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 South Dakota Pugh Clause is an essential provision added to oil and gas leases in South Dakota. This clause specifically addresses the matter of leasehold acreage release in the event of non-production or partial production. It essentially works as a safeguard for both the lessor and lessee, ensuring that unused or unproductive leased acreage is relinquished and made available for potential leasing or development by other parties. The South Dakota Pugh Clause can vary in its specific language and terms depending on the requirements set by the lessor, lessee, or local regulations. The purpose of this variation is to cater to the unique needs and circumstances of each lease agreement. Here, we discuss two common types of South Dakota Pugh Clauses: 1. Full Pugh Clause: This type of Pugh Clause allows for the release of all non-producing or partially producing acreage at the end of the primary lease term. In the case where only a portion of the leased acreage is productive, the lessee must relinquish the unproductive acreage, freeing it up for other potential lease opportunities. 2. Vertical Pugh Clause: The vertical Pugh Clause focuses mainly on vertical depth considerations rather than surface acreage. It stipulates that if a lessee fails to produce oil or gas from a specific depth or formation, the rights for that formation will be released, while still retaining the rights to lease other depths or formations. This type of clause is particularly useful when there are multiple potential oil or gas reservoirs in the leased area. It is crucial to note that the specific terms and conditions of the South Dakota Pugh Clause may vary from lease to lease. Lessees and lessors should carefully review and negotiate the Pugh Clause to ensure its alignment with their project goals and objectives while adhering to local regulations and industry best practices. By incorporating this clause into oil and gas leases, the parties involved ensure efficient utilization of resources, encourage exploration and development, and prevent hoarding of unproductive acreage.
