I’m a mineral owner. Concerning a lease, can anyone explain what a “Static” Pugh Clause is and how that is different from other types of Pugh Clauses? Also, what wording is included (or excluded?) to make a Pugh Clause “Static”?
Pugh clause definitions vary from state to state. Which state are your minerals in?
Of course … I should have mentioned that my minerals are in Texas.
That is not a commonly used term. Are you discussing lease terms? Ask the landman what exactly he means by that term. There is a difference between vertical and horizontal parts in a Pugh clause.
Is it possible you overheard or misunderstood the phrase statutory Pugh clause? Which is in Oklahoma, not Texas.
Thanks for the responses received so far.
This is what prompted my question about the meaning of a “static Pugh clause”.
I received a lease offer from a company who, after I received their offer in the mail, now tells me that they decided to send lease offers without first reviewing previous leases to determine what was Held by Production, with the plan to review that status after a mineral owner responded to their lease offer. They now say that my minerals are being Held by Production so they choose not to move forward with a new lease offer to me.
They believe a few wells are still producing within the area of an earlier lease and that the previous lease has “insufficient lease language to expire acreage outside of what is still producing”. They acknowledge that the previous lease has a Pugh clause but say that the Pugh clause is a “static Pugh clause meaning that it only applies at one point in time: either 1) the end of the primary term, or 2) the end of continuous drilling, whichever is later.” They believe that most (perhaps all) of the wells in the area they wish to acquire were producing at either of those times. They also say that while most of those wells are no longer producing there is no language to expire that non-producing acreage after the point in time the Pugh clause applied so they believe the entire area is still Held by Production and don’t feel they can move forward with a new lease.
They say that they will be leasing as much as they are able to in this area with the intention of taking over operatorship of long-term shut-in wells and restoring them to production. Am I correct to interpreted this to mean that, in addition to acquiring new leases, they’re hoping to buy existing leases that they say are still in effect because they say those leases are Held by Production?
My thought at this time is to start with trying to understand what is meant by a “static Pugh clause”. To not overwhelm readers with an overly long posting at this time, I’m not including a copy of the Pugh Clause from the earlier lease right now, but can provide it later if requested.
Ultimately, I’m trying to determine if my minerals are being Held by Production or if I’m entitled to a new lease. Any thoughts/comments/insights would be much appreciated.