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 Rhode Island Pugh Clause is a legal provision often included in oil and gas leases in the state of Rhode Island. It serves as a means to protect both the lessee (the party leasing the property) and the lessor (the property owner) by addressing the termination and release of certain portions of the leased land. A Rhode Island Pugh Clause aims to address the issue of severance. When an oil or gas lease is negotiated, it typically covers a specific area encompassing multiple mineral interests. However, over time, it may become favorable for either party to terminate a portion of the lease while continuing production on other parts. The essence of the Rhode Island Pugh Clause lies in its structure, which requires the lessee to release or surrender the unused or expired portions of the lease. This allows the property owner or lessor to regain control and potentially enter into separate agreements for the unused parts of the leased land. Moreover, the Pugh Clause can grant the lessee the right to retain portions that are actively producing or under development, avoiding the loss of valuable rights. In Rhode Island, there are primarily two types of Pugh Clauses commonly utilized: 1. Vertical Pugh Clause: With this type of clause, the lease will be divided into horizontal and vertical sections. While the horizontal section pertains to the lands where production is actively occurring or the lessee has made substantial investments, the vertical section relates to the remaining portions not involved in active operations. The vertical Pugh Clause helps to prevent the entire lease from being held indefinitely due to the presence of production on only a small part. 2. Depth Pugh Clause: The depth Pugh Clause is an alternative type where the leasehold is divided based on specific depth ranges. It allows for the release of the depths where the lessee is not actively producing or engaged in exploration activities, while retaining the rights to other depths where operations are ongoing. The Rhode Island Pugh Clause is an essential provision for oil and gas lease agreements, offering flexibility to both parties involved. It ensures efficient land management, prevents unproductive lands from hindering overall lease termination, and allows for separate negotiations to maximize the utilization of the property.
