HomeMy WebLinkAboutResolution 4353-09-2014 A Resolution
NO. 4353-09-2014
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"), collectively the "Parties", for property located on Dallas/Fort Worth International Airport
("Airport");and
WHEREAS, in December 2011, 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 beginning or before June 1, 2012, with completion on or before December
31,2014; and
WHEREAS, in March 2013, due to the lower than expected sales price of natural gas, the Parties
amended the Lease to require that six (6) new wells be drilled no later than December 31, 2014 and the
remaining eight(8)new wells be drilled no later than December 31,2015; and
WHEREAS, due to the continued lower than expected sales price of natural gas, the Board desires to
extend the drilling deadlines for the six (6) new wells from December 31, 2014 to December 31, 2015 and the
eight(8)new wells from December 31, 2015 to December 31,2016; 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, 2015 and eight (8) new wells will be drilled in the same
sector no later than December 31,2016.
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.
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Adopted this 16 day of Se�t�mber, 2014. p�*°�0 00.
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FORT WORT
DALLAS/FORT WORTH INTERNATIONAL AIRPORT
3200 EAST AIRFIELD DRIVE,P.O.BOX 619428
DFW AIRPORT,TEXAS 75261-9428
www.dfwairport.com
T 972 973 8888 F 972 973 5751
July 15, 2014
STATE OF TEXAS §
COUNTY OF DALLAS §
COUNTY OF TARRANT §
I, Donna J. Schnell, Board Secretary of the Dallas-Fort Worth International
Airport Board, do hereby certify that the attached is a true and correct copy of
Resolution No. 2014-07-170 approved by the Dallas-Fort Worth International
Airport Board of Directors at its Board Meeting held on July 3, 2014.
WITNESS MY HAND AND SEAL OF THE DALLAS-FORT WORTH
INTERNATIONAL AIRPORT BOARD, this the 15th day of July, 2014.
Donna J. Schnel
Board Secretary
M
DALLAS FORT WORTH INTERNATIONAL AIRPORT BOARD
OFFICIAL BOARD ACTION/RESOLUTION
Date Committee Subject Resolution#
07/03/2014 Concessions/Commercial Extension of Chesapeake's Current DFW Drilling 2014-07-170
Development Commitment
Action
That the Cities of Dallas and Fort Worth are requested to extend by one year Chesapeake's northern sector
drilling commitment under the oil and Gas Lease.
Description
•The oil and gas lease with Chesapeake, as amended, requires Chesapeake to drill six (6) new wells
by December 31, 2014 and the remaining eight (8) new wells by December 31, 2015 in the sector
north of the line of demarcation.
•The requested extension will amend the lease to require Chesapeake to drill six (6) new wells by
December 31, 2015 and the remaining eight (8) new wells by December 31, 2016 in the sector north
of the line of demarcation.
Justification
•The amendment and extension is requested due to the continued low price of natural gas.
D/S/M/WBE Information
•The M/WBE goal of 20%for subcontracting/supplier participation at the time of the original award will
be applicable on future construction associated with the drilling of new wells.
Contract# Agreement# Purchase Order# Action Amount Revised Amount
$0 $0
For Information contact Fund Project# External Funding Source Amount
John Terrell $0
3-4665
Jim Jackson
3-4660
Resolution#2014-07-170
Additional Information
There have been two previous drilling extensions:
• Resolution #2012-03-092 Retained Tracts Agreement 03/01/2012
•Resolution #2013-01-0280 Chesapeake Drilling Extension 1/10/2013
Additional Attachments: N
BE IT RESOLVED BY THE DALLAS-FORT WORTH INTERNATIONAL AIRPORT BOARD
That the Cities of Dallas and Fort Worth are requested to extend by one year Chesapeake's northern sector
drilling commitment under the oil and Gas Lease.
Approved as to Form by Approved as to Funding by Approved as to M/WBE by
Tomme, Paul Underwood, Max Lee, Tamela
Legal Counsel VP Finance VP Business Diversity& Dev
Jun 19, 2014 10:03 am Finance Business Diversity and
Jun 19, 201410:47 am Development
Jun 20, 2014 9:15 am
SIGNATURE REQUIRED FOR APPROVAL
Approved by
Department Head Jul 8,2014 12:34 pm
Commercial Development
Jun 19,2014 10:01 am Chief Executive Officer Date
City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION: Approved on 9/16/2014 - Resolution No. 4353-09-2014
DATE: Tuesday, September 16, 2014 REFERENCE NO.: **C-26974
LOG NAME: 12DFW CHESAPEAKE MINERAL LEASE AMEND
SUBJECT:
Adopt Resolution Authorizing an Amendment to the Mineral Lease Between Dallas/Fort Worth International
Airport Board, City of Fort Worth and City of Dallas and Chesapeake Exploration, L.L.C. to Extend the
Timeframe for Drilling Additional Wells (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 and City of Dallas
and Chesapeake Exploration, L.L.C., to extend the timeframe for drilling additional wells.
DISCUSSION:
On July 3, 2014, the Dallas/Fort Worth International Airport Board (Board) approved a proposed
amendment to the Mineral Lease between the Board, the cities of Fort Worth and Dallas and Chesapeake
Exploration, L.L.C. (Chesapeake) for property located on the Dallas/Fort Worth International Airport
(Airport). The Board recommends approval of this amendment by the cities of Fort Worth and Dallas. The
amendment will extend the contractual timeframes for drilling of additional wells on the Airport.
As part of the settlement of litigation involving the contractual measure of royalties and retained tracts,
Chesapeake agreed to drill 14 new wells in the northern sector of the leased property no later than
December 31, 2014. Due to the lower than expected sales price of natural gas, the Board, the cities of
Fort Worth and Dallas and Chesapeake agreed to an amendment to the Mineral Lease reducing the
number of wells required to be drilled by December 31, 2014 from 14 to six and requiring drilling of the
remaining eight wells no later than December 31, 2015. The proposed amendment would require
Chesapeake to drill six additional wells by December 31, 2015 and the remaining eight additional wells by
December 31, 2016. The basis for the proposed amendment is the continued low price of natural gas.
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 be approved by the City Councils of both owner
cities. The City of Dallas is scheduled to vote on this item at its September 10, 2014 meeting.
FISCAL INFORMATION /CERTIFICATION:
The Financial Management Services Director certifies that this action will not increase the total
appropriation of City funds.
FUND CENTERS:
TO Fund/Account/Centers FROM Fund/Account/Centers
CERTIFICATIONS:
Logname: 12DFW CHESAPEAKE MINERAL LEASE AMEND Page 1 of 2
Fernando Costa A6122\
Originating Department Head: Sarah J. FuUenvvder (7606)
Additional Information Contact: Charlene Sanders /7611\
I.m6pzame: l2DFW CHESAPEAKE MINERAL LEASE AMEND Page 2of2