I'm thinking about getting serious with the landman and starting negotiations. I am compiling a list of terms that I want. I still don't entirely have a grip on the Pugh clause. I need a regular pugh clause, which means if all my acres are not placed in a unit- I will be released from lease, correct? Next question is the vertical Pugh clause. I understand it is depth restrictions, so I am free to lease the rest to someone else, if desired-correct? Given where my minerals are located, am I requesting only Haynesville Shale depth? I am still confused on how the different formations interact in different areas. Or do I want not HS worded but specific depth to specific depth, so I make sure to get whatever is related to what they are currently going after? Hope this made sense, and thanks!
Thank you adubu,. This is my first experience with leasing, and I do plan on using an attorney. I am trying to figure out if a Montana O/G attorney would be all right, or if I need a Texas attorney. My other thought was if I could cut costs by figuring out what the basic terms are that I need, instead of paying an attorney to do all the foot work for me. So hence the question on the Pugh clause confusion.
vertical pugh clause general lease 1 or 2 possibilties they have right to drill as deep as desired during time of lease (3 years) the depth drilled during lease plus one year can be HBP for ever or the depth of deepest production is HBP. Everything deeper is released on termination of time of lease and they must file release for record. The best is HBP only formation of production depth. You can also have lease without vertical pugh to sign lease of only to specific formation for example surface to cotton valley sands (if that is all they want to drill) then you have not leased the deep rights to the Shale and below and is available to lease to another co.
OK, I think I got the jist. I'll have to reread when I don't have 10 things floating around in my brain. What specific formations am I (they) after in my area I guess is a better question. See my response below to Mac for more clarification.
If you're going to pay for an attorney, get a Texas attorney and one who knows O/G. Especially if you have more than a few acres to consider. You could be talking 10's of thousands of dollars per acre over time. There are too many local gotchas in mineral laws to use a "foreign" attorney.
It's good to understand the terms yourself first so you understand what the attorney says and know what to ask. This site is a lot cheaper per hour than an an attorney.
First, be sure you own the mineral rights. I believe that mineral rights don't revert to the surface landowner over time like they do in Louisiana.
Thank you Mac, "It's good to understand the terms yourself first so you understand what the attorney says and know what to ask. This site is a lot cheaper per hour than an an attorney.", that is what I am after on this question. Yes, I have my signed afidavit that I did when I was 16 years old. My that was a strange piece of paper to see after all these years! So my confusion is what depths do I want them drilling to? They are after HS, but I am confused over the depths. I keep trying to decipher through mentions of Bossier Shale, and Cotton Valley. They are related sommehow in different areas correct? I guess what I'm after is specifics. Bossier Shale in Shelby County, TX is the same as HS, but not in other areas, correct? I can't remember for sure now, buit is Cotton Valley right above HS? So my thought was, do I want to let them have all 3, so they are sure to get the good stuff? I don't want them to have rights to all, but I want to make sure that they are getting the good stuff, and that I am getting paid for it. Whew, hopefully I didn't just sound like I haven't been paying some sort of attention the last year on here!
HORIZONTAL PUGH: In the event a portion or portions of the land described in this lease are pooled or unitized with other lands, lease or leases so as to form a pooled unit or units, operations on or production from the unitized premises shall maintain this lease only as to that portion of the leased premises within such unit or units, and, as to that portion of the leased premises not included in such unit or units, this lease may be maintained during and after the primary term by production of oil or gas therefrom or in any other manner provided for in this lease.
VERTICAL PUGH: At the end of the primary term or any extension thereof, this lease shall terminate and be of no force and effect as to all depths 100 feet below the stratigraphic equivalent of the base of the deepest formation penetrated in any well drilled on the leased premises or on lands pooled therewith.
The_Baron---My leases in Rusk, Nacgodoches, and Shelby County Texas vertical pugh clause are 100' below the stratagraphic equivalent of base of the deepest formation with production. Yes they are more likely accepted depth drilled, but everything is negotiable before you sign lease.
As exciting as this is, we know that we have a responsibility to do this thing correctly. After all, we want the farm to remain a place where the family can gather for another 80 years and beyond. This site was born out of these desires. Before we started this site, googling "shale' brought up little information. Certainly nothing that was useful as we negotiated a lease. Read More