oilfield-msa

# Master Service Agreement — Oilfield Services

Drafts a litigation-tested MSA for the operator-contractor relationship in upstream oil and gas, with knock-for-knock indemnification compliant with state anti-indemnity statutes.

## Prerequisites

Collect before drafting:

1. **Party details** — legal names, entity types, states of organization, principal offices
2. **Service scope** — drilling, completion, workover, maintenance, or other oilfield services
3. **Operational jurisdictions** — states where services will be performed (controls anti-indemnity compliance)
4. **Insurance specs** — existing coverage requirements or broker constraints
5. **Existing agreements** — prior MSAs, rate schedules, HSE policies
6. **Special terms** — exclusivity, minimum volume commitments, subcontracting restrictions

## Core Workflow

### Step 1 — Identify Jurisdictions

Determine all states where services will be performed. This drives indemnification drafting — anti-indemnity statutes vary dramatically and can void entire provisions.

### Step 2 — Draft Articles

Produce a complete MSA with these 14 articles, adapting detail to engagement scope:

| # | Article | Key Contents |
|---|---------|-------------|
| 1 | Parties & Recitals | Legal names, entity types, acknowledgment of hazardous operations |
| 2 | Definitions | See defined terms below |
| 3 | Scope & Work Orders | MSA as framework (no volume commitment); WO incorporation; MSA controls unless WO explicitly modifies |
| 4 | Performance Standards | Good-and-workmanlike; qualified personnel; fit-for-purpose equipment; Contractor holds permits |
| 5 | Term & Termination | Initial term + renewal; convenience (30-90 days notice); cause (HSE violations, uninsured, insolvency, uncured breach at 30 days); WO survival; wind-down |
| 6 | Compensation & Payment | Rates per WO (day rate/unit/lump sum/cost-plus); monthly invoicing; Net-30; dispute holdback; late interest (1.5%/mo or legal max); escalation; audit rights |
| 7 | Insurance | See insurance table below |
| 8 | Indemnification | Knock-for-knock — see below |
| 9 | HSE | OSHA (29 CFR), EPA (40 CFR), DOT (49 CFR), BSEE (offshore), state O&G commissions; written HSE program; pre-job safety meetings; PPE; qualifications (HAZWOPER, H2S, well control); Operator stop-work authority; incident reporting (4 hrs phone / 24 hrs written); more-stringent-controls-apply |
| 10 | Confidentiality | Broad definition; reasonable-care; need-to-know; standard exceptions; return/destroy on termination; 3-5 year survival; well/reservoir data is Operator property |
| 11 | Reps & Warranties | Mutual: organization, authority, enforceability, no conflicts. Contractor: licensed, experienced, qualified, equipment maintained, insured, compliant. Disclaim implied warranties |
| 12 | Intellectual Property | Pre-existing IP retained; work product under Operator direction → Operator owns; Contractor innovations → Operator gets perpetual royalty-free license; well/operational data → Operator property |
| 13 | Governing Law & Disputes | Match governing law to jurisdiction (TX, LA, OK, CO, or ND); litigation or AAA arbitration; jury waiver; equitable relief carve-out; executive negotiation prerequisite (15-day meet, 30-day resolution) |
| 14 | General Provisions | Force majeure (mitigation duty, termination at 60-180 days); assignment (affiliate/M&A exceptions); notices; severability; entire agreement; no waiver; independent contractor; FCPA/export/OFAC; survival |

### Step 3 — Define Terms

Include these defined terms at minimum:

| Term | Scope |
|------|-------|
| Services | Drilling, completion, stimulation, workover, intervention, equipment rental, maintenance, support |
| Work Order | Written authorization: scope, location, personnel, equipment, timeline, deliverables, compensation |
| Oilfield Operations | Exploration, development, drilling, completion, production, workover, maintenance, abandonment |
| Indemnified Parties | Party + parent/subs/affiliates + officers, directors, employees, agents, contractors, subcontractors |
| Personnel | All employees, agents, contractors, subcontractors of a party |
| Equipment | Tools, machinery, vehicles, apparatus used in Services |
| Hazardous Materials | Substances regulated under environmental laws including petroleum, chemicals, waste |
| Force Majeure Event | Beyond reasonable control: natural disaster, war, terrorism, pandemic, government action |
| Confidential Information | All non-public information disclosed by either party |

### Step 4 — Set Insurance Minimums

| Coverage | Minimum Limit |
|----------|--------------|
| Commercial General Liability | $5M per occurrence / $10M aggregate |
| Automobile Liability (owned/non-owned/hired) | $1M per accident |
| Workers' Compensation | Statutory (per state) |
| Employer's Liability | $1M per accident / $1M disease per employee / $1M disease policy limit |
| Pollution Liability | $5M per occurrence and aggregate |
| Excess/Umbrella Liability | $10M over CGL, Auto, Employer's |

Policy requirements: Operator + affiliates as additional insured (all except WC); primary and non-contributory; waiver of subrogation; 30-day cancellation notice; occurrence basis; A.M. Best A- VII minimum.

### Step 5 — Draft Knock-for-Knock Indemnification

Mutual indemnity model:

| Risk | Borne By | Scope |
|------|----------|-------|
| Contractor Personnel injury/death | Contractor | Regardless of fault, except Operator's sole negligence or willful misconduct |
| Contractor Equipment/property damage | Contractor | Regardless of fault, except Operator's sole negligence or willful misconduct |
| Operator Personnel injury/death | Operator | Regardless of fault, except Contractor's sole negligence or willful misconduct |
| Operator property damage | Operator | Regardless of fault, except Contractor's sole negligence or willful misconduct |
| Third-party claims | Comparative fault | Each party indemnifies for proportionate fault |
| Contractor breach / law violations | Contractor | Full indemnity |

**Anti-indemnity statute compliance (CRITICAL):**

Include a savings clause: indemnities enforceable to fullest extent permitted by law; prohibited provisions deemed modified to minimum extent for compliance.

| Statute | Citation | Restriction |
|---------|----------|-------------|
| Louisiana Oilfield Indemnity Act | La. R.S. 9:2780 [VERIFY] | Voids indemnity for indemnitee's negligence causing death/bodily injury |
| Texas Oilfield Anti-Indemnity Act | Tex. Civ. Prac. & Rem. Code Ch. 127 [VERIFY] | Voids indemnity for indemnitee's negligence; mutual indemnity with insurance OK |
| Wyoming | Wyo. Stat. § 30-1-131 [VERIFY] | Voids broad-form indemnity in oilfield contracts |
| New Mexico | N.M. Stat. Ann. § 56-7-2 [VERIFY] | Voids indemnity for indemnitee's negligence in certain contracts |

Indemnification procedures: prompt written notice (failure doesn't relieve unless material prejudice); indemnifying party controls defense with acceptable counsel; no settlement admitting fault without consent; indemnified party cooperates.

### Step 6 — Attach Work Order Template (Exhibit A)

Include a blank Work Order form with fields for: Operator, Contractor, services description, well/location, jurisdiction, start date, duration, personnel, equipment, deliverables, compensation structure (day rate / unit price / lump sum / cost-plus), rate schedule, reimbursable expense threshold, special terms / MSA modifications, and representative contact info for both parties.

## Pitfalls and Checks

- **Never use broad-form indemnity** in anti-indemnity states — always carve out sole negligence/willful misconduct at minimum
- **Insurance must support indemnities** — additional-insured and waiver-of-subrogation endorsements must align with knock-for-knock allocation
- **HSE is non-negotiable** — do not weaken Operator stop-work authority or incident reporting requirements
- **Mark all statutory citations [VERIFY]** — state O&G statutes are frequently amended
- **Conspicuous provisions** — jury waivers, liability limitations, warranty disclaimers must be bold or caps per state enforceability requirements
- **Data ownership default** — all well, reservoir, geological, and production data belongs to Operator; Contractor gets use-license only during engagement
- **Survival clause** — indemnification, confidentiality, IP, payment, dispute resolution, and audit rights must expressly survive termination