January 30, 2013 Articles

Oil and Gas Operator Liability in Texas—”What's in Your Contract?

Reeder v. Wood County Energy, LLC demonstrates the importance of seemingly minor differences in the language of exculpatory clauses. What does your contract say?

Jack G. Carnegie – January 30, 2013

The American Association of Professional Landmen (AAPL) Model Form Operating Agreement commonly used in the energy industry contains broad exculpatory language protecting the operator. For example, the 1982 AAPL Model Form Operating Agreement contains the following language:

________ shall be the Operator of the Contract Area, and shall conduct and direct and have full control of all operations on the Contract Area as permitted and required by, and within the limits of this agreement. It shall conduct all such operations in a good and workmanlike manner, but it shall have no liability as Operator to the other parties for losses sustained or liabilities incurred, except such as may result from gross negligence or willful misconduct.

This form imposes an obligation on the operator to conduct operations in a good and workmanlike manner. At the same time, it exempts the operator from liability as operator, except for gross negligence or willful misconduct.

Premium Content For:
  • Litigation Section
Join - Now