Contractors usually want us to review the contract and make sure that their insurance program meets the requirements. Operators usually want to know why their insurance company is requiring that they have this contract in place with all of the contractors they use in the field.

There are two main types of Master Service Agreements:
The Master Service contract between the operator and anyone coming on the operator’s lease site, and
Drilling contracts between the operator and drilling contractor.

Each MSA is designed to meet specific goals. A few of those goals are:
to protect the operator from the actions of the contractor’s employees;
to mitigate losses stemming from suits filed by injured contractor employees;
to contractually define the fact that the operator will take care of his employees and the contractor will take care of his and
to protect the insurance limits carried by each party.

Some of the elements used in these agreements to accomplish these goals are:
Language to specify the independent contractor relationship;
Required limits of insurance in order to address the hazard of the contractor’s operation;
Waivers of Subrogation;
Additional Insured status;
Certificates of Insurance and
Hold Harmless/Indemnity language.

The laws of several oil & gas producing states place limitations on this language. It is important to know and understand these limitations before entering into this type of agreement.

The staff at Mims and Smith is ready and willing to help you sort through the information found on the MSA. We are familiar with the language and forms necessary to meet the goals of the MSA. Give us a call! We’ll be happy to review the contract and give you specific advice regarding how your insurance program will address the requirements of a particular MSA.
San Smith, CIC
Producer