New Mexico Separate Leases on Multiple Tracts of Lands Described in one Oil and Gas Lease

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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.

New Mexico Separate Leases on Multiple Tracts of Lands Described in one Oil and Gas Lease: In New Mexico, when it comes to oil and gas exploration and production, separate leases on multiple tracts of lands described in one oil and gas lease refer to the division of a larger leasehold into smaller individual leases. This practice allows for efficient resource management and exploration operations across various tracts of land. The primary purpose of separate leases on multiple tracts of lands described in one oil and gas lease is to ensure specific legal rights and obligations are assigned to each individual tract. This allows the lessee to exercise exclusive rights to explore, develop, and produce oil and gas resources within a particular tract, while also providing accurate documentation of ownership and minimizing conflicts between adjacent leaseholders. There are different types of New Mexico Separate Leases on Multiple Tracts of Lands Described in one Oil and Gas Lease, including: 1. Individual Tract Leases: Under this type, each individual tract within the larger leasehold area retains a separate lease from the others. This ensures that the lessee has exclusive rights to explore and produce oil and gas resources within their designated tract. 2. Participating Area Leases: In this scenario, multiple tracts within a larger leasehold are combined into participating areas. The lessee holds a separate lease for each participating area, allowing them to explore and produce resources collectively within that area. This approach encourages cooperation and shared responsibility between multiple leaseholders. 3. Unit Leases: In the case of large leasehold areas where it is challenging to identify individual tracts or participating areas, unit leases may be utilized. A unit agreement is established to combine multiple tracts into a unified unit. The lessee holds a single lease for the entire unit, granting them exclusive rights to explore and produce resources throughout the unit area. 4. Division Order Leases: Division order leases are created when multiple tracts within a larger leasehold area share common ownership or operators. In such cases, a division order is used to allocate rights and responsibilities among the respective tract owners or operators. Each tract may still retain a separate lease, but the division order governs the distribution of production and related royalties. By employing these various types of separate leases on multiple tracts of lands described in one oil and gas lease, New Mexico ensures efficient and transparent management of its valuable oil and gas resources. These practices facilitate effective exploration and production operations while promoting fair allocation of rights and responsibilities among leaseholders.

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If there is production sufficient to preserve all or part of the lease at that one moment, the acreage is retained and not evaluated again. Conversely, under ?rolling? Pugh clauses, ?rolling determinations? following the primary term are to be made whenever any operations or production ceases.

In a few words, a pooling clause is written into a lease. This oil and gas clause allows the leased premises to be combined with other lands to form a single drilling unit. It's not uncommon for there to be a pool of oil or gas under numerous parcels of land.

The Pugh Clause ? A clause in the Oil and Gas Lease which modifies usual pooling language to provide that drilling operations on or production from a pooled unit will not preserve the whole lease.

The declaration shows the boundaries of the pooling unit and identifies all the landowners and amount of property each landowner actually has in the unit.

What is the Pugh clause in an oil and gas lease? A Pugh Clause is enforced to ensure that a lessee can be prevented from declaring all lands under an oil and gas lease as being held by production. This remains true even when production only takes place on a fraction of the property.

Oil leases are agreements between an oil and gas company known as the lessee and mineral owners known as a lessor, in which the lessor grants the lessee the permission to explore, drill, and produce those minerals for a specified period known as a primary term or as long as the minerals continue to be productive.

An example of a Surface Area Pugh Clause: ?Production from or operations on a pooled unit or units including a portion or portions of the leased premises will maintain this Lease in force only as to the acreage included in the unit or units.

A phrase (usually contained in a Pugh clause in an oil & gas lease) that terminates the lease after the primary term as to all formations below a particular depth typically defined as the stratigraphic equivalent of the base of the deepest producing formation in the unit.

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New Mexico Separate Leases on Multiple Tracts of Lands Described in one Oil and Gas Lease