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.
Utah Pugh Clause
Category:
State:
Multi-State
Control #:
US-OG-843
Format:
Word;
Rich Text
Instant download
Description
How to fill out Pugh Clause?
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FAQ
A Vertical Pugh Clause requires the Operator to release the rights below a defined vertical depth after the primary term of your lease expires. For example, all rights 100 feet below the deepest drilled depth or 100 feet below the deepest formation penetrated.
The point of a retained-acreage provision is to be able to seek a new opportunity to lease unworked land to a different lessee, one who might do something productive with it. A Pugh clause is a negotiated provision in favor of the lessor. Pugh clauses modify pooling/unitization rights.
Returning to our example, a properly drafted Horizontal Pugh Clause would not only terminate the lease as to the 180 non-pooled acres but also as to all horizons and strata below the deepest depth drilled, i.e., 7800 feet. In other words, the entire lease would terminate as to all horizons and strata below 7800 feet.
The key language in the Pugh Clause was, ?The lease shall remain in effect as to all depths as to all developed acreage so long as there is production of oil and/or gas in paying quantities from said developed acreage.?
Any provision resulting in acreage being released after production is a Pugh Clause. A Pugh Clause is a type of retained acreage provision that is only applicable with regards to pooled or unitized lands. A Pugh Clause is completely inapplicable when there has been no pooling or unitization.?
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.
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.
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.
