Dore Law - May 2021

Dore Law - May 2021

THE D or É R eport

D ore L aw . com

MAY 2021

SECURED OR UNSECURED?

UNDERSTANDING PIPELINE LIENS AND THEIR DEADLINES

When an oil and gas service company does work or sells equipment and supplies to be used on a pipeline, typically state laws give the contractor the right to place a lien on the pipeline and its affiliated equipment items. Of course, you don’t intend to go dig up the pipe. So focus with me on the “equipment items” for a moment. When invoices are paid as agreed, it is rare that any company files a lien; however, when accounts receivable becomes delinquent, a lien might be the critical step to getting paid. Experience shows that many times, the act of giving notice and/or filing the lien is enough to get the debtor to pay up. In more stubborn cases, or when the debtor’s financial condition leads to a bankruptcy, the companies with timely filed and perfected liens may get paid, while the companies that did not file liens end up with pennies on the dollar or empty hands. When it comes to collection situations, it is much better to be a secured creditor than an unsecured creditor. What kind of lien can you file on a pipeline? Almost all states allow a materialman’s lien or a mechanic’s lien to be filed against the improvements, i.e., the pipeline itself. Some states allow a mineral lien to be filed against the pipeline and the interest in the property on which it is built. We all know that this is often just a right-of-way easement with little value. But think about the endpoints, the compressor station facilities, the pigging operations points, and the sales terminals. That’s where you might find some real value and some negotiation leverage.

For pipelines in Texas, the law seems to be unsettled. State law would appear to allow mineral liens to be filed against pipelines. Nevertheless, some courts have ruled that the facts of a particular situation (e.g., repairs to a pump house structure) permit only a mechanic’s and materialman’s lien, called an M&M lien. Many other courts have found mineral liens to be valid against a pipeline when filed by contractors to collect for work tied to its construction, repair, or maintenance. Our law firm advises clients to file both a mineral lien and an M&M lien when available in Texas to secure the best collection position.

firm. We represent the most oil and gas service companies and have been helping the industry for over 30 years. It may require a lawyer experienced in oil and gas liens studying the facts of your situation to decide what liens are available, where they should be filed, and to whom notices must be sent. Perhaps the most overlooked requirements for liens are the deadlines for giving notices and filing the lien. Although the requirements as to form, place, parties, and amounts must be very accurate (one might even say “perfect”), deadlines are the biggest concern. If you give a required notice late, or you file the lien even

Doré Rothberg McKay files and enforces more mineral liens nationwide than any law

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WHEN YOU WANT EVERY DECISION TO BE A TOUCHDOWN CONFIDENCE IS KEY

If you’re a business owner, you’ve no doubt faced hard decisions. And when we say “hard decisions,” we don’t mean the ones you make on a daily basis. We’re talking about make-or-break decisions that have serious long-term consequences. Choosing the right path forward could mean years of business growth, but choosing the wrong path could be the death knell. With stakes that high, decision-making may not feel that exciting. The prospect of making difficult choices leaves many business owners understandably in a state of paralysis. You may stop and ask yourself: Am I making the right call? What if this endangers the livelihood of my business and my employees? This paralysis is normal, but it can prevent you from making the moves your business needs to survive. Luckily, however, you can change this initial reaction. According to David Meltzer’s book, “Game-Time Decision Making: High-Scoring Business Strategies From the Biggest Names in Sports,” you can be ready to make hard decisions before the buzzer signals the end of the game. As Meltzer’s book title suggests, decision-making in sports parallels decision-making in business. Business leaders can learn lessons from the court, field, or rink, even if they’re just sitting courtside.

easier said than done. According to Meltzer, one way to boost your confidence is by surrounding yourself with people who support you and trust your judgment. Just like having an all-star team that trusts your judgment in the game, having friends and colleagues who affirm your decisions goes a long way toward building your confidence. It’s also important to have a positive mindset. It’s tempting to expect the worst from any decision you make, but according to Meltzer, the most confident decision-makers are those who have a positive outlook on the future. This makes sense, considering how challenging it is to move forward with a decision when negative thoughts are clouding your judgment. After all, no one ever made a game-winning touchdown after imagining all the ways they might fail to do so! While reading books like “Game-Time Decision Making” can certainly help you become a more confident decision-maker when everything is on the line, the fact is that confident decision-making comes with time and practice. So, if you want to be ready to beat the buzzer on your next tough decision as a business owner, surround yourself with a team that supports your call. Let their confidence in your leadership inspire your abilities, and remember: Don’t let thoughts about how your decision could go wrong stop you from making any decision at all. Maintain a positive outlook, put together an all-star team, and you’ll be making confident decisions in no time.

The biggest lesson is that confidence is key. But having confidence in your decisions — especially ones with serious consequences — is

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one day late, your lien may be invalid. You might still be able to sue to collect the debt, but you will not have the privileges of being a secured debtor. And because suppliers/vendors/trades are always trying to work with their customers to give them every chance to pay, it is easy to let deadlines pass. You should also know that state law generally does not allow you and your customer to make any tolling agreement that changes or extends the deadlines for statutory liens. Another trap for the unwary is the timing difference between when your company completed the work versus when an invoice was initially sent for payment. Most state laws count the filing deadline for liens from when you completed the work; however, many companies track their accounts receivable from when the invoice was first mailed to the customer. It is not unusual for several weeks to have passed from when the work is completed to when the invoice is mailed. If you only track the days an invoice is past due, a critical deadline to mail notices or file a lien may have already passed. Don’t let this trap catch you. In Texas, the deadlines to file an M&M lien are relatively short. The mineral lien deadline is a little longer, at six months from the date of last work. Each type of lien has deadlines for notices to be mailed to parties and deadlines for the lien documents to be filed in the proper county clerk’s office. If you are doing pipeline work, it is important

to understand and track all the possible deadlines for your accounts receivable. Doré Rothberg McKay has many videos on its YouTube channel discussing liens for oil and gas companies. Recent videos by Lisa Rothberg, our director of liens and transactions, are in-depth and include tables on how to calculate the deadlines for each type of lien.

WORD SEARCH

THAI MINCED PORK SALAD Inspired by EatingThaiFood.com

Called “Larb” in Thailand, this popular street food comes together quickly and can be easily modified to suit your individual taste.

INGREDIENTS •

5 tbsp uncooked Thai sticky rice 1 lb ground pork 1/2 tbsp chili flakes

Juice of 1–2 limes, to taste 4 small shallots, thinly sliced 4 green onions, thinly sliced Cilantro leaves, to taste

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1/8 tsp sugar

Mint leaves, to taste

1/2 tbsp fish sauce

DIRECTIONS 1. First, make toasted rice powder: In a frying pan over low heat, dry- roast the rice, stirring continuously until it turns golden brown and smells fragrant, about 15 minutes. 2. Let toasted rice cool, then grind into a coarse powder using a mortar and pestle, blender, or food processor. Set aside. 3. In a medium frying pan over medium-high heat, fry pork, breaking it into small pieces as you go, until fully cooked. 4. Remove from heat and add 1 heaping tbsp of toasted rice powder along with all other ingredients. Stir to combine. 5. Taste and adjust, adding more lime juice and herbs to suit your palate. Serve with rice.

BLOOM CINCO COMIC DERBY

EMERALD GEMINI GRADUATION LILY

MEMORIAL MOTHER PARANORMAL VETERANS

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Understanding Pipeline Liens and Their Deadlines

Make Every Decision a Touchdown

Thai Minced Pork Salad

Connecting Your Employees to Your Mission

CONNECTING YOUR EMPLOYEES TO YOUR MISSION Your business might be doing well, but if your workforce doesn’t feel any sort of personal connection to your business’s mission, that could prevent lasting success. You want to boost employee morale and make them happy about their work. To reinvigorate your employees’ passion for your business’s mission, try a few of these tips.

WALK THE TALK. Patagonia CEO Yvon Chouinard decided to make his products out of organic cotton after he saw how industrially grown cotton was hurting the environment. It cost more to do that, but he stuck to Patagonia’s mission of creating environmentally friendly products. If you’re not willing to sacrifice for your mission, then it’s not your mission — and your employees will know it. MAKE IT CLEAR. Make sure everyone at your company knows exactly what your mission is. Only when employees have a clear understanding of the goal can they actually abide by it. If your mission statement can be interpreted in multiple ways, clarify it throughout all levels of your business. SPEAK PASSIONATELY ABOUT IT. While you want the mission itself to be exciting, even the most intriguing of mission statements will be DOA if your delivery doesn’t convey your excitement. Humans are emotional creatures, so

connecting with your employees emotionally in regard to your mission is just as important as the mission itself.

MAKE IT PERSONAL. While you might think tying your personal story to the company’s mission seems narcissistic, the truth is that your team wants to hear your story. People like stories, and if you can convey yours with honesty and humility, no one will think you’re an egoist. RE-WORK IT. If your mission doesn’t seem to be inspiring passion in your workforce, then maybe it’s time to tweak it a little bit. Whether you’re just starting in business or have had the same mission statement for 10 years, a new mission lived out, made clear, and made personal by you can spark a newfound appreciation for your business among your employees.

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