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 Missouri Pugh Clause, also known as the Pugh clause in Missouri, is a legal provision commonly included in oil and gas leases. It is named after Lawrence Pugh, an Oklahoma oil and gas operator who introduced this clause in the 1960s to address the issue of lease extensions. The purpose of the Missouri Pugh Clause is to clarify and limit the extent of the leased premises and the minerals covered within that lease. This clause becomes particularly crucial when there are multiple depths and formations on the leased property. Under the Missouri Pugh Clause, if drilling or production activities occur on a specific part of the leased premises (such as a specific depth or formation), the clause ensures that only the acreage where such activities occur remains under lease. This means that any portions of the leased premises that are not involved in active drilling or production are released from the lease. By implementing the Missouri Pugh Clause, oil and gas companies can prevent the drilling operator from holding on to large tracts of unproductive or undeveloped land while paying minimal rentals or delay rentals to keep the lease in effect. This provision helps in avoiding situations where extensive acreage remains tied up under a single lease without any genuine exploration or production efforts being made. There are variations of the Missouri Pugh Clause, depending on the specific terms and conditions negotiated between the parties. Some common types of the Missouri Pugh Clause include: 1. Depth Pugh Clause: This type of Pugh clause focuses on different depths or geologic formations present on the leased premises. It typically stipulates that if any depth specified within the clause is not producing or is not included in active drilling operations, then the lease in relation to that depth is considered terminated. 2. Formation Pugh Clause: Similarly, the formation Pugh clause addresses the various formations present on the leased property. It states that if any formation mentioned in the provision is not producing or being actively drilled, it will be released from the lease. 3. Horizontal Pugh Clause: With the rise of horizontal drilling techniques, the horizontal Pugh clause has gained importance. This clause ensures that only the acreage contained within a horizontally drilled well bore remains under the lease, while the other portions of the leased premises are released. In conclusion, the Missouri Pugh Clause is a vital element of oil and gas leases in the state. It serves to limit the leased premises to only those areas actively involved in drilling or production activities, releasing the non-productive portions from the lease. The different types of Pugh clauses allow parties to tailor their agreements specifically to address concerns related to depth, formation, or horizontal drilling.
