A hold out question?

My siblings have signed an oil and gas lease in southern "Tx. and I have just discovered I don’t want to warranty the title and also I would like to enter a Pugh clause. Finally I would like to change the sale price from the well head to market value. Do I jepordize anything for them or myself by not signing the original lease.

Mr. Garcia,

This is an excellent question.

If your siblings have already signed a lease, actions by you do not jeopardize their chances of having a well on the acreage, unless you do NOT sign a lease. If you do not sign a lease and the operator wants to drill a well on that tract, then your interest will be carried to payout (the simple explanation). For example, if you own 25% of the minerals under the tract, the Operator could choose to NOT carry your interest, which would of course kill exploration on that tract.

If you choose to not lease and the operator drills a well off your tract, you could never be pooled unless you were successful in a Mineral Interest Pooling Act action (not likely). If you were never pooled, then you would not have income off your interest and your minerals could be drained.

At the end of the day, your requests are very reasonable and all Operators who operate in South Texas are burdened by having to review a multitude of private lease forms, so your modest requests should not be a problem.


Dear Mr. Garcia,

I would not warranty mineral title to any property in an oil and gas lease, even after researching the mineral rights to my own property. What if I made a mistake somewhere along the chain of title? I cannot envision a “No Warranty of Title” clause in your lease being a problem to any reputable operator.

As far as the Pugh clause goes, it is essential for an owner with a large number of mineral acres to insist on this clause. In fact, any reputable operator will include it in their boilerplate lease form, especially for a large tract of land. If you own a large tract of land, the Pugh clause is not in the lease form presented to you, you ask for it, and the operator refuses, RUN FOR THE HILLS! If you own a lot or a small parcel, don’t worry about the Pugh clause.


Philip Wynne