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 Oregon Pugh Clause, also known as the Pugh Clause in Oregon, is a legal provision that is commonly used in oil and gas leases in the state. It is named after Lawrence T. Pugh, an American geologist who played a pivotal role in its development. The purpose of the Pugh Clause is to address situations where a lessee (the party leasing the land) fails to explore and develop all the leased acreage. In essence, the Oregon Pugh Clause serves as a safeguard for lessors (the landowners) by allowing them to sever portions of the leased acreage from the original lease if certain conditions are not met. This ensures that lessees do not indefinitely hold onto unexplored or underdeveloped lands without fulfilling their obligations. There are different types of Pugh Clauses that may be incorporated into Oregon oil and gas leases: 1. Full Pugh Clause: This type of clause allows the lessor to release all the undeveloped portions of the leased acreage from the original lease if a specified condition, such as the absence of production, is met. It provides the lessor with greater flexibility to lease the undeveloped acreage to other parties. 2. Partial Pugh Clause: Under this variation, only specific portions of the leased acreage are released, while the developed portions remain under the lessee's control. This allows the lessor to retain the productive portions of the lease and potentially enter into separate agreements for the remainder. 3. Continuous Development Clause: This clause stipulates that the lessee must continuously explore and develop the leased acreage to maintain rights to the entire area. Failure to meet specified drilling or production requirements could result in the release of the undeveloped portions. 4. Horizontal Pugh Clause: Primarily used in unconventional oil and gas plays, this clause ensures that if the lessee drills a horizontal well on a portion of the leased acreage, only the section affected by that well remains in the lease. It prevents the inclusion of the entire lease in a drilling unit, protecting the lessor's rights. 5. Area of Mutual Interest (AMI) Pugh Clause: This type of clause is employed when multiple parties agree to lease different portions of a larger area but also share information and resources. The AMI Pugh Clause allows any party that successfully develops their portion to release the remaining, undeveloped lands, while still maintaining the shared benefits of cooperation. In summary, the Oregon Pugh Clause is a crucial element of oil and gas leases in the state, protecting the rights of lessors and encouraging exploration and development of leased acreage. By including specific provisions and various types of Pugh Clauses, both lessors and lessees can define and regulate their responsibilities and interests in accordance with their specific needs and objectives.
