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 Michigan Pugh Clause refers to a crucial provision in oil and gas leases that allows the lessor or landowner to maintain ownership of certain lands after the expiration or termination of a portion of the leased property. The clause is named after the landmark Michigan court case, Pugh v. State, which established the principle behind this provision. In oil and gas leases, the primary purpose of the Pugh Clause is to prevent the lessee or oil company from holding the entirety of the leased property under production or paying only minimal rentals without adequately benefitting the landowner. It ensures that the landowner retains full control and ownership of any lands not included in a production unit or extended lease. The Michigan Pugh Clause can vary based on a few factors, including negotiation terms and specific lease agreements. There are two common types of Michigan Pugh Clauses: 1. Continuous Operations Pugh Clause: This type of clause requires the lessee to conduct continuous drilling or production operations on all leased lands or release them from the lease. Under this provision, if the lessee fails to drill or produce hydrocarbons on a particular tract, it will terminate as an individual lease while others unaffected by the situation will remain in effect. 2. Depth or Depth and Space Pugh Clause: This clause focuses on vertical separation or stratification of leased lands to protect the landowner's interests. It stipulates that if a lessee only partially develops a formation, the remaining depths or formations not producing will revert to the lessor. This provision encourages the lessee to maximize production from each layer or formation separately. The Michigan Pugh Clause serves as a safeguard for landowners as it prevents the practice of land tying, where oil companies retain control over leased lands without actively developing or exploring them, denying the landowner opportunities for better lease terms or partnering with other parties. It gives the landowner the ability to lease their property to multiple companies, promoting competition and maximizing the potential of their assets. In conclusion, the Michigan Pugh Clause is a crucial provision in oil and gas leases that protects the interests of landowners. It ensures that the landowner retains control and ownership of lands not included in production units or extended leases. The two main types of Michigan Pugh Clauses are the Continuous Operations Pugh Clause and the Depth or Depth and Space Pugh Clause.The Michigan Pugh Clause refers to a crucial provision in oil and gas leases that allows the lessor or landowner to maintain ownership of certain lands after the expiration or termination of a portion of the leased property. The clause is named after the landmark Michigan court case, Pugh v. State, which established the principle behind this provision. In oil and gas leases, the primary purpose of the Pugh Clause is to prevent the lessee or oil company from holding the entirety of the leased property under production or paying only minimal rentals without adequately benefitting the landowner. It ensures that the landowner retains full control and ownership of any lands not included in a production unit or extended lease. The Michigan Pugh Clause can vary based on a few factors, including negotiation terms and specific lease agreements. There are two common types of Michigan Pugh Clauses: 1. Continuous Operations Pugh Clause: This type of clause requires the lessee to conduct continuous drilling or production operations on all leased lands or release them from the lease. Under this provision, if the lessee fails to drill or produce hydrocarbons on a particular tract, it will terminate as an individual lease while others unaffected by the situation will remain in effect. 2. Depth or Depth and Space Pugh Clause: This clause focuses on vertical separation or stratification of leased lands to protect the landowner's interests. It stipulates that if a lessee only partially develops a formation, the remaining depths or formations not producing will revert to the lessor. This provision encourages the lessee to maximize production from each layer or formation separately. The Michigan Pugh Clause serves as a safeguard for landowners as it prevents the practice of land tying, where oil companies retain control over leased lands without actively developing or exploring them, denying the landowner opportunities for better lease terms or partnering with other parties. It gives the landowner the ability to lease their property to multiple companies, promoting competition and maximizing the potential of their assets. In conclusion, the Michigan Pugh Clause is a crucial provision in oil and gas leases that protects the interests of landowners. It ensures that the landowner retains control and ownership of lands not included in production units or extended leases. The two main types of Michigan Pugh Clauses are the Continuous Operations Pugh Clause and the Depth or Depth and Space Pugh Clause.
