We have a Pugh clause on our current producing lease held by Oasis. If another company wants to lease beneath the current depth (Ratcliff) could we lease from there down to say the Bakken?
Linda:
Depending on the wording in your pugh clause. Be sure to read this area of your lease carefully and if you are unsure about the wording, get an opinion from an experienced source.
Linda, that is the purpose of having a pugh clause. Charles is correct that you should check with a trusted lawyer to make sure the pugh clause was well crafted so you won't have any troubles. For a free opinion you could offer Oasis the chance to lease your deeper rights, if they tell you they don't need to lease you because you are held, then you could skip to the lawyers office to make sure it's true.
Linda: read your Pugh clause. If you believe you can lease deeper rights, lease it to them. Skip the lawyer unless you like spending money. They (the other company) must think the deeper rights are not held.
Linda, if I were to take advice to not seek a legal opinion I would strike the warrant title and agree to defend clause. I remember a nice lady here who was hounded to lease minerals that were already leased. If your pugh clause was not skillfully written by your lawyer but by the lessee, your pugh clause might be worth no more than toilet paper. A little advice before you do something can be alot cheaper than finding out when something goes wrong. I hope you are going to take your new lease to a lawyer anyway, I don't think it would be much more to have the lawyer look at the pugh clause at the same time. I think it's hard for some people to understand that if you were sure of your ability to interpret your pugh clause, that you wouldn't have come here to ask.
Linda: If the Pugh clause isn't too lengthy, post it here.
Linda:
Mr. Kennedy hits the point that I was referring to in my post in that if the wording in the pugh clause is not clear and precisely written, there could be problems.
I agree with Mr. Kennedy. Just strike the warranty language, and cash the check.
If the landman who offered the lease didn't think your deep rights were open, you'd never have heard from him, and its reasonable to shift the onus to him for interpreting your existing lease.
Interpreting lease language has consumed millions of hours of appellate court time.
So far.....