City of Fort Smith

Dear City of Fort Smith leadership,

Our office has completed a parcel-level oil & gas inventory of every Arkansas government parcel using the gis.arkansas.gov parcel registry, the Oil & Gas Commission well database, and active producing-field boundaries derived from the same. I'm writing to flag 10 parcels owned by City of Fort Smith in Sebastian that sit inside or directly adjacent to a producing oil/gas field.

The largest of these — parcel 131-18883-0000-02847-00 (300.0 acres in Sebastian County, within the B-44 AREAfield) — would be expected to generate on the order of $6,358 per year in lessor royalty at current production and pricing if leased on the standard COSL terms (1/8 + signing bonus, lessor share). With full infill drilling on AOGC spacing units that figure could reach $8,969 per year. Aggregated across the 10HIGH-tier parcels in this agency's portfolio, the back-of-envelope royalty potential is approximately $29,139 annually (up to $136,796 at full development).

Operators including Merit Energy Company, LLC, MMGK Arkoma, LLC, Oxley Energy, LLC, Riverfront Exploration, LLC are actively producing in the same fields and paying lessor royalty to private landowners today.

With your office's consent, my staff is prepared to:

1. Walk your team through every parcel on the attached schedule;
2. Run a competitive lease sale on the highest-value tracts; and
3. Direct net royalty receipts into your agency's operating account in accordance with A.C.A. § 22-5-708.

Attached you will find the full parcel inventory exported from our mapping system. I am happy to meet at your convenience to discuss any of these tracts in detail.

Respectfully,

Cole Jester
Commissioner of State Lands