Presenter: Corky Kuhlmann

Commission Agenda Item No. 17
Action
Nominations for Oil and Gas Lease
Harrison, Somervell, Cottle and Cameron Counties
November 2006

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 Parks and Wildlife Lands regarding the nomination for lease of TPWD mineral interest at Caddo Lake State Park, Dinosaur Valley State Park, Matador Wildlife Management Area and Resaca de la Palma State Park at minimum standard fees or greater.

II. Discussion: Minerals owned by or held in trust for Texas Parks and Wildlife Department (TPWD) may be leased by the Board for Lease for Parks and Wildlife Lands under Natural Resources Code §34.051 for the purpose of prospecting or exploring for and mining, producing, storing, caring for, transporting, preserving, selling, and disposing of the oil, gas, or other minerals. State lands are typically offered for lease sale at scheduled intervals. The Board for Lease has traditionally respected recommendations of the Texas Parks and Wildlife Commission (Commission) relative to leasing minerals owned by TPWD. The Board for Lease has received a nomination at the following TPWD facilities: Caddo Lake State Park, Dinosaur Valley State Park, Matador Wildlife Management Area and Resaca de la Palma State Park for a lease sale offering. The purpose of this commission item is to alert the Commission to this nomination and seek recommendations for the Board for Lease. The lease request is for 299.2 acres being Caddo Lake State Park, 1,387 acres being Dinosaur Valley State Park, 200.50 acres being a part of Matador WMA and 160 acres being a portion of Resaca de la Palma State Park.

Staff recommends the Commission approve the lease to the Board for Lease of Parks and Wildlife Lands at 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. The condition of the lease will also include no surface occupancy and off site directional drilling only.

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

"The Executive Director is authorized to make recommendations for oil and gas lease to the Board for Lease for Parks and Wildlife Lands, for nominated tracts at Caddo Lake SP, Dinosaur Valley SP, Matador WMA and Resaca de la Palma SP, at a minimum of $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 – 2

Exhibit A – Restrictions
Exhibit B – Location Map

Commission Agenda Item No. 17
Exhibit A

Restrictions on Activities

This exhibit contains terms and conditions staff recommends be included in an oil and gas lease covering 299.2 being Caddo Lake State Park, 1,387 acres being Dinosaur Valley State Park, 200.50 acres being a portion of Matador WMA and 160 acres being a portion of Resaca de la Palma State Park. These terms and conditions, if approved by the Commission, shall be forwarded to the Board for Lease of Parks and Wildlife Lands:

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. 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.