic equivalent of a depth of one hundred (100) feet below the base of the deepest producing formation in such well which is capable of producing oil and gas in paying quantities, but only in a spacing unit the area or number of acres of which are equal to the area or number of acres determined by adding twenty (20) acres for each five -hundred eighty-five (585) feet horizontally drilled to the original forty (40) acres deemed to be a proration unit for each vertical well. Each such tract around each horizontally drilled we I .s I be as 10 CFW City 0 Gate" -. 14twk llea a rev 06 nearly in the shape of a square or a rectangle as is practical with the boundaries of the tract including the entire horizontal drainhole and the lateral boundaries of such tract being approximately equal distance from such drainhole and parallel thereto. If production should thereafter cease as to acreage included in a proration unit or pooled unit, this Lease will terminate as to such acreage unless Lessee commences reworking or additional drilling operations on such acreage within ninety (90) days thereafter and continues such reworking or additional drilling operations until commercial production is restored thereon, provided that if more than ninety (90) days pass between the abandonment of such well and the commencement of actual drilling operations for an additional well, or more than ninety (90) days pass since the commencement of reworking operations without the restoration of commercial production, the Lease shall terminate as to the applicable proration unit. At any time or times that this Lease terminates as to all or any portion of the acreage of the leased premises, Lessee shall promptly execute and record in the office of the County Clerk in the County where the leased premises are located, a proper release of such terminated acreage and shall furnish executed counterparts of each such release to Lessor at the address shown in Paragraph 19 hereof. 8. OFFSET OBLIGATIONS In the event a well or wells producing oil or gas should be brought in on land within 500 feet from any boundary of the leased premises. Lessee agrees within sixty (60) days from commencement of production from such well or wells to commence the actual drilling of an pffset well or wells on the leased premises; provided that the well or wells which are to be offset are producing in paying quantities; or Lessee shall release to Lessor free of this Lease the offsetting tract of at least one hundred twenty (120) acres. 9. FORCE 1VIA.TELIRE A. The term "force majeure" as used herein shall mean and include: requisition, order, regulation, or control by governmental authority or commission; exercise of rights or priority or control by governmental authority for national defense or war purpose resulting in delay in obtaining or inability to obtain either material, equipment or means of transportation normally necessary in prospecting or drilling for oil, gas or other mineral granted herein, or in producing, handling or transporting same from the leased premises; war, scarcity of or delay in obtaining materials or equipment; lack of labor or means of transportation of labor or materials; acts of God; insurrection; flood; strike; or other things beyond the control of Lessee. The term "force majeure" shall not include lack of markets for production or any other events affecting only the economic or financial aspects of drilling, development or prod 'VIM CFw B. Notwithstanding any other provisions of this Lease, but subject to the conditions hereinafter set forth in this Paragraph 9, should Lessee be prevented by "force majeure" as defined above, from conducting drilling or reworking operations on, or producing oil, gas or other mineral from, the leased premises, such failure shall not constitute a ground for the termination of this Lease or subject said Lessee to damages therefor; and the period of time during which Lessee is so prevented shall not be counted against Lessee, but this Lease shall be extended for a period of time equal to that during which such Lessee is so prevented from conducting such drilling or reworking operations on, or producing oil, gas or other mineral from, such leased premises provided, however, that in no event will the primary term be extended unless Lessee has begun the actual drilling of a well prior to the date of the expiration of the primary tern. All of the provisions of this paragraph are subject to each of the following express conditions: The terms and conditions of this paragraph shall not extend beyond the expiration date of any law, order, rule or regulation invoked under this paragraph, and shall be applicable and effective only during the following periods: (1) If the force majeure shall occur during the primary term of this Lease, it shall not operate to extend this Lease more than two (2) consecutive years beyond the expiration of the primary term. (2) If the force majeure shall occur during a ninety (90) day drilling or reworking period provided for in Paragraphs 6 and 7 hereof, after the primary term has expired, then it shall not operate to extend the Lease more than two (2) successive years beyond the expiration of such ninety (90) day periods. (3) In no event will the primary term be extended unless Lessee has begun the actual drilling of a well prior to the date of the expiration of the primary ten -n. C. None of the provisions of this paragraph shall ever be or become effective and applicable unless Lessee shall, within a reasonable time (not to exceed sixty (60) days in any event) after occurrence of the claimed event of force majeure above referred to, notify the Lessor, in writing, of such occurrence with full particulars thereof. D. The terms of this paragraph do not apply to monetary payments due under the terms of this Lease. 10. SHUT-IN GAS WELL PROVISIONS If at any time while there is a gas well on the leased premises or land pooled therewith which is capable of producing gas it-. paying quantities, but the production thereof is shut-in or suspended for any reason, and if this Lease is not then continued in force by some other provision hereof, then this Lease shall nevertheless continue in force as to such well and the pooled unit or proration unit allocated to it for a period 12 CFW City of FW Gateway Park lease Rev clew of sixty (60) days from the date such well is shut-in. Before the expiration of any such sixty (60) day period, Lessee or any Assignee hereunder may pay or tender to the Lessor a shut-in royalty equal to Twenty Thousand Dollars ($20,000.00) per shut-in gas well and if such payment or tender is timely made, this Lease shall continue in force but only as to said well or wells and the proration unit or the pooled unit allocated to it or them ana:`it shall be considered that gas is being produced from said well or wells in paying quantities for one (1) year from the date such well or wells are shut-in, and in like manner one, and only one, subsequent shut-in royalty payment may be made or tendered and it will be considered that gas is being produced from said well or wells in paying quantities for such additional one (1) year period as well. Lessee shall not be entitled to recover any shut-in royalty payments from the future sale of gas. Should such shut-in royalty payments not be made in a timely manner as provided in this section, it will be considered for all purposes that there is no production and no excuse for delayed production of gas from any such well or wells, and unless there is then in effect other preservation provisions of this Lease, this Lease shall terminate. Lessee shall pay or tender directly to the Lessor at the address as shown in Paragraph 19 all shut-in royalty payments as required by this Lease. 11. INFORMATION, ACCESS AND REPORTS A. Lessor shall have free access at all times to all wells, tanks, and other equipment that services wells under the leased premises, including drilling wells, and Lessee agrees to furnish Lessor, or Lessor's nominee, currently and promptly, upon written request, with full well information including cores, cuttings, samples, logs (including Schlumberger and other electrical logs), copies and results of deviation tests and directional and seismic surveys, and the results of all drill stem tests and other tests of other kind or character that may be made of wells on the leased premises. Lessor or Lessor's nominee shall be furnished with and have free access at all times to Lessee's books and records relative to the production and sale of oil, gas or other minerals from the leased premises, including reports of every kind and character to governmental authorities, State or Federal. Lessor shall have the right at its election to employ gaugers or install meters to gauge or measure the production of all minerals produced from the leased premises, and Lessee agrees to prepare and deliver to Lessor or Lessor's gauger or nominee duplicate run or gauge tickets for all minerals removed from the premises. Lessee shall furnish to Lessor daily drilling reports on each well drilled. B. Lessee shall furnish to Lessor, within a reasonable time after its execution, a copy of any gas purchase contract or transportation agreement entered into in connection with the leased premises, or if there is already a gas purchase contract or transportation agreement in effect due to Lessee's operations in the field, then a copy of that contract. Furthermore, a copy of any amendments to the gas purchase contract or transportation agreement shall be furnished said Lessor within thirty (30) days after execution thereof; 13 . J.. ilk urv.a CFW Ci of P and on request of Lessor and without cost to the Lessor, Lessee shall furnish Lessor a copy of the following reports: core record, core analysis, well completion, bottom hole pressure measurement, directional survey records, electrical and induction surveys and logs, gas and oil ratio reports, paleontological reports pertaining to the paleontology of the formations encountered in the drilling of any wells on the leased premises, and all other reports which pertain to the drilling, completing or operating of the wells located on the leased premises. Such information shall be solely for Lessor's use, and Lessor shall in good faith attempt to keep same confidential for twelve (12) months after receipt. C. Lessee shall advise Lessor in writing of the location of all wells drilled upon the leased premises on or before thirty (30) days prior to commencement of operations, and shall advise Lessor in writing the date of completion and/or abandonment of each well drilled within thirty (30) days after completion or abandonment. 12. PRESS NATION OF ECOLOGY OF LEASED PREMISES Any overflows or releases affecting the leased premises, including, but not limited to, salt water, mud, chemical, or oil shall be reported immediately to Lessor. Lessee shall not use any water in, on or under the leased premises without the prior written consent of the Lessor. 13. REMOVAL OF EQUIPMENT Lessee shall have the right at any time during or within six (6) months after the expiration of this Lease (but not thereafter) to remove all property and fixtures placed by Lessee on the leased premises, including the right to draw and remove all casing, except as to water wells as provided for in Paragraph 14 (d). This paragraph shall not apply to equipment or casing on or in an oil or gas well capable of producing in paying quantities, but Lessee shall be paid reasonable salvage value for any such casing or equipment. It is contemplated that Lessee may drill across and through lands covered by this agreement where production is not obtained or ceases. Where the casing or pipeline placed or laid through such non -producing lands is necessary to the production of a well or wells located on other lands covered by this Lease, or lands pooled therewith, it is expressly unaerstood and agreed that Lessor will make no demand that such casing, pipelines or other equipment necessary for the production of a well or wells drilled by Lessee be removed as long as such casing, pipelines and other equipment is necessary for the production of a producing well or wells drilled by Lessee. 14. ASSIGNABILITY BY LESSEE This Lease may be transferred at any time. All transfers by Lessee (including assignments, sales, subleases, overriding royalty conveyances, or production payment arrangements) must be recorded in the county where the lease premises are located, and the recorded transfer or a copy certified to by the County 14 CFW City of FW Gateway Park Lease Rev dea Clerk of the county where the transfer is recorded must be delivered to the Lessor within sixty (60) days of the execution date. Every transferee shall succeed to all rights and be subject to all obligations, liabilities, and penalties owed to the Lessor by the original Lessee or any prior transferee of the Lease, including any liabilities to the Lessor for unpaid royalties. No such transfer shall release the Lessee (or any subsequent transferor) from any obligation hereunder. 15. NO WARRANTY This Lease is given and granted without warranty of title, express or implied, in law or in equity. Lessor agrees that Lessee, at Lessee's option, may purchase or discharge, in whole or in part, any tax, mortgage or other lien upon the leased premises and thereupon be subrogated to the right of the holder thereof, and may apply royalties accruing hereunder toward satisfying same or reimbursing Lessee. It is also agreed that if Lessor owns an interest in the oil and gas under the leased premises less than the entire fee simple estate therein, the royalties to be paid Lessor shall be reduced proportionately, but in no event shall the shut-in royalty amount for a gas well, as provided for in Paragraph 10 hereof, be reduced. 16. INDEMNITY Lessee shall expressly release and discharge, all claims, demands, actions, judgments, and executions which it ever had, or now has or may have, or assigns may have, or claim to have, against the Lessor or its departments, 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 work performed by the Lessee. The Lessee shall fully defend, protect, indemnify, and hold harmless the Lessor, its departments, agents, officers, servants, employees, successors, assigns, sponsors, or volunteers from and against each and every claim, demand, or cause of action and any and all liability, damages, obligations, judgments, le:sses, fines, penalties, costs, fees, and expenses incurred in defense of the Lessor, 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 work performed by the Lessee under this Lease. THE LESSEE AGREES TO INDEMNIFY AND HOLD HARMLESS THE LESSOR, 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, DEPARTMENTS, ITS OFFICERS, AGENTS, SERVANTS, OR EMPLOYEES, CREAT BY, 15 i CFW City of FW Gateway Pff:k aseRev Clea 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 INSPECTING AND PERMITTING THE GAS WELLS. IT IS UNDERSTOOD AND AGREED THAT THE INDEMNITY PROVIDED FOR IN THIS SECTION IS AN INDEMNITY EXTENDED BY THE LESSEE TO INDEMNIFY AND PROTECT LESSOR AND/OR ITS DEPARTMENTS, AGENTS, OFFICERS, SERVANTS, OR EMPLOYEES FROM THE CONSEQUENCES OF THE NEGLIGENCE OF THE LESSOR AND/OR ITS DEPARTMENTS, AGENTS, OFFICERS, SERVANTS, OR EMPLOYEES, WHETHER THAT NEGLIGENCE IS THE SOLE OR CONTRIBUTING CAUSE OF THE RESULTANT INJURY, DEATH, AND/OR DAMAGE. 17. INSURANCE Lessee shall provide or cause to be provided the insurance described in the City of Fort Worth Gas Ordinance for each well drilled under the terns 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. 18. RELEASES REQUIRED Within thirty (30) days after the partial termination of this Lease as provided under any of the terms and provisions of this Lease, Lessee shall deliver to Lessor a plat showing the production units designated by Lessee, copies of logs showing depths to be retained within each unit, and a fully executed, recordable release properly describing by metes and bounds the lands and depths to be retained by Lessee around each producing well. If this Lease terminates in its entirety, then Lessee shall deliver a complete, fully executed, recordable -elease to Lessor within thirty (30) days. If such release complies with the requirements of this section, Lessor shall record such release. If Lessee fails to deliver a release complying with the requirements of this section within thirty (30) days after Lessor's demand therefore, then Lessee shall pay Lessor an amount equal to Five Dollars ($5.00) per acre per day for each acre of the leased premises that should have been released, beginning with the 30th day after the date of Lessor's request and continuing until such release has been executed and delivered to Lessor. It is agreed that actual damages to Lessor for Lessee's failure to deliver such release are difficult to ascertain with any 16 CFW City of FW Gateway Park Llease Rev clew certainty, and that the payrients herein provided are a reasonable estimate of such damages and shall be considered liquidated damages and not a penalty. Furthermore, Lessor is hereby authorized to execute and file of record an affivavit stating that this Lease has expired and the reason therefor, and such affidavit shall constitute prima facie evidence of the expiration of this Lease or any part of this Lease. 19. NOTICES A. All notices, infonnation, letters, surveys, reports, material, and all other documents, required or permitted to be sent to Lessor by Lessee shall be sent by certified United States mail, postage prepaid, return receipt required, to the following address: City of Fort Worth Attention: Doug Rademaker, Director of Engineering 1000 Throckmorton Street Fort Worth, Texas 76102 B. All notices required or permitted to be sent to Lessee by Lessor shall be sent to Lessee by certified United States mail, postage prepaid, return receipt requested to the following address: Dale Resources, L.L.C. 2121 San Jacinto Street, Suite 1870, LB -9 Dallas, Texas 75201 C. Service of notices, and other documents, hereunder is complete upon deposit of the mailed material in a post office or official depository under the care and custody of the United States Postal Service, in a postpaid, properly addressed and certified wrapper. D. Any party hereto shall have the right to change the name or address of the person or persons required to receive -iotices, and other documents, by so notifying the other party in writing. 20. BREACH BY LESSEE Lessee shall conduct Lessee's operations in strict compliance with all of the terms and provisions of this Lease and with all applicable local, state and federal rules and the regulations of any regulatory body having jurisdiction of such operations including, but not limited to, all local, state and federal environmental rules and regulations and applicable city ordinances. In the event Lessor considers that operations are not, at any time, being conducted in compliance with this Lease, or any imr lied covenant of this Lease, Lessor shall notify Lessee in writing of the facts relied upon as constituting a breach of any express or implied covenant or obligation of Lessee hereunder and, Lessee, if in default, shall have sixty (60) days after receipt of such notice in which to commence compliance with its obligations hereunder. Failure on the part of Lessee to timely commence efforts to rectify any such breach and to exercise diligence in remedying any such breach shall operate as a forfeiture of this Lease as to the portion thereof effected by such breach; provided that if Lessee, in good faith, disputes any 17 17,E 2 CFW City of FW Gateway Park Lease Rev clea alleged grounds of breach set forth in such notice, Lessee may, within said sixty (60) day period, institute a Declaratory Judgment Action in any District Court in a county where all or part of the said leased premises are located questioning whether it has in fact breached any expressed or implied covenant of this Lease, thereby staying any forfeiture during the pendency of such action. However, in the event that Lessor obtains a final judicial ascertainment in any such proceeding that Lessee is in breach of any covenant hereof, express or implied, then it is agreed that Lessor shall be entitled to a decree providing for cancellation or forfeiture of the Lease in the event such breach is not rectified or commenced in good faith to be rectified by Lessee within thirty (30) days from date such decree becomes final. 21. LOCATION OF DRILLING ACTIVITY, PIPELINES AND EQUIPMENT No drilling or other activity shall be conducted on the surface of the leased premises and no roads, electric lines, pipelines, equipment, or other structures shall be placed on the surface of the leased premises. 22. COMPLIANCE WITII 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 Fort Worth. 23. CONFLICT OF INTEREST Lessee represents that Lessee; its officers and directors, are not employees or officers of the City of Fort Worth nor is Lessee (its officers and directors) acting on behalf of any such officer or employee of the City of Fort Worth. 24. TERMS All of the terms and provisions of this Lease shall extend to and be binding upon the heirs, executors, administrators, successors and authorized assigns of the parties hereto. 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, notwithstandin above of other names as "Lessor", this term as used in this Lease shall mean and refer only o `sucl} parties 18 CFW Citv f FW Gatewav Park lease R as execute this Lease and their successors in interest. 26. CAPTIONS The captions to the various paragraphs of the Lease are for convenience only, to be used primarily to more readily locate specific provisions. They shall not be considered a part of the Lease, nor shall they be used to interpret any of the Lease provisions. 27. COUNTERPARTS This Lease may be executed in multiple counterparts, each of which shall be deemed an original, with the same effect as if the signature thereto and hereto were upon the same instrument. EXECUTED and effective as of the date of the notarial acknowledgment of the Lessor's execution. LESSOR: CIT B: ATTEST: N11\ '6 AlkkA�� City Secretary APPROVED AS TO FORM AND LEGALITY: B �� - 1,c `-- Assistant Cit Att rney Date: /-2--15�'0� DALE RESOURCES, L.L.C., LESSEE 19 L--ttnorizatio� CFW City of FW Gateway Park Lease Rev elea ACKNOWLEDGMENTS STATE OF TEXAS COUNTY OF TARRANT § On this day of 2005, the before undersigned, a Notary Public, duly commissioned, qualified anA acting within and for the said County and State, appeared in person the within named Marc A. Ott known to me personally, who stated that he was an Assistant City Manager for the City of Fort Worth, Texas, and was duly authorized in his respective capacity to execute the foregoing instrument and acknowledged that he had so signed, executed and delivered said instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this day of , 2005. he 2AIARASAAAM! LAM HETTIE LANE 4 � MY COMMISSION EXPIRES July 26, 2007Notary Public STATE OF TEXAS COUNTY OF TARRANT BEFORE ME, the undersigned authority, a Notary Public in and for the State of Texas, on this day personally appeared Ann F. Vandenberg, Vice President of Dale Resources, L.L.C., a Texas Limited Liability Company, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that she executed the same for the purposes and consideration therein expressed on behalf of said company. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this day of 2005. C Ait�t Notary Public, State of Te ?�.....' NIKKI MCLERCIY Notary Public State of Texas My Commission Ewes q; DECEMBER 11, 2006 EXHIBIT "A" Attached to and by reference made a part of that certain Oil and Gas Lease between the City of Fort Worth, as Lessor, and Dale Resources, L.L.C., as Lessee dated the 15'' day of February, 2005. Gateway Park, 751 Beach Street, being a tract of land out of the A. C. Warren Survey, Abstract No. 1686; the J. Blackwell Survey, Abstract No. 148; the P. T. Welch Survey, Abstract No. 1642; the E. Johnson Survey, Abstract No. 852; the J. Lynch Survey, Abstract No. 942; the J. Cross Survey, Abstract No. 304; the Sycamore Heights Addition, Volume 309, Page 11; and Volume 6866, Pages 256- 260, as recorded in the Deed Records of Tarrant County, Texas. Quanah Parker Park, 5401 Randol Mill Road, located in a portion of land situated in the J.W. Haynes Survey, Abstract No. 764 and in the J. Blackwell Survey, Abstract No. 149, in the City of Fort Worth, as recorded in Volume 12871, Page 510, as recorded in the Deed Records of Tarrant County, Texas. Tandy Hills Park, 3325 View Street, located in a portion of land situated in the Enoch S. Johnson Survey, Abstract No. 852; Peter T. Welch Survey, Abstract No. 1642, as recorded in Volume 3442, Page 582; and the John Lynch Survey, Abstract No. 942, as recorded in the Deed Records of Tarrant County, Texas. The above three tracts of land are more particularly described by Metes and Bounds on the attachments marked I, U and III. GATEWAY PARK GATEWAY PARK Being a tract of land out of the A -C. Warren Survey, A-1686; the J. Blackwell Survey, A-148; the P.T. Welch Survey, A-1642; the E. Johnson Survey, A-852; the J. Lynch Survey, A-942; the J. Cross Survey, A-304, and the Sycamore Heights Addition, Volume 309, Page 11. Beginning at the northeast corner of the tract described in the deed from Amon G. Carter Jr. and Ruth Carter Johnson to the City of Fort Worth recorded in Volume 6866, Pages 256-260 in the Deed Records of Tarrant county, Texas. THENCE: South no degrees 01 minutes 35 seconds west 2,957.76 feet; THENCE: North 89 degrees 59 minutes 07 seconds east 183.67 feet; THENCE: South 30 degrees 51 minutes 33 seconds west 46.23 feet; THENCE: South 17 degrees 01 minutes 35 seconds west 619.53 feet; THENCE: South 6 degrees 15 minutes 30 seconds west 56.36 feet; THENCE: South 57 degrees 39 minutes no seconds west 550.32 feet; THENCE: South 61 degrees 39 minutes no seconds west 610.10 feet; THENCE: South no degrees 19 minutes 53 seconds east 56.64 feet; THENCE: South 56 degrees 42 minutes 9 seconds west 1,046.73 feet; THENCE: Along a curve with a radius of 5,490.00 feet in a south .and westerly direction 2,682.17 feet along said curve; THENCE: South 83 degrees 26 minutes 24 seconds west 1,444.65 feet; THENCE: North 84 degrees no minutes 32 seconds west 461.82 feet; THENCE: North 62 degrees 54 minutes 32 seconds we=st 143.37 feet; THENCE: North 76 degrees 5 minutes 32 seconds west 183.16 feet; THENCE: North no degrees 7 minutes 26 seconds east 239.83 feet; THENCE: North no degrees 23 minutes 22 seconds west 137.34 feet; THENCE: North 66 degrees 41 minutes 38 seconds east 801.72 feet; THENCE: Along a curve with a radius of 448.14 feet in an easterly direction 545.68 feet along said curve; THENCE: North 8 degrees 20 minutes 16 seconds west 64.2 feet; THENCE: North 22 degrees 37 minutes 34 seconds east 185.22 feet; THENCE: South 52 degrees 08 minutes 31 seconds east 641.82 feet; THENCE:. South 78 degrees 48 minutes 58 seconds east 530.76 feet; THENCE; North 70 degrees 42 minutes 28 seconds east 452.96 feet; THENCE: North no degrees 1 minute 18 seconds east 774.10 feet; THENCE: South 89 degrees 58 minutes 42 seconds east 880.52 feet; THENCE: North no degrees 1 minute 18 segonds east 1,544.27 feet; THENCE: South 89 degrees 58 minutes 42 seconds east 91.70 feet; THENCE: North no degrees 1 minute 18 seconds east 1,153.08 feet; THENCE:. North 89 degrees 31 minutes 35 seconds east 1,,358.78 feet; THENCE: Along a curve with a radius of 2,788.60 feet in an easterly direction 563.76 feet along said curve; THENCE: North 77 degrees 56 minutes 35 seconds east 1,599.52 feet; THENCE: Along a curve with a radius of 2,288.46 feet in an easterly direction 383.02 feet along said curve to the PLACE OF BEGINNING and containing 503.693 acres of land. THENCE: South 43 degrees 32 minutes 22 seconds east 466.75 feet; THENCE: North 89 degrees 30 minutes 38 seconds east 224.33 feet; THENCE: North no degrees 01 minutes 18 seconds east 9.31 feet; THENCE: North 50 degrees 58 minutes 42 seconds west 185.0 feet; THENCE: North 24 degrees 42 minutes 22 seconds west 668.0 feet; THENCE. North 37 degrees 2 minutes l0.seconds west 365.0 feet; THENCE: North 53 degrees 58 minutes 20 seconds west 1,080.12 feet; THENCE: North 8 degrees 20 minutes 16 seconds west 64.2 feet; THENCE: North 22 degrees 37 minutes 34 seconds east 185.22 feet; THENCE: South 52 degrees 08 minutes 31 seconds east 641.82 feet; THENCE:. South 78 degrees 48 minutes 58 seconds east 530.76 feet; THENCE; North 70 degrees 42 minutes 28 seconds east 452.96 feet; THENCE: North no degrees 1 minute 18 seconds east 774.10 feet; THENCE: South 89 degrees 58 minutes 42 seconds east 880.52 feet; THENCE: North no degrees 1 minute 18 segonds east 1,544.27 feet; THENCE: South 89 degrees 58 minutes 42 seconds east 91.70 feet; THENCE: North no degrees 1 minute 18 seconds east 1,153.08 feet; THENCE:. North 89 degrees 31 minutes 35 seconds east 1,,358.78 feet; THENCE: Along a curve with a radius of 2,788.60 feet in an easterly direction 563.76 feet along said curve; THENCE: North 77 degrees 56 minutes 35 seconds east 1,599.52 feet; THENCE: Along a curve with a radius of 2,288.46 feet in an easterly direction 383.02 feet along said curve to the PLACE OF BEGINNING and containing 503.693 acres of land. II QUANAH PARKER PARK Field Notes for a Tract of land to be conveyed to the City of Port Worth, by the Amon G. Carter Foundation; North Tract: Being a tract of land out of the J. Brockman Survey, Abstract Number 102, the' W. R. Reeder Survey, Abstract Number 1303, and the A. C. Warren Survey, Abstract Number 1686, situated about 5 12 miles North 80 degrees East from the courthouse in Tarrant County, Texas, and also being a portion of that certain tract of land as conveyed to A. G. Carter by deed recorded in Volume 1919, Page 211, of the Deed Records of Tarrant County, Texas, and also being a portion of that certain tract of land as conveyed to tho Amon G_ Carter Foundation, by deed recorded in Volume 8780, Page 1354, of the Deed Records of Tarrant County, Texas, and being more particularly described by metes and bounds as follows: Beginning at a 7/8 inch iron rod, found at the northwest comer of that certain tract of land as conveyed to TEXAS ELECTRIC SERVICE COMPANY, by deed recorded in Volume 4205, Page 585 of the Deed Records of Tarrant County, Texas, said iron being in the east line of a 372.5 acre tract of land as conveyed to Emma Henderson Mann, by deed recorded in Volume 1626, Page 360, of the Deed Records of Tarrant County, Texas, from which a Texas Electric Service Company monument found at the southeast -corner of that certain tract of land as conveyed to TEXAS ELECTRIC SERVICE COMPANY, by deed recorded in Volume 4213, Page 422 of the Deed Records of Tarrant County, Texas, said monument also being the southeast comer of said Mann Tract, bears South 00 degrees,, 06 minutes, 53 seconds West, 150.17 feet; Thence with said east line, North 00 degrees 06 minutes 53 seconds East, at 50.05 feet, pass the northeast comer of said TEXAS ELECTRIC SERVICE COMPANY TRACT, from which a''/z" Iron Rod, found, bears South 89 degrees 53 minutes 03 seconds East, 1.24 feet, at 941.14 feet pass a 7/8 inch iron rod, found, for the southwest comer of the said Reeder Survey, Abstract Number 1303, from which a 3/4 inch iron rod was set in the remains of a Burr Oak Stump, the original witness corner, at South 87 degrees 30 minutes East, 26.39 feet from said corner, at 1541.14 feet passing a 5/8 inch capped iron rod marked "CITY FT. WORTH SURVEY SECTION" set, at 1587.14 feet passing.a 7/8 inch iron rod, found, on the top of bank of the Trinity River, in all 1666.08 feet to the center of the Trinity River, a northwest comer of said Carter Tract; Thence down [he middle of the Trinity River with its meanders, the following courses and distances: South 79 degrees 15 minutes East, 164 feet; and North 89 degrees 34 minutes East, 265 feet; and South 50 degrees 30 minutes East, 130 feet; and South 36 degrees 45 minutes 06 seconds East, 725.5 feet; and South 37 degrees 03 minutes East, 162 feet; and South 69 degrees 04 minutes 06 seconds East, 104.17 feet to a northeast corner of said Caner Tract, the northwest comer of said Carter Foundation Tract, from which a '!," Pipe found, on the top of bank, bears Sbuth 01 degrees 21 minutes 16 seconds East, 90.00 feet; and South 67 degrees 45 minutes East, 633.95 �eet; and South 44 degrees 16 minutes East, 284.2 feet.; and South 85 degrees 21 minutes East, 179.5 fper, arid North 41 degrees 53 minutes East, 797.5 feet; and North 76 de6rees 25 minutes East, 262.2 feet, and South 57 degrees 49 minutes East, 166.5 feet; and South 06 degrees 19 minutes East, 333 feet; and South 34 degrees 20 minutes East, 245 feet; and South 89 degrees East, 744.28 feet, to the northeast corner of said Carter Foundation Tract; Thence with the east line, of said tract, South 00 degrees 14 minutes East; at 91.80 feet, passing a 7/8 inch iron rod, found, on the top of bank, in all 416.03 feet to a capped 5/8 inch iron rod marked "CITY FT. WORTH SURVEY SECTION' set at the northeast comer of that certain tract of land as conveyed to the City of Fort worth by S. J. Crow, Executive Diroctor of Amon G. Carter Foundation by deed recorded in Volume 9236, Page 157 of the Deed Records of Tarrant County, Texas; Thence with the north line of said City Tract, North 83 degrees 44 minutes 56 seconds West, 559.07 feet (called 559:45 feet) to a capped 5/8 inch iron rod marked "CITY FT. WORTH SURVEY SECTION" set for its northwest corner, Thence with the west line of said City Tract, Sduth' 06 •degrees 15 minutes 04 seconds West, 120.00 feet to a capped 5/8 inch iron rod marked "CITY FT. -WORTH SURVEY SECTION' set for its southwest corner, in the north line of a that certain tract of land, as conveyed to TEXAS ELECTRIC SERVICE COMPANY, by deed recorded in Volume 4201, Page 163'6ftlie Deed Records of Tarrant County, Texas; Thence with said north line, North 83 degrees 44 minutes 56 seconds West, 2241.64 feet to a Texas Electric Service Company monument found at the northwest comer of said Tract, the northeast corner of the aforesaid TEXAS ELECTRIC SERVICE COMPANY Tract, Thence with the north lint of said tract, South 82 degrees 05 minutes 02 seconds West, 999.08 feet to a 7/8 inch iron rod found at an angle point in said line; Thence continuing with said line, South 89 degrees 36 minutes 1 I seconds West, 185.06 feet, to the Place of Beginning and containing 72.2 acres of land more or less. Field Notes for a Tract of land to be conveyed'to the City of Fort Worth,. by the Amon G..Carter Foundation; South Tract: Being a tract of land out of the John W. Haynes Survey, Abstract Number 764, the A. C. Warren Survey, Abstract Number 1686, and the James Blackwell Survey, Abstract Number 148, about 5 1/2 miles North 80 degrees East from the courthouse in Tan -ant County, Texas, and also. being a portion of that certain tract o_f land as conveyed to A. G. Carter by decd recorded in Volume 1919, Page 211, of the Deed Records of Tarrant County, Texas, and being more particularly described by metes and bounds as follows: Beginning at a Texas Electric Service Company monument, found, in the south line of the A. C. Warren Survey, said monument also being the southeast comer of that certain tract of land as conveyed to Texas Electric Service Company by deed recorded in Volume 4213, Page 422, of the Deed Records of Tarrant County, Texas; and being in the south line of a 372.5 acre tract as conveyed to Emma Henderson Mann, by deed recorded in Volume 1626, Page 360 of the Deed Records of Tarrant County, Texas; Thence with the east line of said 372.5 acres, North 00 degrees 06 minutes 53 seconds East, 50.16 feet to a 518 inch iron rod with "City Fort Worth Survey Section" cap, set, said iron rod being the most'westerly southwest corner of a tract conveyed to Texas Electric Service Company by deed recorded in Volume 4205, Page 585, of the Deed Records of Tarrant County, Texas, from which a Texas Electric Service Company monument, found, bears North 89 degrees 32 minutes 47 seconds East, 0.30 feet; Thence with the south line of said Texas Electric Service Company tract, North 89 degrees 32 minutes 47 seconds East, 193.68 feet to a 5/8 inch iron rod with "City Fort Worth Survey Section" cap, set; Thence continuing with the south line of said Texas Electric Service Company tract, North 82 degrees 05 minutes 43 seconds East, 992.97 feet to a 718 inch iron rod, found, from which a Texas Electric Service Company monument, found, bears South 88 degrees 06 minutes 03 seconds West, 2.66 feet; Thence South 01 degrees 21 minutes 16 seconds East, 53.37 feet to a Spike, found in the center of Randol Mill Road; Thence generally with the center of Randol Mill Road the following courses and distances: South 89 degrees 12 minutes 13 seconds West, 49.63 feet; and South 87 degrees 50 minutes 57 seconds West, 50.00 feet; and South 84 degrees 19 minutes 24 seconds West, 49.97 feet; and South 83 degrees 18 minutes 03 seconds West, 49.98 feet; and South 82 degrees 07 minutes 31 seconds West, 50.00 feet; and South 79 degrees 25 minutes 22 seconds West, 49.98 feet; and South 78 degrees 21 minutes 18 seconds West, 50.01 feet; and South 78 degrees 26 minutes 05 seconds West, 50.00 feet, South 77 degrees 23 minutes 21 seconds West, 199.94 feet, South 74 degrees f11,7 minutes 12 seconds West, 49.97 feet; South 72 degrees 35 minutes 36 seconds West, 49.98 feet; and SoVth 68 degrees 28 minutes 1.2 seconds West, 50.00 feet; and South 57 degrees 59 minutes 46 seconds West, 50.01 feet; and South 52 degrees 42 minutes 21 seconds West, 49.96 feet; and South 45 degrees 20 minutes 21 seconds West, 50.05 feet; and South 41 degrees l5 minutes 27 seconds West, 49.90 feet; and South 40 degrees 23 minutes 25 seconds West, 49.93 feet; and South 39 degrees 49 minutes 47 seconds West, 49.98 feet, to a 318 inch iron rod with "City Fort Worth Survey Section" cap, set; Thence continuing with the center of Randol Mill Road, South 40 degrees 22 minutes 46 seconds West, 429.95 feet, to a 5/8 inch iron rod with "City Fort Worth Survey Section" cap, set; Thence continuing with the center of Randol Mill Road, South 39 degrees 49 minutes 02 seconds West, 460.66 feet, to a 5/8 inch iron rod with "City Fort Worth Survey Section" cap, sct; M. Thence continuing with the center of R.andol Mill Road, South 39 degrees 14 minutes 05 seconds West, 504.08 feet, to a 5/8 inch iron rod with "City Fort Worth Survey Section" cap, set, from which a 7/8 inch iron rod, found, bears North 89 degrees 46 minutes 00 seconds East, 0.94 feet; Thence South 89 degrees 46 minutes 00 seconds West, 203.82 feet, to a spike found in the center of East First Street, ac the southeast corner of a 60 foot strip of land dedicated for bight of Way, according to the plat of Lot 1, Block 1, Arc Park Addition, according to plat filed in Volume 388-176, Page 67 of the Plat Records of Tarrant County, Texas; Thence North 00 degrees 10 minutes 58 seconds West, at 24.92 feet, passing a 7/8 inch iron rod, found, at 60 feet passing a 5/8 inch iron rod with "City Fort Worth Survey Section" cap, set, for the southeast corner of said Lot 1, in all 1277.3 l feet to a 7/8 inch iron rod, found for the northeast corner of said Lot 1, and also being in the south line of said 3725 acre tract; Thence; wirh the south line of said 372.5 acre tract, North 89 degrees 36 minutes 08 seconds East, at 469.74 feet passing a Texas Electric Service Company monument, found, for the southwest corner of the aforesaid Texas Electric Service Company tract, in all 869.79 feet to the Place of Beginning and containing 23.4 acres more or less, of which 1.9 acres lies with the existing Right of Way ofRandol Mill Road, leaving a net area of 21.5 acres. III TANDY HILLS PARK have GRANTED, SL.,.D AND CONVEYED, and by these parescnts do CONVEY unto the CITY OF FORT WORTH, A Municipal Corporation, of Tarrant County, Texas, all that certain property situated in ....ANT, SELL AND Tarrant I I County, Texas, described as follows, to. -wit: i !j I, I Situated in Tarrant County, Texas, Being 105.25 acres of land, more or less, out of the ENOCH S. JORNSON SURVEY, Abstract No. 552; PETER T. 6ELCR SURVEY, Abstract No. 1642, and the JOHIN LYNCH SURVEY, Abstract No. 942 in Tarrant County, Texas, and' being described by metes and bounds as follows: BEGIMINING at a point in the East line of the said Peter T. Relch Survey, Abstract No. 11542 and the South Right -of -Way lire of the Fort Worth -Dallas Turnpike, a. distance of�I� i 9S4.�' feet Nlorth of the Southeast corner of the said Peter T. Welch Survey, Abstract T Ei4CE SOUT_z 0 Degrees, 20 �;inutes East along the East line of the said Peter T. T.•;alch Survey, Abstract 1-7o. 1642, a distance 'of 984.4 Feet to it's, Southeast Corner; TRE N,CE SOUTH 1 Degree, 30 I°mutes East a distance .of 1722.6 Feet to an iron pine for corner; j II _ : Page 1 of 2 City of Fort Worth, Texas Mayor and Council Communication COUNCIL ACTION: Approved on 1/4/2005 DATE: Tuesday, January 04, 2005 LOG NAME: 30EASTSIDEGAS REFERENCE NO.: L-14010 SUBJECT: Approval of Lease Agreement for Natural Gas Drilling under Eastside Parks (Gateway, Quanah Parker, and Tandy Hills) with Dale Resources, LLC RECOMMENDATION: It is recommended that the City Council approve the acceptance of a lease agreement for natural gas drilling under the Eastside Parks (Gateway, Quanah Parker, and Tandy Hills) with Dale Resources, LLC for one two-year term. DISCUSSION: On August 24, 2004 (M&C C-20233), Fort Worth City Council authorized staff to advertise a request for proposals from private companies to drill for natural gas under Eastside parkland, which is comprised of the Gateway, Quanah Parker, and Tandy Hills City parks. The total available acreage is 702.65 acres. A request for bid proposals (RFP) was advertised for three consecutive weeks in two daily publications: the Commercial Recorder, published on October 28, November 3, and November 11; and the Fort Worth Star Telegram, published on October 28, November 5, and November 11. The RFP was also advertised twice in the Fort Worth Business Press in the November 7-13 and November 21-27 issues. The following sealed bids were received and opened on December 2, 2004: Bidder Lease Bonus/Acre Total Lease Bonus % Royalty - Dale Resources LLC $2,031.00 $1,427,082.00 25 Four Sevens Oil Company $1,151.00 $ 808,750.00 25 Frost Brothers Resources, LLLP $1,000.00 $ 702,650.00 25 The bids received were evaluated by staff and the City's mineral asset management consultant, JPMorgan Chase to determine the best overall bidder. 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. On December 14, City staff and representatives from JPMorgan Chase met with representatives of each bidder to obtain additional information and clarification of each proposal. City staff and JPMorgan Chase determined, based upon the proposal content and follow-up interview, that the Dale Resources LLC bid is the overall best bid. In accordance with the Alternative Assets Agency Account Agreement between JPMorgan Chase and the City (City Secretary Contract 29698), JPMorgan Chase will serve as the depository of the lease bonus revenue until the City adopts a Gas Lease Revenue Policy. The recommendation to adopt this policy is scheduled to be brought before Council on January 11, 2004. Page 2 of 2 The properties in the lease agreement are located in COUNCIL DISTRICTS 4 and 8, Mapsco 64T, U, V, X, Y, and Z; 65N, P, S, and T; and 78A, B, and C. FISCAL INFORMATION/CERTIFICATION: The Finance Director certifies that the Engineering Department is responsible for the collection of funds due to the City under this agreement. TO Fund/Account/Centers Submitted for City Manager's Office by. Originating Department Head: Additional Information Contact: FROM Fund/Account/Centers Marc Ott (8476) A. Douglas Rademaker (6157) A. Douglas Rademaker (6157)