I have some opinions about the statements that the oil companies are adding to the Pugh Clauses and am curious as to what others think.
The original intent of the Pugh Clause was so that one lease that covered several sections or acres of minerals could not hold down all sections upon expiration of the lease, but only those actually producing or within the spacing unit of the producing wells.
I have old acres that were leased before the Pugh clauses existed and one well is tying up two sections of land even though one of the sections has absolutely no production coming from it. So I am a big fan of the Pugh clause, having "lived" without it for some acres. In fact if/when those acres that are still held by those OLD leases (sans Pugh Clauses) produce with this new "boom" we are stuck with the OLD 1/8th royalty on those acres as well.
What I have seen on leases, however, are added statements to the Pugh clause, or in that section of the lease. Gone is the old Pugh clause which was basically one simple sentence and here are newly revised and amended Pugh clauses.
Some of the leases are including "pooling units" in the Pugh Clause. Can that not mean several wells pooled together for production purposes, that could include your acres even if they are no longer producing, but your neighbors (also in the same pooling unit) are? I believe that to be the case, but am not positive. We were actually presented with a lease that had almost 1 1/2 pages of statements about pooling units and how they could change them as they wanted, etc. Then the Pugh Clause included Pooling Units in the statement. We did not sign this lease although I believe some relatives did.
Another sentence added to a lease after the Pugh Clause statement is a statement that the company has 180 days from the start of one well to begin another, thus defeating the Pugh clause at lease for 180 days.
I'm interested in hearing other experiences in this area and the legalities of some of these add-ons. (sorry this is so long)