A note from Tom Roberts, chairman of the gas leasing committee

Last week I spoke with the landman whose company has expressed an interest in Crestwood with adjacent Westside neighborhoods but is heavily leasing in S. Arlington right now. He was to meet last week with Parnell Mcglinchey, the attorney for Arlington Heights, Crestline Area and North Hi Mount neighborhood associations but there was a scheduling problem. A rescheduled meeting is forthcoming. He asked us to hold on a bit longer as the competition is crazy right now in S. Arlington and he needs to concentrate there.

Afterwards I spoke with Parnell who mentioned that he has been in discussions with neighborhoods west of Crestline Area, including Westover Hills, Byers and Ridglea. The total area is around 2,800 acres; Crestwood would make it over 3,000 acres. Parnell has also spoken with a broker, Tim Fleet, who approached him about packaging the whole area and taking it to Chesapeake. Parnell is looking into the idea of opening the area up for bids once he has commitments from other neighborhood associations.

What does this mean for us? Stay the course.

No one can drill in Crestwood under the current leases because there is no continuous wellbore path (2,000 to 3,000’ lateral). However, offset operators could easily pool your lease into a large (704 acres) unit drilled outside Crestwood. In such case your rights would be limited to the terms and conditions of the current lease form offered by Dale Resources, Four Sevens or Two Rocks, all agents for Chesapeake, which are definitely not Lessor friendly.

Recent (conservative) estimates are projecting 45,000 MCF per acre of recoverable gas within the city limits of Fort Worth for a well with a 25 year life. This translates to $45,000,000 (45,000 MCF/AC x 200 acres x $5/MCF) of recoverable gas in Crestwood; which is $11,250,000 in royalty to our neighborhood or $56,250 per acre to each mineral owner (you and me). Added to a lease bonus payment of $10,000 an acre, you are looking at around $66,250 if your lot size is an acre or around $33,125 for a half-acre. This amount of money requires our prudent pursuit of favorable lease terms.

As always feel free to call me at 817-335-1179 (day), 817-625-4475 (night) or email me at troberts@jettaoperating.com.

Sincerely, Tom Roberts, Crestwood Gas Leasing Committee

P.S. For an interesting look at what is going on in South Arlington and the leasing efforts of one neighborhood, see this website: http://www.swapo2.com/