Dore Law - June 2021

Dore Law - June 2021

THE D or É R eport

D ore L aw . com

JUNE 2021

NEW TRICKS & TRAPS IN MASTER SERVICE AGREEMENTS

WHAT YOU MUST KNOW TO PROTECT YOURSELF

Several recent Texas court cases have created doubts in the previously well-established principal that contract provisions to attack statutory liens are against public policy and void. The bottom line is that oilfield service companies must be even more careful reviewing terms in new MSAs (Master Service Agreements). When it comes to waivers of your mineral liens and changes in the deadlines for mineral liens, there are new tricks and traps that you must avoid! MSAs in the oil & gas industry “govern” the relationship between the oilfield services company and its customer, an E&P company or another OFS company. While each separate job may have its own job order with details, the MSA terms will govern the rights and duties of the parties should there be any conflict. This is the opposite from the norm in contract law where the more recent writing is assumed to amend the earlier agreement. Therefore, it is important to negotiate MSA terms that avoid legal problems in the future. TEXAS STATUTES The MSA should include terms related to the protection of your invoice claim, including the right to file liens if you are not paid as agreed. Texas Property Code Chapter 53 creates what are called M&M (mechanic’s and materialman’s) liens. Chapter 56 of the Property Code creates mineral liens against “the land, leasehold, oil or gas well, water well, oil or gas pipeline and its right-of-way, and lease for oil and gas purposes for which the labor was performed or material, machinery, or supplies were furnished or hauled, and the buildings and appurtenances on this property.” The mineral lien also extends to “other wells and pipelines used in operations related to oil, gas, and minerals and located on [the] property.” When enforcing a mineral lien, the Texas statute piggybacks on the M&M lien statute stating that “a claimant must enforce the lien within the same time and in the same manner as a mechanic’s, contractor’s, or materialman’s lien.” Questions have recently begun to arise since Section 53.286 was revised to read, “Any contract, agreement, or understanding purporting to waive the right to file or enforce any lien or claim created under this chapter [Ch. 56 M&M Liens] is void as against public policy.” When the Texas Legislature amended the

statute to clearly protect M&M lienholders, it did not also revise the language of the mineral lien statute to expressly include these liens also. Whether oversight or simply clever lawyering, attorneys opposing efforts to enforce liens have begun arguing that the omission opened the door to waiving or changing mineral liens by agreement, i.e., via the terms of your MSA. WAIVER OF MINERAL LIENS In the recent case of Mesa Southern v. Deep Energy , the court stated, “Mesa cannot obtain satisfaction of the alleged debt from Deep Energy either by direct money judgment or through foreclosure and sale based on purported lien rights.” The court relied upon a provision in the MSA where Mesa agreed it was “relying on the creditworthiness of [Deep Operating] and shall look solely and exclusively to [Deep Operating] for payment.” Mesa argued that any agreement to waive the right to assert a mineral lien is void as against public policy. The court held, “Without deciding whether Mesa’s liens are valid, Mesa may not foreclose on the liens or otherwise enforce the liens against Deep Energy.” In the future, you must carefully read proposed MSAs for language like the Mesa case, which tries to limit your payments and collection rights to the customer company only. In the event of a default, the customer and all the other parties subject to your mineral lien will likely argue that you waived the rights to a mineral lien.

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ACCORDING TO ‘THE POWER OF MOMENTS’ BY THE HEATH BROTHERS, YES! CAN ‘DEFININGMOMENTS’ BE CREATED?

Why do we remember our best and worst experiences and forget pretty much everything else in between? Why are we most comfortable when things are certain, but we feel so incredibly alive when we plunge into the unknown? These are the moments that stick with us — the moments that define us. They’re an organic part of the human experience, and they can’t be purposely created. Or can they? In “The Power of Moments: Why Certain Experiences Have Extraordinary Impact,” brothers Chip and Dan Heath seek to answer these questions and ultimately discern why specific moments can define us. They also explore whether those moments can be purposely created. According to the Heath brothers’ research, positive moments share four characteristics: elevation, insight, pride, and connection. When you look for situations in which you

can foster those characteristics, you can create moments that you and the people around you will remember for years to come. “The Power of Moments” is great for anyone looking to leave a lasting impact on their employees or work team. Rather than have your next meeting be about unity — and leave your team grumbling about how that information could have been sent in an email — create a meeting that has, in the words of the Heath brothers, “drama, meaning, and connection.” You can’t bring your team together for a defining moment by just talking about unity; they have to experience it. While the characteristics the Heath brothers describe may seem a little vague at times, rest assured that “The Power of Moments” will give you a fantastic playbook for creating moments that define your team and stick with them. Check it out today!

OUR EXCELLENT CLIENTS We wish to congratulate a few of our clients who have been recognized for their excellence in customer service. CHAMPIONX Awarded No. 1 in Total Customer Satisfaction for Oilfield Products (2021) NEWPARK RESOURCES Awarded No. 1 in Total Customer Satisfaction for Oilfield Services (2020) Other client companies recognized as the best in customer satisfaction in various market categories include: BASIC ENERGY SERVICES DRIL-QUIP HALLIBURTON NABORS INDUSTRIES RPC SCHLUMBERGER SUPERIOR ENERGY SERVICES

These awards were made by Energypoint Research in Houston. At Doré Rothberg McKay, we strive for excellence in customer satisfaction just like the clients we serve.

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NOTICES & OTHER DEADLINES Generally, the Texas statute allows you to file a mineral lien up to six months after the work is completed. However, you are also required to send a notice to the property owner not less than 10 days before filing the lien. Court opinions in the past found MSA clauses invalid that tried to change the statutory deadlines for notice and filing mineral liens. Recently, the lower courts have appeared willing to embrace arguments that “Texas is a big freedom of contract State in contracting around what would otherwise be statutory or, in some cases, constitutional rights.” In other words, be careful what you agree to in the MSA! MSA terms might change the statutory 10-day period to 15, 30, or even 60 days before you can file a mineral lien. This creates a trap for the unwary. If your company ordinarily monitors its past-due accounts receivable to decide whether to file a mineral lien 4–5 months after a job is finished and billed, you might not have enough time to give the notice required by your MSA and still file the lien with the six-month statutory deadline. It is possible that MSA provisions might even attempt to change by agreement the period in which you can file the mineral lien. Older Texas cases have held that the parties may not extend the statutory

six-month period by agreement. This is another trap for OFS companies who tried to give their customers more time to pay before filing a mineral lien. Until the Texas Supreme Court decides a case clarifying the issues discussed in this article, you should be careful not to agree to MSA terms that are different from the statute, including a shorter period for filing a mineral lien. Say, for example, that you clearly state your right to a mineral lien, but the agreement also states the lien must be filed within three months and notice must be given at least 30 days before it is filed. The customer is billed a few days or weeks after the work is completed, and the account is less than 60 days old when the notice of lien is required per the MSA. Since no oil and gas company begins its actions to file a mineral lien in the first couple of months, you may have waived your rights to a mineral lien for all practical purposes without doing it expressly. Although the example is hypothetical, beware of the potential for tricks and traps that might lurk in future MSAs! Only the imagination of your potential customers and their lawyers limit the possible clauses that you might encounter.

WORD SEARCH

GRILLED CHICKEN SHAWARMA Inspired by FeastingAtHome.com

A spice-filled marinade and time do all the work in this recipe that features Middle Eastern flavors.

INGREDIENTS •

2 tbsp ground cumin 2 tbsp ground coriander

1 tsp ground black pepper

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2 tsp allspice

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2 tsp kosher salt

8 garlic cloves, minced

1/4 tsp cayenne pepper

6 tbsp olive oil

2 tsp turmeric

2 lbs boneless, skinless chicken thighs

1 tsp ground ginger

DIRECTIONS

1. To create marinade, whisk all spices with the garlic and olive oil in a medium bowl. 2. Add chicken to the bowl, coat well with marinade, cover, and let sit in the fridge for at least 20 minutes — or up to 48 hours. Strain off excess marinade before cooking. 3. Preheat grill to medium-high heat. Grill thighs for 10–12 minutes on each side, or until a meat thermometer reads 165 F. 4. Serve with rice, vegetables, or pita bread with tzatziki.

ADVENTURE CAMPING FATHER GEMINI

HIKING JUNETEENTH PARK PICNIC

PRIDE SANDALS SUNBURN SWIMMING

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What You Must Know for Master Service Agreements

Understanding ‘The Power of Moments'

Our Excellent Clients

Grilled Chicken Shawarma

3 Professional Development Resources That Don’t Suck

IMPROVE YOUR SKILL SET A lifelong learner mentality is often lauded as a habit of successful people, but far too many professional development courses are geared toward entrepreneurs, CEOs, and managers. However, you don’t need a leadership title to benefit from this knowledge. Dip your toe into the professional development waters with these three tips for seamlessly incorporating learning into your life. GO TO SCHOOL WITH THE PROS. If you could harness the knowledge of world-leading experts, wouldn’t you want to? Platforms like MasterClass, LinkedIn Learning, and Skillshare offer expert knowledge in bite-size courses that users can take at their own pace. Learn how to write from Malcolm Gladwell or Roxanne Gay or master the art of negotiation from FBI hostage negotiator Chris Voss. (And for fun, become a chef with Gordon Ramsay!) Commit to one video chapter each week or listen as you do household chores. Just spend a few moments afterward reflecting on the content so it can soak in. DOWNLOAD APPS FOR QUICK LEARNING. There may be points when you are just too busy or find that starting a new class or habit is difficult. Don’t quit; instead, look at your smartphone. Download apps like Libby — an app connected to local libraries where users can check out audiobooks or read digitally — to get a quick, easy fix of professional development. You could also try

podcasts on Spotify, Stitcher, or Apple Podcasts. There are plenty of short episodes that focus on professional development.

TRACK YOUR PROGRESS. With so many options, classes, and tools available to you, it can be overwhelming to set, track, and meet your professional development goals. That’s where habit trackers can help! Whether you prefer to use pen and paper for journaling or download an app for digital tracking (try Coach.me or Habitify), a habit tracker allows you to see tangible progress and identify areas of improvement. Bonus Tip: Find a mentor or buddy to do professional development with you! Everything is easier with a friend, and whether you need someone to hold you accountable or are looking for support from someone wiser than you, someone by your side may be just what you need.

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WWW.DORELAW.COM

Doré Rothberg McKay is a business law firm with offices in Houston and Fort Worth. We represent owners and managers of companies primarily in oil and gas and real estate/construction. Representing the most oilfield service companies in the country, the firm files the most mineral liens nationwide.

Rothberg McKay has helped businesses from startup to merger and beyond. We work with CEOs, CFOs, general counsels, and credit managers to avoid problems and deal with them when unavoidable.

BANKRUPTCY CREDITORS

We have a lot of experience representing trade creditors in almost every major bankruptcy. Evaluating your claim and negotiating the best result with trustees, creditor committees, and other creditors who think they should get paid before you is what we do. Many times, you can lower legal fees with sharing arrangements. And our lawyers are experts at defending your company against bankruptcy preference claims. “I consider my relationship with Doré Rothberg McKay an important part of my success. I try to surround myself with the best people. Doré Rothberg McKay is a strong piece of the equation, ever-present if we do not get paid and ready to get involved if needed for a dispute resolution. Glad they are part of our team and proud of our 20-year partnership.” DOUG DUNLAP, CCE Director – Credit to Cash and Assistant Treasurer Basic Energy Services Fort Worth, Texas

REVIEWING CONTRACTS

From master service agreements to construction contracts and commercial leases, Doré Rothberg McKay advises you on how to avoid the latest tricks and traps that might be in a proposed contract, giving you the chance to make changes that avoid future legal troubles. Most contracts are reviewed for a fixed fee.

FILING & ENFORCING LIENS

To help your company get paid for its work, our firm has a team that investigates, drafts, and files hundreds of “perfect” liens across the U.S. every year because only a perfect lien protects you. Whether a mechanic’s and materialman’s lien for real estate or a mineral lien for oil and gas, you will know the fees before hiring us.

BUSINESS LITIGATION

Commercial collections and contract disputes keep our litigation section busy. For over 30 years, Doré

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