Replies to This Discussion

Permalink Reply by J Harris on August 14, 2008 at 17:00

No we do not have a pugh clause. What does HBP mean?

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Permalink Reply by J Harris on August 14, 2008 at 17:10

So all can be held if only a portion is used? And if all was not used the first time how can it now be included in the new well that is being talk about? The unit boundaries can change?

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Permalink Reply by J Harris on August 15, 2008 at 2:16

Thanks for the information KB. Would the oil company have to inform me if they had obtained an "application and order"? Any ideas as to what the terms in the lease would be that would alow the use of only a portion of the leased land?

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Permalink Reply by Charmine on August 14, 2008 at 17:58

To the best of my understanding,(which isn't much yet)...this sounds like a simple good definetion of a Pugh clause. Is this correct?

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Permalink Reply by J Harris on August 15, 2008 at 2:23

Thanks for the reply PBOL. I have only seen a Pugh clause in the past define depth limitations with in it. I am unsure as if it can be used in other ways in a lease.

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Permalink Reply by Dion Warr, CPL on August 15, 2008 at 2:38

J Harris:

The original use of a Pugh Clause was a "lease termination" provision to cleave non-unitized and/or non-productive acreage out of the lease. The amount of acreage was inconsequential, ie., you could hold a 500 acre lease with 5 acres being in a producing unit, or a well drilled in the southeast corner. It was first used (anecdotally) in the late 40s. Pugh generally gets the credit, but a similarly worded provision from Texas was also known as a "Freestone Rider" (named for the county in Texas).

The stratigraphic Pugh came later. Jim, when would you think it came into vogue? Early 1970's?

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Permalink Reply by J Harris on August 15, 2008 at 2:53

Thank you for the information Dion Warr. So what I gather for you is that with out a Pugh clause, the oil company can hold all of my 52 acres and use whatever portion of it in which ever well they would like? For future use, what would the Pugh clause need to say to have prevented this type of usage of our property by the oil company?

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Permalink Reply by P.G. on August 15, 2008 at 4:27

http://www.mitchell-texaslaw.com/subpage.html

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Permalink Reply by Dion Warr, CPL on August 15, 2008 at 5:20

This is a good one.

Probably a little ticky-tack on this, but I would prefer to say "except as to the portion or portions of the leased premises" instead of "part or parts". But it gets the job done.

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Permalink Reply by Duncan McGehee on August 15, 2008 at 4:48

J,

There are two types of pugh clause. Vertical and Horizontal. I have both on my clause page http://www.landmen.net/ClausesForms/ClausesForms.htm

Someone has a dispute about the wording of the vertical pugh clause on my site. I put the clauses up as examples for landmen to go by when they do not have one.

As someone brings up an issue with the wording I try to adjust the clauses, so be aware the clauses are just go bys and the wording can change due to specific instances or issues.

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Permalink Reply by insomniacnla on August 15, 2008 at 5:00

J. Harris,

Leases like yours is the main reason that the Pugh Clause came into use. Previously, if a landowner owed 2,000 acres in separate tracts and then leased all 2,000 acres in one lease, the o/g company could drill one well in any of the tracts and hold all the acreage by production.

It would not hurt (nor probably cost very much) to have an attorney review your existing lease.

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Permalink Reply by Dion Warr, CPL on August 15, 2008 at 5:23

I dunno, Insomniac:

Based upon what another friend on this forum just told me, some attorneys are trying to make a pretty good living on advice on and negotiation of leases in the HS...

No wonder so many folks want to do it themselves.

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