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Permalink Reply by Skip Peel - Mineral Consultant on March 21, 2010 at 4:06

The lease controls. Doesn't matter what company ends up with it. There are varying forms and types of Pugh clauses. We often discuss limiting the depth covered by a lease based on deepest production plus 100', a vertical Pugh clause. There is also a horizontal Pugh clause which was designed to limit minerals covered in a lease to only those pooled in a producing unit or lease well. Crunchy, I'm not suggesting this example fits your situation, as I don't have the details to make that assumption. However, in the event of a lease covering a tract or tracts existing in multiple sections, the horizontal Pugh clause would release the rights to any acres not falling in a drilling and production unit or a producing lease well. In other words development rights would be limited to only those acres being produced and those not being produced at the end of the primary lease term are automatically released. Where old leases without Pugh clauses remain in effect, it is possible that they hold some minerals which have never been produced. Long time GHS members will remember that this happened to a number of mineral owners in one of Kassi Fitzgerald's groups. Kassi and that group are featured prominently in Mr. Kallenberg's Haynesville Shale documentary.

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Permalink Reply by sesport on March 21, 2010 at 6:00

And, Kassi is/was a member here on GHS, worked with the (Shreveport) mayor's team in presenting information to the general public in '08. If you do a member search, you'll find her postings & blogs. You might find something useful there.

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