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 Ohio Pugh Clause is an essential aspect of oil and gas leasing in the state of Ohio. It is a provision that helps determine the termination or continuation of the lease in the event of oil and gas production. Keywords: Ohio Pugh Clause, oil and gas leasing, termination, continuation, production. In Ohio, the Pugh Clause plays a crucial role in clarifying the effect of terminating oil and gas leases on unexplored or undeveloped portions of the property. When an oil or gas lease contains a Pugh Clause, it helps protect landowners' interests by ensuring that the lease does not remain perpetually in effect over the entirety of the property, even if exploration or production activities are limited to specific areas. The Ohio Pugh Clause works by separating the leased property into two parts: the "Pugh Tract" and the "Held by Production" (HBP) Tract. The Pugh Tract refers to the portion of the land not included in the HBP Tract, primarily consisting of unexplored or underdeveloped areas. On the other hand, the HBP Tract contains the specific areas where oil or gas production is actively taking place or has occurred. When the Pugh Clause is triggered, usually due to the expiration or termination of the lease concerning a specific area, it affects the extent to which the remainder of the property remains under the lease. The Pugh Clause ensures that only the HBP Tract, which has seen active production, remains under lease, while the Pugh Tract is released from the lease agreement. This provision allows landowners to potentially negotiate new leases or explore other opportunities for the unexplored areas. There are different types of Ohio Pugh Clauses that can be incorporated into oil and gas leases, depending on the landowner's preferences or negotiation with lessees. One type is the "Vertical Pugh Clause," which focuses on vertical separation. It serves to terminate the portions of the lease that are not productively utilized vertically, while keeping the participating areas under lease. Another type is the "Horizontal Pugh Clause," which applies to situations where multiple horizontal wells are drilled within the same unit. It aims to trigger the release of portions of the property that are not part of the drilling unit, effectively allowing landowners to seek new opportunities or lease agreements for those portions. Furthermore, it is essential for landowners and lessees in Ohio to understand the variations and specific terms of the Pugh Clause within their lease agreements. Experienced legal counsel should be consulted to ensure that the Pugh Clause adequately represents the landowner's interests and aligns with the specific circumstances of the property. In conclusion, the Ohio Pugh Clause is a vital provision in oil and gas leasing agreements. It safeguards landowners' rights by defining the termination and continuation of the lease with respect to unexplored or undeveloped areas. By using different types of Pugh Clauses, such as vertical and horizontal variations, landowners can effectively manage their property and explore new opportunities for leasing or development.
