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Permalink Reply by Dion Warr, CPL on August 11, 2008 at 13:19

Jack:

Yes you can, but remember: without a Pugh clause, any lands in the lease on which production or operations are ongoing can serve to hold your entire leased acreage.

So, if you leased a couple of properties in this manner, "Tract 1" being a town lot in Sec X that is unitized as to all of Section X, and there is a producing well holding your lease as to Sec X acreage, your forty acres in Section Y (which you leased on the same description as "Tract 2") can be held under the lease as long as Sec. X continues to be worked or produced. No matter how far away Sec. Y is. Or whether anybody drills in Sec. Y for months or years, as long as Sec. X is still HBP.

I say this because it is common for small lot or town lots to be leased without a Pugh clause. This is usually because the acreage is so small that you can only place it in one unit, anyway, but if you put multiple tracts on such a form without a Pugh clause...

This is generally why you should lease such acreage on separate leases.

Hope this helps.

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