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Permalink Reply by adubu on August 22, 2009 at 7:26

all good questions with multiple variable answers if this is your first leasing get it right 1st time consult with oil & gas attorney before signing anything

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Permalink Reply by Charmine on August 22, 2009 at 7:35

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.

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Permalink Reply by adubu on August 22, 2009 at 7:47

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.

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Permalink Reply by Charmine on August 22, 2009 at 9:03

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.

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Permalink Reply by Mac Davis on August 22, 2009 at 8:21

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.

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Permalink Reply by Charmine on August 22, 2009 at 8:59

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!

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Permalink Reply by BirdDawg, plain ole' idiot on August 22, 2009 at 14:51

Mac is right, make sure you get a Texas attorney if your minerals are in Texas.

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Permalink Reply by The_Baron on August 24, 2009 at 7:35

For my two cents worth:

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.

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Permalink Reply by adubu on August 24, 2009 at 13:05

in vertical pugh terminate 100 feet below deepest depth with production is better than 100 feet below drilled depth

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Permalink Reply by The_Baron on August 26, 2009 at 9:05

yes, but the 100' below depth drilled is more likely to be accepted.

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Permalink Reply by Loyd Riviera on August 27, 2009 at 11:28

I have also seen clauses that release '100 feet below base of deepest producing formation'. These things can get a little hairy.

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Permalink Reply by adubu on August 28, 2009 at 5:44

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.

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