Presenter: Jack Bauer

Commission Agenda Item No. 11
Nomination for Oil and Gas Lease – Anderson County
November 2004

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 for the nomination of TPWD mineral interest for lease at Gus Engeling Wildlife Management Area at the 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 Gus Engeling WMA 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 request includes two tracts totaling approximately 156 acres (78 net mineral acres) within the WMA. This property has been under lease for three years but the leasor did not exercise the option to explore.

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. The lease will also include the conditions for TPWD review and approval of all surface activities.

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 156 acres out of Gus Engeling WMA, 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

  1. Exhibit A - Restrictions
  2. Exhibit B - Locator Map
  3. Exhibit C - Fiscal Note

Commission Agenda Item No. 11
Exhibit A

Restrictions on Activities

This Exhibit contains terms and conditions staff recommends be included in an oil and gas lease covering certain areas in the Gus Engeling WMA. 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.