HomeMy WebLinkAboutContract 42753 CITY SECRETARY -S3
CONTRACT NO. A2
OIL AND GAS LEASE
THE STATE OF TEXAS §
COUNTY OF TARRANT §
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,
CHESAPEAKE EXPLORATION, LLC, an Oklahoma limited liability company (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 22.480 acres,whether actually containing more or less.
2.
PRIMARY TERM
OFFICIAL RECORD
Subject to the other provisions herein contained, this Lease shall be for a ttelrr�_o�-two. 1.�
AN
10-28-11 P01 :48 IN FT.WORTH,TX
1 OIL AND GA
01-10-12 P03 :25 IN
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 of computing the
royalties to which owners of royalties and payments out of production and each of them 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 therein above, all of the leased premises contained in this lease shall be included
in a unit unless Lessee is able to demonstrate that for prudent development purposes only a portion of the
lease should be included in a unit. In such cases, at least 50% of the leased premises must be included in
the unit.
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6.
CONTINUOUS DRILLING
At the expiration of the primary term this Lease shall remain in full force and effect for so long as
Lessee is conducting Continuous Drilling Operations (as herein defined). Lessee shall be considered to be
engaged in Continuous Drilling Operations at the expiration of the primary term if. (1) Lessee is then
engaged in drilling operations on the leased premises or lands pooled therewith or(2)Lessee has completed a
well as a producer or as a dry hole within one hundred twenty (120) days prior to the expiration of the
primary term. Lessee also shall be considered to be engaged in Continuous Drilling Operations for so long
thereafter as Lessee conducts drilling operations on the leased premises, or lands pooled therewith, with due
diligence and with intervals of no more than one hundred twenty (120) days between the date of completion
of one well and the date of commencement of drilling operations on an additional well. "Completion" shall
be considered to be the date of release of the completion rig for a completed well, but in no event more than
one hundred twenty (120) days following the release of the drilling rig. In the case of a dry hole,
"completion" shall be considered to be the date of release of the drilling rig. "Commencement" shall be the
actual spud date of a well. Continuous Drilling Operations shall be deemed to have ceased upon the failure of
Lessee to commence drilling operations on an additional well within such one hundred twenty (120) day
period. When the Continuous Drilling Operations cease, 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
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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
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 or 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 more 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
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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 all 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 or 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 well shall be as 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
13 OIL AND GAS LEASE-HALLMARK PARK
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 330 feet from
any boundary of the leased premises, Lessee agrees within ninety (90) days from commencement of
production from such well or wells to commence the actual drilling of an offset well or wells on the
leased premises; provided that the well or wells which are to be offset are producing in paying quantities and
have been perforated and fraced within 330 feet of the leased premises; or Lessee shall release to Lessor free
of this Lease the offsetting tract.
9.
FORCE MAJEURE
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 production or the
inability to conform to city, state or federal regulations.
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 therefore; and the period of time during which Lessee is so prevented shall not be counted against
14 OIL AND GAS LEASE-HALLMARK PARK
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 term. 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 one hundred twenty (120) 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 one hundred twenty(120)day periods.
(3) In no event will the primary term be extended beyond the two (2) year term
described in B (1)and B (2).
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.
carr r_IN GAS WELL PROVISIONS
1YXX�
If at any time after the expiration of the primary term while there is a gas well on the leased
15 OIL AND GAS LEASE-HALLMARK PARK
premises or land pooled therewith which is capable of producing gas in 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 of sixty(60) days from the date such well is shut-in
or at the end of the primary term, whichever is the later date. 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
Five Thousand Dollars ($5,000.00) 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 and 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. Upon five (5) business days
16 OIL AND GAS LEASE-HALLMARK PARK
notice to Lessee, 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,
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 or land pooled therewith 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 all wells drilled upon the
leased premises or land pooled therewith within thirty(30) days after completion or abandonment.
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12.
PRESERVATION 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 riot 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 understood 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 assigned in whole or in part by Lessee and the provisions shall extend to the
heirs, executors, administrators, successors and assigns of the parties hereto; provided, however, that any
such assignment by Lessee shall require the prior written consent of Lessor, with the exception of the
following:
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(i) Any assignment of an overriding royalty interest that does not provide,by option or
otherwise, for such overriding royalty interest to convert at any time to a working or
leasehold estate interest;
(ii) Any assignment of a working or leasehold interest to wholly owned subsidiaries of
Chesapeake Energy Corporation, Aubrey McClendon, Larchmont Resources, L.L.C., or
any successors and assigns of such;
(iii) Any assignment of a working interest to Total E&P, USA, Inc. and/or its successors and
assigns(up to accumulative working or leasehold interest of twenty-five percent(25%);
(iv) Any assignment of a non-operating working or leasehold interest of ten percent (10%) or
less,provided that Chesapeake Exploration, L.L.C. remains the Operator of the Lease.
However, the Lessor shall be given written notice of any such assignment. All such
approved transfers must be recorded in the county where the leased premises are located, and the recorded
transfer or a copy certified to by the County 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, liability, 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. Any cost
incurred by the Lessor including without limitation, attorney fees or the cost of the time of Lessor's city
attorneys due to a transfer by Lessee shall be reimbursed to Lessor 30 days after invoice by Lessor.
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.
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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, LOSSES, FINES, PENALTIES, COSTS, FEES, AND
EXPENSES INCURRED IN DEFENSE OF THE LESSOR, ITS DEPARTMENTS, AGENTS,
OFFICERS, SERVANTS, OR EMPLOYEES, INCLUDING, WITHOUT LIMITATION, THE
PAYMENT OF BONUS AND/OR ROYALTIES REGARDING OWNERSHIP 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 LESSEE SHALL FULLY DEFEND, PROTECT, INDEMNIFY, AND HOLD
HARMLESS THE LESSOR, ITS DEPARTMENTS, AGENTS, OFFICERS, SERVANTS,
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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 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, ITS
DEPARTMENTS, ITS OFFICERS, AGENTS, SERVANTS, OR EMPLOYEES, CREATED BY,
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
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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 terms 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 release 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
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
22 OIL AND GAS LEASE-HALLMARK PARK
and file of record an affidavit stating that this Lease has expired and the reason therefore, and such
affidavit shall constitute prima facie evidence of the expiration of this Lease or any part of this Lease.
19.
NOTICES
A. Notifications Required. Lessee shall advise Lessor in writing of the location of
all wells to be drilled under the leased premises or on land pooled therewith 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 all wells drilled under the leased premises or on land pooled
therewith within thirty (30) days after completion or abandonment. Such notice shall include
furnishing the Lessor a copy of the applicable completion or plugging report filed with any
governmental or regulatory agency and a plat or map showing the location of all wells under
this Lease or lands pooled therewith.
Lessee shall also advise Lessor in writing the date of testing, fracing, reworking,
recompletion, pluggin back or repairing of all wells drilled under the leases premises or on land
pooled therewith within thirty (30) days after such activity occurs. Reports are also to be made
monthly, to include name of well, total monthly production and total product sales. On a quarterly basis,
Lessee shall provide a report demonstrating its compliance with the Minority/Women Business Enterprise
(MWBE) Goal of 3% for leases over 40 acres.
B. All notices, information, 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: Planning and Development Department
1000 Throckmorton Street
Fort Worth,Texas 76102
C. All notices required or permitted to be sent to Lessee by Lessor shall be sent to Lessee by
23 OIL AND GAS LEASE-HALLMARK PARK
certified United States mail,postage prepaid,return receipt requested to the following address:
Chesapeake Exploration, LLC
Attention: Mr. Henry Hood
P.O.Box 18496
Oklahoma City,OK 73154
D. 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.
E. Any party hereto shall have the right to change the name or address of the person or
persons required to receive notices, 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 implied 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
alleged grounds of breach set forth in such notice, Lessee may, within said sixty (60) day period, institute a
24 OIL AND GAS LEASE-HALLMARK PARK
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 WITH 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 OIL AND GAS LEASE-HALLMARK PARK
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, notwithstanding the inclusion
above of other names as "Lessor", this term as used in this Lease shall mean and refer 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 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.
28.
INTERPRETATION
In the event of any dispute over the meaning or application of any provision of this Lease, this
Lease shall be interpreted fairly and reasonably, and neither more strongly for or against any party,
regardless of the actual drafter of this Lease.
29.
NO THIRD PARTY RIGHTS
The provisions and conditions of this Lease are solely for the benefit of the Lessor and the
Lessee, and any lawful assign or successor of the Lessee and are not intended to create any rights,
26 OIL AND GAS LEASE-HALLMARK PARK
contractual or otherwise, to any other person or entity.
30.
SEVERABILITY
If any provision of this Lease shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be affected or impaired.
31.
VENUE AND JURISDICTION
If any action, whether real or asserted, at law or in equity, arises on the basis of any provision of
this Lease, venue for such action shall lie in state courts located in Tarrant County, Texas or the United
States District Court for the Northern District of Texas — Fort Worth Division. This Lease shall be
construed in accordance with the laws of the State of Texas.
32.
INDEPENDENT CONTRACTOR
It is expressly understood and agreed that Lessee shall operate as an independent contractor in
each and every respect hereunder and not as an agent, representative or employee of the Lessor. Lessee
shall have the exclusive right to control all details and day-to-day operations relative to this Lease and all
Exhibits and shall be solely responsible for the acts and omissions of its officers, agents, servants,
employees, contractors, subcontractors, licensees and invitees. Lessee acknowledges that the doctrine of
respot:deat superior will not apply as between the Lessor and Lessee, its officers, agents, servants,
employees, contractors, subcontractors, licensees and invitees. Lessee further agrees that nothing in this
Lease will be construed as the creation of a partnership or joint enterprise between the Lessor and Lessee.
33.
GOVERNMENTAL POWERS
It is understood that by execution of this Lease, the Lessor does not waive or surrender any of it
governmental powers.
27 OIL AND GAS LEASE-HALLMARK PARK
EXECUTED and effective as of the date of the notarial acknowledgment of the Lessor's execution.
LESSOR: o Of FP4 44 0
J,� °0000° O a
00
CITY OF FORT WORTH foo amp
CIO a
BY o ATTEST:
p-, 000°00°0 t*C�
Fernando Costa �aS
Assistant City Manager
City Secreta , NA CJ�Yt'y 11
APPROVED AS TO FORM AND LEGALITY: 152
- Contract Authorizatioa
By: PPr b Zs
Assistant ity Attorney ------
i Date
Date:
ACKNOWLEDGEMENT
THE STATE OF TEXAS §
COUNTY OF TARRANT §
BEFORE ME,the undersigned,a Notary Public, on this day personally appeared Fernando Costa,
Assistant City Manager of the City of Fort Worth, a home-rule municipal corporation of the State of
Texas, known to me to be the person whose name is subscribed to the foregoing instrument and, that he
has executed the same for the purposes and consideration therein expressed.
9�- L�12 "
GIVEN UNDER MY HAND AND SEAL OF OFFICE thi 22 day of Oil.
[SEAL ZL
Notary Public in and for the taa
State of Texas `•
Ilry
My Commission Expires: Lzig
EPI EXPIRES
13
Print Name of Notary Public Here
7
OFFICIAL RECORD
CITY SECRETARY
FT,WORTH,TX
2g OIL AND GAS LEA -HAL
LESSEE: CHESAPEAKE EXPLORATION,L ,
an Oklahoma limited liability company
By: Henry J. Hood
Its: Senior Vice President of Land
and Legal&General Counsel
X41
Date:
ACKNOWLEDGEMENT
THE STATE OF OKLAHOMA §
COUNTY OF 00 0,IM-a— §
BEFORE ME, the undersigned, a Notary Public, on this day personally appeared
Henry J. Hood, Senior Vice President of Land and Legal & General Counsel, on behalf of Chesapeake
Exploration, L.L.C., an Oklahoma Limited Liability Company, known to me to be the person whose name
is subscribed to the foregoing instrument and, that he has executed the same for the purposes and
consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 5hday of No v4 , 2011.
[SEA
Notary Public in and for the ````�,,�muunriii��i
State of Qw�1 p YYI�� �.� H UA4p
My Commission Expires: _
Print Name of Notary Public Here = #11001263
EXP.02J14115' �
6
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OFFICIAL RECORD
CITY SECRETARY
FT. WORTH, TX
29 OIL AND GA - PARK
EXHIBIT A
Being 22.480 acres, more or less, situated in the G. Herrera Survey, Abstract No. 2027, Tarrant
County, Texas, as described in that certain Warranty Deed dated April 23, 1964, from E. L.
TRIMBLE, LEE S. DICKERSON and J. S. DUBOSE to the CITY OF FORT WORTH, recorded
in Volume 3937, Page 579, Official Public Records, Tarrant County, Texas.
(HALLMARK PARK)
30 OIL AND GAS LEASE-HALLMARK PARK
M&C Review Page 1 of 2
official site of the City of Fort Worth,Texas
CITY COUNCIL AGENDA FoR_ T�H
COUNCIL ACTION: Approved on 10/25/2011
DATE: 10/25/2011 REFERENCE NO.: L-15274 LOG NAME: 062050 HALLMARK
PARK
CODE: L TYPE: NOW PUBLIC CONSENT HEARING:
NO
SUBJECT: Approve Acceptance of Lease Agreement with Chesapeake Exploration, LLC, in the
Amount of$112,400.00 for Natural Gas Drilling Under 22.480 Acres of City-Owned
Properties Known as Hallmark Park Located at 820 Sycamore School Road (COUNCIL
DISTRICT 6)
RECOMMENDATION:
It is recommended that the City Council authorize acceptance of a Lease Agreement for natural gas
drilling under 22.480 acres more or less of City-owned properties known as Hallmark Park to
Chesapeake Exploration, LLC, in the amount of$112,400.00 for a two-year primary term.
DISCUSSION:
On August 17, 2010, (M&C L-15044)the City Council authorized the conversion of Hallmark Park for
subsurface drilling and the extraction of natural gas from an off site location.
A Request for Bid Proposals (RFP)for a natural gas lease for Hallmark Park was advertised for two
consecutive weeks in the Fort Worth Star-Telegram, published on September 14, 2011 and
September 21, 2011.
The following sealed bid for the natural gas lease was received and opened on September 22, 2011.
Bidder Lease Bonus/Acre Total Lease Bonus Percent
Roaft
Chesapeake Exploration, LLC $5,000.00 $112,400.00 25 Percent
The bid received was evaluated by staff. In addition to the lease bonus rate and royalties paid to the
City, the bidder's drilling plans was also evaluated. Timely award and execution of this lease will allow
for inclusion of this property in the drilling unit currently being formed.
The City has established a Minority/Women Business Enterprise (M/WBE) participation goal of three
percent on City-owned property of 40 acres or more without an investment goal. On leases of City-
owned property of 700 acres or more, the City has established an option of either a three percent
M/WBE goal or the inclusion of an M/WBE investor. This lease is less than 40 acres therefore no
M/WBE participation goal is required.
Revenues received from this lease will be deposited according to the current Financial Management
Policy Statements(M&C G-17156 approved December 14, 2010)which direct 100 percent of the
bonus to the Parks and Community Services Capital Improvements Fund to be used for capital
improvements at this park. This park has not received funds from grants and therefore the mineral
revenue is unrestricted. Royalty and other revenues received from this lease will be allocated as
follows: i. Fifty percent of the revenue will be allocated to the Capital Projects Reserve Fund and ii. Fifty
percent of the revenue will be allocated to the General Endowment Gas Lease Fund.
littp:Happs.cfwnet.org/council_packet/mc review.asp?ID=16015&councildate=l0/25/2011 1/17/2012
M&C Review Page 2 of 2
The property is located in COUNCIL DISTRICT 6, Mapsco 104H and 105E.
FISCAL INFORMATION/CERTIFICATION:
The Financial Management Services Director certifies that the Planning and Development
Department is responsible for the collection and deposit of funds due to the City.
TO Fund/Account/Centers FROM Fund/Account/Centers
C282 446100 801929966900 $112.400.00
Submitted for City Manager's Office by- Fernando Costa (6122)
Originating Department Head: Randle Harwood (6101)
Additional Information Contact: Jean Petr(8367)
ATTACHMENTS
M&C Hallmark park.apg
http://apps.cfwnet.org/council_packet/mc review.asp?ID=16015&councildate=10/25/2011 1/17/2012