This lease rider form may be used when you are involved in a lease transaction, and have made the decision to utilize the form of Oil and Gas Lease presented to you by the Lessee, and you want to include additional provisions to that Lease form to address specific concerns you may have, or place limitations on the rights granted the Lessee in the “standard” lease form.
Florida Pugh Clause — Detailed Description and Types The Florida Pugh Clause is a legal provision that pertains to oil and gas leases in the state of Florida. It plays a crucial role in determining the rights and obligations of both the lessor (landowner) and the lessee (oil and gas company) when it comes to lease termination and the release of certain leased lands. In essence, the Pugh Clause in Florida ensures that if a lessee fails to actively drill or produce oil or gas on certain leased portions of land, the lease term for those particular tracts will expire. This allows the lessor to regain control over the undeveloped sections while keeping the lease active for any productive parts. The clause is named after a Texas landsman named Lawrence Pugh who popularized its inclusion in oil and gas leases as a means to prevent lessees from retaining large amounts of land by drilling a single well on a small portion. Types of Florida Pugh Clause: 1. Standard Pugh Clause: The most common type, this clause included in a Florida oil and gas lease ensures that if a lessee ceases production or drilling operations on a specific portion of land, that portion will revert to the lessor while the remainder of the lease remains unaffected. 2. Horizontal Pugh Clause: This variant of the Pugh Clause is used when an oil or gas well is drilled horizontally, crossing several tracts within a lease. It specifies that if a well crosses a portion of land, but only production from one tract is ceased, the other tracts will remain under lease. 3. Vertical Pugh Clause: When an oil or gas lease allows for multiple depths or stratigraphic zones, a vertical Pugh Clause comes into play. It states that if one depth or zone ceases production, it will not affect other productive depths or zones, allowing the lessor to reclaim control while keeping the remaining areas leased. 4. Depth Severance Pugh Clause: This type focuses specifically on vertical depth separations within an oil or gas lease. It enables the lessee to retain the lease for productive zones while relinquishing unproductive depths to the lessor. In conclusion, the Florida Pugh Clause is a significant component of oil and gas leases in the state. Its purpose is to prevent lessees from indefinitely holding land without actively exploring or extracting resources. By utilizing different types of Pugh Clauses, both the lessor and lessee can protect their interests and ensure a fair and beneficial arrangement for all parties involved in the lease agreement.
