Dore Law - December 2020

Dore Law - December 2020

THE D or É R eport

D ore L aw . com

DECEMBER 2020

MSAS AND RISK-SHIFTING DURING THE DOWNTURN:

LIEN WAIVERS AND BAD OPERATORS

With the current state of the oil and gas industry, many operators are attempting to push more of the risks onto their service providers and vendors. Usually, this risk- shifting shows up in the warranty and indemnities provisions of an MSA, but operators are also coming up with creative ways to contract around service companies' lien rights. Since we represent more oilfield services companies than any other law firm in the country, and since we file more mineral liens than any other law firm, we are very familiar with how these lien waivers can have a real world impact on our clients. I review MSAs on an almost daily basis for several of our major oilfield services clients, and I see these operator attempts both in new MSA negotiations and requests to "re-visit" MSAs that are already in place. A longtime client of the firm requested that we review a proposed MSA from a relatively new independent operator. The client's credit department, which usually handled the MSA reviews, had looked at the document and had some "heartburn" about the lien language. It turns out that the client's gut instinct was correct. Without expressly stating its intent, the operator had attempted to contract around the client's lien rights with the following language: "Contractor expressly waives its right to file, perfect, or continue a lien for work performed by Contractor (including, without limitation, any right of Contractor to any statutory lien pursuant to Chapter 56 of the

Texas Property Code) prior to a final, non- appealable judgement in a court of law in the favor of the Contractor." At first glance, to a layperson unfamiliar with Chapters 56 and 53 of the Texas Property Code, this may seem like a reasonable compromise regarding the service company's lien rights. The language seems to imply that the service company only waives its lien rights until it obtains a “final, non-appealable judgment” in its favor. Unfortunately, this language would effectively serve as a waiver of the service company's right to file and pursue a lien for non-payment. The likelihood that a services company would be able to obtain a final, non-appealable judgment in a court of law prior to its statutory lien deadline expiring is practically zero. The deadline to file a mineral lien under Chapter 56 is six months after the date services or materials were last furnished on the operator's property. If the service company continues to furnish goods or services on the same leasehold, then the deadline for all lien claims on that leasehold will be extended accordingly, provided that there was no more than a six-month gap between the last two service dates. Furthermore, if the service company performed services or furnished goods as a "mineral subcontractor," it must meet an additional deadline by providing all of the mineral property owners of the leasehold with at least 10 days' notice of its claim prior to filing its lien. The mineral subcontractor's

lien notice must also contain specific details and information.

The deadlines for filing and perfecting a mineral lien are strictly interpreted by Texas courts. If they are not met, the lien claimant has lost its rights to file a lien. It is as simple as that. There are no exceptions or tolling Continued on Page 2 ...

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provisions. Therefore, MSAs should be carefully reviewed and, whenever possible, any language expressly waiving the service company's lien rights, shortening the statutory deadlines for filing a lien, or placing any additional administrative hurdles on the service company's lien rights should be struck. Instead, the service company should request that the MSA be revised to include language like: "Nothing in the Agreement will be interpreted to prevent the Contractor from claiming, filing, or enforcing any lien rights when the rights thereto arise from Company's failure to pay Contractor in accordance with the terms of this Agreement." Of course, for this language to be fully effective when read in conjunction with the rest of the contract, the service company should have its attorney review the document in its entirety and negotiate reasonable payment terms — with a special focus on the ‘invoice dispute’ language and the operator’s payment withholding rights.

After having reviewed and redlined the problematic lien language in the client's MSA, I did some research on the operator. As it turns out, the contracting entity had been recently acquired by another operator with whom we were familiar. This parent entity had numerous pending lawsuits and lien claims against it for outstanding debts to services companies. Several of those claims were handled by our firm. Also, this operator was not shy in raising job disputes and filing lawsuits or counterclaims in a bid to delay payment or scare services companies into compromising claims. Sharing this information with our client further enhanced the value of the MSA review. The client knew that they had to take a stand and insist on certain terms in the MSA negotiation process. In this tough market, most clients are reluctant to risk losing work just because of some “legalese” in the MSA. But simply signing a proposed contract “as-is” to secure the work can put the services company in an even worse financial position when the customer refuses to pay. Regardless of your niche, there is a saturation point at which you cannot take on more work. It happens when you are working long hours, when you rarely spend time with your family, and when your health and sleep habits are suffering. Suddenly, you don’t enjoy work anymore, and you are constantly stressed. When your work-life balance is slipping away, it’s time to say no. Your business serves a specific demographic. But what about when you get a new offer from a prospect who falls outside your normal arena? Ask yourself these questions: Does it conflict with my demographic? Do I have enough expertise to be able to do the job? Does it hurt the image I’m trying to create around my brand? If you can say yes to these questions, say no to the prospect. It can be tempting to chase a new offer, but think about your business and stay true to your mission and long-term goals. The secret to saying no is knowing when to say it. Saying no might mean you have to pass on one opportunity now, but it can

-Andrija "Andre" Stanojcic

THE ART OF SAYING NO Business owners can find it hard to say no. If you say no, you can be left with thoughts

like “What if I miss out on an amazing opportunity?” or “Can’t I take on just one more project to hit my revenue goal this month?” However, saying no can be extremely empowering for your business. Steve Jobs, co-founder of Apple, once said, “People think focus means saying yes to the thing that you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I am actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things.” It can be tempting to jump at every new opportunity or challenge presented to you, especially when you are dedicated to growing your business. However, there are certain instances in which saying no is completely necessary to the success of your business.

open new doors for you later down the road. Be empowered by your ability to say no and use it to showcase the value of your work to others and yourself.

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5 WAYS TO WOW YOUR CUSTOMERS With so much competition in business these days, it’s a lot harder to stand out from the crowd — which is why it’s so rewarding when you do. Don’t forget that with so many choices, many customers are actually looking to pick one business or brand that they love and can stick with. Here are five ways you can wow your customers until they can’t imagine doing business with anyone but you! RECOGNIZE THEM When a customer does something amazing, recognize them on social media or through your corporate communications. Making them feel special is such a simple gesture while garnering a great deal of loyalty and gratitude — and no one is going to turn their nose up at free publicity.

TAKE THEIR FEEDBACK Your customers don’t know everything about your business, but they know what it’s like to buy from you and use your products or services. Their feedback is invaluable for improving your business and for making them feel heard. BREAK THE RULES There’s a frustration that comes from asking for a favor and being denied. If your customers call and ask for special treatment, seriously consider it rather than automatically saying no. While you can’t grant outrageous requests or lose money in the relationship, it’s those little accommodations that make customers into lifelong raving fans. GIVE THEM FREEBIES What’s better than getting something for free? If you send your customers a token of your appreciation, you’ll be surprised how much it will stick in their minds. The gift can be as simple as a card, bouquet of flowers, or gift card. Give based on who your audience is and don’t forget the valuable goodwill you can earn!

GET PERSONAL Know your customers as personally as you can. This is easier in some businesses than others, but knowing the names of your customers’ kids, where they live, and what they do for a living will make them feel like they matter. As a bonus, the more you know your customers, the better you can customize the service you offer them.

FESTIVE APPLE CIDER

word search

Inspired by BoulderLocavore.com

If you’re cutting back on calories, skip the eggnog and buttered rum this year and fill up your mug with this delicious mulled cider!

INGREDIENTS

1 lemon

2 tsp allspice berries

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•

1 gallon pure apple cider

1 inch fresh ginger, thinly sliced

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1 large orange, thinly sliced crosswise

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2 tbsp honey

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2 tsp whole cloves

3 cinnamon sticks

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DIRECTIONS 1. Using a paring knife, shave the lemon peel off in curls. Reserve the curls and save the lemon for use in a different recipe.

CAROL

GIFT

SHOVEL

2. In a large slow cooker, combine the lemon peel with all other ingredients. Cook on low for 3–4 hours.

CHEER

HOLIDAY

SLEDDING

COCOA

HOLLY

SNOW

3. If desired, use a sieve to strain the spices. Serve and enjoy!

FAMILY

PEACE

TURQUOISE

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MSAs and Risk-Shifting During the Downturn

The Art of Saying No

5 Ways to Wow Your Customers

Festive Apple Cider

‘Think and Grow Rich’ With Napoleon Hill

‘THINK AND GROW RICH’ Have you had a chance to read “Think and Grow Rich” by Napoleon Hill? If not, here’s what makes this book a seminal classic in the fields of business and self-help.

Edison’s salesmen didn’t like the machine and didn’t

believe it could be sold without tremendous effort, but Barnes decided he could do it. Edison gave him a chance, and Barnes sold the machine so successfully that Edison gave him a contract to distribute and market it all over the nation, leading to the slogan: “Made by Edison and installed by Barnes.” Barnes grew wealthy, and he achieved all this just by knowing what he wanted and standing by that desire until he realized it.

The book was originally published in 1937, in the midst of the Great Depression. Hill had spent 20 years interviewing and observing some of the most successful individuals in history, including business magnate Andrew Carnegie, in order to come up with several laws of success that you could follow to achieve great wealth. “Think and Grow Rich” begins with a discussion of definite purpose and burning desire. Hill relates the story of a man named Edwin C. Barnes who wanted to work with Thomas Edison, not merely for him. At the time, Barnes had two major disadvantages: He couldn’t afford to travel by train to Orange, New Jersey, where Edison lived, and he didn’t know Mr. Edison. But because of his extraordinary desire, Barnes decided to travel by freight train and present himself at Mr. Edison’s laboratory, looking more like a beggar than an inventor. Barnes announced his intention to become Edison’s partner, and Edison was impressed by the intensity of his desire, so he gave him an opportunity to work in the office for a nominal wage. After months with seemingly no progress, the opportunity Barnes was looking for presented itself: the Edison dictating machine.

The story of Barnes is one of many examples in “Think and

Grow Rich.” The book is a fairly quick and easy read, but its principles are profound. One of Hill’s most poignant quotes is, “What the mind of man can conceive and believe, it can achieve,” and it’s an idea that every entrepreneur can consider while pushing their business to greater heights.

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