Title
Ordinance - Third and Final Reading of an Ordinance Authorizing the Execution of a Gas Lease Agreement Between the City of Mansfield and Chesapeake Exploration, LLC for City-Owned Property Located at 3100 East Broad Street
Requested Action
Consider Gas Lease Agreement
Recommendation
Approve Gas Lease Agreement
Description/History
The City advertised for bids for mineral leases, no drill sites, for all City-owned property. The bids were opened on December 2, 2005. The bids were approved by City Council on December 12, 2005. The following property was bid out and did not receive a bid during the initial bid process but has now received an offer from Chesapeake Exploration L.L.C. The property is located at 3100 East Broad Street and is approximately 6.654 acres. A map of the property is attached. The drill site is located along 360, South of Broad Street and no drilling activity will occur on this property. Chesapeake is requesting a perpetual sub-surface easement on this property that will be part of the drilling route that will reach other properties. This easement will be 500 feet below the surface and Chesapeake is providing an increase in the bonus money per acre for consideration of this easement. Also, as consideration for this easement, Chesapeake is offering the MPFDC the same bonus per acre for the MPFDC-owned property on Matlock Road.
Justification
This lease has been approved by legal and recommended by staff. Chesapeake is offering a one year primary term with a $5,000/acre bonus and a 25% royalty amount. This offer exceeds the initial bid requirements that were approved by City Council in December 2005. In addition, this lease is completely free of all affiliate and non-affiliate post production costs; in other words, the city will receive CEMI’s (Chesapeake’s affiliate) downstream sales price free of all costs (when calculating the City’s royalty share).
Funding Source
N/A
Prepared By
Shelly Lanners, Director, Community Se...
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