NETGLO - Comparison of Leases

Document Sample
NETGLO - Comparison of Leases Powered By Docstoc
					9/30/2008                                                                                                                                                                                                                                                                                                                             PAGE 1 of 1
                                                                                                                                       NETGLO - Comparison of Leases

                                               TITAN                              XTO                            XTO                         Petrocasa                  Dale Resources                    Chesepeake                      Chesepeake                   Dale Resources                      TITAN

                                                                                                                                                                                                                                                                                                           NAN




                                                               Rating




                                                                                              Rating




                                                                                                                              Rating




                                                                                                                                                             Rating




                                                                                                                                                                                            Rating




                                                                                                                                                                                                                             Rating




                                                                                                                                                                                                                                                            Rating




                                                                                                                                                                                                                                                                                           Rating




                                                                                                                                                                                                                                                                                                                             Rating
            Item
                       Terms &
                                               CAMRA                       Hidden Lakes                     Sarah Brooks                     Keller/NRH                 Meadow Lakes                      360 Coalition                   Ridglea Hills                   White Chapel                North Arlington
                      Conditions
                                                                                                                                                                                                                                                                                                        Neighbors

            1      Signing Bonus       $25,000                  3       $20,000                1       $20,000                1        $20,000               1        $22,500               2        $23,500                 2        $25,000               3        $18,000 + $18,000      1       $26,000                 4.25
                                                                                                                                                                                                                                                                     on renewal
            2      Depth (feet)        1,000                    5       100                    1       100                     1       500                    3       100                   1        100                     1        100                   1        1,000                 5        1,000                    5
            3      Primary Term        3+2                      3       3+2                    3       3+2                     3       3                      4       3+2                   3        3+2                     3        3+2                   3        3+2                   3        3+2                      3
            4      Royalty             25.5%                    4       25%                    2       25%                     2       25%                    2       25%                   2        25%                     2        25%                   2        25%                   2        25.5%                    4
                                       no deduct's                      deduct's if market             deduct's if market              deduct's if market             deduct's if market             deduct's if market               deduct's if market                                            no deduct's
                                                                        enhancement                    enhancement                     enhancement                    enhancement                    enhancement                      enhancement
            5      Shut-In Royalty     $250/acre                5       $100/acre              3       $100/acre               3       No Provision           1       $25/acre               2       $100/acre                3       $25/acre               2       $100/acre              1       $250/acre                5
                                       Max: 12 months/                  24 months/3 years              24 months/3 years                                              24 months                      24 months/3 years                1 year/3 years agg.            Max: 2 years                   Max: 12 months/
                                       2 years agg.                     agg.                           agg.                                                                                          agg.                                                            3 Years Cumulative             3 years agg.

            6      Continuous          90 days                  4       90 days                3       90 days                 3       60 days                2       90 days                3       90 days                  4       90 days                3       90 Days                3       90 days                  4
                   Development         Density = 40 acres or            No density req't               No density req't                No density req't               No density req't               Density = 40 acres or            No density req't                                              Density = 40 acres or
                                       reas. prud. operator                                                                                                                                          reas. prud. operator                                                                           reas. prud. operator

            7      Pooling oil/gas     40/640                   3       80/640                 2       80/640                  2       40/160                 4       80/640                 2       40/640                   3       80/320                 2       40/640 + 10%           3       40/640                   3
                   Offset wells        330' or RPO                      RPO                            RPO                             660' or RPO                    RPO                            467' or RPO                      RPO                            tolerance - 467'               330' or RPO
            8      Most Favored        YES                      5       NO                     3       NO                      3       NO                     3       NO                     3       NO                       3       NO                     3       No                     1       YES                      5
                   Nation
            9      Set Back (feet)     1,000                    5       600                    3       300                    2        200                   1        600                   3        1,000                   5        1,000                 5        1,000                 5        1,000                    5
            10     Insurance           Spelled out              5       City complaince        3       City complaince        3        City compliance       3        City compliance       3        Spelled out             5        Spelled out           5        Must be maintained    3        Spelled out              5
                                                                                                                                                                                                                                                                     in force in
                                                                                                                                                                                                                                                                     compliance with all
                                                                                                                                                                                                                                                                     ordinances

            11     Trucks Allowed in NO                         5       No Provision           1       No Provision            1       No Provision           1       No Provision          1        NO                      5        No Provision          1        NO                    5        NO                       5
                   HOA streets
            12     Force Majeure     2 years agg.               4       No Period Specified    1       No Period Specified     1       No Period Specified   1        1 year/ 3 year agg.   3        18 Month agg.           5        No Period Specified   1        Not Specified          1       2 years agg.             4
                                     no permit or gas                                                                                                                                                                                                                                               no permit or gas
                                     market                                                                                                                                                                                                                                                         market
            13     Subordination     YES                        5       YES                    5       YES                     5       YES                    5       YES                    5       YES                      5       YES                    5       Yes                    5       YES                      5
                   protection
            14     Water Testing     YES                        5       Not Specified          1       Not Specified           1       Not Specified          1       Not Specified         1        Not Specified           1        Not Specified         1        No                    1        YES                      5
            15     Damages covered YES                          5       YES                    5       YES                     5       YES                    5       YES                   5        YES                     5        YES                   5        Yes                   5        YES                      5

            16     Release and         YES                      5       YES                    5       YES                     5       YES                    5       YES                    5       YES                      5       YES                    5       Yes                    5       YES                      5
                   Discharge of
                   Committee
            17     Eminent Domain      YES                      5       Not Specified          1       Not Specified          1        Not Specified         1        Not Specified         1        Not Specified           1        Not Specified         1        Not Specified         1        YES                      5

            18     No Surface      YES                          5       YES                    5       YES                     5       YES                    5       YES                    5       YES                      5       YES                    5       YES                    5       YES                      5
                   Operations
                   Requirement
            19     Depth Severance YES                          5       YES                    5       YES                     5       YES                    5       YES                    5       YES                      5       YES                    5       YES                    5       YES                      5

            20     Survival of no      YES                      5       YES                    5       NO                      5       YES                    5       YES                    5       YES                      5       YES                    5       YES                    5       YES                      5
                   surface req't
                                                   SCORE 91                          SCORE 58                       SCORE 57                       SCORE 58                        SCORE 60                      SCORE 73                          SCORE 63                      SCORE 65                  RAW SCORE 92.25
                                               LEASE RANK 2                      LEASE RANK 7                   LEASE RANK 9                   LEASE RANK 7                    LEASE RANK 6                  LEASE RANK 3                      LEASE RANK 5                  LEASE RANK 4                  LEASE RANK  1

                   Rating Column Explanation                            Terms & Conditions Definitions
                   5=best possible term                                 Signing Bonus                                        The up front money to hold your lease for a given term
                   4=better that average term                           Depth                                                The distance below the surface where the lease begins
                   3=average term                                       Primary Term                                         Amount of time the up front signing bonus covers
                   2=less that acceptable term                          Royalty                                              % of gross proceeds retained by royalty owner
                   1=unacceptable term                                  Shut-In Royalty                                      Amount of money paid to royalty owner when a well is shut-in for specific reasons
                                                                        Continuous Development                               Compels the operator to continually drill until the acreage is fully exploited
                                                                        Pooling oil/gas Offset wells                         The size (number of acres) approved to drill on and the number of wells that will be drilled on this acreage
                   Lease Rank                                           Most Favored Nation                                  Protects the royalty owner from someone else getting more for their acreage from the same company
                   1 = most desirable lease                             Set Back                                             Distance from the edge of the drillsite from any private property
                                     to                                 Insurance                                            Amount of liability coverage in case of accident or unforeseen damages
                   9 = least desirable lease                            Trucks Allowed in HOA streets                        Traffic by heavy vehicles that could cause damage to subdivision streets
                                                                        Force Majeure                                        An occurrence which could cause the operator to suspend operations or shut in a well beyond their control
                                                                        Subordination protection                             Suspension of a mortgage provision that allows the bank to garnish your royalty and apply to principle or call your note due if you lease
                                                                        Water Testing                                        Periodic testing of surface and subsurface fresh water to insure no contamination by drilling or production operations
                                                                        Damages covered                                      Reclamation of drill site or construction site to previous condition or better
                                                                        Release and Discharge of Committee                   Indemnifying the committee that negotiated this agreement from any lawsuits or further obligation as we are volunteers
                                                                        Eminent Domain                                       The right to take private land for public use, primarily used in right of way for pipelines
                                                                        No Surface Operations Requirement                    During reasonable times (ex. School start/dismissal) suspending drilling/completion operations for public safety reasons
                                                                        Depth Severance                                      A set of upper and lower depths which the lease covers, nothing above or below
                                                                        Survival of no surface req't                         Suspension of production operations during reasonable times for public safety reasons
                                                                        RPO                                                  Reasonable Prudent Operator