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 Kentucky Pugh Clause is a legal provision often included in oil and gas leases, primarily used in the state of Kentucky. It serves as a mechanism to release or retain specific portions of land that are subject to the lease, allowing for the termination of undeveloped or non-producing parts while maintaining the lease's validity over productive areas. The Pugh Clause essentially prevents the doctrine of "leased land as a whole" from hindering the lessee's opportunities for development. Without this clause, if only a small portion of the leased land contains producing wells, the entire lease would remain in effect until the expiration of the primary term. There are different types of Kentucky Pugh Clauses that can be modified or included in an oil and gas lease. These variations offer flexibility and customization to fit specific circumstances. Some common types include: 1. Horizontal Pugh Clause: This type focuses on horizontal drilling activity. It allows the lessee to release or retain portions of land based on whether they fall within or outside the path of the horizontal well bore. 2. Vertical Pugh Clause: Unlike the horizontal version, the vertical Pugh Clause considers vertical drilling wells. It permits the lessee to release or retain portions of land based on vertical penetration or productivity. 3. Depth Pugh Clause: This type is associated with the depth of the wells drilled. It enables the lessee to release or retain portions of land based on whether the wells' depth exceeds a predetermined threshold. 4. Acreage Pugh Clause: The acreage Pugh Clause focuses on the number of acres of the leased land. It allows the lessee to release or retain portions of land based on the acreage that is actively producing oil or gas. 5. Time Pugh Clause: This type in particular pertains to the expiration of the primary term. It permits the lessee to release or retain portions of land upon the expiration of the primary term, effectively eliminating the continuation of the lease over non-producing areas. The Kentucky Pugh Clause offers crucial protections and flexibility to both lessors and lessees in oil and gas leases. It ensures efficient land usage, encourages timely development, and allows for the termination of non-productive areas to avoid unnecessary financial burden or land tie-up.
