Should I have a Pugh clause in my oil and gas lease

Should I insist on a Pugh clause on my lease

That would most likely depend on how large your lease is and how it is configured. Richland County wells are typically spaced into 1280 acre or 1920 acre units. If your lease is smaller than that, a Pugh Clause wouldn’t do you much good unless it was spread across different units.

Thankyou, the acres are 280 in one section & 280 on another section, so 560 total!

Since you are spread across two Sections, a Pugh clause might be beneficial, but it would depend on where you are. Most of Richland County is being spaced in a North-South configuration, but there are a few areas where East-West has been done. If you go on the MT BOGCC Website and go to the GIS page, you can see how the wells are being laid out and maybe figure out if you will end up in one unit or two. I can help you if you supply the location details (Township-Range-Section).

Thank you I made a mistake it’s two different townships. 25N range 58 East & 26N range 58 East. Of the MPM

Dear Ms. Belcastro,

Certainly, you absolutely should have a horizontal and a vertical Pugh clause on your lease with many other provisions that are generally more profitable than a simple Pugh clause.

For example, some years ago, I developed a Montana Lease form, modeled on the State of Montana Lease Form.

You could frame such a lease yourself if you felt competent in your abilities.

Also, an attorney or a skilled landman representing you could give you a hand and it might be worth well more than any costs incurred.

Very good luck on your endeavors and have a prosperous 2020.

Best wishes,

Buddy Cotten

Thank you so much for the information, and I hope your 2020 is prosperous as well, I haven’t the good knowledge to write a lease nor do I have the means for an attorney so I appreciate any input I get from these forums thank you very much!!!

It does appear that the drilling units in your area are divided at the Township line, so you would most likely be in two separate units. A Pugh clause would benefit you.

Debra I recently received an offer letter for interest in Township 25N, Range 58E section 24. Is this where your interest is located? If so I was wondering if I could ask you some questions.

Yes this is where it is, don’t know if I can help you but I will try what did you need?

Were you able to negotiate your lease terms at all? (length of lease, royalty, lease bonus per acre, pugh clause)

I am in Texas and don’t know much about what’s going on in Richland County. Normally I can look through the online records to see if any other leasing is going on, but can not seem to do that in Richland County, MT. Also from past experience a 5 year term normally means they don’t have intentions to drill any time soon.

I have four other siblings when we receive leases, they are usually quick to sign new leases so I don’t have too much control over what is going on! This is a five-year lease, and I told my siblings that we should have a Pugh clause but they don’t listen to me, I don’t see any problems in this lease but I have no negotiations because of my siblings, I live in Colorado and I’m not too experienced with leases either!! That’s about all I know sorry I can’t help you further

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