Replies to This Discussion

landownerPermalink Reply by Spring Branch,mineral owner on May 1, 2011 at 10:52

Did the lease contain a Pugh Clause?

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landownerPermalink Reply by Bud on May 1, 2011 at 13:48

I have not seen the lease, but I think it did.  I will try to get a copy.

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Oil & Gas ProPermalink Reply by The_Baron on May 2, 2011 at 3:03

private message me the names, and I can look in the courthouse records for you.

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landownerPermalink Reply by Henry on May 1, 2011 at 23:29

Most leases today contain a "horizontal Pugh Clause."  Spring Branch is right in noting that  you need to see if your lease has one.  This clause covers exactly the issue you are writing about.  It would say that if one part of y our land falls into a production unit and another part doesn't, then the part that doesn't go into the production unit should be released after the primary term of the lease expires. 

 

Note:  If you have such a clause in your lease, and part of your land is released at the end of the primary term, you might ask your lessee to file a formal release in the courthouse, just to make it clear for any future dealings with that land, that it is not HBP on the earlier lease. 

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Oil & Gas ProPermalink Reply by The_Baron on May 2, 2011 at 3:00

Actually far more leases do not have a horizontal pugh than those that do.

 

Most will only include them if the mineral owner requests it. We do not offer a horizonral pugh, but will almost always grant one if asked.

 

 

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Oil & Gas ProPermalink Reply by The_Baron on May 2, 2011 at 3:02

Bud:

 

If you have a producing well, your lease will not expire, it will be held by production. If you have no horizontal pugh, the entire tract covered will be held as well. This is very common. You will not be due any new bonus, as there will be no new lease to sign.

 

If you do have a horizontal pugh, read it carefully to see what the terms are.

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