If All Acerage Not Used, Is The Rest Held By Lease

In 2003 I leased 52 acres and the production company drilled a well. The company only included 40 acres of the 52 in the unit. So when I contacted the company last week I was informed that not only was the 12 acres held by the original lease but that a new well was going to be drilled that would now include the total 52 acres. Does anyone know if a company can lease 52 acres and only include 40 in the well? And, would the remaining 12 acres have come back to me after the inital 3 year lease was up, because it was not used

Tags: lease, questions

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Permalink Reply by insomniacnla on August 15, 2008 at 5:52
There are some in any field, including landmen, that will take advantage of a situation. That being said, still there are many skilled attorneys that are reviewing leases for their usual hourly fee. I feel that the answers/advice provided by you and others on this board are correct but when landowners have thousands of dollars at stake, they should get personal, professional advice other than just from the message boards.
Permalink Reply by insomniacnla on August 15, 2008 at 5:55
KB,

That sounds like the beginning of one of those jokes again. LOL
Permalink Reply by Dion Warr, CPL on August 15, 2008 at 5:37
Duncan:

This clause looks like you could strike the standard continuous drilling obligation clause out of the form lease and replace it with this one, as well as get a Pugh provision.

As a side note, I've had so many problems getting folks to differentiate on what a horizontal and vertical Pugh clause is that I have just gone to calling the "original" clause a Pugh clause, and the other a "Stratigraphic Pugh". Some people want to look at the property from above (map view) with unit boundaries cutting vertically into the earth (thus calling that a "Vertical" Pugh clause), thus making the strata termination parallel to the ground, thus a "Horizontal Pugh Clause". Other people look at it from the POV of being "on the lease" (thus the unit boundary is toward the horizon (thus calling it the Horizontal Pugh), and looking in to the earth as an elevation change (thus calling the other a Vertical Pugh). Using "Stratigraphic" seems to clear up any miscommunication.

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