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 Phoenix Arizona Pugh Clause is a crucial provision commonly included in oil and gas leases to protect both the lessor and the lessee. It aims to prevent the continuous retention of non-producing or underperforming mineral acreage by forcing the lessee to release specific portions of the leased property that do not demonstrate productive results. The Pugh Clause, named after Lawrence Pugh, an Oklahoma attorney who introduced it in the 1960s, operates by separating the leased lands into two categories: "Held by Production" (HBP) and "Released Lands." If drilling activities result in a well producing oil or gas from a particular tract or formation, the Pugh Clause ensures that only the relevant acreage is held under the lease. This mechanism avoids tying up the entire leasehold simply due to the presence of production from a minor portion. There are various types of Phoenix Arizona Pugh Clause that can be incorporated depending on the specific requirements of the lessor and the lessee. Some common variations include: 1. Depth Pugh Clause: This type focuses on specific depths or formations. It allows the lessee to retain only the depths or formations that contribute to productive activities and releases the remaining portions from the lease. This provision is beneficial when multiple types of minerals are found at different depths. 2. Horizontal Pugh Clause: Tailored for horizontal drilling scenarios, this clause ensures that only the lands traversed by the horizontal well bore are retained, while the surrounding areas are released. It minimizes the extent of land held by the lease, thus facilitating efficient development and conservation of resources. 3. Time Pugh Clause: This type revolves around the time factor. It enables the lessor to release any unproductive acreage if the lessee fails to commence drilling operations within a specified period. This provision allows the lessor to reevaluate the lease if development efforts are delayed excessively. 4. Pooling Pugh Clause: Designed to address pooling or unitization agreements, this clause ensures that lands outside a designated drilling or production unit are released from the lease. It prevents the lessee from holding additional non-productive acreage beyond the defined unit boundaries. In summary, the Phoenix Arizona Pugh Clause is a vital component of oil and gas leases, particularly in ensuring efficient land utilization and resource development. Its various types, including Depth, Horizontal, Time, and Pooling variations, allow the lessor to reclaim unproductive acreage while promoting responsible exploration and production practices.The Phoenix Arizona Pugh Clause is a crucial provision commonly included in oil and gas leases to protect both the lessor and the lessee. It aims to prevent the continuous retention of non-producing or underperforming mineral acreage by forcing the lessee to release specific portions of the leased property that do not demonstrate productive results. The Pugh Clause, named after Lawrence Pugh, an Oklahoma attorney who introduced it in the 1960s, operates by separating the leased lands into two categories: "Held by Production" (HBP) and "Released Lands." If drilling activities result in a well producing oil or gas from a particular tract or formation, the Pugh Clause ensures that only the relevant acreage is held under the lease. This mechanism avoids tying up the entire leasehold simply due to the presence of production from a minor portion. There are various types of Phoenix Arizona Pugh Clause that can be incorporated depending on the specific requirements of the lessor and the lessee. Some common variations include: 1. Depth Pugh Clause: This type focuses on specific depths or formations. It allows the lessee to retain only the depths or formations that contribute to productive activities and releases the remaining portions from the lease. This provision is beneficial when multiple types of minerals are found at different depths. 2. Horizontal Pugh Clause: Tailored for horizontal drilling scenarios, this clause ensures that only the lands traversed by the horizontal well bore are retained, while the surrounding areas are released. It minimizes the extent of land held by the lease, thus facilitating efficient development and conservation of resources. 3. Time Pugh Clause: This type revolves around the time factor. It enables the lessor to release any unproductive acreage if the lessee fails to commence drilling operations within a specified period. This provision allows the lessor to reevaluate the lease if development efforts are delayed excessively. 4. Pooling Pugh Clause: Designed to address pooling or unitization agreements, this clause ensures that lands outside a designated drilling or production unit are released from the lease. It prevents the lessee from holding additional non-productive acreage beyond the defined unit boundaries. In summary, the Phoenix Arizona Pugh Clause is a vital component of oil and gas leases, particularly in ensuring efficient land utilization and resource development. Its various types, including Depth, Horizontal, Time, and Pooling variations, allow the lessor to reclaim unproductive acreage while promoting responsible exploration and production practices.
