How do you feel about the PUGH CLAUSE?

I suppose it depends what kind or property you have to lease. As I understand it, the PUGH CLAUSE  allows the landowner to set aside  certain areas that he does not want disturbed in any, way, shape or form.  Am I correct in my understanding?

 

Also other gas or oil deposits in another and  lower  layer are not to be exploited without a new lease unless they are specifically included in the original lease.

 

I can understand why drillers would not want this clause included. They would then be hampered from much deeper drilling then the land owner is expecting them to drill.

 

Bill L.

aka Bummy

Views: 128

Replies to This Discussion

Permalink Reply by Lynn Wigglesworth on July 10, 2010 at 2:59pm
My understanding of a PUGH clause is that if only part of your property is included in a unit, the rest of the property isn't tied up...once the original lease expires, you can sign a new lease with the same or another company for the land not included in a unit. The way many leases are written, if you have 100 acres leased, the gas company can include only 1 acre in a unit, but the other 99 acres is still held by production (but not getting any royalty).
Permalink Reply by William Ladd on July 10, 2010 at 3:06pm
Guess I will have to do more research on this subject.

I thank you lynn for your input

Bill L.
aka Bummy
Permalink Reply by N Bohl on July 10, 2010 at 5:36pm
As far as I know there are at least two types of pugh clauses with O&G leases- vertical and horizontal.
Permalink Reply by Lynn Wigglesworth on July 11, 2010 at 9:50am
Also, there are some companies (like East) that refuse to put a PUGH clause in their lease. I don't know if other companies allow it or not.
Permalink Reply by William Ladd on July 12, 2010 at 12:12am
You can find much information about PUGH CLAUSES by punching "PUGH CLAUSES" in a search blank at the top of your monitor.

Bill L.
aka Bummy
Permalink Reply by Lynn Wigglesworth on July 12, 2010 at 12:50am
Unfortunately, it doesn't matter how great of a PUGH clause you come up with if the gas company rejects it. I fought with East for several months and ended up walking away from their offer, in part because they wouldn't accept a PUGH. I submitted the addendum my lawyer wrote (with a PUGH) to the lease Chesapeake offered me, and haven't heard from them in almost a month...I take that to mean that they have also rejected it.

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