Presenter: Ronnie Ray

Commission Agenda Item No. 10
Action
Nomination for Oil and Gas Lease – Tarrant County
November 2003

I. Executive Summary: This item is a request for the recommendation by the Texas Parks and Wildlife Commission (Commission) to the Board for Lease for the nomination of lease-sale, by bid, of all the mineral interest the Department owns at Eagle Mountain Lake State Park (EML SP) at the minimum standard fees or greater.

II. Discussion: In April 2003, the Commission passed a motion directing the evaluation of the mineral estate of EML SP in regard to value and future use of the property. This evaluation has been completed for the mineral interest by staff with the assistance of the General Land Office. As a result, Texas Parks and Wildlife Department staff has requested nomination of mineral interest at Eagle Mountain Lake State Park for a Board for Lease sale offering.

The Department owns a ½ undivided interest in the minerals under one tract, being 99.660 acres and 100% of the minerals under two tracts, one being 297.180 acres and one of 3.870 acres, totaling 400.710 surface acres. This calculates to approximately 350.880 mineral acres.

Staff recommends minimum terms of a cash bonus of $150.00 per acre and a fixed royalty of 25 percent, with a $10.00 per acre delay rental for a 3-year lease will apply. The lease will also be subject to the conditions for off-site drilling.

III. Recommendation: The staff recommends the Texas Parks and Wildlife Commission adopt the following motion:

"The Executive Director is authorized to nominate for oil and gas lease to the Board for Lease for Parks and Wildlife Lands, approximately 350.880 mineral acres out of Eagle Mountain Lake State Park, at $150.00 per acre with a 25 percent royalty, $10.00 per acre rental, and a 3-year term, incorporating the restrictions set out in Exhibit A.”

Attachments – 3
1. Exhibit A – Restrictions on Drilling
2. Exhibit B – Locator Map
3. Exhibit C – Fiscal Note


Commission Agenda Item No. 10
Exhibit A

Restrictions on Drilling

This Exhibit contains terms and conditions staff recommends be included in an oil and gas lease covering certain areas in the Eagle Mountain Lake State Park. These terms and conditions, if approved by the Commission, shall be forwarded to the Board for Lease:

The lease shall contain the following provision:

Any provision herein to the contrary notwithstanding, it is agreed and understood that no entry shall be permitted on the surface of the leased land, except in area reviewed by TPWD and with written permission from TPWD granting access to specific limited areas. Otherwise, any development of the land shall be by means of directional wells located off the leased land, or by pooling of said land with other land or leases as provided by Subchapter E, Chapter 52, Natural Resources Code.


Commission Agenda Item No. 10
Exhibit B

Map of Eagle Mountain Lake State Park in Tarrant County


Commission Agenda Item No. 10
Exhibit C

Item Sponsor: Ronnie Ray, Land Conservation Program
Note Prepared By: Ronnie Ray

Fiscal Note
Nomination for Oil and Gas Lease – Tarrant County
November 2003

Brief Description: The proposed nomination would be forwarded to the Board for Lease if approved by the Commission for final action. Because receipt of rentals would be contingent on whether or when a well is drilled, and receipt of royalties would be contingent on whether there is a successful well, related additional and ongoing revenue is too speculative to be included in the fiscal note.

Estimated Revenue:
  FY04 FY05 FY06 Annual Ongoing
Property Lease   $52,632.00    
         
Total   $52,632.00    

Explanation: Bonus is calculated at $150 per acre for estimated 350.880-mineral acres.


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