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 West Virginia Pugh Clause is an important legal provision commonly used in oil and gas leases in West Virginia. It allows for the partial termination or release of leased acreage that has not been specifically included in a well drilling unit. This provision is crucial for both the lessor and lessee as it clarifies the extent to which the leasehold will be held by production from a single well. The Pugh Clause ensures that a lessee cannot indefinitely hold all leased land by producing from only a specific portion. Instead, it establishes a time limit for the leasehold to encompass only the acreage actually used for oil or gas production. Any remaining acreage not included in the drilling unit is automatically released, allowing the lessor the opportunity to negotiate new lease agreements or develop the land in other ways. There are two main types of West Virginia Pugh Clauses — vertical depth and horizontal depth clauses. A vertical depth Pugh Clause pertains to the depth horizon at which the oil or gas production occurs. If the lessee produces from a particular depth, the Pugh Clause will release any other depths or formations not actively producing. On the other hand, a horizontal depth Pugh Clause focuses on the lateral extent of the well bore. It stipulates that if the lessee drills a horizontal well within a specified area, all other acreage outside that area will be released. Furthermore, there are variations of Pugh Clauses that can be tailored to suit specific leasing agreements and landowners' requirements. For instance, a timed Pugh Clause might include a provision that releases the acreage not included in a drilling unit after a certain period of time has passed without any production. Another variation known as a pooled Pugh Clause restricts the pooling of acreage located outside the drilling unit, preserving it for potential future negotiations. In summary, the West Virginia Pugh Clause is a critical provision in oil and gas leases that ensures fair treatment for both lessors and lessees. By outlining the terms for releasing unused acreage, it allows landowners to maximize their opportunities and protects lessees from being indefinitely tied up in non-producing acreage. The two main types of Pugh Clauses, vertical depth and horizontal depth, provide flexibility in defining the scope of leased land. Additional variations, such as timed and pooled Pugh Clauses, offer further customization options, making the provision adaptable to different leasing scenarios.
