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 Montana Pugh Clause is a legal provision found in oil and gas leases in Montana. It is designed to protect the lessor's rights and prevent continuous leasing of lands. The clause is named after the landmark case Pugh v. Robertson, which established the enforceability of this provision. The Montana Pugh Clause states that if oil and gas operations are being conducted on a leased parcel, the lessee must release any acreage within the same lease that is not held by production or within a defined production unit. This clause enables the lessor to regain control and potentially negotiate better terms for the unreleased acreage. There are different types of Montana Pugh Clauses that can be included in an oil and gas lease. These variations aim to address specific concerns or situations. Some common types are: 1. "Full Pugh Clause": This type requires the lessee to release all non-producing acreage at the end of a primary term or separate leasehold tract, ensuring that only the productive areas are held under lease. 2. "Vertical Pugh Clause": It applies to situations where multiple formations or strata exist within a single lease. The clause states that if production ceases in one formation, the lease covering that particular formation will terminate automatically, allowing the lessor to negotiate new terms for the unreleased formation. 3. "Horizontal Pugh Clause": This variation is used when horizontal drilling or multi-unit operations are involved. It mandates the release of any sections or units that are not included in the drilling operation or do not hold production, allowing the lessor to retain control over additional tracts. 4. "Subsurface Pugh Clause": This type applies to lands where surface rights are owned separately from mineral rights. It ensures that if production is not achieved in a specific depth or stratum, the lessee will release the acreage relevant to that depth, allowing the surface rights' owner to potentially lease the unproductive depth to another party. In conclusion, the Montana Pugh Clause is a vital provision in oil and gas leases in Montana, protecting the lessor's rights and preventing indefinite leasing of unproductive acreage. By including specific variations of this clause, such as the Full Pugh, Vertical Pugh, Horizontal Pugh, and Subsurface Pugh Clauses, both parties can ensure fair and advantageous arrangements within the lease agreement.
