Fort Worth reaches gas lease deals for Z Boaz, Trinity Park rights [Fort Worth Star-Telegram]

Aug. 14--FORT WORTH -- The city has reached agreements on natural gas leases that will provide new funds for improvements at Fort Worth's Z Boaz and Trinity parks, but the Z Boaz deal was leaner than the city hoped for.

Chesapeake Energy has agreed to pay a $1,250 per acre lease bonus and 25 percent royalty to the city for the Z Boaz rights, the city said. The city owns 60 percent of the mineral rights to the 140-acre west side park. The family that donated the site to Fort Worth several decades ago owns the remaining 40 percent and has reached its own deal with Chesapeake.

XTO Energy has agreed to pay a lease bonus of $3,045 per acre and 25 percent royalty for the rights to extract minerals from beneath 155.3 acres of Trinity Park.

Chesapeake and XTO were the lone bidders on each of the agreements, which go before the City Council on Tuesday.

Further demonstrating the market vagaries, the city last Thursday opened the one bid it received for the gas rights at Martin Luther King Park in southeast Fort Worth. Vantage, the bidder, offered $5,000 per acre, said Jean Petr, the city's gas lease program manager.

"The market is what it is," she said. "It depends on where the property is, it depends on what gas company it is, it depends on the price of gas."

Mayor Pro Tem W.B. "Zim" Zimmerman, whose district includes Z Boaz, said he had no comment on the leases.

Chesapeake, like other energy companies, has been refocusing on crude oil since natural gas prices dropped to 10-year lows this year. Chesapeake also has been dealing with high debt and issues regarding the personal finances of its CEO.

The lease agreement is the latest chapter in Chesapeake's west side story; the company has tangled with the city and neighborhoods over the Ridglea location.

Julie Wilson, Chesapeake's vice president for urban development, said the company months ago was offering $2,500 per acre for leases off its Westridge site, off of Bryant Irvin Road, one of two that can reach beneath Z Boaz.

Offers for Westridge leases will decline to $500-$1,000 per acre after Oct. 1, she said.

She said the Z Boaz heirs leased their rights to Chesapeake for $2,500 per acre under the early offers, and said, at one time, Chesapeake offered the city $2,500.

"We don't think $1,250 is below market," Wilson said. "We really don't. It depends on different areas."

Chesapeake has drilled the Westridge site and one in the Ridgmar area, which also can reach Z Boaz. It hasn't yet fractured either site, Wilson said.

On the Z Boaz site, the city's 60 percent lease bonus amounts to $110,595.50, and the lease runs five years, with an option to renew at the same bonus.

The city's agreement with the Z Boaz heirs says at least 17 percent of city's Z Boaz lease proceeds must go toward the site, which the city is converting to a park from a golf course Sept. 30.

The city staff will likely recommend leaving all of the money with Z Boaz, Richard Zavala, the parks director, said Monday.

"In the scheme of things, it's not a huge amount," he said. And "we have no funding for any of the first phase" of improvements in the Z Boaz master plan the city is developing this summer.

The plan, which Zavala said could take 10-20 years to implement, will likely include a dog park, playgrounds, trail improvements, and picnic facilities, and could include amenities such as an aquatics center.

Zimmerman said he is leaving it to the parks department to decide what to do with the gas lease money.

"I believe the parks department needs to decide where the money is going to go," he said.

Trinity bonus

The Trinity Park lease bonus amounts to $472,839.78, with a two-year initial term, the city said. Fifty percent of proceeds from the agreement are earmarked for capital improvements in the parks system, and 50 percent toward a parks endowment fund that the city is setting up.

Trinity's capital needs are largely in parking, roads and utilities, Zavala said. Money from the annual Mayfest celebration has gone to improving its playgrounds, he said.

Petr said it is impossible to predict future gas lease revenue streams, and the city makes no projections.

Z Boaz improvements will be an item under consideration in the city's planned 2014 bond package, parks officials say. The Fort Worth Dog Park Association has offered to help raise money for a dog park.

Grants and other partnerships are potential funding sources. Some amenities would provide typical fee sources, including the picnic pavilions, basketball courts and pool.

The city also could consider nominal fees for admission to the dog park, parks officials say. A proposed skate park could carry a fee to enter, and the city may approach someone, such as the adjacent Putt-Putt mini course, to manage it.

Staff writer Jim Fuquay contributed to this report.

Scott Nishimura, 817-390-7808

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