Important info for those not yet leased: Get Pugh Clauses

For those of you still not under lease:

Include a Vertical Pugh Clause and a Horizontal Pugh Clause.

A Pugh Clause prevents your surface (horizontal) and mineral layers (vertical) from being tied up past the length of your lease.

If acreage (horizontal) is not included in a drilled unit or specific mineral layers (vertical) are not drilled, YOU ARE FREE TO LEASE THE UNDEVELOPED ACREAGE OR LAYERS AGAIN at the end of your lease term.

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Permalink Reply by jett on March 4, 2014 at 12:51pm

Moving the discussion from the Vine discussion.

As a mineral rights owner trying to learn this complicated business and its complex terminology, I'm trying my best.

The two ideas are 

(1) a Pugh Clause that releases undeveloped strata in a certain acreage

and 

(2) a Pugh Clause that releases all the undeveloped surface and all the undeveloped stratas in a certain acreage

Permalink Reply by jett on March 4, 2014 at 2:12pm

I It is possible. When they are ready to lease your area the companies are more agreeable to working with the Lessor.

Permalink Reply by Utica JOE on March 4, 2014 at 3:14pm

Also, if you do get pughs added to your lease, be very careful of how it is worded. Ive seen some strategraphic pughs worded in ways that will hold all strata's from the surface to 100 feet below the deepest well drilled. A operator can drill a very deep well, then come back and produce from the whatever pay zone they choose, while holding all the deep rights. 

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