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 Mississippi Pugh Clause, also known as the Pugh termination clause, is a legal provision commonly used in oil and gas leases in Mississippi. It serves to address the duration and extent of a lessee's rights to a property in case of partial or inadequate development or production. The Pugh Clause is named after the court case "Pugh v. Hawkins" in 1974 that set a precedent on the issue. It aims to protect lessors by preventing lessees from indefinitely holding large tracts of land under a single lease while only developing a small portion. This clause becomes relevant when a lessee fails to meet certain development or production requirements specified in the lease. Essentially, the Mississippi Pugh Clause operates by dividing the lease into separate portions or tracts based on the acreage where production exists at the time of lease termination. If the lessee has failed to explore or produce oil and gas on a particular tract, that tract is released from the original lease and reverts to the lessor. The remaining tracts, where production has occurred, remain under lease and are subject to continued operations. The Pugh Clause can be further categorized into three different types: 1. Horizontal Pugh Clause: This type is applicable when the lease covers multiple horizontal formations. It allows for the release of specific formations or sections that have not been developed or produced, while retaining the rights to the formations where production has taken place. 2. Vertical Pugh Clause: This type is used when the lease encompasses vertical formations and allows for the release of specific depths or strata where exploration or production has not occurred, while preserving the rights to the depths where production exists. 3. Depth Severance Pugh Clause: This type divides the lease based on specified depth intervals, liberating the lessee from obligations to formations that have not been developed or produced, while continuing the lease for the depths that have been explored. In conclusion, the Mississippi Pugh Clause is a crucial provision in oil and gas leases in Mississippi that safeguards the interests of lessors. By requiring lessees to diligently explore and develop all portions of the leased property, it ensures fair utilization of land and resources. The horizontal, vertical, and depth severance variations of the clause provide flexibility and specificity, allowing for tailored agreements between lessors and lessees.The Mississippi Pugh Clause, also known as the Pugh termination clause, is a legal provision commonly used in oil and gas leases in Mississippi. It serves to address the duration and extent of a lessee's rights to a property in case of partial or inadequate development or production. The Pugh Clause is named after the court case "Pugh v. Hawkins" in 1974 that set a precedent on the issue. It aims to protect lessors by preventing lessees from indefinitely holding large tracts of land under a single lease while only developing a small portion. This clause becomes relevant when a lessee fails to meet certain development or production requirements specified in the lease. Essentially, the Mississippi Pugh Clause operates by dividing the lease into separate portions or tracts based on the acreage where production exists at the time of lease termination. If the lessee has failed to explore or produce oil and gas on a particular tract, that tract is released from the original lease and reverts to the lessor. The remaining tracts, where production has occurred, remain under lease and are subject to continued operations. The Pugh Clause can be further categorized into three different types: 1. Horizontal Pugh Clause: This type is applicable when the lease covers multiple horizontal formations. It allows for the release of specific formations or sections that have not been developed or produced, while retaining the rights to the formations where production has taken place. 2. Vertical Pugh Clause: This type is used when the lease encompasses vertical formations and allows for the release of specific depths or strata where exploration or production has not occurred, while preserving the rights to the depths where production exists. 3. Depth Severance Pugh Clause: This type divides the lease based on specified depth intervals, liberating the lessee from obligations to formations that have not been developed or produced, while continuing the lease for the depths that have been explored. In conclusion, the Mississippi Pugh Clause is a crucial provision in oil and gas leases in Mississippi that safeguards the interests of lessors. By requiring lessees to diligently explore and develop all portions of the leased property, it ensures fair utilization of land and resources. The horizontal, vertical, and depth severance variations of the clause provide flexibility and specificity, allowing for tailored agreements between lessors and lessees.
