Master Service Agreements in the Texas Oil and Gas Industry
Call 800-929-1725 to review a master service agreement you have questions or concerns about signing. In this video, Attorney and Shareholder, Ray Kerlick, provides an overview of the provisions in many master service agreements and the provisions that might concern a vendor in the oil and gas industry. Wadler, Perches, Hundl & Kerlick has three convenient offices to serve our clients — two in Wharton County in Wharton and El Campo and one in Fort Bend County in Richmond. We provide our clients with the advice derived from many years of oil and gas experience in Texas.
This is a summary of Ray Kerlick’s overview of master service agreements.
– Hi, my name is Ray Kerlick. I’m a partner with the law firm of Wadler, Perches, Hundl and Kerlick in Wharton, Texas. Today I’d like to talk a little bit about something that most of our clients in the oilfield industry are very familiar with and that’s MSAs or master service agreements. A master service agreement is typically something that’s put out by a large company in order to qualify vendors to be added to their preferred vendor list.
Normally you’re trying to get more work from this customer, and so as a small contractor or small business you’re certainly going to do what you can to get that work. But often times when we review master service agreements on behalf of our clients, we’ve had clients that say based on what they want us to sign off on, we’re not sure we want that work. Because there are certainly going to be costs associated with taking this work.
Costs such as insurance, indemnity provisions, certain types of regulations that need to be followed that may not be actually applicable to you, perhaps ways that billing and other invoices have to be sent out. So, what does a master service agreement do? It’s something in writing that says no matter what the purchase orders or invoices between us might say, and certainly regardless of what may be said over the phone by way of an oral order, the provisions in this contract apply first.
Normally they’re not very specific, but certainly they normally apply to how soon and how often you can invoice things to the company, what has to be in a purchase order, who has to sign off on a purchase order and what types of items can be charged for and what items can’t be charged for. Often an MSA will include a price list that governs how much things will be charged and what your agreed price list will be.
Perhaps most importantly, typically to the company with whom you’re doing business, is the indemnity and insurance provisions. What they want to make sure of is that you’ve agreed to indemnify them from any claims that might arise out of your work out on a project. Further, they want to make sure that you have liability insurance sufficient to cover any lawsuits or claims that might arise out of the work on their work site.
Texas has very specific provisions dealing with oilfield indemnity. In fact, there’s something called the Oilfield Indemnity Act. What it says is, indemnity provisions have to meet very specific technical guidelines, both in the language they use and the types of insurance that support them in order for them to be enforceable. So, normally these provisions are included in an MSA. Normally these are not negotiable items. However, there are often times additional provisions in the indemnity and insurance that are negotiable.
Because these master service agreements are very technical, often times only an attorney would be capable of parsing through the language that you find in these documents to find what’s negotiable and what’s not. This is certainly a service that we provide to our clients and we would be happy to discuss your needs and the items that are being requested of you on a short turnaround basis. We look forward to hearing from you and appreciate your time. Thanks.
If you have questions or if you’d like an experienced attorney to review a master service agreement, please call our offices at 800-929-1725 to schedule an appointment. You can also contact us using our contact form.