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HomeMy WebLinkAboutContract 40072• • '' � �� OIL AND GAS LEASE THE STATE OF TEXAS § O R f G f JVA L COUNTY OF TARRANT § THIS AGREEMENT ("Lease") is made and entered into as of the date herein specified by and between CITY OF FORT WORTH, a home rule municipal corporation of the State of Texas located within Tarrant, Denton, and Wise Counties, Texas, (hereinafter referred to as "Lessor"), and, 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 lliquid 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 1.8081 acres, whether actually containing more or less. 2. • � � : 1l l Subject to the other provisions herein contained, this Lease shall be for a term of two (2) years from the date of the notarial acknowledgment of Lessor's execution of this instrument (hereinafter called "primary term") and so long thereafter as oil, gas or other minerals granted herein are produced from the leased premises or lands pooled therewith, in paying quantities, or operations are in progress thereon as hereinafter provided, and the royalties are paid as provided herein. For the purposes of this lease, the term "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 operations are carried out with due diligence with no cessation of more than ninety (90) consecutive days. 1 0[L AND GAS LEASE —South Jennings Addition pipelines on the same basis as Lessee's share of liquids is stored or delivered. Lessor shall reimburse Lessee for all reasonable costs incurred by Lessee in installing, operating or maintaining additional facilities necessary for Lessor's royalty gas and processed liquids to be separately metered, accounted for, and delivered to a third party, but Lessor shall not be charged for any expense in the production, gathering, dehydration, separation, compression, transportation, treatment, processing or storage of Lessor's share of gas and processed liquids. B. On products, twenty five percent (25%) of the gross market value or proceeds of sale thereof, whichever is higher. C. On residue gas or gas remaining after separation, extraction or processing operations, twenty five percent (25%) of the proceeds of sale or of the market value thereof, whichever is higher. D. For purposes of this Paragraph 4, the term "market value" shall mean for gas and products therefrom (i) the gross price at which gas or products therefrom are sold pursuant to a Gas Contract, as defined below, that is ratified by Lessor according to Paragraph G below or (ii) if not sold pursuant to a Gas Contract, as defined below, ratified by Lessor and Lessee, the highest gross price reasonably obtainable for the quantity of gas or products available for sale, through good faith negotiations for gas or products produced from the leased premises at the place where such gas or product is available for sale on the date of such a contract with adequate provisions for redetermination of price at intervals of no less frequency than one (1) year to ensure that the production is being sold for no less than the current market price. Included within the definition of "Market Value" as used herein is the presumption that Gas Contracts that are ratified by Lessor are arms -length contracts with purchasers who are not affiliates of Lessee. An "affiliate" includes, but is not limited to, the parent company or a subsidiary of Lessee, a 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 five percent (25%) of all such substances so produced and saved, same to be delivered to Lessor, free of all costs; or, at Lessor's election, Lessor's twenty five percent (25%) of such substances shall be sold by Lessee with Lessee's portion of such substances and at the same profit realized by Lessee for its portion of such substances. 3 OIL AND GAS LEASE —South Jennings Addition 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 ninety (90) days following the end of the month in which 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 rated by Lessor without the prior written consent of Lessor. If Lessor does not approve of a Gas Contract, Lessee shall consult with Lessor in an effort to agree to the terms of the proposed Gas Contract, and if the other party or parties to the Gas Contract agree to the changes or modifications to the Gas Contract which are 4 OIL AND GAS LEASE —South Jennings Addition 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 five percent (25%) of all such sums paid to Lessee or producer under the "pay" provisions of such gas purchase contract. Such royalty payments shall be due and owing to Lessor within thirty (30) days after the receipt of such payments by Lessee. If the gas purchaser "makes up" such gas within the period called for in the 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 Lite duty to make shut-in royalty payments if Lessee desires to continue this Lease, but such "take or pay" royalty payments shall be applied as a credit against any shut-in royalty obligation of the Lessee. Lessor shall be a third -party beneficiary of any gas purchase contract and/or transportation agreement entered into between Lessee and any purchaser and/or transporter of Lessor's gas, irrespective of any provision of said contracts to the contrary, and such gas purchase contract and/or transportation agreement will expressly so provide. Further, Lessor shall be entitled to twenty-five percent (25%) of the value of any benefits obtained by or granted to Lessee from any gas purchaser and/or transporter for the amendment, modification, extension, alteration, consolidation, transfer, 5 OIL AND GAS LEASE —South Jennings Addition 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 agreeA and understood that: (i) this provision shall in no way diminish the obligation of Lessee to make full and punctual payments of all amounts due to Lessor or to any other person under the terms and provisions of this Lease, and (ii) any overpayments made to the Lessor under any provisions of this Lease shall not be entitled to be offset against future amounts payable to parties hereunder. K. The terms 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 permission. M. Lessee shall pay Lessor royalty on all gas produced from a well on the leased premises and sold or used off the leased premises, regardless of whether or not such gas is produced to the credit of Lessee or sold under a contract executed by or binding on Lessee. Should gas be sold under a sales contract not binding on Lessee, Lessor's royalty will be calculated based on the highest price paid for any of the gas produced from the well from which such gas is produced. In no event will the price paid Lessor for Lessor's share of gas be less than the price paid Lessee for Lessee's share of gas. 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 6 OIL AND GAS LEASE —South Jennings Addition 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 formed by pooling as to any stratum or strata need not conform in size or area with the unit or units into which the Lease is pooled or combined as to any other stratum or strata, and oil units need not conform as to area with gas units. The pooling in one or more instances shall not exhaust the rights of the Lessee hereunder to pool this Lease or portions thereof into other units. Lessee shall file for record in the appropriate records of the county in which the leased premises are situated an instrument describing the pooled acreage as a pooled unit. In this 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 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 effect of changing the ownership of any delay rental or shut-in 7 OIL AND GAS LEASE —South Jennings Addition 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. G� 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. VA RETAINED ACREAGE A. Vertical Wells At the expiration of the primary term of this Lease or upon the termination of the continuous drilling program set forth in Paragraph 6, each non -horizontal well drilled hereon capable of producing in paying quantities will hold only forty (40) acres for any formation from the surface to the base of the Barnett Shale formation. As to depths below the base of the Barnett Shale Formation, the proration unit shall be the minimum size necessary to obtain the maximum production allowable. If the proration unit for a well completed below the base of the Barnett Shale Formation is larger than 40 acres, the well may maintain the Lease as to formations above the base of the Barnett Shale Formation as to not more than 40 8 OIL AND GAS LEASE —South Jennings Addition 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. Be Horizontal Wells It is expressly understood and agreed that, subject to the other terms, provisions and limitations containeI 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 Lite Railroad Commission of Texas, which definitions are incorporated herein for all purposes. In the event of any partial termination of the Lease as provided in Paragraph 7A, then, with regard to a well which is a horizontal well or a horizontally drilled well, Lessee shall be entitled to retain all sands and horizons at all depths from the surface down to a depth which is the stratigraphic equivalent of a depth of one hundred (100) feet below the base of the deepest producing formation in such well which is capable of producing oil or gas in paying quantities, but only in a spacing unit the area or number of acres 9 OIL AND GAS LEASE —South Jennings Addition 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 ficreage and shall furnish executed counterparts of each such release to Lessor at the address shown in Paragraph 19 hereof. E:1 OFFSET OBLIGATIONS In the event a well or wells producing oil or gas should be brought in on land within 330 feet from any boundary of the leased premises, Lessee agrees within ninety (90) days from commencement of production from such well or wells to commence the actual drilling of an offset well or wells on the leased premises or on a pooled unit that contains 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 with a minimum of 500 feet of lateral wellbore length within 330 feet of the leased premises; or Lessee shall release to Lessor free of this Lease the offsetting tract of forty (40) acres limited to the formation in which the offsetting well is producing. This provision. shall not be applicable for the first year of the primary term or for offset wells spud prior to the execution of this lease. 9. FORCE MAJEURE A. The term "force majeure" as used herein shall mean and include: requisition, order, regulation, or control by governmental authority or commission; exercise of rights or priority or control by governmental authority for national defense or war purpose resulting in delay in obtaining or inability to obtain either material, equipment or means of transportation normally necessary in prospecting or drilling 10 OIL AND GAS LEASE —South Jennings Addition 10. SHUTWe 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 ashut-in royalty equal to Five Thousand Dollars ($5,000.00) per shut-in gas well and if such payment or tender is timely made, this Lease shall continue in force but only as to said well or wells and the proration unit or the pooled unit allocated to it or them and it shall be considered that gas is being produced from said well or wells in paying quantities for one (1) year from the date such well or wells are shut-in, and in like manner one, and only one, subsequent shut-in royalty payment may be made or tendered and it will be considered that gas is being produced from said well or wells in paying quantities for such additional one (1) year period as well. Lessee shall not be entitled to recover any shut-in royalty payments from the future sale of gas. Should such shut-in royalty payments not be made in a timely manner as provided in this section, it will be considered for all purposes that there is no production and no excuse for delayed production of gas from any such well or wells, and unless there is then in effect other preservation provisions of this Lease, this Lease shall terminate. Lessee shall pay or tender directly to the Lessor at the address as shown in Paragraph 19 all shut-in royalty payments as required by this Lease. 11. I1olFORMATION, 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 devon 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 12 OIL AND GAS LEASE —South Jennings Addition run or gauge tickets for all minerals removed from the premises. Lessee shall furnish to Lessor daily drilling reports on each well drilled. B. Lessee shall furnish to Lessor, within a reasonable time after its execution, a copy of any gas purchase contract or transportation agreement entered into in connection with the leased premises, or if there is already a gas purchase contract or transportation agreement in effect due to Lessee's operations in the field, then a copy of that contract. Furthermore, a copy of any amendments to the gas purchase contract or transportation agreement shall be furnished said Lessor within thirty (30) days after execution thereof; and on request of Lessor and without cost to the Lessor, Lessee shall furnish Lessor a copy of the following reports: core record, core analysis, well completion, bottom hole pressure measurement, directional survey records, electrical and induction surveys and logs, gas and oil ratio reports, paleontological reports pertaining to the paleontology of the formations encountered in the drilling of any wells on the leased premises, and all other reports which pertain to the drilling, completing or operating of the wells located on the leased premises. Such information shall be solely for Lessor's use, and Lessor shall in good faith attempt to keep same confidential for twelve (12) months after receipt. C. Lessee shall advise Lessor in writing of the location of all wells drilled upon the leased premises 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 13 OIL AND GAS LEASE —South Jennings Addition affidavit shall constitute prima facie evidence of the expiration of this Lease or any part of this Lease. 19. NOTICES A. Notifications Il2eguired. 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 00) days after 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. 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 _% for leases over 40 acres. B. All notices, information, letters, surveys, reports, material, and all other documents, required or permitted to be sent to Lessor by Lessee shall be sent by certified United States mail, postage prepaid, return receipt required, to the following address: City of Fort Worth Attention: Planning and Development Department 1000 Throckmorton Street Fort Worth, Texas 76102 C. All notices required or permitted to be sent to Lessee by Lessor shall be sent to Lessee by certified United States mail, postage prepaid, return receipt requested to the following address: XTO Energy Inc. 810 Houston Street Fort Worth, Texas 76102-6298 D. Service of notices, and other documents, hereunder is complete upon deposit of the mailed material in a post office or officiall depository under the care and custody of the United States Postal Service, in a postpaid, properly addressed and certified wrapper. E. Any party hereto shall have the right to change the name or address of the person or persons required to receive notices, and other documents, by so notifying the other party in writing. 20. BREACH B�' 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 17 OIL AND GAS LEASE —South Jennings Addition 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. LOCATION OF DRILLING ACTIVITY, PII'ELINES AND EQUIPMENT No drilling or other activity shall be conducted on the surface of the leased premises and no roads, electric lines, pipelines, equipment, or other structures shall be placed on the surface of the leased premises. 22. COMPLIANCE WITH LAWS Lessee shall comply with all applicable rules, regulations, ordinances, statutes and other laws in connection with any drilling, producing or other operations under the terms of this Lease, including, without limitation, the oil and gas well regulations of the City of Fort Worth. 23. CONFLICT OF INTEREST Lessee represents that Lessee; its officers and directors, are not employees or officers of the City of Fort Worth nor is Lessee (its officers and directors) acting on behalf of any such officer or employee of the City of Fort Worth. 24. TERMS All of the terms and provisions of this Lease shall extend to and be binding upon the heirs, 18 OIL AND GAS LEASE —South Jennings Addition executors, administrators, successors and authorized assigns of the parties hereto. 25. ENTIRE AGREEMENT This Lease states the entire contract between the parties, and no representation or promise, verbal or written, on behalf of either party shall be binding unless contained herein; and this Lease shall be binding upon each party executing the same, regardless of whether or not executed by all owners of the above described land or by all persons above named as "Lessor", and, 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. VENUE AND JURISDICTION. If any action, whether real or asserted, at law or in equity, arises on the basis of any provision of this Agreement, 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 Agreement shall be construed in accordance with the laws of the State of Texas. 29. V��ELL WAITING TO BE FRACED. Notwithstanding anything to the contrary contained in this lease, at the option of Lessee, which may be exercised by Lessee giving notice to Lessor, a well which has been drilled and Lessee intends to frac shall be deemed a well capable of producing in paying quantities and the date such well is shut-in shall be when the drilling operations are completed. 30. OFF LEASE/UNIT DRILLSITE. As a result of land development in the vicinity of the lease premises, governmental rules or ordinances regarding well sites, and/or surface restrictions as may be set forth in this lease and/or other leases in the I9 OIL AND GAS LEASE —South Jennings Addition vicinity, surface locations for well sites in the vicinity may be limited and Lessee may encounter difficulty securing surface locations) for drilling, reworking or other operations. Therefore, since drilling, reworking or other operations are either restricted or not allowed on the lease premises or other leases in the vicinity, it is agreed that any such operations conducted at a surface location off of the lease premises or off of lands with which the lease premises are pooled in accordance with this lease, provided that such operations are associated with a directional well for the purpose of drilling, reworking, producing or other operations under the lease premises or lands pooled therewith, shall for purposes of this lease be deemed operations conducted on the lease premises. Nothing contained in this paragraph is intended to modify any surface restrictions or pooling provisions or restrictions contained in this lease, except as expressly stated. EXECUTED and effective as of the date of the notarial acknowledgment of the Lessor's execution. LESSOR: CITY OF FORT WORTH By: Assistant City Manager ATTEST: � A City Secretary APPROVED AS TO FORM AND LEGALITY: Assistant City Attorney Date: LESSEE: XTO Energy Inc. Edwin S. Ryan, Jr. Sr. VP -Land Administration Date: 3 A 1/ 0 20 OIL AND GAS LEASE —South Jennings Addition THE STATE OF TEXAS S COUNTY OF BEFORE ME, the undersigned, a Notary Public, on this day personally appeared %���%(7 ��� 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 cons deratton therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE this' " day of IIVZhl 2010. Public in and for the f Texas My Commission Expires: Name of Notary Public THE STATE OF TEXAS COUNTY OF (Mr £llOA!IA i)AIVIELS MY COMMISSION EXPIRES July 10, 2013 BEFORE ME, the undersigned, a Notary Public, on this day personally appeared _Edwin S. Ryan, Jr. ,known to me to be the person whose name is subscribed to Lite foregoing instrument and acknowledged, that (s)he has executed the same for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE this crk day of _ , /' rnrl [SEAL] My Commission Expires: .� ,� �/ �(a I Notary Public in and for the State of Texas Name of Notary Public Here 21 OIL AND GAS LEASE —South Jennings Addition EXHIBIT A 1.8081 acres of land, more or less, as better described in the following four (4) tracts out of Blocks 3, 22 and 23, South Jennings Addition. Tract 1: Being 1,667.985 square meters (17,954 square feet) of land situated in Lots 3 & 5, Block 3, Jennings South Addition, being an unrecorded addition to the City of Fort Worth, Tarrant County, Texas, and being a portion of tlxat certain tract of land conveyed to Marshall T. Robinson by deed recorded in Volume 6998, Page 9W of the Deed Records of Tarrant County, Texas, said 1,667,985 square meter (17,954 square foot) tract of land being more particularly described by metes and bounds as follows: BEGINNING aL a point not set being 3 5.000, meters (49.21 feet) northwesterly from and at right angles to rxntexime station 0t349A59 from which a five -eighths inch iron rod with yellow plastic cap madwd'WLA' set bears $oath 01 degrees 33 minutes 19 seconds West a distance of 4A46 meters (14.59 feet) for reference, also from said point not set is tho northwest corner of said Robinson tract of land, said point being at the intersection of the existing cast right of way line of College Avenue (a 18.288 meter or 60 foot wide right-of-way) and the existing south right of way line of Vickery Boulevard (a variable.width right-of-way) and bears North 01 degrees 33 minutes 19 seconds East, a distance;of 62328 meters (2.05.14 feet) with the west line of said Robinson tract and the said existing east right-of=way line of College Avenue; (1) T)3Ef10E, along the proposed northwesterly right of way line, North $1 degrees 48 minutes 44 seconds East, a distance of 79.441 meters (260.63 r=),w a five -eighths inch iron rod with yellow plastic cap marked "WLA' set in the east line of said Robinson tract and the west line of Lot 2 and that certain tract of land conveyed to Plaza Investment Associates 11 by deed recorded in volume 9225, page 1777 of said Deed Records, said point also lying along the face of an existing masonry building; (2) THENCE along the common line between said Lots 2 and 3, Block 3, South Ol degrees 33 minutes 21 seconds West a distance of 39.Of6 meters (128.01 feet) to a fivo-eighths inch iron rod with yellow plastic cap marked "WLA" set in the proposed southeasterly right of way line of Vickery Boulevard; (3)' THENCE, with said proposed southeastedy right of way lint, South 51 degrees 48 minutes 44 seconds West, a distance of 25.627 meters (84.08 feet) to afive-eighths inch iron rod with yellow plastic cap marked `WLA" set in the south line of said Robinson tract and the existing north right of way line of Jarvis Street, (a 12.192 meter or 40 foot wide right of way); (4) Tfil]�TCE, along the south line of said Rubinson tract and the said existing north right of way Iine, North 88 degrees 13 minutes Ol seconds West a distanx,of 4137$ meters (135.76 feet) to a five -eighths inch iron rod with yellow plastic cap marked'WLA' set at the southwest corner of said t, Robinsonson trasaid point also being in the existing east right of way fine of College Avenue; (5) 'TIIF.NCE, along the west Iine of said Robinson tract and the said existing east right of way line of College Avenue, North 01 degree 33 minutes 19 seconds East a distance of 4.446 meters (1459 feet) to the POINT OF BEGINNING of the herein described tract and containing 1,667,985 square meters (17,954 square feet) of land. The above described property also being known as Lots; 3B, 5A2 and 5B2 of Block 3 out of Jennings South Addition and being the same lands conveyed in that certain Special Warranty Deed, dated January 23, 2007 from the City of Fort Worth, as Grantor to Marshall T. Robinson, as Grantee; wherein said Grantor reserved all the Oil, Gas and Minerals unto itself; Said Deed recorded under Document No. D207046160 of the Official Public Records of Tarrant County, Texas. OFi CITY SECRETARY 22 OIL AND GAS LEASE South Jennings Addition Tract 2: ♦: • •• • � :,♦ ♦', ♦ ♦I • t• • • • •+ • • • • • • r •• • •. • • • • • :: • - a _ • •I • • • 1 Wit• • •:•• • � • it • • s - � . • r: • r• _ r - rl• • 1 - - - • • i a: S .. f - 1 r ,: 1 _ _ • • - 1 r: • ",• � • r • : • r • 1 • • - • • .� . . • . • .: 1/ . 1 .:• 1 1 -... • • 1 1 r _ r ' 1 • ter• ♦ ► ,: �- ♦- • :: r • •, • f', ••�• • • : �: � • • The above described property also being known as Lots; ZA2, ZC2, 2D2, 2E2 and 17R2 of Block 22 out of Jennings South Addition and being the same lands conveyed in that certain Special Warranty Deed, dated January 31, 2007 from the City of Fort Worth, as Grantor to Tarrant County Association for the Blind, as Grantee; wherein said Grantor reserved all the Oil, Gas and Minerals unto itself; Said Deed recorded under Document No. D207043943 of the Official Public Records of Tarrant County, Texas. Tract 3: Being the S '/2 of Lot 1 (also known as Lot; 1D), Block 23 of the Jennings South Addition, an addition to the City of Fart Worth, Tarrant County, Texas; calculated to contain 0.459 acres, more or less. Being the same lands conveyed by that certain Warranty Deed, dated March 20, 1991 from 23 O1L AND GAS LEASE —South Jennings Addition Fort Worth Day Nursery, as Grantor to the City of Fort Worth, as Grantee and recorded in Volume 10206, Page 385 of the Deed Records of Tarrant County, Texas. Tract 4: Situated I.rt the pity of Fart 6�Forth, Tarrant County, Texas: A Portion of Lot �, Block 23, 3ENNINGS SOUTH A�JDYTIOH, Fort Horth, Tarraa}t County, Texas, and berg more parti�cuiarly dsscri-bed as fal.la�as: BEGINNING at a: iron ?'off being the t�orti�east cor��er of said Lot 2, said iron rod also being an the south right of gray Tine of hest Daggett tivenue, THENCE South 0 d.egrees 08 minutes 33 seconds East, aloliq the east lfne of said Lot 2, 2i?C.0 feet to an iron rod for coiner; THENCE South 83 degrees 54 minutes West, along the edge of a brick building, 290.00 feet no an ikon �Vt� f:,r Lor�tcr, said iron rod being on the east right of way of South Henderson Street; ili£NC£ North t! degrees a8 minutes hest, along the said east right of way line of: South Sertdersar. Street, 99.94 feet to an iron rod for corner; THEI3CE north 89 degrees 52 minutes East, 1�U. QO feet CQ a�1 iron rocl fox corner; T,!{EY�CE t{orth 4 degrees �8 minutes 13 seconds Nest, 1�0. {id feet to an iron rod for corner, said iron rod being on the said south right of uay line of West i7aggett Aventtei THB�tCS North 89 �dea�rees 52 minutes 52 Seconds East, a2onc� said south ri4ltt of Kay �.itie of West Daggett Avenue, 5fl.g0 feet to the F3,ACE tDF BEGINNING and CUHTAINI?iG approximately 23�g91 square feet air approximate3y 0.�5�8 of an acre of land. Being the same lands conveyed by that certain General Warranty Deed, dated May 7, 1992 from Henderson Properties II, a Texas General Partnership, as Grantor to The City of Fort Worth, as Grantee and recorded in Volume 10631, Page 450 of the Deed Records of Tarrant County, Texas. SAVE AND EXCEPT from the above described tract the following; A parcel of land out of the original Lot 2, Block 23, Jennings South Addition, an unrecorded addition to the City of Fort Worth, Tarrant County, Texas, and being more particularly described as follows; Beginning at a 5/8" iron rod set, for the northeast corner of said Lot 2, said point also being in the south right -of --way line of West Daggett Avenue; THENCE: Along the east line of said Lot 2, 99.98 feet, to a 5/8" iron rod set; THENCE: west 50.0 feet to a 5/8" iron rod set, from which a 1" pipe found, bears west 140.25 feet, called 140.0 feet, and further from which a 1" iron rod found bears south, 0.69 feet; THENCE: north 99.98 feet to a mark "F" cut in the north line of said Lot 2 and in said right -of --way and from which a copper plug found bears north, 8.9 feet; THENCE: Along said line and said right -of --way, east 50.0 feet to the POINT OF BEGINNING, and containing 4,999 square feet of land, more or less. 24 OIL AND GAS LEASE —South Jennings Addition Being the same lands conveyed by that certain Special Warranty Deed, dated March 15, 1994 from the City of Fort Worth, as Grantor to Planned Parenthood of North Texas, as Grantee and recorded in Volume 11582, Page 1775 of the Deed Records of Tarrant County, Texas. LEAVING 18,992 square feet of land or approximately 0.436 acres; Said lands currently being more particularly referred to by the Tarrant County Appraisal District (TAD) as Lots; 2B, 2C and 2D1 of Block 23, Jennings South Addition to the City of Fort Worth, Tarrant County, Texas. Containing in total 1.8081 acres of land, more or less. (Jennings South Addition) 25 OIL AND GAS LEASE —South Jennings Addition