HomeMy WebLinkAboutResolution 4634-06-2016 A Resolution
NO. 4634-06-2016
AUTHORIZING LEGAL ACTION BY DALLAS-FORT WORTH INTERNATIONAL
AIRPORT AGAINST CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP AND THE
HIRING OF THE LAW FIRM OF MOSES, PALMER AND HOWELL
WHEREAS, effective October 5, 2006, the Board and the Owner Cities (collectively, "DFW")
entered into an Oil and Gas Lease with Chesapeake Exploration Limited Partnership that required
Chesapeake to continue to develop minerals from the acreage or release acreage that was not exploited
on Airport; and
WHEREAS, as of 2009, Chesapeake Exploration Limited Partnership had drilled 112 wells, and
had ceased further development due to low gas prices; and
WHEREAS, the DFW Board authorized the filing of a lawsuit filed suit based on, among other
things, Chesapeake Exploration Limited Partnership's failure to release undeveloped acreage; and
WHEREAS, in 2012, DFW and Chesapeake Exploration Limited Partnership entered into a
settlement agreement that established a "Line of Demarcation" between the northwest sector and the
southeast sector, and required Chesapeake to drill a certain number of additional wells by certain dates,
which dates were subsequently extended by agreement of the parties; and
WHEREAS, Chesapeake Exploration Limited Partnership has failed to drill those additional
wells by the deadline and the parties have attempted to resolve the issues to no avail.
WHEREAS, because of the extraordinary complexity of this area of law, the City Manager and
the City Attorney recommend that the Board be authorized to retain outside legal counsel with
knowledge and expertise in matters involving oil and gas mineral lease litigation to represent the Board
and the Owner Cities; and
WHEREAS, the law firm of Moses, Palmer and Howell, L.L.P., possesses the required
knowledge and expertise in oil and gas mineral lease litigation.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF FORT WORTH, TEXAS:
1. That Fort Worth, as one of two owner cities of the Dallas Fort Worth International Airport,
hereby authorize the Chief Executive Officer or designee of DFW be authorized to pursue any
and all necessary legal action, including litigation, to enforce the terms of an Oil and Gas Lease
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with Chesapeake Exploration Limited Partnership as a result of Chesapeake's breach of the
Lease; and further seek the approval of the Owner Cities to pursue such litigation; and
2. That such suit seek (i) money damages based on the default of Chesapeake's drilling
commitment under the Lease, (ii) an order compelling Chesapeake to plug and abandon non-
producing wells and to reclaim the well sites, (iii) a declaration of retained tracts in the Southeast
Tract and a release of acreage not included in the Retained Tracts, (iv) money damages for
royalties on gas reinjected for use in gas-lift operations and gas used for compression, and (v)
such other relief as may be appropriate.
3. The Board is authorized to retain the law firm of Moses, Palmer and Howell, L.L.P., as outside
legal counsel pursuant to Chapter VI, Section 3, of the City Charter to represent the City in the
litigation authorized in this resolution.
4. The compensation of Moses, Palmer and Howell, L.L.P., for its advice and representation in such
litigation will be paid as authorized by the Board.
Adopted this 7th day of June, 2016. �,a�oati
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By: d a'ix 4ad
Mary J. yser, City Secretary
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