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Oilfield services

Holding the liability allocation on customer paper.

The operator's MSA comes on their paper, and the fight is the same on every well: the knock-for-knock indemnity, the insurance schedule, pollution and environmental risk, and who bears the loss of equipment downhole. Leela reads each draft to your positions, cites every issue to its clause, and keeps track of which indemnity carve-outs were agreed and which were traded, across the turns of a negotiation that can run for months.

Leela Received. I am reviewing the Caprock MSA against the Sabine positions. 7:51 AM

Reviewed against your positions: 14 issues, 6 in the indemnity and insurance articles

Dear Tom

There are 14 issues, 6 of them in Articles 10 and 11.

The indemnity at 10.1 is drafted as mutual but the definition of Contractor Group at 1.8 includes your subcontractors and their invitees while Company Group at 1.6 excludes Caprock's other contractors, so the allocation is not symmetrical. I have aligned the two definitions and quoted both in the margin. The pollution clause at 10.4 places all pollution risk on the contractor; I have restored the standard split, with pollution originating below the rotary table at the operator's risk. The equipment clause at 10.6 makes you bear loss of tools in the hole at your cost; I have revised it to replacement cost at Caprock's risk while the equipment is in the hole, which is your standard position, with depreciated value as the fallback. The insurance schedule omits the waiver of subrogation and the additional insured endorsements that make the indemnities work; both are restored. The consequential loss exclusion at 10.8 is one-sided and I have made it mutual.

One point is open for you. Caprock asks for a 24-month warranty on services at 7.2, against your standard 12. I have not redlined it.

Leela

W Caprock MSA - issues list.docx68 KBW Caprock MSA - redline.docx322 KB

Indemnity structure

Knock-for-knock only works when the two groups are defined the same way. She reads the definitions against the indemnity and quotes both, so the asymmetry buried in Article 1 is found before the signature.

Insurance

Additional insured, waiver of subrogation and primary and non-contributory language are checked against the indemnity they support. A schedule that omits them is flagged as an indemnity issue, not a formality.

Equipment, pollution and consequential loss

Loss in the hole, pollution below the rotary table and the consequential loss exclusion, each held to your position and its fallback, and each tracked across every turn of the negotiation.

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