- Don’t bother to comply with the most basic and unambiguous requirements of the contract.
- Take informality for granted.
- Assume that if
Definitions Mattered in Oil Field Master Services Agreements
MDC Enegy LLC v. Crosby Energy Services Inc. et al. was an indemnity dispute in which the players were many and the facts complicated.
But first
Gray Reed’s own Mitch Ackal and Jeremy Walter will present an entertaining and informative webinar on Texas Business Courts on January 29 at noon. Use this link to learn
Master Service Agreement Imposes a Ceiling on Indemnity Obligations
Mr./Ms. Negotiator/scrivener/reviewer of Master Service Agreements: When did you last review your go-to indemnity provision? In light of Century Surety Company v. Colgate Operating LLC., perhaps you should do it now. The court deemed an innocuous-seeming indemnity provision to impose a ceiling on indemnity obligations under an MSA. Is your MSA consistent with
Texas Court Addresses MSA Indemnity Obligations
At issue in RKI Exploration and Production LLC v. AmeriFlow Energy Services LLC and Crescent Services, LLC. were two Master Service Agreements. RKI was the operator of a well in Loving County; AmeriFlow and Crescent were contractors. A sand separator exploded at the well site injuring or killing three workers who worked for another subcontractor. The result was three suits in New Mexico and a mazelike series of indemnity demands, denials, settlements, and judgments, including settlement of one death case for $9.1 million.
To preserve your patience, and mine, let’s focus on the takeaways from this 72-page behemoth of an opinion based on a 10,000-page record.
Grammar lessons
The court defined a phrase common to Master Service Agreements: “arising in connection herewith”. Indemnitees AmeriFlow and Crescent argued that the phrase “encompasses all activities reasonably incident to or anticipated by the principal activity of the MSA, which was oil well operation”. No, it doesn’t. The court determined that the phrase requires a causal connection between the MSA and the claims for which the indemnitee sought indemnity. The scope of work envisioned in the MSA was defined by work orders, and the indemnity could go no further than the scope of work.
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Texas Supreme Court Reverses Judgment Because of Lack of Written Notice
If you administer or advise on master service agreements, or for that matter any other contract that requires written notice, this post by my Gray Reed partner Joe Virene is essential reading:
Texas Supreme Court: Actual Notice Does Not Satisfy Written Notice Requirement
In short, the Supreme Court of Texas reversed a jury verdict in
Added Party Can’t Avoid Amended Master Service Agreement
Co-author Brittany Blakey
Let’s begin with a question: Master service agreements (“MSA’s” in the trade), once agreed upon, often remain in force for years. As time passes and circumstances change, the parties amend, sometimes losing sight of the original details. Was Stingray Pressure Pumping, LLC v. In re Gulfport Energy Corporation the result of forgetfulness
Company Man Wins MSA Dispute
A fellow walks into a bar in New Orleans. “What’ll it be?” “A Corona and two Hurricanes,” says he. “Here you go. That’ll be $20.20.”
Co-author Rusty Tucker
Now, on to operations in hurricane-free New Mexico. Lessons from BEPCO, L.P. v. RMTDC Operations, LLC d/b/a Total Energy Services:
- Hire a good company man and trust him
- Get a good expert for trial
- Prep your witnesses well for deposition and trial
Oil Field Services: What is the Status of Mineral Lien Waivers?
Co-author Ethan Wood
Merry Christmas and Happy Holidays from all of us at Gray Reed! Assuming that most of you have been good this year (stay tuned for 2019’s Bad Guys in Energy to see who hasn’t), we hope Santa brought you everything on your Amazon Wish List. Our sympathies go out to those in the oilfield services industry in Texas—it looks like you got a lump of coal. In Mesa Southern CWS Acquisition v. Deep Energy Exploration Partners the Houston Court of Appeals upended the long-held view that mineral lien waivers violate public policy. Bah Humbug!
Continue Reading Oil Field Services: What is the Status of Mineral Lien Waivers?
Choice of Law Matters in an Oilfield Indemnity Suit
Did Texas law or New Mexico law apply to knock-for-knock indemnity provisions in a Master Work and Services Agreement? When a contract explicitly calls for Texas law, that is likely to be the outcome, as it was in North American Tubular Services LLC v. BOPCO, LP.
Takeaways
- Decide before something bad happens what law you want to apply to a transaction.
- Think about it. You’ll have to live with the choice.
- Providing a safe work place is a moral imperative; financial risk goes a long way toward assuring the imperative is satisfied.
- (Better left for another post: Does that also apply to leaking methane?)
- The parties’ choice of law was was bolstered because under the contract the indemnity and insurance requirements would be liberally construed in order to effectuate their enforceability.
- It would have helped the choice of law if the contract had also said that the choice was without regard for the chosen state’s conflict of law provisions.
Continue Reading Choice of Law Matters in an Oilfield Indemnity Suit
MSA Indemnity Denied Under the Louisiana Oilfield Indemnity Act
Co-author Brittany Blakey*
Cardoso-Gonzales v. Anadarko Petroleum Corp. addressed the all-important indemnity and insurance provisions in Master Service Agreements in light of the Outer Continental Shelf Lands Act and the Louisiana Oilfield Indemnity Act.
Continue Reading MSA Indemnity Denied Under the Louisiana Oilfield Indemnity Act