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In the oil and gas sector, Master Service Agreements (MSAs) are indispensable for defining the overarching contractual framework between companies engaged in exploration, drilling, and production operations. These agreements govern the general terms and conditions that apply across multiple projects throughout the duration of the business relationship.
While individual work orders are executed for specific tasks—detailing the scope, location, and duration of services—it is the MSA that determines the parties’ respective legal rights and obligations. As such, an MSA should never be viewed as a mere formality; rather, it is a critical risk management instrument that requires meticulous review and negotiation.
For oilfield services companies, MSAs frequently encompass provisions relating to:
Entering into an MSA without thoroughly evaluating these provisions—especially when under pressure to secure a new client—can result in significant legal and financial exposure. Poorly negotiated agreements may severely limit a service provider’s ability to seek redress or recover unpaid compensation.
A particularly critical issue in Texas oilfield contracts is the potential waiver of mineral lien rights under Chapter 56 of the Texas Property Code. These statutory rights permit service providers to secure unpaid debts by filing a mineral lien on the operator’s leasehold or property; however, some MSAs include provisions that effectively waive the service provider’s right to file such liens. The enforceability of these clauses remains somewhat uncertain due to limited case law. That said, a federal bankruptcy court in the Northern District of Texas issued an oral ruling upholding the validity of a contractual waiver of Chapter 56 lien rights. While the ruling has limited precedential authority, it is a reminder that Texas courts generally favor freedom of contract and may enforce such waivers in the absence of statutory prohibition.
This is in contrast to Chapter 53 of the Property Code, which governs mechanic’s and materialman’s liens and expressly prohibits certain types of waivers. Chapter 56 contains no such restriction. As a result, it is incumbent upon service providers to negotiate lien-related clauses carefully, particularly when the MSA attempts to restrict lien rights in the event of a payment dispute.
If the operator insists on excluding lien rights for disputed amounts, service providers should seek to narrowly tailor the language. Ideally, the MSA should require that any dispute be made in good faith, be material in nature, and be communicated in writing within a reasonable timeframe, complete with sufficient detail to substantiate the dispute. This approach minimizes the risk of a blanket lien waiver and preserves the company’s legal remedies in the event of nonpayment.
Many oilfield service providers routinely furnish equipment or services not delivered directly to a well site—for example, temporary housing units, communications systems, or logistical support located at a staging yard or housing facility. These services, though offsite, may still qualify as “mineral activities” under Texas law and therefore may entitle the provider to assert a lien under Chapter 56.
However, asserting such lien rights depends heavily on documentation. A provider must be able to link the offsite service to a specific well or lease. Failure to do so could preclude lien eligibility. To safeguard these rights, companies should implement an internal due diligence protocol—such as requiring personnel to complete standardized work order forms that include the name of the relevant well or lease and other identifying property information.
This seemingly minor administrative step can prove decisive in the event of a dispute. When properly documented, these forms enable legal counsel to prepare and file Chapter 56 liens that are more likely to withstand legal scrutiny.
Texas courts have consistently interpreted “mineral activity” broadly, encompassing services such as:
If the work or service supports the exploration or production of oil and gas, it may fall within the scope of lien protection—even if it takes place offsite.
Beyond payment and lien rights, several other contractual provisions in MSAs deserve close attention:
Each of these provisions should be evaluated in light of the service provider’s operational footprint, financial exposure, and tolerance for risk. A boilerplate approach is insufficient. Instead, companies should seek customized contractual terms that align with their commercial interests and risk profile.
Given the complexity and high stakes involved in MSA negotiations, legal review by experienced counsel is a necessity. Attorneys who specialize in oilfield contracts can identify problematic clauses, propose alternatives, and ensure that the final agreement provides adequate protection.
Doré Rothberg Law attorneys possess extensive experience advising oilfield services providers on MSAs. The firm offers both hourly and fixed-fee reviews, depending on your individual needs.
With a comprehensive understanding of industry norms and the nuances of Texas contract law, legal counsel can help ensure that your company is not exposed to unnecessary risks—particularly in contracts with well-capitalized operators who may have significantly more bargaining power.
Master Service Agreements form the legal backbone of business relationships in the energy sector. For oilfield services companies, a well-structured MSA is essential to mitigating legal risk, ensuring timely payment, and preserving lien rights in the event of a dispute.
By carefully negotiating lien-related clauses, documenting offsite services properly, and seeking professional legal guidance, service providers can safeguard their interests and establish a stronger foundation for long-term commercial success.
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