What Pugh / depth means

Pugh / depth is two related ideas packed into one line on a lease offer. A Pugh clause (horizontal) releases undeveloped acreage when only part of the leased premises is producing or pooled. A depth clause, or vertical Pugh, releases undeveloped formations below (or above) the producing interval. Without that language, one well — or a shut-in payment — can hold the entire tract and all depths for as long as the lease is held by production.

Landmen put bonus and royalty on the cover sheet. The Pugh / depth paragraph is usually later, next to pooling, continuous operations, and retained-acreage language. Read it before you treat a three-year primary term as “only three years.” This page is not legal advice. Mineral Vertex buys oil and gas minerals and matches owners with buyers. We do not promise to beat every letter.

Copies of the printed lease — Pugh / depth included — plus the county are enough to start. Do not notarize their form because the bonus looks large. A producing well with no Pugh can hold deep rights you thought you still controlled.

Horizontal Pugh (acreage)

A horizontal Pugh is about the map, not the wellbore. If they pool 40 acres of a 160-acre caption, or drill only the north half, the clause says whether the unpooled or undrilled acres drop out at the end of the primary term — or after a stated period of operations. Retained-acreage and wellbore-only clauses are cousins: they try to keep the lease only on the acres actually used. Pooling language can swallow those acres back into a larger unit unless the Pugh is written to survive the unit.

Public unit outlines on the oil and gas map (Ohio DNR units, Louisiana conservation units) are not your Pugh. They show how operators draw spacing. They do not release your undeveloped remainder.

Vertical Pugh and depth

Vertical Pugh / depth is about the column under the same surface. A Haynesville well should not automatically hold Cotton Valley, Smackover, or anything else the granting clause named as “oil, gas, and other minerals” unless the lease says it does. Depth can be written as:

• a formation name (“the Haynesville”) — ambiguous if the name is used loosely;
• a measured depth or a stratigraphic equivalent (“100 feet below the base of X”);
• a wellbore-only limit — only the hole, not the rest of the section at that depth;
• silence — which usually means all depths stay leased while any production holds the lease.

Continuous-drilling and operations clauses can delay a vertical release. So can a shut-in royalty that keeps the whole lease alive without a producing well. Read those next to Pugh / depth, not instead of it.

What happens without Pugh / depth

Many printed “standard” forms have no Pugh, a weak Pugh, or a Pugh that only fires if they never pool. Then HBP / contiguous property does the work: a well, a unit well, or sometimes a shut-in payment holds every acre and every depth in the caption until the lease actually expires. That is why a small royalty check can still mean the deep rights are not free to re-lease. It is also why a mineral deed offer on “non-producing” deep rights can still be a sale of something the lease already parked with an operator.

What to read twice on Pugh / depth

• When it fires — end of primary term, end of operations, or only if they fail to pool. A clause that never fires is decoration.
• What is retained — pooled unit, drilled unit, proration unit, or the wellbore. Those are different sizes.
• What is released — “outside the unit,” “below the deepest producing perforation,” or “all other formations.” Vague words get litigated.
• Pooling / unit and proportionate reduction — a large pooling power plus no Pugh is how a thin well holds a wide caption. See proportionate reduction for the decimal; Pugh / depth is the acres and depths that decimal sits on.
• The legal — survey, abstract, or section-township-range. Match it on the oil and gas map so their basin story is not the only story.

Lease Pugh vs a depth reservation on a deed

A Pugh / depth clause lives on a lease: it decides what the lessee keeps. A depth reservation on a mineral deed decides what you keep after a sale. They are not substitutes. Signing a deed that sells “all oil, gas, and other minerals” can move the deep rights even if a vertical Pugh would have dropped them from an old lease. If both papers are in the folder, treat them as two deals. Use how to respond if you need a week, then send Pugh / depth here — meaning the lease (and any deed in the same packet) — so we can try an offer, a buyer match, or a counter.