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.
The Hawaii Pugh Clause refers to a legal provision commonly found in oil and gas lease agreements in Hawaii. It serves as a safeguard for both the lessor (landowner) and the lessee (oil or gas company) by addressing the issue of lease termination when only a portion of the leased land is being developed for oil and gas activities. Incorporating keywords such as "Hawaii Pugh Clause," "oil and gas lease agreements," and "lease termination" in the content will increase its relevance. The Hawaii Pugh Clause is designed to ensure that if the lessee fails to develop or produce oil or gas from certain portions of the leased property, the lease will not remain in effect for those specific areas, allowing the landowner to potentially lease the remaining unproductive lands to other parties. This provision prevents the lessee from retaining control over the entire leasing area while only exploiting a small portion. There are two primary types or variations of the Hawaii Pugh Clause that can be included in lease agreements: 1. Horizontal Pugh Clause: The horizontal Pugh Clause applies when oil or gas operations on the leased land are conducted through horizontal drilling techniques, which involve drilling a well bore horizontally through the underground reservoir. This type of Pugh Clause allows the lessor to terminate the lease for specific portions of the property where no horizontal drilling has taken place, while the lease remains intact for the productive areas. 2. Vertical Pugh Clause: The vertical Pugh Clause, on the other hand, is relevant when oil and gas production occurs through vertical drilling methods, where the well bore is drilled straight down into the targeted reservoir. Under this clause, the lessor has the right to terminate the lease for unproductive areas that have not been vertically drilled, leaving the productive sections still under lease. Both the Horizontal and Vertical Pugh Clauses provide a fair balance between the parties involved in an oil and gas lease agreement in Hawaii. By allowing the release of unproductive portions of the leased land, the landowner can seek alternative lessees or uses for those areas, while the lessee can maintain the rights to continue oil and gas operations in the productive sections. The incorporation of the Hawaii Pugh Clause in such agreements ensures diligent exploration and utilization of leased lands, benefiting both parties involved.
