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.
Colorado Pugh Clause, also known as the Colorado Pugh Rule, is a legal provision in oil and gas leases specific to the state of Colorado. This clause is designed to protect the rights of both the lessor (property owner) and the lessee (oil and gas exploration company) during the extraction of mineral resources. It outlines the conditions under which a partial release of leased land may be obtained by the lessor. The Colorado Pugh Clause is named after Lawrence Pugh, the landowner who filed a lawsuit in Colorado in 1924, challenging the standard oil and gas lease provisions. The case set a precedent that paved the way for the inclusion of the Pugh Clause in Colorado leases, ensuring fair compensation and rights for landowners. Under the Colorado Pugh Clause, if a lessee has drilled a well that is productive and extracting oil or gas from a specific portion of the leased land, the lease for that particular land is held in force until production ceases. This means that the lessee cannot indefinitely hold the entire lease without actively exploiting the leased property. Different types of Colorado Pugh Clauses are: 1. Horizontal Pugh Clause: A variation of the Pugh Clause designed specifically for horizontal drilling. It allows the lessor to either include or exclude certain depths or formations from the lease depending on the current drilling activities. 2. Vertical Pugh Clause: This clause is applicable for the conventional vertical drilling operations. It determines the release of land based on vertical depths or formations rather than horizontal ones. 3. Standard Pugh Clause: The standard Pugh Clause applies to leases not involving horizontal drilling or other specific conditions. It provides a general framework for partial releases based on vertical depths or formations. 4. Modified Pugh Clause: This type of Colorado Pugh Clause allows for customization and modification of the specific terms based on the negotiation between the lessor and lessee. It provides flexibility to address unique circumstances and specific requirements. The Colorado Pugh Clause is an essential provision in oil and gas leases in the state, protecting both landowners and exploration companies. It ensures that landowners maintain control and receive fair compensation for their properties while promoting responsible development of mineral resources in Colorado.
