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Permalink Reply by Skip Peel - Mineral Consultant on August 15, 2010 at 15:50

You have provided insufficient information for an informed reply. Does the lease include a horizontal Pugh clause? Lacking such a clause, a lease with production on an included tract can maintain the lease for tracts outside of the drilling unit for the producing well.

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Permalink Reply by Henry on August 15, 2010 at 23:42

Gene,
Skip is right. The purpose of a horizontal Pugh clause is to prevent exactly what you are talking about. It basicly says that if there are multiple tracts being covered by a single lease, then only those tracts that are in producing units will be HBP at the end of the primary term. The other tracts will be released (not re-leased). Go back and read your lease and look for this language.

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Permalink Reply by Ken Knight on August 16, 2010 at 11:39

In 1975 my mother signed a lease for 1/8th royalty that included 100 acres in Section 1 and 25 acres in Section 2 in north Louisiana. A local attorney who reviewed the lease before she signed it didn't know to add a Pugh clause to protect her. Successful wells were drilled in both sections.

About 2002, the well in Section 1 was shut down for about three years and the other landowners in that section were able to sign a new 1/5 royalty lease for their property. However, since the old well in Section 2 was still paying a few dollars a month royalty, my mother was unable to sign a new lease for her property in Section 1.

My advice...even if you do not know any oil and gas attorneys, find one before signing a lease.

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Permalink Reply by Skip Peel - Mineral Consultant on August 16, 2010 at 11:51

Ken, in 1975 "real" O&G attorneys used vertical and horizontal Push clauses as an accepted matter of professional competence. Attorneys who were not "real" O&G attorneys but were willing to accept clients with mineral related legal needs didn't have a clue. That analogy is as valid today as it was then. Members should understand that the relatively small cost differential between those who are "real" and those who are not is small but the potential for harm can be tremendous. And long lasting.

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Permalink Reply by The_Baron on August 17, 2010 at 7:26

kinda the same reason I wouldn't use Morris Bart for anything other than to get a settlement check for a car wreck....

actually, I don't I would use Morris Bart even then.....

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Permalink Reply by The_Baron on August 17, 2010 at 7:28

Anyway, sorry gene I got distracted.

The real answer is that it depends on your lease, there has been some good advice here already. But without a horizontal pugh, the standard lease form holds all this acreage with a successful well on you leased lands or lands pooled with your lands.

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