HomeMy WebLinkAboutContract 31784 CITY SECRr-Arjy_�
CONTP� :,
0111L AND GAS LEASE
1"HE STATE OFT,EXAS §
COUNTY OFTARRANT §
THIS AGRFENIFN'r(,,r.ease) is niade and entered into as orf the date hercin specificd by and
belween- CITY OF FORT '4'l OR a home rule municipal corporation of the State ofTexas located
Within 'Jan-ant, Denton, and Wise Counties, Texas, (hereinafter refiarred to as Tessor"), and, DALE
RESOURCES,L.L.C.(hercinafitel-referred to as'Tcssce").
%V1 T N E S S ETH
1.
GRANTIN(...C11AZINE
Lessor,in Collsa(Ierafion ofa cash bonus, in hand paid,of the royalfic,,,herein provided,and of flic
agreements of Lessee fiereinafter conrained. herchy,graws,leases,arid lets cxcfustve9y unto Lessee for the
,A,Ac purpose of investigating, exploring, drilling, operafing, and producing oil and/or gas from the land
leased hereunder,togedier with any liquid or gaseous substances produces in association with oil and gas,
the folliuwing described [and situated in the Cily of I'mi Wcoh, Texas described in Lxhibit "A"attached
herelo(the"leased prcrrlist^,S`),
All mincral subs'tanecs and nuncral vights,other than oil and gas (and all:other hquid or'gaseous
nimetals produced in association with oil or gas)are eNpressly reservvd to Lessor and excepted firox-P diis
Lease. These reserved mineral nghts include. Nit are not limited to,the right,,to lignite,coal and sulfur
not produced as as component(afofl and gas.
For the purpose of determining die amount ofany bonus or other payment hereunder,said leased
--30-,863-
2.
PRIMARYTERM
Subject to the other provisions herein contained. this Lease shall he for a lerm of two:(2)years
fironi the date of the notarial acknowledgment ofl,essor's execution of this instrument(hereinafter called
'primary ler-ill")and so long thereafter as oil,gas or other minerals granted herein are pro,duced ftoril,the
leased prerniscs or lands pooled therewnh, in paying quantities, or drilling operations, ve in pro@vess
thereon as hereinafter provided,and the royaltics are paid as provided herein.
3-
DELAY RENTALS
If actual drilling is not c(mnmcnccd on the leased PrellliSCS Mon any lands pooled therewith oil or
before melve(12)months ftorn,the date ofthis Lea.w. this[.ease shaD aultornatically terminate,unless on:
or-before such anniversary date Lessee shall pay to Lessor or to the credit of Lessur,
PA Of A jj,
Hundred Seventy One and Fifty eight cents($771,58) (hereinafter called "rental")which shall cover the
privilege of deferring commencement of drilling operations for a period of tovelve (12) months. In like
manner, and upon like payments annually, the cornmencement of drilling operations may be fut1her
defmcd for successive periods of twelve(12) months each during the primary terrn, 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 &C, then this Lease will automatically terminate. Upon
termination,Lessee shall prepare, execute and deliver to I.,,essor a recordable release covering the]eased
premises in accordance with this Lease. Lessee may at any time or times execute and deliver to Lessor,a
release or releases oftbis Lease as tcu all or any part of the]eased premises,and thereby be relieved of al]
obligations as to the released land or interest, except for the indemnificakion 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.
ROYALTIFS
Lessee shall pay 'Co Lessor the following royalties, which shall be free of all costs of any kind,
including, but not linfired to, costs of gathering, production, transportation., (Teafing, compression,
dehydration,processing, marketing, trucking or other expense,directly or indirectly inCluTcd by Lessee,
whether as a direct charge or a reduced price or otherwise. In this regard, Lessee agrees to bear one
hundred percent (tO101%) of all costs and expenses incurred in rendertrig 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 royaltics 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 ]cased 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[..,ease operations(such as in drips or separators)twenty-five percent
(25',Vo)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
operations,, is to he delivered free of cost at the well or to the credit of the Lessor into pipchrics,
CFW 011.M D C�
I"EPx5fi,140
gathering lines,barges or other flacilities to whicl)the weN and tanks on the properiy,rnay be coymccied.
Laasmar shall always have the right,at any time and frotri finic to time,upon reasonable Written n(Aice to
Lessee,to take Lessor's share of'od,gas and processed I iquids in Child. Le,,,,sor may elect li)take Lessor's
gas in kind at the well,or at the point ol'delivery where Lessee delivers Lessee's gas lo any third party,
It'gas is processed, lessor may elect to take Lessor's share rad 1he restrkm gas attributable to production
from the leased;premises,at the sarric point ol'defivery Where Lessee receives its share ofl"CSiduc 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 Lessce's
share of liquids i,,,stored or delivered. Lessor ,bafl reirnburse Lessce forzdl reasonable costs incurred by
Lessee in instalfing,operating or maintaining additional facilities necessary for Lessor's royalty gas and
processed liquids to be separately metered,accounted fair,and delivered to a third party,but Lessor shall
not be charged for any expense in the produciton, gathering, dehydration, separation, compression,
transportation,treatment,proeming or storage of`Lessors share ofgas and processed hquids.
B. On products, twenty-five perccrit t2511111) of the gross market value or- proceeds of sale
thereof,whichever is higher,
G On residue gas, m gas ret-riaming after separation, cxtraction, or processing opera,tions,
twenty-five percent(25`/+a)of`the proceeds of sale or of the ntarket value 0icrcof,Whichever is higher.
1). 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 (As
Contract,as defined below,that is ratified by Lessor according to Paragraph G bidow or l ii) if not sold
pursuant to a Gas Con1ract, as derined below, ralified by Lessor and Lessee, the highest gross price
reasonably obtainable for the quantity (it' gas or product,,-, availablc 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 oni the date of'such a contract with adequate provisions,for redetermination
ofprice at intervals of no less frequency than one(I)year to ensure that the production is being sold for
no less than the current market price-Included within the definition of"Markel,Value"as Used herein is
the presumption that Gas Contracts that arc ratified by Lessor are arms-length CMMWIS With pUtchasers
who are not afflihat", of Lessee. An"affflaatc" includes,but is not limited to,the parent company or a
subsidiary ofLessee,a corporation 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 plarrt,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 evcrit .-,hall"market value,""ever
he less than the artiount actually received by the Lessee for the sale of'hydrocarbons.
E, This Lease is intended to cover only oil and gas, but wrnc wher substances (including
3 (TW 011,AND OAS LFASI.Cly(IDIIIV-K(AV)<
hchum and sulphur) may be produced necessarily with and tneidental to flw production of oil or gas
from the [eased prognoses,;, and, it, suet event, this I case shall also cover all such: o,ther substances so
produced, On all such substances so produced under and by Virtue 01'the 1CMIS of this lease. Lessor
shall receive a royalty,oftwenty-fi,,,e pereent(251A,Q,)or app such substances so produced and saved,sarne
to be delivered to Lessor,freer ofall costs,-or,at Lessor's election,Lessor's twenty-live percent(25'i',)of
such substances shall'be sold by Lessee with lessce's portion of'sucli substances and at the sarne profit
realized by Lessee for its portion ofsuch substances,
F. All royalties hereinahove provkIed sd,mH he payable in cash (unless Lessor elects to,take
such royaliy oil or gas in kind)to l.es,,.,OT within sixty(60)days following the first conintercial sale of
production and thereafter no rnore than thirty(30:)days after the end of the month following the r7lorifli
during which production takes place. Subject to the provisions of Paragraph 10 of this I-ease
concerning shut-in wells,royalties shall be paid to,Lessor by Lessee and/or its assigns or by the PTt)dUCt
PUTC113SVT fOr 011 andfor gas. Upon the failure of any party to pay Lessor the royalty as provided in this
paragraph, Lessor may, at Lessors option, elect to terminate this lease by sending written notice to
Lessee, Lessee ,,hall then have thirty (30)clays frorn the date of service of such written notice in which
to avoid termination of this Lease by making or causing to be made the proper royally payment or
payments that-should have been patd. If such royalty payment is not made on or before the expiration of
the 30-day period,or written approval is not obtained frons I essur to defer such payment, Lessor may
elect to terminate this I-ease by filing a Notice of—fernrination with the County Clerk in the county
where the peased premises are located. The effective date of said ttTrnn-iation: shall be the date said
Notice of Termination is filed with the said County Clerk,
GLessee agrees that it wilt not enter into any contract for the gale,delivery,transporting or
processing ofgas produced from the leased prernises which shall extend more than two, (2)years from
the effective dine ot'such sales contract unless such contract has adequaw provision,",tot redetermination
of price at intervals of no less frequoicy than one(1)year to ensure that production from this Lcase is
not bieing sold for less than the then current market value. At least thirty(3,0)days Prior tO the delivery or
the execution of any contract for-the sale,dehvcry,transporting or processing of gas produced From the
leased premises, Lessee shall provide Lessor with a complete copy of each proposed contract F(A the
purchase, transportation and/or processing of such gas that 1,cssee intends to execute (cach a "Gas
Contract"), wwhereupon, Lessor shall have fifteen (15) days wiflnn which to either ratify such Gas
Contract or notify Lessee in writing that it does not approve of such Gas Contract,including a stalernent
cif the reasons that Lessor does not approve of such Gas Contract(Lessor's failure to respond within the
fifteen(115)clays etther by ratification or by written notice that it does not approve ofthe proposed Gas
Corut-,act shall be dcerned to,be Lessor's ratification of such Gas Contract), If Lessor ratifies, the Gas
4
fAAVOIL Nlt,,�,�ASU AM
Contract, Lessor shall he deerned bound by the terms of'such Gas C'untract (and, at Lessee's option,
Uss,or shall execute such Gas Contract as a party thereto) and the gas or products therefroin sold
pursuant to such Gas Contract shall be deemed sold at uiaTkel viflue haled on the gross price stated
therein. Lessee shall not arno,id or modify any material terms of as Gas Contract ratified by Lessor
wiffiout the prior Written Consew off-essor. IfLessor does not approve of a G'as Contract, Lessee shaill
o'ms,alt with Lessor in an effort to agree to the terms of the;proposed(Jas Contract,and ifthe other party
or parties to the Gas Contract agree to the changes or modifi(Nitions to the Gas Contract which are
proposed by Lessor in order for Lessor to rafilw+such Gas Contract,then Lessor shall be deerned to have
ratified such Gas Contract(and,at I.,essec's option, Lessor shalt CXCCUtC 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 partics, thereto. Lessee may elect to execute such Gas C,ontract and
sell,deliver, transport and process gas according to the ICTTTIS thereof,subject to the Other terms,ofths
Paragraph 4 concerning the payment ofl,cs:;or's royalty on gas and products there front, McIu(fing the
right of lessor to take ils share of gas in kind, In the everts 1,cssor elects to take and separately dispose
of its royalty share of gas, the parties shall enter into at mutually acceptable balancing agreement
providitig for (a) the right of an under produced party to make up an imbalance by taking up to 150
percent of its share Of III-OdUCtion and (b) and obligation to settle any imbalance remaining after
depIction in cash, based on the proceeds received by the overproduced party when the nribalance was
created,or,ifthe overproduced party's gas was used but not Sold, based on the market value of gas
when imbalance v,us created.
11, In the event Lessee enters into a pas purchase contract which contains what is commonly
referred to,as a "take or pay provision"(such provision nicaning that the gas purchaser agrees to take
delivery of a specified minimum volume or quantity,of gas over a specified terni at as specified price or
to make minimurn periodic payments to the producer for gas riot taken by the purchaser) and the
purchaser under such gas Purchase contract makes payment to Lessee by V61 LIC 01'Snell purchaser's
failure to take delivery Of Such minimum volume or quamity of gas, then Lessor shall be entitfml to
1wenty.-fivc percent (2514n)op"all such surns paid w, Lessee or producer under the "pay"' provisions of
such gas purchase contract, Such royalty payments shall be due and owning to Lessor widini thirty(30)
clays after the receipt of'such payments by Lessee. If Hic gas purchaser"inakes up" such gas within the
period called Jlor in The gas contract and Lessee is required to give such purchaser a credit 6)r gas
previously paid for but not taken,then I,CSS0rSh'11ll not be entitled to royalty on Such"make up' gus, If
Lessee is not Producing any quaraine",of gas frorn the leased prenusts but is receiving, payments under
the"pay"jxn-lion ofsuch"take or pay"gas purchase contract provision,such,payments shall riot reficvc
Lessee of the duty to make shut-in royally payments if'LCssec desires to continue t1iiis [,case, but such
$ C1 W 011ND,4
"t,akc or pay" r0yahy payments shalf be applicd as a credit agarnst any shut-in royalty obligation:of the
Lcsscc, Lcs,,or shall be a third-party beneficiary of any ga,., purchase contract and/or transportation
agreement entered inio hoween I,n,,we and any J)UrChaSer an(FOr h-anSp0rtCr Of I,CSS0r`.s paw,
irrespective of any provtsion of swd 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%o) of'the value of any benefits obtained by or granted to Lcssec froin any gas purchaser
an(Vor transl-iorter for the afriendnient, modification, extension, alteration, consolidation, b-ansfer,
cancellation or settlement of any gas purchase contract and/or transportation agrecrrient.
I- Lessee agrees that before any gas produced front the leased prernises is used or sold off
ihe leased prcniiscs-,it will be run,free of cost to Lessor,through an adequate oil and gas separator of aa.
convcnfional type or eqUipMeril at least as cl,ficient,to the crid that all liquid hydrocarbons recoverable
from Ific gas by such means will be recovered and Lessor properly compensated therefor.
J. Any payment cif royalty or shut-in gas royalty hereunder paid to Lessor to excess of the
amount actuafly due to the Lessor shall never1h6css hecorne the property of'the Lessor if Lessee does
not make wriiien rccjuest to LesWr Rff' NiMbUrsetrient 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 [ands covered hereby,and a
deterrrunation of the name, interest ownership and whereabouts ofany person entitled to any payment
whatsoever under the terms hereof'shall be the s(Oc responsibility of Lessee. It is further expressly
a,gn-ced and understood that: (i)this provtsion shall in no way diminish the obligation ofl,cssec to make
Rill and PlUnCtUU1 payments ofaH amounts due to Lesmn- or io any other person under the terms and
provisions of this Lease, and Qii) 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.
if,. The terms of this Lease Enay not he amended by any (it vision order and the signing of
division order by any rnmeral owner may not be rnade a prerequisite to payment ofroyalty hereunder.
t'. Oil, gas or pro,ducts may not be sold In a subsidiary or affiliate of I-essoc as defined
herein without the I essot's prior written permission.
M, Lessee shall pay Lessor royalty on afl gas produced fi-orn a wcll on the leased premises
and sold or used offffie lease(] premises, regardless ofwhethcr or not such gas is produced to the credit
of Lessee or sold under a contract executed by or binding on Les',s'ec. Should gas be sold under as sales
contract not binding on Lessee, Lessor',,,royalty will be calculated based on the highest price paid for
any ofthe gas produced frorn the well from which such gas is produced. In no event will 0w price paid
Lessor fbr Lessor's share ofgas be less than the price paid Lessee for Lessee's share of gas.
6 (TNOIL AND UAS 1 EASL Cily(JUle-W)Wt:
POOLING'
Ltsscv, upon the prior written consent of Lessor which qW1 not be unreasonably withheld, is
hereby gNen the right to pool or combine The acreage covered by this Lease or any portion ffiereof as to
oil and gas, or either ofthem with any Other land, lease or leases in the immediate vicinity thereof to the
extent hereinafter stipulated, when u is necessary or advisable toy do so in order to property explore, or
develop,produce and operate said leased premises in compliance with the spacing rules,of the appropriate
lawflul authority,, or when to do so would promote the conservation of oil and gas in and under and that
may he produced from said premises, In the absence of field rules,units pooled Im oil and gas hereunder
shall not exceed 40 acres each in area, provided that should f.,rovernmental authority having jurisdiction
prescribe the creation of units larger than those specified (including, for example, for as horizontal well),
liar the drilling or operations of a well at a regular location or l6r obtaining maximum allowable from any
wvett to be drilled, drilling or already drilled, units thcreafter created may confbrril in, size with fliose
prescribed by governmenW regulations. Lessee.,, under the pro),isions hereof, may pool or conlbinc
acreage coveTed by this Lease or any portion thereof as above provided as to oil in any one or more strata
Irbe
as to any straturn or strata need:not
and as to gas in any one or more strata ,units farmed by pool i ng
conform: in size or area with the unit or units into which,the Lease is pooled or combined as to any other
stratum Of Strata,and oil units need not cumarin as to area with gas units. 'rlrjC pooling in one or enure
instanct,,shall not exhaust the rights of the Le-swe hereunder to pool this I aease or portions thereof into
other units. Lessee shall file foT record m the appropriate fCC0rdS Of the County in Which the leased
premises are situated an instrument describing the pealed acreage as a pooled unil. in this regard, 1,esrsec
shall provide I essor with a copy ofany and all documents filed with any regulatory authority or recorded
in the records of any county ,%Ithin rllarn (301)days of"filing such documents. I fpon the recordation of the,
unit in the county records and the firricly furnishing of the copies required herein to Lessor the unit shall
be eff'ective as to all parties hereto,their heirs,successors,and assigns,irrespective of whether or not tile
unit i,,likewiNe effective as to all other owners of surface,mineral,royalty or other right,,;in land included
in such unit- Lessee may at its election vxercise its poohng option bcforc or after conimeneing operations
for or completing an oil or gas well on the]eased prenvses,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 thcretofcwc been completed or upon which operations for the drilling of a "rell for oil or gas have
theretofore been commenced, In the event ofoperations for drilling on or production ofoil or gas froan
any part iWa pooW unil which includes all or a portion of'll-Le land covered by this IlLcase,such operations
shall be, considered as operations ibr drilling on or production of Oil and gas 1-turn land covered by this
Lease whoher or not the well or wells be located oil the premises covered by this Lease and in such event
(TW OH AND(j AS LEASE00�
openflions for drilling shall be deemed to have been commenced on said land within the meaning of this
,.case. For the purpose of'computing the royalties to which owners of royalties and payments out of
production and each ofthem shall be entitled on production of sail and gas,or either ofthem,there shall,be
allocated to the land covered by this Lease and included in said unit(or lo each separate tract within the
unit if1his Lease covers separaw tracts within the unit)a pro rata portion of1he oil and gas, or efther of
them, produced from the pooled un,it. Royalties hereunder shall he compuled on, the portion of such
production, whether it be,on oil and gas,or either of therm,so allocated to the land covered by this [,,ease
and included H1 the Urflt just as though such production were frorn such land, The production from an oil
well will be considered as production firom this Lease or oil pooled unit firorn which it.is producing and not
as production froni agas poofed unit;and production firorn a
i gas well will he considered as production firom
this Lease or gas pooled unit from which it is prodixing and not from an oil pooled unit. The formation,
ofany unit heretinder shall:not have ific effect of changing the(),,nership of any delay rental or shut-in
production royally which may become payable under this lease. If this Lease now or hereafter covers
wparate,tiacts,no pooling or unitization ofroyalty interest as between any such separate tracts is intended
or shall be iniplied or rCSLJ1t Merely fiom the inclusion of'such separate tracts within this Lease but T,csscc
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" Trican any tract with royalty
ownership differing,now or hereafter,,either as,to parties or amowds,fironi that`as to any other part offlic
]eased pretnises,
6.
DRILLING COMMITMENT AND CONTINUOUS DRILLING OF WELLS
Upon OW Completion ofany well as a well capable of producing oil or l,,,as in paying quan6fies or
as a chy hole(completion being
,the reiease of the corripletion rig, io no event being more than nlnety (90)
(lays following release of the drilling rig, or if the %veH is as dry hole, the release of the drilling rig),
Lessee shall, wahin ninety (90)days thereafter, conimence the driffing of another well or wells on the
leased premises(commencement being the actual spudding ofthe;succeeding well),or,it'it he within the
pritriary term. Lessee shall commence or resume the payrnfent of' delay rental,,, fim- all acreage not
otherwise being maintained under the provisions of this Lease,within ninety (9,0):days frorn the date of
completion and abandonment of said dry hole or holes or the cessation of prGdUdi0o. Failure to
commence such: additional web or wells within the time herein provided, or fi ihjrc to resume the
payment oi'delay rentals within the time herein provided, shah terminate this Lease ipso fiacao as to A
lands except those included within the surface boundaries of any governanental, proration unit otherwise
being maintained tinder the provisions of this Lease. Nothing hercin shall be construed to limit or
rnodify L,ea.wc`s obligmion for drill any offset wells provided for herein.
li
Ci-WOU.ANDOAS LLASE(ky(Dulv-ROWi.
If at the expiration of the primary term,Leswe is then engaged in drffling opera ions or shall have
completed a dry hole or a producing well on,the leased prernises within ninety(9(l),days prior to the end
of'the primary term, the Lease shall remain in force so lora; as Lessee condLWtS 2 continuous,drilling
program in which the drilling of additional wells is prosecuted with no more than ninety (90) days
betwcen, the abandonnient of a well as to dry hole or the completion of such Aell as a con-maercial
producer and the commencement of actual drilling operations for an additional well. At such time as
said cowinuous,drilling prograrn ceases,the provisions OfPatagTaph 7 will be applicable,
7,
RETAINED ACREMW
A. Ve.'r-li.lical Fells
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-honzontal well drilled hereon capable of producing in
paying; quantities will hold only fbrty (40) acres for any i6nnalion frorn the surike io, the base of the
Bartrat Shale for-numon. As to depths below the base of tine Barnot Shale Formation, the proration unit
shall be the rnintmunt size necessary to obtain the maximum production ailowable. If the proration uml
for a well completed below the base of the Farness Shale Formation is larger lhart 40 acres,the w0i may,
maintain the Leascus to formations,above the base of the B&MCH Shale Formation as to not tnore 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 square,with the bottom of the well in the center. Further,it is uridenstood and agreed
that Lessee ,,hall earn depths as to each proration unit or pooled unit only fi-oni the surface down a defuh,
which is the wing., aphic equivalent to a depth of one hundred feet(1100) below the deepest producing
formation in such well which is capable of producing oil and gas it)paying cluunticies at the expiration of
the prirriary term, of'this Lease or upon the lermnation of the continuous drilling program set Forth in
Paragraph 6. T*his Lease will terminate at Such time as to all depths below such depths as to each
respective proration unit or pooled unit. 11'produciion should thereafter ceaw. as to acreage ITIClUded in as
proration unit or pooled unit, this Lease will terrninate as to such acreage unless Lessee commences
reworking or additional drilling operations on such acreage within, ninety (910) days thereafter and
confinue,s such reworking or additional drilling operations until commercial production is restored
thereon,provided that ffmore than ninety(90) days elapse heiween the abandonment of'such well as a
dry hole and the commencement of actual drilling operations for an additional well,or more than ninety
(9'0) days Pass SilTICC the commencement of reworking operations without the restoration ofconurierciat
production,this Lease shall terininate as to,the apphcable proration unit or pooled unit,
At any time or linics that this Lease terminates as to all or arty portion of the act-cage of the lewsed
9 6TW Olt AND(i A S LEAs I' Oty flkk-ROW)."
premises, Lessee shall promptly execute and record in, the office of the (7ourity Clerk in the County
where the leased premises are located, as proper release of such terminated acreage and:, shall, furnish
executed counterparts of each such reIcase to[.,csm,)r at the address shown in Paragraph 19 hd-eof.
B� Horizontal Welk
It is expressly underslood and agrccd that, sub,*t to the other terms, prod ions and limitations
contained in this Lcase, Lessee shall have the right to dnH "horizontal wells" under the ]eased premises,
or lands pooled therewith. The term"horizontal well"'or"horizontally drilled well"shall mcan,any well that
i:s drilled witli one or mare;boTi7ontal drainholes having a horizontal drainhole displacement of at least five
hundred eighty-fivc (585,) fiect, For die purposes of further defining the term "'horizontal we ' 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 7'A, then, with
regard to a well which is a hod7,ontal well or a horizontally driHed well, Lessee shall be entitled to retain
all sands and horizons at all,depths ftorn the surface down to a depth which,is the strutigraphic eqLnV3lC1,1t Of
a depth of one hundred(110,0)feet helow the hast(if the deepest producing,formation in such well which is
capable Or PrOdLiCing Oil -and gas in paying quantities, but only in;at spacing unit the area or number of
acres of which are equal to the area or nurnber of acres deterrnined by adding twenty(20)acres for cache
five-hundred eighty-five (585) feet horizontally drilled to the original forty (40) acres deerned to he a
PTOTat1On Unit for each Vertical Well. Bach Such tract around each horizontally drilled well shall he as
nearly in the shape of a square or a rectangle as i:s practical with the houndaries of the tract including the
entire horizontal drainhole and thin lateral boundaries of such tract tieing approximately equal distance
frorn such drainhofe and parallel thereto,
U'produefion 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 ach:hfional drilling
operations on such acreage within ninety(90)days thereafter and continues such reworking Or additional
drilling.;operations until commercial production is restored thereon,PTOVidCd that ifniorc,than ninety+(90)
days pass helwern the abandonment(if such well and the corninencernent of actual drifling operations for
an additional w6l,or more than;ninety(90)days pass since the commencement of reworking operations
withotil the restoration ofcommercial production.the Lease shall terminate m 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
prcmises,Lessee shall promptly execute and record in the office ofthe County Clerk in the County where
the leased premises are 4 wated, as proper release of such terminated acreage and shall fur-nish, executed
l 0 CFW OR,AND QAS LLASh Cl"l Male-XOW)a
counterparts ofeach such release to Lessor at the address shown in Paragi-aph l9 hereof
OFFSETOBIAGATIONS
In the event a welt aur wells producing oil or gas should be brought in on land ,%!thin 500 feet from
any boundary of the ]eased premises. Lessee agrecs within sixty l60) days from commencement of
production firom such well or we is to cornmence the actual drilling ofan offset well or wells on the
leased preniises;proOdcd that the well or wells which are to be ol'fiset are producing in payhig quantities;or
I-csscc shalt release to Lessor free of thus. Lease the offisLtting tract ofm least one hundred twenty (l 20:)
acres,
FORCE MAJEURE
A, The term "force majcurc" as used herein shalt mean and. include: requisition, order,
regukoion, or Control by governmental authority or commission; exercise of rights Or priorly or control
by govcrnmenW authority for national defense or war purpose resulting in delay in obtaining or inability to
obtain either niatenal, equipment.or means of transportation normally necessary in prospecting or drilling
for oil,gas or other rniner-al glanted herein,or in producing,handling or transpolinig same from the leascd
premises; war, scarcity o,f or delay in obtaining materials or equipment; lack of labor or means of
trarispotlation of labor or materials; acts, of,God-, insurrection:-, good; stri'ke, or other things beyond the
control of Lessee. Ific tcrni"force majeure"shall,not include lack of Tilarkets for production or any other
events affecling only the econonlic or financial aspects of drilling,development or production.
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 abo,ve,
from conducting drilling or reworking operations oil,or producing oil,gas or other nirnerat f'rom, the leased
premises,such faifttrediall not CIOTIStnUte al gmund for the termination of this Lease or subject said Lessee to
d.aniages therefor;avid the period oftirnc during which Lessee is so prevented shall not be counted against.
Lessee,'but this Lease shalt)be extended for a period of throne 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 prcmarc.s provided,however,that ill 110CVCnt Will the Plritnary term be extended Unless
Lessee has begun the UCIUAl drilling of a well,prior to the data;cif the expiration of the pHniary term, All
of the provisions ofthis paragraph are subject to each of f6floming express coindifiolns:
The terms and conditions ofthis paragraph shalt not extend beyond the expiration date ofany law,
order,rule or regulation invoked under this,paragraph,and shall be applicable and effective only
during,the following penods:
(11) If the force majeure shalt occur during the pi-trilary tenni of this I&asv„it shall not
operate to extend thils I.caw,more than two,(2),consecutive years beyond the expiration of
ll
CFW 0 1 L AND 6AS LEASE uny+Dale-ROW):
the primary term.
(2) If'the force nuijeure shall occur during a ninny (90) day drdhnp or rcv,,orking
pe6cld provided for in Paraqaphs Cr and 7 hereof,after the prinw-y 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) hi no event wilt the primary term he extended unless Lessee has begun the
actual drilling of a wcH prior to the:date ofthe expiration ol'the primary lerni.
Cl. None of the provisions of this.paragraph shall ever be or becorne clTectivc and applicable
unless lessee shall,within a reasonable time(not to exceed sixty(00)(lays in ally anent)after occurrence of
the eWmcd event of force majeure above referred to, notify the Lessor, in Wrilil1g, Of such occurrence
with full particulars fbereoll,
DThe terms ofthis panagyaph do not apply to trionctary payments due undo,the term.,;ofthis
Lease.
10.
SHUT-IN GAS NVELL PROVISIONS�
It'at any fame whilc there is a gas well on the leased premises or land pooled therewith which is
capable of producing gas in paying qUantifitN, but the production thereof is shut-in or suspended for ally
reason,and ffkhis Lease is not then continued in force by~carne other provision hereof.then this I-case shall
nevctilicless continue in,force as io such well,and the pooled unit or proration unit ako,cated to it for a period
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 hereLinder nlay pay or tender to the Lessor a shut-in royalty equal to
Twenty ThouSaTld Dotlars(S20,0001.0,O) 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 weeds and the proration unit or the pooled unit.
allocated to it or thorn and it shall he considered that gas is being
,produced frorn said well or wells ill
paying quantities for one(1)year frorn the(late such well or well,,,are shut-in,and in like manner one,and
only one,subsequent shut-in loyalty payment may be made or tendered and it will he considered that gas is
being produced ftona said wet]or wetis ill paying quantities fbr such additional one(1)year 1.)eriod as well.
Lessee shall not be entitled to recover any shout-fn royally payments frorn the future sale ofgas.
Should such shut-in royalty payments not be Triade in,a timely rnanner as provided in this section, [I will be
considered for all ptiqloses that there is no production and 110 Muse R)r delayed production oi'gas fi-oln
any such,well or wells„and unless there is then in eftect other preserVatiOrl pTOViSionS 01'111iS Lease,ihiS
Lease shall ternnnatc. Lessee shall pay or tender directly to the Lessor al the address as shown in
Paragraph 19 all shut-in royahy payments as required by this Lease,
12 (YWOWD
Nt1ASFL bi 4 lagw ac%v�
11.
INFORMATION,ACCESS AND REPORTS
A, Lcssor shall have free access at all finics to all ,wells„ tanks, and other equipment that
wcaviccs wells under the leased premises,including drilling wells,and Lessee agrees to fumish Lessor,or
Lessor's nominee, currently and promptly, upon wriuctit request, with full well information including
cores, cuttings, Samples, logs (including Schlumberger and ollicr 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 car character that may be niadc ofwells on thelew.,rd premises. I.CSSOr Or USSIOr'S TIOTTIinCU shall
be rurnisfied with and have fice access at all times to Lessice's hooks and records relative to(lie production
and sale of oil, gas or other minerals from the leased premises, including reports of every kind and
character to gover-mi-enLal authorities, State or Federal. Le"Lor shall have the right at its election to
employ gaugers or install ineters to gauge or measure the production of all mirieraN produced ftoni the
leased premises,and Lessee agrees to prepare and deliver to Les-,,or or Lessor's y,IaugCr 01'noMinee duplicate
run or ga
,!,uge tickets for all minerals rernoved from the premises. Lessee furnish to Lesscir daily
drilling reports oil cacti well drilled.
B, Lessee shall furnish to Lessor,within a reasonable time aller its execution,a copy ofany
gas purchase contract or transportation agreement entered into in connection with the leased premises,or if'
!here is*eady a gas purchase contract or transportation agreement in effect due to Lessc.cs operations in
the field,then a copy ofthat contiact. Fur9icirmorc,a copy ofany amendments to the gas purchase contract
or transportation agreerricni shall be flurliished said Lessor withm thirty (30)clays after execution thercor.
and on request of Lessor and without cost to the Lessor, Lessee shall furnish Lessor a copy- of the:.
Riltw,Ong rcports: core record, core analysis, well completion, botiorn hate pressure meas Lire men i,
directional survcy records, electrical and induction burvcy.i arid logs, gas and oil S-atio repoils,
paleontological reports pertaining to the patconioIcij.r,,y of the forrnations encountered in the drifling of any
wells on the leased Premises,and all other reports which pertain to the drilling,completing OT operating of
the wells located on the leased,premises. Such information shall be solely for Lessor's use, and, I,cssor
shall in good faith attempt to keep same confidential for twelve(l 2)months after receipt.
C, Lessee shall advise Lessor in %witing of the location of all well,,;drilled upon the leased
Premises; oil or betbre thirty (30) days prior to commencement of operations, and shall advise Lessor in
writing the date of completion and/or abandonnient, of cacti well drilled within thirty (30:) days after
completion or abandonment.
12,
PRESERVATION OF-E('Ol.t)(.V O�F LEASED PREMISES
Any overflows or releases affeefing the leased premises, including, but not limited to,salt water,
mud, chemical, or oil shall be reported immediately tel Lessor, Lessee shall not use any water in,on or
13
O"WOU.-ANDGAS I FASF City fl)Ov-ROIX)
under the leased premises without the prior writlen consent ofihe l-essor.
13.
REMOVAL 0E E-Q11P.MEN F
Lessee shall have the right at any lirne during or within six (6)months after the expiration of this
Leaw Mut not thereafter) to rernove all property and fixtures placed by Lessee on the leased premises,
including the right to draw and remove all casing,cKccpt 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 ofpr(LKlucing iri
paying quantities,but Lessee shall be paid reasonable salvage value for any such casing or cquipmcnt. It is
contemplated]hat Lessee may drill across and through lands covered by this agrocnient where production is
not obtained or ceases. Where the casing or pipeline placcd or laid through such non-producing lands is
necessary to the production Ora well or wells located on other lands covered by thus Lease,or lands pooled
therewilh,it is expressly undersmod and agreed that Leswr wwill make no demand that such casing,pipelines
war other equipment necessary for the production of as well or wells drilled by Le,,suc he removed as,long as
such casing, pipchnes and othei- equipiricnt is necessary for the production of a producing well cor wells
drilled by Lcssce
14,
ASSIGNABILITY BY LESSEE
This lease may be h-ansferred at any Lime. All wansfvrs by Lessee Qinc luding assigni-rients, sales,
subleases, overriding royalty conveyances, or production paynient an"angemonts) must be recorded in the
county where the lease premises are located,and the recorded transfer or a copy certified Co by the County
Clerk of the county where the transtc.r is recorded must be delivered to the L,cssor withiri sixty(60)days of
the execution date. FNery trwisferce shall succeed to all rights and be sublect 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 fbt Unpaid royalties. No such transfer shall release the Lessee(or any SUbsequent
trans1c-ror)kom any obligation hereunder.
15.
NO WARRANTY
'17his Lease is given and g7anted without warramy 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 hen upon the leased premises and thereupon be subrogated to the right of the holder
thereof,arld may apply royalties accruing hereunder toward satisfying same or reimbursing Lessee. It is
also agreed that ifLessor owns an interest in the oil and gas under the]eased 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 arTIOUnt for a gas wcH,as provided for in Pal-agraph 101 hereof,be reduced,
7,,�-7777771.1,
14
INDEMNITY
Lessee shall expressly release and discharge., 3tl C1,WnIS, (ICTnands, actions, judgments, and
executions which it ever had,or now has or may have,or assalpis may have,or 0airn to have,against the
Lessor or its departments, agents, officers. scyvants, sucucss-ors, assigns, sponso�s, votunicers, or
enwfloyecs,created by, or arising out ofpensonal injwies, known or unknown, and injuries, to, property,
real or personal,or in any way incidental:io or in connection with the perl'onnance of the work perf6ri-ned
by the Lessee. The Lessee shall fully defend,protect,indeinnity,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,losses, fines,penalties, costs,fees, and expenses incurred in defense of the
Lessor, its departments, agents,officers, servants, or employees,including,without thnitation,the
payment of bonus and/or royalties regarding ownershil3 of the Lessor's mineral interest of the
leased premises 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 ownership and
title of the mineral interest of the Lessor under this Lease.
The L,essee shall fully defend,, protect, indemnify, and hold harmless the Lessor, its
departments,agents,officers,servants,employees,successors,assigns,sponsors,or volunteers froin
and against each and ever), claim, demand, or cause of action and any and all liability, damages,
obligations,judgments,losses,fines, penalties,costs,fees,and expenses incurred in defense of the
Lessor, 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 ivith the performance of the,work performed by the,Lessee under this Lease.
THE LESSEE AGREES TO INDEMNIFY AND HOLD HARMLESS"I"HE LESSOR,ITS
OFFICERS, AGEN-IS,SERVANTS,EMPLOYEES,SUCCESSORS, ASSIGNS,SPONSORS, OR
VOLUNTEERS FROM ANY LIABIL['I'IFS OR DAMAGES SUFFERED AS A RESULT OF
CLAIMS, DEMANDS, COSTS, OR JUDGMENTS AGAINST THE LESSOR, ITS
DEPARTMENTS, ITS OFFICERS, AGENTS, SERVANTS, OR EMPLOYEES, CREATED BY,
OR ARISING OUT OFTHF AC,"TS OR OMISSIONS OF THE LESSOR OCCURRING ON THE
DRILL SITE OR OPERATION SITE IN 'THE COURSE AND SCOPE OF INSPECTING AND
PERINUTTING THE GAS WELLS INCLUDING, BUT NOT LIMITED TO, CLAIMS ANI)
DAMAGES ARISING IN WHOLE OR IN PART FROM THE NEGLIGENCE OF THE LESSOR
OCCLARING ON THE DRILI.A., SITE OR OPFRATION SITE IN THE C`OIJRSE AND SCOPE
15 (I'Mr 01L AND 6AS LEASF CiEy(Dalt-ROW)"
OF INSPECTINC. AND PERMrrTING THE CAS WELLS. IT IS UNDERs"rOOD AND
AGREEDTHAT THE INDEMMury PROVIDED FOR IN THIS SFCTION IS AN INDEMNITY
EXTENDED BY TILE LESSEE TO INDEMNIFY AND PROTECT LESSOR AND/(.R ITS
DEPARTMENTS, AGENTS, OFFICERS, SERVANTS, OR EMPLOYEES 1,ROM THE
CNSEQUENCIES OF THE NEGLIGENCE OF THE I,ESSOR AND�/OR as DEPARTMENTS,
AGENTS, OFFICERS, SERVANTS, OR EMPI.A.)YEES, WHETHER THAT NECAJGENCE IS
'THE SOLE OR CONTRIBUTING CAUSE, OF THE RESULTANT INJURY, DEATH,ANWOR
DAMAGE.
17.
jN
.ST;'RANCE
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 1crins of"this Lease, such insurance to continue until the
well i,;abandoned and the site restored. Such insurance shall provide that I.essor shalll be a co-insured,
without cost, and that said insurance can not be canceled or terminated without thirly (30) days prior
notice to Lessor and ten(W)days notice to Lessor for nonpayment ofpremiums.
18.
RELEASES REQUIRED
Within thirty ()0) days after the partial termination of this Lease as provided under any of the
ternis and provisions eat"thus Lease. Le ss'ec shall deliver to Lessor a plat showing the production units
designated by Lessee,copies of logs showing depths, w be retained within each unit,and a fully eXeCUied'
recordable release properly describing by rnetes and hounds 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 release to I-essor within thirty ('30) days, It'such release complics, with the
TeCjUiTerflentS Of this section, Lessor ,,hall record such rcleasc. V Lessee fails to deliver a release
complying with the requirements of this section within thirty (30) days after Lessor's demand thtTelbre,
then Lessce shall pay Lessor an amount equal to Five Dollar,, per acre per day for each acre ol'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 UNsor for Lessee's failure to deliver such release are Micult, to ascertain with any
certainty,and that the payments 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 ot'record, art affidavft swing that this Lease has expired and the reason thcrefbr, and such
affidavitsWl consfiniteprima t'acie evidence of°the expirafionofthis Lease orany part o,f this Lease.
16 (FW O,U,AND(JAS iJASL Cily(D,,ft-ROW)'
19.
NOTICES
A. AH notices, inrormation, letters,, surveys, reports, niaterial, and all ocher doeuments,
required or permitted to be sent to L,cssorby Lessee shall be sent by certified Unitcd State,.,,-mad,postage
prepaid,return receipt required,to the following address:
City of Fort Worth
Attention:DougRademaker,Director ol'Friginecring
100OThrockmorlon Strect
Foi t Worth,Texas 76102
B. All notices,requirtd or permitted to,lic sent to Lessee by Lessor shall be sew to Lessee by
certified United States wtail,postage prepaid,return receipt requestcd to the R)Ilowing address:
Dale Resources,I-L.C.
2 l 2 1 San Jacinto Street,Suite 1870,LB-9
Daltas,Tcxas 75201
C Service of notices,and other documents,hercunder is oomptete upon deposit of the mailed
material in a post tiff icc or official depository under the care and custody of the I)nited States,Postal Service,
in a postpaid,property 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 notices,and other documenis,by so notifying the other party in writing.
X
BREACH BY LESSEE
Lessee shale conduct Lessee's operations in strict compliance with all of the terms and provisions of
this Least and with all applucahic local, state and federal rules and the regulations of any regulatory body
having jurisdiction ol'such operations including,but riot orated to,all local,sUite and federal environmcnW
rules an(]fegulationsand applicable city ordinances,
In the event Lessor tier sidci-N that operations are not,at any time, being COndUCtCd in complIance
with this Lease,or any implied covenant of this Lease, Lessor shall notify Lessee in writing of the Facts
retied upon as constituting a breach ofwiy express or implied covenant or obligation of Lessce hereunder
and, Lessee, if'in default, shalt hawk sixty(W)days after receipt of`such notice in which to commence
compliance with its obfigationS hereunder, Failure on the part of Lessee to(intely commence to rccfi ,
any such breach and to exercise diligence in remedying any such breach shall operate as a for eniure of this.
Lease as to the portion thereof effected by such breach,provided that ti'Lessce, in good faith,disputes any
alleged grounds of"breac.111 wt fiorth in such notice,I-essee nidy,within said sixty,1(60)day period,institute a
Dcclaralory Judgment Action in any District Court m a county where all or part of the said leased
preirins'es are located questioning whether it has un fact breached any expressed or implied covenant apt this
, �illl .
Lease, thereby staying any forfeiture during the pendency of'such action. However, ,�e v,ifll.r-
17
(Tv, -XOVJ)I-
it-Ae�
Lessor obtains as 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 shafl 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 he rectified by Lessee within thirty(30)days frorn date SUCh decree becomes final,
21.
LOCATION OF DRILLING ACTIVITY.PIPELINESAND EQUIPMENT
No drilling or other activity shall be conducted on: the surface of'the ]eased premises and no
roads,electric lines,pipelines, equiptnent,or other structures shall be placed on the surface ofthe PCased
premises.
22.
COMPLIANCE WITH I.AWS
Lesste shall comply with all applicable rules, regulations,ordinances,statwes and other laws in
corincefion with any drillin,g, producing or other operations under the lerrits of this Lease, including,
without limitation,the od and gas swell regulation,,,,of the City of Fort Worth.
23.
('*QNFHCT OF INTEREST
Lessee represents that I esqce-1 its officers and directors,are not ernp4oyees Or officers of`the City
of Fort Worth nor is Lessee(its of'ficers and directors)aching on belhalf'ol'any such officer or employce of
the City of Fort Worth,
24.
TERNIS
All of the terms and provisions of this I-ease shall extend to and be binding upon the heirs,
executors,admint.,oralors,successors,and authorized assagns of the parties hereto.
25,
ENTIRE AGREEMENT
`rhis Lease states the entire contract bewccn the parties,and no representation or promise,verbal
or wcntten, on behalf of either party shall lac hinding unless contained herein: and this Lease shall he
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 narned as "Lessor", and, notwithstanding the inclusion
above of other riarries as"l-essor",this term as used in this Lease shall mean and re:Fer only to such parties
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 rcadfly locate specific provisions, They shall not be considered a part of the Lease,nor
18 CFW 0 It,AN D GkS I EASFJ-:*,y(DaIC,X0W)2
shatl they be LISCd to intei-pret any of the Lease pruvtsions.
27.
COUNTERTIARTS
Th is Lease may 1w exec Wed in multipte countei-parts,each ul7which sha I I be deemed an ot-iginal,
with the carne dJ"ect as ifthe signature therein and hereto were upon the same instrument.
FIXECUTFID and effeclive as ofibe date ofthe notarial acknowledpient of the L,essor's execution.
LESSOR:
CITY OF FORT WORTH
By: ...............
Aqsist,
.................----—------—----- .......................................
AV I US'k
r�iit-raAuthorization
City Secre kiry
&K Lct t a,
AJIP�CINTD %S TQ F(..)RN4 AND I EGAL111':
(ant City Attorney
Datc:
............... --------------
DAVE RESOURCES,1.,L,C,,[.ES EF
ly:
Date:
t I HSTA[ OF I L\AS
COUNly OF ,72ZL�ay— §
IIEPORL NIL,Oe lm&�,�dntd,,a Nowt y Pulflw,on hidjq pvsml,vlIy apfwarol
GIWN FNLW9'qy'-IJAXrJ
'uhh,�ft and for thc
I mi,
My('WIlMivSiOn I 91PkU, LANE
Prim Nhr.,P.,ol'Nolmy Publw Hun� MY
----------------------------------------
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19
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Exhibit A
Tract 1
5.383 acres of land, more or iess, located in the James Blackwel:l Survey, Abstract No. 148, A.
C. Warren Survey, Abstract No. 687, and the John Lynch Survey, Abstract No. 942�, Tarrant
County, Texas, being a 60 foot wide strip of land dedicated to the City of Forth Worth as Right-
Of-Way, being described in Gateway Park Addition, an addition to the City of Fort Worth,
Tarr-ant County, Texas, according to the plat recorded in Cabinet A, Slides 3 and 4, Plat
Records, Tarrant County, Texas. Said 5.363 acres of land being more particularly described as
follows:
Beginning at a 5/8" iron rod stamped "CAy of Fort Worth" found at the Northeast corner of Block
1, in said Gateway Park Addition, said point being the beginning of a curve to the left, of which
the radius point lies S02'29'23"E, a radial distance of 2,288.46 feet,
THENCE along the North line of said Block 1 as follows:
1.) Westerly along said curve to the left, a distance of 382.86 feet, a central angle of
09"35'08"', and a chord bearing 382043'03"W 382.41 feet to a point;
2.) 577055'29'W, a distance of 1,598-95 feet tri an 1/2" iron rod found at the beginning of a
curve to the right;
3,) Westerly, 563.76 feet, along said curve to the right, having a radius of 2,788.60 feet, a
central angle of 110'35'00"' and a chord bearing S83'42'59"'W 562-80 feet to a 3/4" iron rod
found;
4.) S89030'29"W, at 1,309.26 feet passing the Northwest comer of said Block 1, in all a
distance of 1,369.26 feet to an 1/2" iron rod stamped "Precise"found at the North'West corner of
Block 4, in said Gateway Park Addition;
THENCE N00001'56"W, a distance of 60.00 feet to a point;
THENCE N89030'29"'E, a distance of 1,,358.29 feet to a point at the beginning of a curve to the
l'eft;
THENCE easterly, 551,63 feet, along said curve to the left, having a radius of 2,728.60 feet, a
central angle of 11'35'00" and a chord bearing N83'42'59"E 550-69 feet to a point;
THENCE N77055'29'15, a distance of 1,598.95 feet to a point at the beginning of a non tangent
curve,to the right;
THENCE easterly, 396.03 feet along said non tangent curve to the right, having a radius of
2,348-46 feet, a central angle of 09'39'43" and a chord bearing N82044'59"E, 395.56 feet to a
point-,
THENCE S00001'26"W, a distance of 60.11 feet to the point of beginning, containing 5.383
acres of land.
I he bearings recited hereon are oriented to Gateway Park Addition, Cabinet A,-Slides 3 and 4,
Plat Records, I arrant County,, Texas.
Tract 2
25,48 acres of land, more or less,, out of the Enoch Johnson Survey, Abstract No. 852, the J.
Lynch Survey, Abstract No. 942 and the P.T. Welch Survey, Abstract No. 1642, more
particularly described by metes and bounds in that certain Warranty Deed dated October 14,
1955 from O'Della Draug�hon to the Texas Turnpike Authority, recorded in Volume 2919, Page
522 of the Deed Records of Tarrant County, Tea.,
City of Fort Worth, Texas
Mayor and Council Comm u,n ication
COUNCIL ACTION:! Approved on 4/512005
DATE,: Tuesday, April 015, 2005
LOG NAME: 30GASLEA SEDALE REFERENCE NO.: **C-20633
Approval of Lease Agreement for Natural: Gas Drilling under City-Owned Right-of-Way Adjacent to
Gateway and Tandy Hills Parks with Dale Resources,: LLC
RECOMMENDATION:
It is, recommended: that the City Council approve the acceptance of a lease agreement for natural gas
drilling under City-owned right-of-way with Dale Resources,, LLC, for one two-year term,
DISCUSSION:
The City owns right-of-way throughout the City and' in many cases owns the subsurface mineralrights in:
addition to the surface rights. Due to the increased gas, drilling activity in: the Barnett Shale, independent
gas drilling companies are requesting;: to, lease the minerals beneath: City-owned right-of-way. City staff
has reviewed a number of requests and recommends that the City lease its minerals under right-of-way it
owns while being sensitive to the environment and nearby neighborhoods.
The City owns right-of-way along East 1st Street adjacent to Gateway and Tandy Hills Parks, containing
approximately 31 acres. Dale Resources, LLC, currently is leasing:: the City's park properties adjacent to
the right-of-way for gas well' development and has requested an opportunity to bid for the City-owned
minerals in the City's right-of-way as further described in Exhibit "A"' (See Attachment) and: totaling 30.863
net mineral: acres.
A request for bid proposal's (RFP) was advertised for three consecutive weeks in the Commercial
Recorder, published on: February 17, 24, and March 3, 200,5.
The foll'owing sealed bid: for the gas lease was received and opened on: March: 10, 2005:
Lease Bonus/Acre TotalLease %.Royalty.
Dale Resources, LLC $2,611.00 $801,58 29 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 Alternative Assets Agency Account Agreement between JPMorgan Chase and the
City (City Secretary Contract 296918), JPMorg:an Chase will serve as the depository of the lease bonus
revenue until:the City requests wire transfer of the funds.
It is anticipated that the lease bonus and royalty proceeds will: be deposited in the City's, Contract Street
Lognarne: 30GASLEASEDALE Paue I of 2
Maintenance Fund and designated for street and roadway improvements.
The properties are located in COUNCIL DISTRICT 4, Ma�ps,co 78 B and, C.
FISCAL,.I.N.FORM.ATI01NICERTI,F]CATIO.N:
..........................................................11.1 1"'.1_1.......
The Finance Director certifies that the Engineering Department is responsible for the collection of funds due
to the City under this agreement.
TO Fund,jA.;,.ppN.jjt/Centers FROM F u�nd/Acco u nt/C enters
............................................................. ................
G�593 488100 0209305,76,010
$0_00
Submitted for City. by; Marc Oft (8476):
g
Ori i :atin Dep;krtment P Head; A. Douglas Rademaker (6157)
Ad d in.C19-M.141act: A. Douglas Rademaker (6157)
1.oaname: 30GASLEASEDAI-E pa(ye 2 of