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 Louisiana Pugh Clause is a legal provision that addresses the termination of oil and gas leases. It is named after its creator, Lawrence Pugh. This clause grants the lessee or mineral rights' owner the ability to extend or terminate a lease partially, rather than being obligated to maintain the entire leased area. When an oil and gas lease is signed, it typically covers a specific area or a defined tract of land. The Louisiana Pugh Clause comes into play when a lessee wants to relinquish or sever a portion of the leased area that is not being actively developed. Instead of terminating the entire lease, they can use the Pugh Clause to retain only the portion of land where active production is taking place. The main purpose of the Louisiana Pugh Clause is to prevent an automatic extension of the lease due to production in a small part of the leased area, which could result in the lessee holding on to unproductive or non-operational lands. When this clause is included in an oil and gas lease, it allows for the release of the non-producing portions, providing landowners with the opportunity to lease those areas to other interested parties. Different types of Louisiana Pugh Clauses may vary in their specific language, but they generally aim to achieve the same outcome of partially relinquishing the leased land. Some variations include the standard Pugh Clause, the depth Pugh Clause, the time-based Pugh Clause, and the leasehold Pugh Clause. The standard Pugh Clause focuses on dividing the leased lands based on producing and non-producing zones. It allows the lessee to retain the portion of land where production or operations are conducted, while releasing the remaining unproductive areas. On the other hand, a depth Pugh Clause is based on the vertical stratification of mineral ownership. It allows the lessor to terminate the lease on the portions of land that fall below a specified depth threshold, while the lessee retains the rights to the shallower intervals. The time-based Pugh Clause operates on a specific time frame. It enables the lessor to terminate the lease after a determined period, usually when drilling is not initiated or completed within a specified duration. The remaining productive areas will be held under the original lease. Lastly, the leasehold Pugh Clause allows the lessee to retain only the leasehold interest that is actively held by production or operations. It releases any non-producing leasehold interests, giving the lessor the chance to lease those areas to other potential lessees. In conclusion, the Louisiana Pugh Clause provides flexibility and efficiency in terminating oil and gas leases. By incorporating this clause, both lessees and lessors can optimize land utilization and ensure only productive areas are tied to the lease, benefiting all parties involved in the exploration and production of oil and gas resources.
