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.
Maine Pugh Clause, also known as a Pugh termination clause, is a legal provision often included in oil and gas leases. This clause is designed to govern the termination of a lease and ensure that the lessee (the person or company leasing the property) relinquishes only specific portions of the leased property while retaining rights to the remaining drilled or producing areas. The purpose of a Maine Pugh Clause is to prevent lease extension or continuation over expired areas that are not actively being explored or producing hydrocarbons. This ensures that the lessor (landowner) has the opportunity to renegotiate lease terms or grant leases to other interested parties for unexplored portions of the property. In its simplest form, a Maine Pugh Clause mandates that any portion of the leased property not producing or deemed as "held by production" is automatically terminated when the lease term expires. This can help the lessor avoid situations where the lessee retains unproductive or partially explored sections of the land for an extended period. There are a few variations of the Maine Pugh Clause, including the "Vertical Pugh" and the "Horizontal Pugh." The Vertical Pugh pertains to vertical exploration, meaning that if the lessee produces from a specific depth or zone, only that particular depth or zone is retained, and the remaining unexplored sections become available for re-lease or negotiation. On the other hand, the Horizontal Pugh is specific to horizontal drilling, which means that if the lessee drills a horizontal well in one section of the property, only that specific section will be held under the lease, leaving the remaining areas open for re-lease. It is essential for landowners to be aware of the different types of Maine Pugh Clauses and negotiate lease terms diligently to protect their property interests. By including such clauses in contracts, both parties can ensure a fair and transparent relationship throughout the lease term, promoting efficient exploration and production of oil and gas resources while safeguarding landowner rights.
