HomeMy WebLinkAboutContract 36744 ITY
EC
TARV
CONTRACTENo
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 rile municipal corporation of the State of Texas located
within Tarrant,Denton,and Wise Counties,Texas,(hereinafter referred to as"Lessor"),and XTO Energy
Inc.,(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 819.6993 acres,whether actually containing more or less.
2.
PRIMARY TERM
Subject to the other provisions herein contained, this Lease shall be for a term of one (1)year
from the later of(i)the date of the notarial acknowledgment of the Lessor's execution,or(ii)the
approval of this Lease by the FAA (hereinafter called"primary term")and so long thereafter as oil,
gas or other minerals granted herein are produced from the leased premises or lands pooled therewith,in
paying quantities,or operations are in progress thereon as hereinafter provided,and the royalties are paid
as provided herein. For the purposes of this lease, the terns "operations" means any of the following:
drilling,testing, completing,reworking,recompleting, deepening,plugging back,or repairing of a well
in search for or in the endeavor to obtain production of oil or gas,so long as such operati6n=rF=TMed I�
out with due diligence with no cessation of more than ninety(90)consecutive days. 'CITY6"KAETRY
ORIGINAL 03-01 AI1 :3'1 1N
1 03-12-08 P12:48 IN
3.
DELAY RENTALS
This is a paid-up lease and no delay rentals are due. Upon termination, Lessee shall prepare,
execute and deliver to Lessor a recordable release covering the leased premises in accordance with this
Lease. Lessee may at any time or times execute and deliver to Lessor,a release or releases of this Lease
as to all or any part of the leased premises, and thereby be relieved of all obligations as to the released
land or interest, except for the indemnification obligations described in Section 16 and the plugging
obligations of this Lease.
4.
ROYALTIES
Lessee shall pay to Lessor the following royalties,which shall be free of all costs of any kind,
including, but not limited to, costs of gathering, production, transportation, treating, compression,
dehydration,processing,marketing,trucking or other expense,directly or indirectly incurred by Lessee,
whether as a direct charge or a reduced price or otherwise. In this regard, Lessee agrees to bear one
hundred percent(100%) of all costs and expenses incurred in rendering hydrocarbons produced on or
from the leased premises marketable and delivering the same into the purchaser's pipeline for immediate
transportation to an end user or storage facility. Additionally, said royalties shall never bear, either
directly or indirectly, under any circumstances, the costs or expenses (including depreciation) to
construct, repair, renovate or operate any pipeline, plant, or other facilities or equipment used in
connection with the treating, separation, extraction, gathering, processing, refining, compression,
transporting, manufacturing or marketing of hydrocarbons produced from the leased premises or lands
pooled therewith.
A. On oil, gas (including flared gas) and casinghead gas,together with any other liquid or
gaseous hydrocarbons recovered by Lease operations (such as in drips or separators) twenty eight
percent (28%) 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 be delivered free of cost at the well or to the credit of the Lessor
into pipelines, gathering lines, barges or other facilities to which the wells and tanks on the property
may be connected. Lessor shall always have the right, at any time and from time to time, upon
reasonable written notice to Lessee, to take Lessor's share of oil, gas and processed liquids in kind.
Lessor may elect to take Lessor's gas in kind at the well, or at the point of delivery where Lessee
delivers Lessee's gas to any third party. If gas is processed,Lessor may elect to take Lessor's share of
the residue gas attributable to production from the leased premises,at the same point of delivery where
Lessee receives its share of residue gas or has its share of residue gas delivered to a third party. Lessor
may elect to have its royalty share of processed liquids stored in tanks at the plant or delivered into
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pipelines on the same basis as Lessee's share of liquids is stored or delivered. Lessor shall reimburse
Lessee for all reasonable costs incurred by Lessee in installing, operating or maintaining additional
facilities necessary for Lessor's royalty gas and processed liquids to be separately metered, accounted
for, and delivered to a third party, but Lessor shall not be charged for any expense in the production,
gathering, dehydration, separation, compression, transportation, treatment, processing or storage of
Lessor's share of gas and processed liquids.
B. On products, twenty eight percent(28%) of the gross market value or proceeds of sale
thereof,whichever is higher.
C. On residue gas or gas remaining after separation, extraction or processing operations,
twenty eight percent(28%)of the proceeds of sale or of the market value thereof,whichever is higher.
I). For purposes of this Paragraph 4, the term "market value" shall mean for gas and
products therefrom (i)the gross price at which gas or products therefrom are sold pursuant to a Gas
Contract,as defined below,that is ratified by Lessor according to Paragraph G below or(ii) if not sold
pursuant to a Gas Contract, as defined below, ratified by Lessor and Lessee, the highest gross price
reasonably obtainable for the quantity of gas or products available for sale, through good faith
negotiations for gas or products produced from the leased premises at the place where such gas or
product is available for sale on the date of such a contract with adequate provisions for redetennination
of price at intervals of no less frequency than one(1)year to ensure that the production is being sold for
no less than the current market price.Included within the definition of"Market Value"as used herein is
the presumption that Gas Contracts that are ratified by Lessor are arms-length contracts with purchasers
who are not affiliates of Lessee. An "affiliate" includes,but is not limited to,the parent company or a
subsidiary of Lessee,a 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 plant,a corporation
or other entity in which Lessee owns a ten percent or greater interest,or any individual,corporation or
other entity that owns a ten percent or greater interest in Lessee. In no event shall "market value"ever
be less than the amount actually received by the Lessee for the sale of hydrocarbons.
E. This Lease is intended to cover only oil and gas,but some other substances (including
helium and sulphur) may be produced necessarily with and incidental to the production of oil or gas
from the leased premises; and, in such event, this Lease shall also cover all such other substances so
produced. On all such substances so produced under and by virtue of the terms of this Lease, Lessor
shall receive a royalty of twenty eight percent(28%)of all such substances so produced and saved,same
to be delivered to Lessor, free of all costs;or,at Lessor's election,Lessor's twenty eight percent(28%)
of such substances shall be sold by Lessee with Lessee's portion of such substances and at the same
profit realized by Lessee for its portion of such substances.
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F. All royalties hereinabove provided shall be payable in cash(unless Lessor elects to take
such royalty oil or gas in kind)to Lessor within sixty(60)days following the first commercial sale of
production and thereafter no more than sixty(60)days after the end of the month following the month
during which production takes place. Subject to the provisions of Paragraph 10 of this Lease
concerning shut-in wells,royalties shall be paid to Lessor by Lessee and/or its assigns or by the product
purchaser for oil and/or gas. Upon the failure of any party to pay Lessor the royalty as provided in this
paragraph, Lessor may, at Lessor's option, elect to terminate this Lease by sending written notice to
Lessee. Lessee shall then have thirty(30)days from the date of service of such written notice in which
to avoid termination of this Lease by making or causing to be made the proper royalty payment or
payments that should have been paid. If such royalty payment is not made on or before the expiration of
the 30-day period, or written approval is not obtained from Lessor to defer such payment,Lessor may
elect to terminate this Lease by filing a Notice of Termination with the County Clerk in the county
where the leased premises are located. The effective date of said termination shall be the date said
Notice of Termination is filed with the said County Clerk.
G. Lessee agrees that it will not enter into any contract for the sale,delivery,transporting or
processing of gas produced from the leased premises which shall extend more than two(2)years from
the effective date of such sales contract unless such contract has adequate provisions for redetermination
of price at intervals of no less frequency than one(1)year to ensure that production from this Lease is
not being sold for less than the then current market value. At least thirty(30)days prior to the delivery or
the execution of any contract for the sale,delivery,transporting or processing of gas produced from the
leased premises, Lessee shall provide Lessor with a complete copy of each proposed contract for the
purchase, transportation and/or processing of such gas that Lessee intends to execute (each a "Gas
Contract"), whereupon, Lessor shall have fifteen (15) days within which to either ratify such Gas
Contract or notify Lessee in writing that it does not approve of such Gas Contract,including a statement
of the reasons that Lessor does not approve of such Gas Contract(Lessor's failure to respond within the
fifteen(15)days either by ratification or by written notice that it does not approve of the proposed Gas
Contract shall be deemed to be Lessor's ratification of such Gas Contract). If Lessor ratifies the Gas
Contract, Lessor shall be deemed bound by the terms of such Gas Contract (and, at Lessee's option,
Lessor shall execute such Gas Contract as a party thereto) and the gas or products therefrom sold
pursuant to such Gas Contract shall be deemed sold at market value based on the gross price stated
therein. Lessee shall not amend or modify any material terms of a Gas Contract ratified by Lessor
without the prior written consent of Lessor. If Lessor does not approve of a Gas Contract,Lessee shall
consult with Lessor in an effort to agree to the terms of the proposed Gas Contract,and if the other party
or parties to the Gas Contract agree to the changes or modifications to the Gas
proposed by Lessor in order for Lessor to ratify such Gas Contract,then Lessor shall be deemed to have
ratified such Gas Contract(and,at Lessee's option,Lessor shall execute such Gas Contract as amended
and modified,as a party thereto). If Lessor and Lessee cannot agree on the terms of a Gas Contract that
are acceptable to the other party or parties thereto,Lessee may elect to execute such Gas Contract and
sell,deliver,transport and process gas according to the terms thereof,subject to the other terms of this
Paragraph 4 concerning the payment of Lessor's royalty on gas and products there from, including the
right of Lessor to take its share of gas in kind. In the event Lessor elects to take and separately dispose
of its royalty share of gas, the parties shall enter into a mutually acceptable balancing agreement
providing for(a)the right of an under produced party to make up an imbalance by taking up to 150
percent of its share of production and(b)an obligation to settle any imbalance remaining after depletion
in cash,based on the proceeds received by the overproduced party when the imbalance was created,or
if the overproduced party's gas was used but not sold, based on the market value of the gas when
imbalance was created.
H. In the event Lessee enters into a gas purchase contract which contains what is commonly
referred to as a "take or pay provision" (such provision meaning that the gas purchaser agrees to take
delivery of a specified minimum volume or quantity of gas over a specified term at a specified price or
to make minimum periodic payments to the producer for gas not taken by the purchaser) and the
purchaser under such gas purchase contract makes payment to Lessee by virtue of such purchaser's
failure to take delivery of such minimum volume or quantity of gas, then Lessor shall be entitled to
twenty eight percent(28%)of all such sums paid to Lessee or producer under the "pay"provisions of
such gas purchase contract. Such royalty payments shall be due and owing to Lessor within thirty(30)
days after the receipt of such payments by Lessee. If the gas purchaser"makes up"such gas within the
period called for in the gas contract and Lessee is required to give such purchaser a credit for gas
previously paid for but not taken,then Lessor shall not be entitled to royalty on such"make up"gas. If
Lessee is not producing any quantities of gas from the leased premises but is receiving payments under
the"pay"portion of such"take or pay"gas purchase contract provision,such payments shall not relieve
Lessee of the duty to make shut-in royalty payments if Lessee desires to continue this Lease,but such
"take or pay"royalty payments shall be applied as a credit against any shut-in royalty obligation of the
Lessee. Lessor shall be a third-party beneficiary of any gas purchase contract and/or transportation
agreement entered into between Lessee and any purchaser and/or transporter of Lessor's gas,
irrespective of any provision of said contracts to the contrary, and such gas purchase contract and/or
transportation agreement will expressly so provide. Further, Lessor shall be entitled to twenty eight
percent(28%) of the value of any benefits obtained by or granted to Lessee from any gas purchaser
and/or transporter for the amendment, modification, extension, alteration, consolidation, transfer,
cancellation or settlement of any gas purchase contract and/or transportation agreement.
I. Lessee agrees that before any gas produced from the leased premises is used or sold off
the leased premises,it will be run,free of cost to Lessor,through an adequate oil and gas separator of a
conventional type or equipment at least as efficient,to the end that all liquid hydrocarbons recoverable
from the gas by such means will be recovered and Lessor properly compensated therefor.
J. Any payment of royalty or shut-in gas royalty hereunder paid to Lessor in excess of the
amount actually due to the Lessor shall nevertheless become the property of the Lessor if Lessee does
not make written request to Lessor for reimbursement within one (1)year from the date that Lessor
received the erroneous payment, it being agreed and expressly understood between the parties hereto
that Lessor is not the collecting agent for any other royalty owner under the lands covered hereby,and a
determination of the name, interest ownership and whereabouts of any person entitled to any payment
whatsoever under the terms hereof shall be the sole responsibility of Lessee. It is further expressly
agreed and understood that: (i)this provision shall in no way diminish the obligation of Lessee to make
full and punctual payments of all amounts due to Lessor or to any other person under the teens and
provisions of this Lease, and (ii) any overpayments made to the Lessor under any provisions of this
Lease shall not be entitled to be offset against future amounts payable to parties hereunder.
K. The terms of this Lease may not be amended by any division order and the signing of a
division order by any mineral owner may not be made a prerequisite to payment of royalty hereunder.
L. Oil, gas or products may not be sold to a subsidiary or affiliate of Lessee as defined
herein without the Lessor's prior written pennission.
M. Lessee shall pay Lessor royalty on all gas produced from a well on the leased premises
and sold or used off the leased premises,regardless of whether or not such gas is produced to the credit
of Lessee or sold under a contract executed by or binding on Lessee. Should gas be sold under a sales
contract not binding on Lessee, Lessor's royalty will be calculated based an the highest price paid for
any of the gas produced from the well from which such gas is produced. In no event will the price paid
Lessor for Lessor's share of gas be less than the price paid Lessee for Lessee's share of gas.
5.
POOLING
Lessee, upon the prior written consent of Lessor which shall not be unreasonably withheld, is
hereby given the right to pool or combine the acreage covered by this Lease or any portion thereof as to
oil and gas,or either of them with any other land,lease or leases in the immediate vicinity thereof to the
extent hereinafter stipulated, when it is necessary or advisable to do so in order to properly explore, or
develop,produce and operate said leased premises in compliance with the spacing rules of the appropriate
lawful authority, or when to do so would promote the conservation of oil and gas in and under and that
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may be produced from said premises. In the absence of field rules,units pooled for oil and gas hereunder
shall not exceed the acreage provided for retained acreage tracts in Section 7.Lessee,under the provisions
hereof,may pool or combine acreage covered by this Lease or any portion thereof as above provided as to
oil in any one or more strata and as to gas in any one or more strata. The units fonned by pooling as to
any stratum or strata need not conform in size or area with the unit or units into which the Lease is pooled
or combined as to any other stratum or strata, and oil units need not conform as to area with gas units.
The pooling in one or more instances shall not exhaust the rights of the Lessee hereunder to pool this
Lease or portions thereof into other units. Lessee shall file for record in the appropriate records of the
county in which the leased premises are situated an instrument describing the pooled acreage as a pooled
unit. In this regard, Lessee shall provide Lessor with a copy of any and all documents filed with any
regulatory authority or recorded in the records of any county within thirty (30) days of filing such
documents. Upon the recordation of the unit in the county records and the timely furnishing of the copies
required herein to Lessor the unit shall be effective as to all parties hereto,their heirs, successors, and
assigns, irrespective of whether or not the unit is likewise effective as to all other owners of surface,
mineral, royalty or other rights in land included in such unit. Lessee may at its election exercise its
pooling option before or after commencing operations for or completing an oil or gas well on the leased
premises,and the pooled unit may include,but it is not required to include,land or leases upon which a
well capable of producing oil or gas in paying quantities has theretofore been completed or upon which
operations for the drilling of a well for oil or gas have theretofore been commenced. In the event of
operations for drilling on or production of oil or gas from any part of a pooled unit which includes all or a
portion of the land covered by this Lease,such operations shall be considered as operations for drilling on or
production of oil and gas from land covered by this Lease whether or not the well or wells be located on
the premises covered by this Lease and in such event operations for drilling shall be deemed to have been
commenced on said land within the meaning of this Lease. For the purpose 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
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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,no unit may be formed that is comprised of less than 50%of the
leased premises.
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.
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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
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for a well completed below the base of the Barnett Shale Formation is larger than 40 acres,the well may
maintain the Lease as to formations above the base of the Barnett Shale Formation as to not more than 40
acres. All other acreage except that included in a proration unit or pooled unit as described above will
cease to be covered by this Lease and will be released. To the extent possible,each such proration unit will
be in the shape of a square,with the bottom of the well in the center. Further,it is understood and agreed
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
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
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a depth of one hundred(100)feet below the base of the deepest producing fonnation 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
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 following the effective date of this Lease,Lessee agrees within one
hundred twenty(120)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 of at least one hundred
twenty(120)acres.
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 nonnally necessary in prospecting or drilling
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for oil,gas or other mineral granted herein,or in producing,handling or transporting salve 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.
B. Notwithstanding any other provisions of this Lease, but subject to the conditions
hereinafter set forth in this Paragraph 9,should Lessee be prevented by"force majeure"as defined above,
from conducting drilling or reworking operations on,or producing oil,gas or other mineral from,the leased
premises,such failure shall not constitute a ground for the termination of this Lease or subject said Lessee to
damages therefor;and the period of time during which Lessee is so prevented shall not be counted against
Lessee,but this Lease shall be extended for a period of time equal to that during which such Lessee is so
prevented from conducting such drilling or reworking operations on,or producing oil,gas or other mineral
from,such leased premises provided,however,that in no event will the primary term be extended unless
Lessee has begun the actual drilling of a well prior to the date of the expiration of the primary 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 unless Lessee has begun the
actual drilling of a well prior to the date of the expiration of the primary term.
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.
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10.
SHUT-IN GAS WELL PROVISIONS
If at any time after the expiration of the primary term while there is a gas well on the leased
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.
IL
INFORMATION,ACCESS AND REPORTS
A. Lessor shall have free access at all times to all wells, tanks, and other equipment that
services wells under the leased premises,including drilling wells,and Lessee agrees to furnish Lessor,or
Lessor's nominee, currently and promptly, upon written request, with full well information including
cores, cuttings, samples, logs (including Schlumberger and other electrical logs), copies and results of
deviation tests and directional and seismic surveys, and the results of all drill stem tests and other tests of
other kind or character that may be made of wells on the leased premises. Lessor or Lessor's nominee shall
be furnished with and have free access at all times to Lessee's books and records relative to the production
and sale of oil, gas or other minerals from the leased premises, including reports of every kind and
character to governmental authorities, State or Federal. Lessor shall have the right at its election to
employ gaugers or install meters to gauge or measure the production of all minerals produced from the
leased premises,and Lessee agrees to prepare and deliver to Lessor or Lessor's gauger or nominee duplicate
run or gauge tickets for all,minerals removed from the premises. Lessee shall furnish to Lessor daily
12
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 L.essee'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 welts drilled upon 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 each well drilled within
thirty(30)days after completion or abandonment.
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 not apply to equipment or casing on or in an oil or gas well capable of producing in
paying quantities,but Lessee shall be paid reasonable salvage value for any such casing or equipment. It is
contemplated that Lessee may drill across and through lands covered by this agreement where production is
not obtained or ceases. Where the casing or pipeline placed or laid through such non-producing lands is
necessary to the production of a well or wells located on other lands covered by this Lease,or lands pooled
therewith,it is expressly 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
13
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, and the separate surface and subsurface rights set forth herein, either together or
separately, 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, which consent shall not be
unreasonably withheld. Consent of the Lessor shall be subject to FAA approval, if such consent is
required by the FAA. All transfers by Lessee (including assignments, sales, subleases, overriding royalty
conveyances,or production payment arrangements)must be recorded in the county where the lease premises
are located, and the recorded transfer or a copy certified to by the County Clerk of the county where the
transfer is recorded must be delivered to the Lessor within sixty (60) days of the execution date. Every
transferee shall succeed to all rights and be subject to all obligations, liabilities, and penalties owed to the
Lessor by the original.Lessee or any prior transferee of the Lease,including any liabilities to the Lessor for
unpaid royalties. No such transfer shall release the Lessee (or any subsequent transferor) from any
obligation hereunder.
15.
NO WARRANTY
This Lease is given and granted without warranty of title, express or implied, in law or in equity.
Lessor agrees that Lessee, at Lessee's option, may purchase or discharge, in whole or in part, any tax;
mortgage or other lien upon the leased premises and thereupon be subrogated to the right of the holder
thereof, and may apply royalties accruing hereunder toward satisfying same or reimbursing Lessee. It is
also agreed that if Lessor owns an interest in the oil and gas under the leased premises less than the entire
fee simple estate therein,the royalties to be paid Lessor shall be reduced proportionately,but in no event
shall the shut-in royalty amount for a gas well,as provided for in Paragraph 10 hereof,be reduced.
16.
INDEMNITY
LESSEE SHALL EXPRESSLY RELEASE AND DISCHARGE, ALL CLAIMS,
DEMANDS,ACTIONS,JUDGMENTS,AND EXECUTIONS WHICH IT EVER HAD,OR NOW
HAS.OR MAY HAVE, OR ASSIGNS MAY HAVE, OR CLAIM TO HAVE, AGAINST THE
LESSOR OR ITS DEPARTMENTS, AGENTS, OFFICERS, SERVANTS, SUCCESSORS,
ASSIGNS,SPONSORS,VOLUNTEERS,OR EMPLOYEES,CREATED BY,OR ARISING OUT
OF PERSONAL INJURIES,KNOWN OR UNKNOWN,AND INJURIES TO PROPERTY,REAL
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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,
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
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
and file of record an affidavit stating that this Lease has expired and the reason therefor, and such
affidavit shall constitute prima facie evidence of the expiration of this Lease or any part of this Lease.
19.
NOTICES
A. Notifications Required. Lessee shall advise Lessor in writing of the location of
each well to be drilled upon 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 each well drilled on 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 the well on this
Lease or lands pooled therewith within thirty(30)days after completion or abandonment.
Reports are also to be made monthly, to include (1) name of well, total monthly
production and total product sales and(2)lease activity report to include drilling,testing,fracing,
completing,reworking,recompleting,plugging back,repairing and abandonment of the well and
(3) 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:Director,Department of Engineering
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
certified United States mail,postage prepaid,return receipt requested to the following address:
XTO Energy Inc.
810 Houston Street
Fort Worth,Texas 76102
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
1R
TO
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
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.
FAA RULES AND REGULATIONS
No drilling activity or any other activity shall be conducted on any portion of the leased
premises in contravention of any Federal Aviation Administration("FAA")rule or regulation or which
interferes with any future expansion plan for runways or taxiways Lessee shall make inquiry with the
proper officials of the FAA and obtain all necessary approvals,consents or waivers prior to the location of
any drill site on the subject property to verify compliance with all applicable FAA rules or regulations.
Lessee shall provide Lessor with copies of all waivers or other documentation issued by the FAA
indicating approval of well site locations or any other operations prior to the commencement of
operations.
This Lease recognizes that the Meacham Airport was acquired and developed with aid and/or
18
grant of land from the United States. Copies of such grants are available for review at the office of the
City Secretary in Fort Worth. These grants include a number of obligations and commitments to the
general and flying public,to the State of Texas,and to the United States. In addition to the above general
obligations and commitments, this Lease is subject and subordinate to and is controlled by all the
provisions, stipulations, covenants, and agreements in that certain indenture by and between the United
States of America and the Lessor and it is understood that the Lessee agrees to abide by and enforce all of
the provisions,stipulations,covenants,and agreements incorporated in the foregoing instrument the same
as if set out in full herein. This Lease is subject to approval by the FAA and shall be effective only as of
the date of such approval. The following agreements and understandings are specifically enumerated to
comply with FAA stipulations:
A. It is further especially agreed by the parties hereto that no structures or
obstructions, temporary or otherwise, shall be erected which will be in violation of the Federal
Aviation Regulations Part 77 (Criteria for Detertnining Obstructions to Air Navigation), unless
otherwise approved in writing by the FAA.
B. Without the prior specific approval of the FAA no surface operations shall be conducted
upon any of the lands covered by this Lease closer than the distances set forth in the sub-paragraph above,
or within the safety areas of said improvements,including ingress and egress of vehicular traffic.
C. It is specifically understood and agreed that the Lessee and its successors and assigns
shall give to the Lessor and the FAA,notice in writing of the location of any contemplated well and the
route of ingress and egress to such well adjacent to the Airport Open Space and that if neither the FAA
nor the Lessor objects to said location within a period of thirty(30)days from the receipt of written notice
thereof, the said Lessee and its successors and assigns may proceed to drill the well at the location
specified in said notice,provided same does not contravene other provisions of this Lease or the further
restrictions and obligations imposed by the City of Fort Worth.
D. This written notice shall not relieve the Lessee from obligation for filing a Notice of
Proposed Construction or Alteration, FAA Form 7460-1, if required by Federal Aviation Regulations,
Part 77,Subpart B.
B. Also it is agreed,that in the event a well is drilled on the land within the Pooling Unit,
then such drilling operations shall be prosecuted continuously,with due diligence, until same results in
production or a dry hole. All temporary structures used in such drilling operations shall be painted and
lighted in such a manner as prescribed by the FAA,and further provided that no permanent structures of
any kind used in the development, production or transportation of oil, gas and other minerals shall be
placed on the above described land in such manner as to interfere with or introduce hazard to the
operation of the aircraft.
19
F. Further,it is agreed that in the event any drilling operations for oil,gas,or other minerals
result in production, Lessee at its own expense shall immediately remove all temporary structures and
place all semi-permanent or permanent equipment in such manner as will not interfere with or introduce
any hazard to the operation of the aircraft. In event such drilling operations result in a dry hole, then
Lessee shall at its own expense immediately remove all temporary structures used in such landing
operation and level the area so that it may be safely used for landing or taxiing aircraft.
G. Lessee shall not interfere with the access roads to the Meacham Airport, and shall not
interfere with any other person or agency having a lawful right to use the above-described land.
H. During time of war or national emergency,Lessor shall have the right to use the airport
open space or any part thereof to the United States Government for military I or naval use,and if a lease is
executed with the United States Government,the provisions of this Lease insofar as they are inconsistent
with the provisions of the lease to the Government,shall be suspended.
1. Additional provisions and requirements concerning the use of the surface,the use
of the sub-surface,the off-site wells and the overriding royalty provisions are set out in Exhibit B
entitled"Operations Restrictions" attached to and incorporated herein by reference. For so long
as rights granted under Article 1.13 of Exhibit B to this Lease continue beyond the term of this
Lease,all provisions and requirements set out in Exhibit B shall survive termination of this Lease
or any portion thereof,
22.
COMPLIANCE WITH LAWS,ORDINANCES,RULES AND REGULATIONS
This Lease will be subject to all applicable federal, state and local laws, ordinances, rules and
regulations,including,but not limited to,all provisions of the City's Charter and ordinances,as amended
as well as the FAA rules and regulations.
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.
20
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 parry 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,
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
21
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
respondeat 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.
EXECUTED AND EFFECTIVE as of the later of(i)the date of the notarial acknowledgment
of the Lessor's execution,or(ii)the approval of this Lease by the FAA.
LESSOR:
By:
O-__ ��,L�—
Fernando Costa,Acting
Assistant City Manager
ATTEs-r: ontract- �uthorizatio�
City Secretary Date
APPROVED AS TO FORM AND LEGALITY:
Assistant City A orney
Date: 3- s-w'61
LESSEE: f`
XTO ENERGY INC.
Edwin S.Ryan,Jr.
Senior Vice President—Land Administration
Date: /z7/O�
v r
TILE STATE OF TEXAS §
COUNTY OF §
BEFORE ME,the undersigned,a Notary Public,on this day personally appeared �� ,Assistant City
Manager for City of Fort Worth,known tome to be the person whose name is subscribed to the foregoing instrument and acknowledged,that
(s)he has executed the same for,the purposes and consideration therein exp ssed.. /,
GIVEN UNDER MY HAND AND SEAL OF OFFICE this_ day of R cc//� 2008.
[SEAL] _�
otary Public in and for the
State of Texas
My Commission Expires:
Print Name of Notary Public Here
NETTIE LANE
MY COMMISSION EXPIRES
�' Juy28,2011
THE STATE OF TEXAS §
COUNTY OF�V1f §
BEFORE ME,the undersigned,a Notary Public,on this day personally appeared Edwin S.Ryan,Jr.,Senior Vice President—Land
Administration of XTO Energy Inc.,a Delaware corporation,known to me to be the person whose name is subscribed to the foregoing instrument
and acknowledged,that(s)he has executed the same for the purposes and consideration therein eexppressed-
NEN UNDER MY HAND AND SEAL OF OFFICE this I day ofFC.�'J 2008.
[SEAI
Notary Public in and for the
State of Texas
My Commission Expires:
Print Name of Notary Public Here
•P=...w.w.. -- -
s_ CARLAJ.DANIELS
Iv • Notary Pu61k
L STATE OF TEXAS
°jr A`�arr cmra.€en.06/1412011
23
EXHIBIT"A"
Attached hereto and made a part hereof that certain Oil and Gas Lease dated fmch ,
2008,by and between the City of Forth Worth,as Lessor and XTO Energy Inc.,as Lessee,to-
wit:
819.6993 acres,more or less,described below as Parcel One through Parcel Seven,to-wit:
Parcel One:
760.319 acres,more or less,more particularly described as:
798.00 acres, more or less, described as Meacham Airport, an Addition to the City of Fort
Worth, Tarrant County, Texas, according to Plats recorded as Plat A, Slide 2445 through Slide
2447,Plat Records of Tarrant County,Texas,and being out of the A.F.Albright Survey,A-1849,
the L. Cohen Survey, A-297, the John H. Duncan Survey, A-397, the W.M. Gray Survey, A-635,
the Thomas Hicks Survey,A-1820, the Rush Loyd Survey, A-986, the Robert Musselman Survey,
A-1102, the Phillip Nicholas Survey, A-1175, the Charles H. Putnam Survey, A-1250, the John
Ringer Survey,A-1939, the S.A. &M.G.R.R. Company Survey,A-1464, the Thomas J. Thompson
Survey,A-1503, and the James Wallace Survey,A-1605, Tarrant County,Texas
LESS, SAVE AND EXCEPT: 37.681 acres, more or less, being all that hart
and only that part of the following:
1.584 acres, more or less, out of the C. H. Putnam Survey, A-1250, Tarrant County,
Texas, and being the same land described in Right of Way Deed dated October 10, 1941,
from Trinity Portland Cement Company to State of Texas, recorded in Volume 1496,
Page 45,Deed Records of Tarrant County,Texas;
58.416 acres, more or less, out of the C. H. Putnam Survey, A-1250 and the T. J.
Thompson Survey, A-1503, and being the 60.00 acres described as "Second Trace' in
Warranty Deed dated March 18, 1924, from W. H. L. McCourtie to Trinity Portland
Cement Company,recorded in Volume 853, Page 602,Deed Records of Tarrant County,
Texas,
LESS, SAVE AND EXCEPT: 1.584 acres, more or less, out of the C. H.
Putnam Survey, A-1250, Tarrant County, Texas, and being the same land
described in Right of Way Deed dated October 10, 1941, from Trinity Portland
Cement Company to State of Texas, recorded in Volume 1496, Page 45, Deed
Records of Tarrant County,Texas;
50.406 acres, more or less, out of the C. H. Putnam Survey, A-1250 and the T. J.
Thompson Survey,A-1503, Tarrant County, Texas, and being the same land described as
51.8 acres in Warranty Deed dated April 22, 1955, from Helen May Baker to Tarrant
County Water Control and Improvement District No. 1, recorded in Volume 2857, Page
3,Deed Records of Tarrant County,Texas
LESS, SAVE AND EXCEPT: 1.394 acres, more or less, out of the C. H.
Putnam Survey, A-1250, Tarrant County, Texas being the same land described as
"Tract Two" in Warranty Deed dated December 9, 1969 from Nellie Reed, a
widow,to City of Fort Worth,recorded in Volume 4817,Page 599,Deed Records
of Tarrant County,Texas
that lies within the above described Meacham Airport, an Addition to the City of Fort
Worth, Tarrant County, Texas, as described in Plats recorded as Plat A, Slide 2445
through Slide 2447,Plat Records of Tarrant County,Texas,
Parcel Two:
2.535 acres,more or less,more particularly described as:
24
9,74 acres,more or less, out of the C. H. Putnam Survey, A-1250 and being ALL THAT PART
AND ONLY THAT PART of the 44.5 acres, more or less, described as "Tract No. 4-Runway
Area" in Release and Quit Claim Deed from Nellie Reed and Kenneth Reed to the City of Fort
Worth, recorded in Volume 4771, Page 527, Deed Records of Tarrant County, Texas, THAT
LIES WITHIN the boundaries of the 30.74 acres, described in Warranty Deed dated August 8,
1955, from Nellie Reed, a widow, to Tarrant County Water and Control and Improvement
District No. 1,recorded in Volume 2900, Page 74,Deed Records of Tarrant County,Texas
LESS, SAVE AND EXCEPT- 7.205 acres, more or less, out of the C. H. Putnanz
Survey,A-1250 and being ALL THAT PART AND ONLY THAT PART of the above
described land that lies within the above described Meacham Airport,an Addition to the
City of Fort Worth,.Tarrant County,Texas,as described in Plats recorded as Plat A, Slide
2445 through Slide 2447, Plat Records of Tarrant County,Texas,
Parcel Three:
14.6093 acres,more or less,more particularly described in the following three tracts:
FIRST TRACT: 2.2563 acres, more or less, out of the Alexander F. Albright Survey, A-7849,
and being the same land described by metes and bounds in quit claim deed dated May 27, 1972,
from Lucille Beall McLean,et al.to the City of Fort Worth,recorded at Volume 5263,Page 899,
Official Public Records,Tarrant County,Texas;
SECOND TRACT: 10.00 acres,more or less, out of the Alexander F. Albright Survey, A-1849,
and the Robert Husselman Survey, A-1102, and being the same land described by metes and
bounds in warranty deed dated January 26, 1971, from Sara Beall, widow of Jarvis Beall, to the
City of Fort Worth, recorded at Volume 4993, Page 924, Official Public Records, Tarrant
County,Texas.
THIRD TRACT: 2.353 acres, more or less, out of the Robert Musselman Survey, A-1102, and
being the same land described by metes and bounds in Controlled Access Highway Facility Deed
dated February 1, 1971, fi-om the City of Fort Worth to the State of Texas (Highway
t
Commission), recorded at Volume 5025, Page 27, Official Public Records, Tarrant County,
Texas. y,
Parcel Four:
6.48_8acres,more or less,described as follows:
Lots 14, 15, 17, 18, 19,20,21 and 22 of Block 1;
Lots 1,3,4,5,6,7,8,9 and 10 of Block 4;
Lots 5,6,7, 10, 12, 14, 15, 16, 18, 19&20 of Block 5;
all in the Airport Acres Addition, an addition to the City of Fort Worth, Tarrant County, Texas,
according to the plat recorded in Volume 1792, Page 91, Deed Records of Tarrant County,
Texas.
Parcel Five:
29-444 acres moreor less described as follows:
Lots 1,2,3 and 4 of Block 1;
Lots 1, 17, 18, 19 and 20 of Block 2;
Lots 1,2,5,6,7,9 and 10 of Block 3;
Lots 1,3,5,6,7,8,9, 10, 11, 13 and 14 of Block 4;
Lots 1,2,4,5,6,7, 8,9, 10, 11, 12, 13, 16 and 20 of Block 5;
Lots 12, 13, 14, 15, 16, 17, 18, 19 and 20 of Block 6;
25
Lots A,B&D, 13, 114, 16, 17. 18 and 19 of Block 8;
Lots 3,4,5,7,8,9, 10, 13, 14, 15, 16, 17, 18, 19,20,21,22 and 23 of Block 9;
Lots 2,3, 10, 11, 12, 13, 17, 18, 19,20,21,22 and 23 of Block 10;
Lots 2,3,4,5,6,7, 8,9, 10, 14, 15, 16, 17, 18, 19,20,21,22 and 23 of Block 11;
Lots 4,5,6,7,8,9, 10, 11, 12, 13, 14, 15, 16, 17, 18,21 and 22 of Block 12;
Lots 12 and 13 of Block 13;
all in the Worth Hills Addition, an addition to the City of Fort Worth, Tarrant County, Texas,
according to the plat recorded at Volume 309, Page 60, in the Plat Records of Tarrant County,
Texas
LESS SAVE AND EXCEPT any part of the above described land located lying within
the 7.8323 acres platted as Marine Creek Park, an Addition to the City of Fort Worth,
according to plat recorded as Volume A, Pages 2938-2939, Plat Records of Tarrant
County,Texas;
Parcel Six:
4.27 acres, more or less, out of the S.A. & M.G. Railroad Company Survey, A-1464 and the
James Wallace Survey, A-1605, Tarrant County, Texas, and being all that part and only that
part of the following that lies West of State Highway Spur No.496 to-wit:
5.060 acres, more or less, out of the S.A. &MG. Railroad Company Survey, A-1464, and being
the same land described in Warranty Deed dated July 7, 1932 from Annie L. White, a widow, et
al, to the City of Fort Worth, recorded in Volume 1166, Page 313, Deed Records of Tarrant
County,Texas;
34.016 acres, more or less, out of the S.A.& M.G. Railroad Company Survey, A-1464 and the
James Wallace Survey, A-1605 and being the same land described as First Tract of 25.036 acres
and Second Tract of 8.98 acres in Warranty Deed dated June 3, 1947, from Annie L. White, a
widow, et al. to the City of Fort Worth, recorded in Volume 1910, Page 561, Deed Records of
Tarrant County,Texas;
.394 acres,more or less, out of the S.A. & M.G. Railroad Company Survey, A-1464, and being
the same land described in Warranty Deed dated February 14, 1941, from Annie L. White, a
widow,et al.to the State of Texas,recorded in Volume 1467,Page 383,Deed Records of Tarrant
County,Texas;
LESS, SAVE AND EXCEPT any part of the above described land lying within the
Meacham Airport, an Addition to the City of Fort Worth,recorded as Plat A, Slide 2445
through Slide 2447, Plat Records of Tarrant County, Texas, said land is also shown as
Tract I H2, Tract IC and Tract 4 on Map 2042-420, Tarrant Appraisal District Map,
Tarrant County,Texas;
Parcel Seven:
2.034 acres,more or less, out of the S.A. &M.G. Railroad Company Survey, A-1464, and being
the same land described as the 2.034 acre tract in Warranty Deed dated November 24, 1982,
from The Atchison,Topeka and Santa Fe Railway Company,to City of Fort Worth, recorded in
Volume 7456,Page 1251,Deed Records of Tarrant County,Texas.
The hereinabove described Parcel One through Parcel Seven contains 819.6993 acres, more
or less,in the aggregate.
26
Exhibit A-I
Plat of Leased Premises- Meacham
Attached to and ade a part of that Certain Oil and Gas Lease
Dated�(C}) 'tn 2008, by and between XTO Energy Inc.
as Lessee and City of Fort Worth as Lessor
OF
0199//aT[o,
p4�AI ,> '• '�'tl'p�-`�� I r LOTS A-I A-2 B-1,a c-I BLOCK
f•y? .;y 1.AN ftLOC'KS 2,3,ANO 4.
- AAQy^ = City of Fort Worth-XTO OGL MEACH.AM AIRPORT
�1k':- ' Meacham Airport ' �- T4Nq HOF CFOORT WORTH,
P4Ef = A T NNTY,TEAS.
tK`'• Description gcq„r°
/ ��'V"y,i•ri•• c`°rx-_ _ ,•i."av,�•.'O',a,�iu,'Wi o�n,,.•',::/n
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EXHIBIT"B"
OPERATIONS RESTRICTIONS
tt ched and made a part of that certain Oil and Gas Lease dated
,2008,(the "Lease")between The City of Fort Worth(Lessor/City)and
PTO Energy Inc.,(Lessee/Operator), covering the lands described in Exhibit A. This Exhibit
incorporates by reference the terms of the Lease,which is made a part of this Exhibit.
ARTICLE I
GENERAL SURFACE PROVISIONS
1.01. General. The provisions of this Article I shall be applicable to all operations to
develop the Minerals beneath the Leased Premises, as defined in the Lease, as required to be
conducted within multiple Operations Sites defined as well locations on the.Lease surface. For
purposes of this Exhibit B,Lessee and any other party conducting operations shall be referred to
collectively as "Operator." The Operator shall comply with all provisions of the City's Gas
Drilling Ordinance and any other applicable federal, state and city laws, rules, ordinances or
regulations.
A Site Survey shall be attached to this Exhibit`B" indicating the wells sites, fracture pit
location and well access roads to be installed and used by the Operator. No other locations or
access roads may be installed or used by the Operator without the prior written consent of the
Lessor and the submittal of a new site survey.
1.02. Litter. Operator shall not cause, suffer, or allow any amounts of trash or litter to
be placed upon the Leased Premises,except for litter placed in permanent trash containers on the
Operations Sites pursuant to Article 3.09 below.
1.03. Pipelines Roads and other Facilities. Other than on the Operations Sites and
access roads as indicated on the Site Survey, Operator shall not construct any pipelines
(including the depth of same), pits, roads, and other aboveground and underground facilities
(collectively, "Facilities") without the prior written consent of Lessor, which shall not be
unreasonably withheld. Operator shall locate its Facilities only on the Operations Sites and those
other areas of the Leased Premises specified in writing by Lessor. Any Facilities approved by
Lessor and constructed by Operator shall be constructed and maintained by Operator in
accordance with industry standards for equivalent facilities. Operator shall access the Operations
Sites only by using existing roads or ways present on the Leased Premises as indicated on the
Site Survey, except unless otherwise designated by the Lessor. Operator shall use reasonable
efforts to prevent all persons engaged in operations from operating vehicles and equipment on
any part of the Leased Premises other than upon the Operations Sites and Facilities approved by
Lessor or upon existing roads or ways.
1.04. Other Activities. Operator shall cause each person entering the Leased Premises
on Operator's behalf to refrain from carrying on any activities except those reasonably necessary
to operations.Operator shall cause each such person to refrain from using for recreation any part
of the Leased Premises. Lessor shall have the right to exclude from the Leased Premises any
individual or entity who has violated this provision, and Operator shall notify any such
individual or entity that he/she or it will not be allowed to enter or remain upon the Leased
Premises.
1.05. Damage to Roads or Ways. Any damages to roads or ways on the Leased
Premises caused by Operator's activities upon the Leased Premises, including without limitation
operations conducted within the Operations Site and activities related to accessing the Operations
Site, shall be promptly repaired by Operator, so as to return such roads or ways to their prior
condition insofar as reasonably practicable. Operator shall provide the Lessor with a Road
Maintenance Agreement and Bond as required by the City's Gas Drilling Ordinance.
1.06. Indemnification. ALL OPERATIONS CONDUCTED ON THE LEASE
PREMISES SHALL BE AT THE SOLE RISK AND EXPENSE OF THE OPERATOR.
PARAGRAPH 16 OF THE ATTACHED OIL AND GAS LEASE IS EXPRESSLY
INCORPORATED INTO AND MADE A PART OF EXHIBIT B AND SHALL SURVIVE
27
Tt"RIVIINATION OF THE OIL AND GAS LEASE OR ANY PORTION THEREOF.
I.07. CtittiM4 of Fences. Operator shall not cut any fence lines or remove or relocate
any fence posts located upon the Leased Premises without the prior written consent of Lessor.
and any such actions shall be taken only in accordance with reasonable instructions of, and in
coordination with, Lessor.
1.08. Water Rights. Except as otherwise provided herein or in the Lease, Operator shall
have no right of use of private cinpoundments of fresh water from ponds, lakes, rivers or
streams,or other surface waters,located upon the Leased Premises.
1.09. Caliche. Operator shall have no right under this Lease to remove or extract from
the Leased Premises caliche, sand or gravel for use in connection with the activities and
operations to be conducted pursuant to this Lease.
1.10. Drilling Mud and Saltwater Disposal. Operator shall not dispose of drilling mud
or saltwater in, on, under or upon the Leased Premises. If the site is located within 600 feet of
any Protected Use, as defined by the City's Gas Drilling Ordinance, the Operator shall use a
closed loop mud system as required by the Ordinance.
1.IL Survey. Upon the expiration of the primary term, or, if this lease is maintained
beyond the primary term by continuous development, upon the expiration of the continuous
development period, Lessee shall deliver to Lessor a survey showing the location of the
Operations Sites, and all roads and pipelines then located on the Leased Premises and shall
prepare and deliver to Lessor a Release in recordable form, releasing Lessee's right to use any
other portion of the surface of the Leased Premises not designated as a road, Operation Site or
Pipeline located on the survey.
1.12 Off Site Wells 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. 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 sales volumes 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 promises, 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, upon written request, a summary of the pertinent
provisions of any applicable gas purchase contracts or transportation agreements entered into in
connection with the leased premises. Furthermore, on request of Lessor and without cost to the
Lessor, Lessee shall furnish Lessor a copy of the well completion reports. 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.
I C. Lessee shall advise Lessor in writing of the location of all wells drilled upon 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
each well drilled within thirty(30)days after completion or abandonment.
113. Off-Site Wells, Surface and Subsurface Use and ORRI. In consideration of the
premises, Lessor grants to Operator the right to drill, operate and produce one or.more
directional or horizontal wells with surface locations on the Operations Sites as defined in this
Exhibit B,to other lands not covered by this Lease and not pooled with any lands covered by this
Lease, in order to produce or develop minerals not covered by this Lease or lands pooled
therewith ("Off-Site Wells"). In connection therewith, Lessor grants unto Operator, its
successors and assigns, a surface and subsurface easement and right-of-way to provide Operator
ingress to and egress from, and the right to use and occupy, the surface of the Operations Sites
for Off-Site Wells subject to Paragraph Nos, 12, 13 (provided that Lessee's right to remove all
property and fixtures associated with rights granted under this Article 1.13 shall occur within six
months after the expiration of the Lease or six months after the expiration of the rights granted
under this Article 1.13, whichever is later), 14, 15, 16, 17, 19, 20 and 21 of the Oil and Gas
29
Lease, and a non-exclusive subsurface easement for a well bore or well bores to drill across,
through and under the Operations Sites and leased premises. Lessor reserves unto itself and its
successors and assigns the right to utilize, and the right to grant third parties the right to utilize,
similar subsurface easement rights as herein granted to Operator,provided the utilization of any
such rights by Lessor and its successors, assigns and third party grantees shall not interfere with
Operator's exercise and safe operation of its rights as herein provided. Operator's easement and
right-of-way granted herein shall include the right to use all roads now or hereafter located on the,
leased premises that will allow Operator ingress to and egress from the Operations Sites for all
surface and subsurface operations as may be necessary or desirable for the operation and
production of the Off-Site Wells, including, without limitation, drilling, testing, equipping,
producing, completing, operating, deepening, reworking, plugging back, laying pipelines,
plugging and abandoning,and performing all other associated surface and subsurface operations.
As to any Off-Site Well, if the Off-Site Well is completed as a producing well, Lessor shall be
entitled to receive an overriding royalty interest(herein"ORRI")from Operator equal to two and
one-half percent of eight-eighths(2.5%of 8/8ths)in and to all production from the wellbore(s)of
each Off-Site Well so drilled and producing and attributable to the oil,gas and/or mineral leases
covering the land included in the proration unit or pooled unit for the Off-Site Well (the
"Producing Tract"), the surface location of which is one the Operations Site; provided that the
ORRI shall at all times be proportionately reduced to the extent of the interest owned by Lessor
in the surface of the Operations Site. The ORRI shall be evidenced by an assignment in
recordable form and shall be effective from and after first production from the applicable Off-
Site Well. The ORRI to be conveyed to Lessor shall be limited to the well bore(s) in which the
surface location is on the Operations Site and the bottom hole location and/or portion of the
production interval of the directional or horizontal lateral of such well is producing oil, gas or
other hydrocarbons from the Producing Tract and attributable to that portion of the oil, gas or
mineral leases included within the Producing Tract. The assignment of the ORRI to Lessor shall
not apply to any well or wells in which the bottom hole and/or portion of the production interval
of the directional or horizontal lateral of such well is on the Producing Tract but the surface
location is on lands other than the Operations Site or to any tracts of land other than the
Producing Tract. Except for the amount of the ORRI itself, which is specified herein, the
amounts attributable to such ORRI shall be determined,paid,calculated and delivered to Lessor
in the same manner, at the same time and under the same terms and conditions as is provided in
this Lease for the detennination,payment,calculation and delivery of royalty to the Lessor under'
this Lease. Additionally, such ORRI shall be free of the same costs and expenses that such
royalty is free of under this Lease, and shall bear the same costs and expenses that such royalty
bears under this Lease.
If the Oil and Gas Lease terminates as to the leased premises,or any portion thereof,the surface
and subsurface easement and right-of-way granted to Operator in this Paragraph shall,
nevertheless, survive such termination, and Operator shall continue to have the right to use the
Operations Sites and subsurface of the leased premises to drill, test, equip, produce, complete,
operate, deepen, rework, plug back, lay pipelines, plug and abandon, and perform all other
associated surface and subsurface operations as may be necessary or desirable for the operation
and production of the Off-Site Wells, for so long as Operator produces oil or gas from the Off-
Site Wells or maintains a lease on which an Off-Site Well has been drilled by payment of shut-in
royalties, operations or as otherwise provided therein, and Operator shall continue to have the
right of ingress and egress over,under and across the leased premises to the Operations Sites for
the above-stated purposes.
ARTICLE II
SURFACE PROVISIONS FOR G&G OPERATIONS
2.01. Application to G&G Operations. The provisions of this Article 11 shall be
applicable to all geological and geophysical operations ("G&G Operations") conducted by
Operator upon the Leased Premises.
2.02. G&G Operations. All G&G operations shall be conducted in conformance with
the City's adopted Gas Drilling Ordinance and any other applicable federal, state and city laws,
rules, ordinances or regulations. At all times Operator shall consult with and keep Lessor
informed as to the nature, timing and scope of all G&G Operations to be conducted upon the
Leased Premises.
29
2.03. Specific Limitations on G&G Operations. In connection with proposing any G&G
Operations,Operator shall comply with the following restrictions:
(a) All G&G Operations conducted upon the Leased Premises shall be
conducted in a manner so as to reasonably limit and reduce their impact upon and
disturbance of the use and enjoyment of the Leased Premises, including its residential
developments;
(b) No shot holes shall be located within 600 feet of any building,residence or
water well., and
(c) No G&G Operations may be conducted upon any portion of the Leased
Premises that is wet to the extent that light vehicles would leave ruts or tracks in the soil.
(d) No explosives will be used. Seismic will be done only by "thumper"
procedures, Lessee must obtain Lessor's written consent prior to conducting any seismic
survey.
(e) Lessee shall furnish Lessor with a copy of all data and information
obtained from seismic surveys, including interpretations of the data and shall provide
Lessor with reasonable access to Lessee's employees or contractors involved in the
interpretation of the data.
2.04. G&G Restorations. Operator shall promptly plug all shot holes and coring holes
drilled in connection with the G&G Operations with good and sufficient bentonite plugs, and
shall restore,to the extent reasonably practicable,the surface of the Leased Premises to the same
condition as existed before such G&G Operations.All such holes shall be drilled and plugged so
as to avoid damage to any aquifers. In the event Operator fails to restore the Leased Premises
following G&G Operations, Operator shall reimburse Lessor for the reasonable costs incurred by
Lessor in performing such restoration.
ARTICLE III
SURFACE PROVISIONS FOR OPERATIONS
3.01. Application to Operations. The provisions of this Article III shall be applicable to
a]I operations conducted by Operator upon the Leased Premises.
3.02. Pipelines and Other Lines. Operator shall not install any permanent pipelines on
the Leased Premises except those utilized to gather, handle and market production from a Well
located upon the Leased Premises and producing from the Leased Premises, except as provided
for in Article 1.13 of this Exhibit"B" to the Lease. Operator shall cause all pipelines, electrical
lines and telephone lines constructed either by it, or by any third party acting (a) at its request,
(b) in concert with Operator, or (c) pursuant to Lease with Operator, even if said party is
considered a common carrier, upon the Leased Premises that are of a Perinarient Nature to be
buried at least three (3) feet below the surface of the earth. Operator shall cause stakes to be
placed at each point where a Transmission Route crosses beneath a road or fence and shall
furnish Lessor a plat reflecting the location of all Transmission Routes located upon the Leased
Premises and which are subject to this Article 3.02.All pipeline installation under the Lease shall
require the prior written consent of the City and FAA approval prior to installation on any part of
the airport property. All pipelines on any part of the airport property under the Lease shall be in
an casement recorded in the Real Property Records of Tarrant County,Texas,which consent and
easement shall not be unreasonably withhold by the City. Placement of any pipelines shall not
obstruct airport surfaces or imaginary control surfaces associated with airport surfaces as
determined by the City. All permanent pipeline installation shall be subject to relocaton based
on airport infrastructure improvements or changes and FAA requirements.
3.03. Gates. Lessor shall possess the unqualified right to deny erection of a gate or
gates upon the Leased Premises, except to provide for access to the 'Operations Site. Any gate
erected shall conform to existing gates upon the Leased Premises as to construction materials,
construction methods, paint colors, and other technical specifications presently employed upon
the Leased Premises. If there are no existing gates, any gates installed by the Operator shall
30
conform to the City's Gas Drilling Ordinance. All gate access codes must be provided to the
Department of Aviation for staff access during or as a result of an airport emergency.
3.04, Operations Sites Appearance. Operator shall maintain the Operations Sites in a
neat and orderly fashion including all equipment and materials located thereof) in compliance
with the City's Gas Drilling Ordinance. Operator shall remove all casing, tubing, pipe,
equipment and other materials within one hundred eighty(180)days of the cessation of its active,,
use in connection with operations. In no event shall Operator place upon an Operations Site any
structures or equipment, including without limitation structures of a permanent nature, which
exceed twenty feet(20') in height, except for drilling, completion and workover rigs which may
exceed that height if necessary. Operator shall comply with all height restrictions as required by
the Federal Aviation Administration, including, but not limited to, the FAA 7460-1 response.
Operator must notify the airport manager in writing at least 48 hours prior to raising any rigs or
cranes.No rigs or cranes may be raised without prior notification and the City's consent.
Operator shall comply with the City's drainage requirements and no installation of
facilities shall interfere with the existing drainage patterns of the Leased Premises. Operator
shall comply with all operations and environmental laws,rules and regulations,
3.05, Discharges. Operator shall not purposefully discharge any oil, condensate,
saltwater, or any substance used in drilling or production onto the Leased Promises under any
circumstances. No salt water disposal wells shall be allowed on the Leased Premises. Prior to
commencing production from any Well on the Leased Premises, the tanks and other storage
vessels shall be enclosed by a compacted earthen berm of sufficient height to contain any
discharge which might occur. In the event that there is a discharge, Operator shall take actions
and make notifications as required by Federal, State, and local rules and regulations. The
affected area shall be restored to its original condition insofar as reasonably practicable. Operator
agrees that such restoration shall include correction of any erosion damage and removal of any
contaminated soil, and replacement with uncontaminated soil, regardless of whether the
discharge occurred through its negligence or otherwise.
3.06. Operations Sites Restoration. Within one hundred eighty (180) days, weather
permitting, of the completion and equipping by Operator of a well as a producing well or the
plugging and abandonment thereof, and unless Operator commences the drilling of another well
within one hundred eighty(180)days of the completion and equipping by Operator of a well as a
producing well or the plugging and abandonment thereof, Operator, at its sole cost and expense,
shall:
(a) remove from the Operations Sites upon which such well is located all
unnecessary surface equipment, flow lines and tankage, all drilling mud, chemical mud,
saltwater,surface oil and other materials;
(b) remove all materials stored in any earthen pits, together with any
contaminated soil,and refill any such pits;and
(c) remove from such Operations Sites all caliche,return the Operations Sites
to its original contour as nearly as is practicable, and replow and replant such Operations
Sites, provided, however, should such Well be completed and equipped as a producing
Well, then such portion of the Operations Site as is necessary for the operation and
maintenance of such Well may retain its original caliche and/or be otherwise surfaced for
use as a producing Well site.
The site shall be restored in compliance with any state laws and the City's Gas Drilling
Ordinance.
3.07. Noise Attenuation. Operator shall exercise reasonable efforts to control the noise
level resulting from operations upon the Leased Premises,and if required by the Lessor,conforrn
to the Gas Drilling Ordinance standards for noise levels.
3.08. Permanent Structures and Equipment. Operator shall cause all tank batteries and
other surface equipment located upon an Operations Site to be maintained in good repair and all
such items which are of a permanent nature to be painted to blend in with the surrounding
31
landscape and shall be installed,maintained and repainted as required by the City's Gas Drilling
Ordinance.
3.09. Litter. Operator shall construct and place permanent trash containers at the
Operations Site. Operator shall cause each trash container constructed and placed by it upon the
Operations Site to be serviced,maintained and emptied at least weekly,if necessary.
Y
3.10. Time and Location of Operations. Operator shall conduct all drilling and
completion Operations within the boundaries of the Operations Sites as identified on the Site
Survey and if required by the Lessor, during times in compliance with the City's Gas Drilling
Ordinance or as required by the City during special events on the airport or by the FAA during a
state or national emergency where the FAA has closed or restricted access to all or part of the
airport.
3.11. Sgf* Equipment. Operator shall install and utilize all safety equipment
reasonably necessary in accord with industry standards and in compliance with the City's Gas
Drilling Ordinance,including emergency shut-off valves,on the Operations Sites.
3.12. Landscaping. Operator shall comply with the landscape requirements of the
City's Gas Drilling Ordinance,unless otherwise waived in writing by the Lessor.
3.13. Electricity. All electricity needed for Lessee's operations,including any electrical
equipment used by Lessee,will be obtained at the sole cost and expense of Lessee.
3.14. Inspection. The City and its Gas Inspectors shall have the right to enter the
Leased Premises at any time to inspect for compliance with the terms of this agreement and the
City's Gas Drilling Ordinance.
3.15. Compliance. In the event that Lessor notifies the Operator in writing that the
Operator is not in compliance with the terms of this Exhibit B,Operator shall have ten days after
receipt of said notice to comply with the terms of this Exhibit B, unless said noncompliance is
related to health and safety, in which the Operator must remedy and comply within 24 hours of
said notice. The service of said notice and the failure of the Operator to comply within the stated
time frame shall not be a condition precedent to any action by the Lessor for any cause
hereunder.
3.16. Survivability If the Lease terminates as to the leased premises, or any portion
thereof,for so long as rights granted under Article 1.13 in this Exhibit`B"to the Lease continue
beyond the termination of the Lease, Paragraph Nos. 12, 13 (provided that Lessee's right to
remove all property and fixtures associated with rights granted under Article 1.13 of this Exhibit
"B" shall occur within six months after the expiration of the Lease or six months after the
expiration of the rights granted under Article 1.13 of Exhibit"B",whichever is later), 14, 15, 16,
17, 19,20, 21 and 22 through 33 of the Lease shall,nevertheless, survive such termination, and
Operator shall be bound by such terms and provisions of said paragraphs.
EXECUTED AND EFFECTIVE as of the later of(i)the date of the notarial acknowledgment
of the Lessor's execution of the Oil and Gas Lease,or(ii)the approval of the Oil and Gas Lease by the
FAA.
LESSOR: OPERATOR:
CITY OF FORT WORTH / XTO�ENERGY INC.
Fernando Costa,Acting Edwin S.Ryan,Jr.
Assistant City Manager Senior Vice President—Land
ATTEST: Administration
City Secretary
32
APPROVED AS TO FORM AND LEGALITY:
B
Assistant Ci Attorney
33p, ''�'';pl, ��i�,
Exhibit E-1
Site Survey- Meacham
Attached to and made a rt of Exhibit B to that Certain Oil and Gas Lease
Dated 2008, by and between XTO Energy Inc.
as Lessee and City of Dort Worth as Lessor
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PAD EXHIBIT
XTO ENERGY INC.
November 5,2007.
The locatlon shown hereon was staked from MEACHAM FIELD
tract lines as evidenced by occupation.
Distances shown are not intended to be TARRANT COUNTY,TEXAS
definitive In establishing title boundaries.The
acreage shown hereon were provided by others.
Bearings are based on NAD 27 State Plane o SCALE• 1 re=1000r
Coordinates, it
FOR THE EXCLUSIVE USE OF ° " 1000 From the Office of ELS Surveying&Mapping,Inc./
XTO ENERGY INC. Harry L.Johnson&Associates-Aledo,Texas
Drafter:C.S. Job No.273666 Map No.Pad Exhibits
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November 2,2007. I
The location shown hereon was staked from tract
lines as evidenced by occupation.Distances shown
are not intended to be definitive in establishing title TARRANT COUNTY,TEXAS
boundaries.The acreage shown hereon were
provided by others.Bearings are based an NAD 27 SCALE: 11°=5®®e
State Plane Coordinates.
FOR THE EXCLUSIVE USE OF From the Office of ELS Surveying&Mapping,Inc./
XTO ENERGY INC. Harry L.Johnson&Associates-Aledo,Texas
Drafter:C.S. Job No.273666 Map No.Pad Exhibits
Page 1 of 2
City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION: Approved on 3/20/2007
DATE: Tuesday, March 20, 2007
LOG NAME: 30MEACH 070209 REFERENCE NO.: **L-14294
SUBJECT:
Approve Acceptance of Lease Agreement with XTO Energy Inc., for Natural Gas Drilling under 869
Acres More or Less of City-Owned Properties Located in Tarrant County, Texas, Known as
Meacham Airport
RECOMMENDATION:
It is recommended that the City Council approve the acceptance of a lease agreement for natural gas
drilling under 869 acres more or less of City-Owned Properties Located in Tarrant County, Texas, known as
Meacham Airport to XTO Energy Inc., for a one-year term.
DISCUSSION:
On May 17, 2005, (M&C G-14798) Fort Worth City Council authorized City staff to advertise City-owned
property known as Meacham Airport for the purpose of subsurface drilling and extraction of natural gas.
A request for bid proposals (RFP) was advertised for three consecutive weeks in the Commercial
Recorder, published on December 21, 2006, December 28, 2006, and January 4, 2007.
The following sealed bid for the gas lease was received and opened on January 11, 2007.
Bidders Lease Bonus/Acre Total Lease Bonus % Royalty Gift
XTO Energy Inc $17,111.00 $14,869,459.00 28%
Four Sevens Oil Co., Ltd. $13,500.00 $11,731,500.00 30% $250,000.00
Chesapeake Energy Corporation $11,785.00 $10,241.165.00 27.5%
Additional bid terms were included in the XTO Energy Inc., bid and the Four Sevens Oil Co., Ltd. bid.
XTO Energy Inc. offered a 1-year lease instead of the City standard 2-year lease. Four Sevens Oil Co.,
Ltd. bid included terms that the lease and bonus would be released and the bonus refunded if Four Sevens
Oil Co., Ltd. did not receive FAA approval of adequate well sites.
The bids received were 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. Staff and JPMorgan
Chase determined that XTO Energy Inc., had the best overall bid due to a larger upfront bonus, shorter
lease term, access to pipeline, and the ability to access minerals from both on-site and off-site locations.
After comparing information from bidders, City staff and JPMorgan Chase determined, based upon the
proposal content, that the XTO Energy Inc., bid is likely to yield the most revenues over the life of the well
(s).
In accordance with the Alternative Assets Agency Account Agreement between JPMorgan Chase and the
City (City Secretary Contract 29698), JPMorgan .Chase will serve as the depository of the lease bonus
http://www.fortworthgov.org/council_packet/Reports/mc_print.asp 03/20/2007
Page 2 of 2
revenue until the City requests wire transfer of the funds. The net transfer to the City less administrative
and legal fees is estimated to be $14,125,986.00 more or less.
FISCAL INFORMATION/CERTIFICATION:
The Finance Director certifies that the Engineering Department is responsible for the collection of funds due
the City under this agreement.
TO Fund/Account/Centers FROM Fund/Account/Centers
GC24 446100 055240439020 $14,125,986.00
Submitted for City Manager's Office by: Marc A. Ott (8476)
Originating Department Head: A. Douglas Rademaker(6157)
Additional Information Contact: Jean Petr(8367)
http://www.fortworthgov.org/council_packet/Reports/Me print.asp M0,0/9.007