HomeMy WebLinkAboutResolution 4188-03-2013 A Resolution
NO. 4188-03-2013
AUTHORIZING THE EXECUTION OF AN AMENDMENT TO A
MINERAL LEASE FOR PROPERTY LOCATED AT
DALLAS/FORT WORTH INTERNATIONAL AIRPORT
WHEREAS, the Cities of Fort Worth and Dallas, together with the Dallas/Fort Worth
International Airport Board ("Board") entered into a Mineral Lease ("Lease") with Chesapeake
Exploration, L.L.C. ("Chesapeake") for property located on Dallas/Fort Worth International
Airport ("Airport"); and
WHEREAS, as part of the settlement of litigation involving the contractual measure of
royalties and retained tracts, the parties agreed that Chesapeake would drill fourteen (14) new
wells in the northern sector of the Airport, as identified in the settlement agreement; and
WHEREAS, due to the lower than expected sales price of natural gas, the Board desires
to reduce the number of wells required to be drilled by December 3 1, 20 14 from fourteen (14)
to six (6) and require drilling of the remaining eight (8) wells by December 3 1, 20 15; and
WHEREAS, Chesapeake has agreed to the revised drilling schedule;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF FORT WORTH, TEXAS THAT:
SECTION 1. The City Manager is hereby authorized to execute an amendment to the
Lease providing that six (6) new wells will be drilled in the northern sector of the Airport, as
identified in the litigation settlement documents, no later than December 31, 2014 and eight (8)
new wells will be drilled in the same sector no later than December 3 1 , 20 15.
SECTION 2. The approvals and authorizations contained in this resolution are further
conditioned upon similar approvals and authorizations by the City Council of the City of Dallas.
SECTION 3. This resolution shall take effect immediately from and after its passage in
accordance with the provisions of the Charter of the City of Fort Worth, Texas and it is
accordingly so resolved.
Adopted this 511, day of March, 2013.
MOO 0040
By 0
00 .4CY
0 0000
Mary Kayser, y ecret'a"ry
EORTLVORU
'
City of Fort Worth, Texas
Mayor and Council Communication
»111,1 YIw/,IwY�mINNNIIHIN1,�NUI�H, IH,uH//, I/1,/,
IflM1NFI ///YYMiFO AWldfAWlMOAIIINfSYIX1100PNW' LIDYi9;Y !WdPP YItOtl(Id (NMdId6WIHi!YLW/r(C1U14✓/ (fMM➢n'(RJ!4M PMNl i/IUIW.Ptl/Y!'dtllPgrWNUPUN1pXVNHnV'Yl;'f Y)MNiiNY/d,0.'W ONIIIIMD1YQIItl/'NG'DNM HM4WAAA,IIpf M1U�1L 14iWNdRVtlf.IdlliNN➢I�,OIUVb
COIUNCI!I,ACTIO Approved on 3/512013 - Resolutto No. 418S.43-2013,
Y////,l/NnffPll IM1H /f..., .�
/ ANfNWI II(It!AhtN(IIM811!UI�pPwfIWUWWI�Fl1i1ttY111 NY✓IIIIIM1YIVII V! bl if
AIJ;i)IIVn'41IMdbIA4;HFC,IM1Vfffftl/M6aWY"�Pf GMf91�Y1.11FQ�111YW AI.H�YIVIAb MWfMfllllfwRi6,9/�WMI,Ntipll R<1 11 fl N7'l,Pm.�.Yi UIIlIpIMIfIN^IDII LdI1N.W]YXY✓9fi fflf. l AAflC.1ttVM1 IM Y NII/Adt XM.'M7•,'..XXPP pMI1lN:pl JL'EUl Np1.H1pv0%IIiI11dIW;INIIw;AIttIllPoY4HMMNYM1AVPf ffiPlW(IhIAId1VMYfVIRAOUriIPnVIM//AN i6(NNNI AV NgIVIq"1 @\IY4 flIS16I115114 @fi',Y.hNIOE
DATE: Tuesday, March 05, 2013 REFERENCE NO.: G-17825
LOG NAME: 12DFW CHESAPEAKE MINERAL LEASE
SUBJECT:
Adopt Resolution Authorizing an Amendment to the Mineral Lease Between Dallas/Fort Worth International
Airport Board, City of Fort Worth, City of Dallas and Chesapeake Exploration, L.L.C. to Revise the
Required Drilling Schedule (ALL COUNCIL DISTRICTS)
RECOMMENDATION:
It is recommended that the City Council adopt the attached resolution authorizing an amendment to the
Mineral Lease between Dallas/Fort Worth International Airport Board, City of Fort Worth, City of Dallas
and Chesapeake Exploration, L.L.C. to revise the required drilling schedule.
DISCUSSION:
The City of Dallas, the City of Fort Worth, and the Dallas/Fort Worth International Airport Board (Airport
Board) were in litigation with Chesapeake Exploration, L.L.C. regarding two issues that arose under the
Lease: the measure of royalties and the measure of"Retained Tracts".
In December, 2011, the Dallas City Council and the Fort Worth City Council voted to approve an
amendment to the Lease to allow for partial settlement with regard to the issue of retained tracts. That
settlement set forth the exact dimensions of the Retained Tracts and provided that in order to retain it,
Chesapeake must drill three new wells in that sector by the end of 2012, three additional wells by the end
of 2013, and eight additional wells by the end of 2014.
In March and April, 2012, respectively, the Fort Worth City Council, Dallas City Council and the Airport
Board voted to postpone the 2012 three-well commitment to the end of 2013, due to the fact that natural
gas prices had not risen sufficiently to justify the cost of drilling to either Lessor or Lessee.
As of February 2013, natural gas prices have still not risen significantly and it is still not in the Dallas/Fort
Worth International Airport's best interest to hold Chesapeake to the current drilling schedule. On January
10, 2013, the Airport Board voted to request the City of Dallas and the City of Fort Worth to amend that
drilling commitment again, postponing the first six new wells to the end of 2014 and the remaining eight
additional wells to the end of 2015.
Both state law and the 1968 Contract and Agreement between the City of Dallas, Texas and the City of
Fort Worth, Texas require that real property transactions must be approved by the City Councils of both
owner cities. The City of Dallas is scheduled to vote on this item at its February 27, 2013 meeting.
FISCAL INFORMATION /CERTIFICATION:
The Financial Management Services Director certifies that this action will have no material effect on City
funds.
Logname: 12DFW CHESAPEAKE MINERAL LEASE Pagel of 2
TO F u nd/Accou nt/C enters FROM Fund/Account/Centers
CERTIFICATIONS:
Submitted for City Manager's Office by: Fernando Costa (6122)
Originating Department Head: Sarah Fullenwider (8006)
Additional Information Contact: Charlene Sanders (7611)
Logname: 12DFW CHESAPEAKE MINERAL LEASE Page 2 of 2