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 Kansas Pugh Clause is a significant provision commonly included in oil and gas leases in the state of Kansas. It serves to address the issue of leasehold continuance and subsequent release of unproductive or non-producing portions of the leased land. In essence, the Kansas Pugh Clause stipulates that at the expiration of the primary term of the lease, any undeveloped acreage not actively producing hydrocarbons will be released and revert to the lessor. This clause ensures that the lessee cannot maintain control over unexplored or unproductive portions of the leased land indefinitely. The primary purpose of the Kansas Pugh Clause is to protect the lessor's land rights while allowing the lessee to retain their hold on productive portions of the leased premises. By emphasizing the release of non-producing acreage, it encourages lessees to actively explore and exploit the leased areas, leading to increased production and more efficient use of resources. Types of Kansas Pugh Clauses include: 1. Horizontal Pugh Clause: This variant of the Pugh Clause stipulates that any unproductive tracts located below a specific depth, referred to as the "Pugh depth," will be released at the end of the primary term. By designating a depth level, this type ensures that only unproductive sections below the specified depth are relinquished. 2. Vertical Pugh Clause: In contrast to the horizontal variant, the vertical Pugh Clause releases any unproductive tracts above a designated depth. It allows the lessee to maintain control over deeper producing formations while returning non-producing shallower sections to the lessor. 3. Complete Pugh Clause: The complete Pugh Clause goes beyond releasing only unproductive acreage and demands the release of the entire leased area except for the producing portions at the end of the primary term. This variant compels lessees to focus on developing productive land and frees up the lessor's unused land for other potential leasing opportunities. 4. Continuous Drilling Pugh Clause: This type of Pugh Clause emphasizes continuous drilling as a condition for leasehold continuance. It requires the lessee to diligently pursue drilling operations on all unexpired leases before the primary term ends. If the lessee fails to do so, all unproductive acreage outside the spacing unit will be released back to the lessor. In conclusion, the Kansas Pugh Clause plays a vital role in managing oil and gas leases by ensuring the efficient use of land and encouraging lessees to explore and develop leased areas. The various types of Pugh Clauses offer flexibility in releasing non-producing acreage and safeguarding the lessor's rights, ultimately benefiting both parties involved.
