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.
Arkansas Pugh Clause is a crucial provision in oil and gas leases that focuses on the termination and release of non-producing portions of land from lease agreements. This clause prevents the indefinite tying up of land which is not actively producing oil or gas. The primary purpose of the Arkansas Pugh Clause is to allow lessors to regain control and re-lease non-producing portions of the leased land to other oil and gas companies, thus maximizing the potential for exploration and production. By incorporating this clause into the lease, it ensures that lessees are motivated to diligently explore and develop the entire leased area or risk losing control over unproductive sections. There are two main types of Arkansas Pugh Clauses commonly seen in oil and gas lease agreements: 1. Horizontal Pugh Clause: This type of Pugh Clause is specifically designed for horizontal drilling operations. It provides the lessor with the ability to release and terminate lease rights for non-producing depths while maintaining the lease rights for productive depths. The horizontal Pugh Clause is especially important in areas where multiple productive depths exist, enabling the lessor to negotiate separate lease agreements for each productive formation. 2. Vertical Pugh Clause: The vertical Pugh Clause is applicable to vertical drilling operations and focuses on the release and termination of non-producing acreage. It allows the lessor to free up the unproductive portions of land while keeping the lease rights intact for any productive acreage. This type of Pugh Clause is crucial in situations where different zones or formations have varying productivity levels. Overall, the Arkansas Pugh Clause is an essential provision in oil and gas leases, empowering lessors to efficiently utilize their land resources. Its inclusion ensures that lessees are incentivized to explore and develop the entire leased area, benefiting both parties involved in the agreement. As such, understanding the intricacies of the Arkansas Pugh Clause is fundamental for anyone involved in the oil and gas leasing industry within Arkansas.
