Dore Law - April 2019

THE D or É R eport

D orÉ L aw G roup

D ore L aw G roup . net

APRIL 2019

INDUSTRY TRENDS

Howdy, and welcome to our first newsletter! We hope you find it interesting, informative, and even a little fun. I often receive questions about what trends we see in a particular industry. So that’s where I’ll start, and I invite you to email me with your own recent experiences, thoughts, and concerns. This area of our practice is quite different from our energy practice despite the fact that we live in the energy capital of the world. Everything is full speed ahead with our clients. The large, unleased commercial space is gradually being eliminated as companies expand and develop. Our firm has seen an increase in the creation of new corporate entities, which often precedes economic expansion and goodwill. It has been said that the advent of the corporate entity was the greatest pro-wealth creation invention. When people see an opportunity, one of the first things they do is form an LLC or corporation. REAL ESTATE SECTOR:

1. Actual job disputes are causing a little concern, but many could be better characterized as a failure to

2. Made-up job disputes are the fastest growing area. We are coming across operators building AFEs too tight with no contingency protection and under- capitalized investors, resulting in an inability to pay the service provider when the job comes in over budget. The only option in the minds of some E&P companies is to generate a dispute that will delay the inevitable and maybe create some time to find the money. 3. Just out-of-money issues are sometimes the cost of doing business. No one likes to talk about it, but many service companies are pushing to find the “next great customer” and are willing take a risk on credit extension. Several law firms have generated some statistically “You cannot live a perfect day without doing something for someone who will never be able to repay you.” –John Wooden, U.S. basketball coach (1910–2010) -Carl Doré sound solutions that just might be enough to keep you in this game.

communicate. For example, coil tubing technology is being stressed to the point that it is having difficulty keeping up with drilling technology, with its longer laterals. When a coil tubing failure occurs, the operator immediately concludes that the failure is the fault of the service provider. Often, though, it is simply that the operator has requested actions at the well site that are beyond the equipment’s capability or beyond the recommendations of the field supervisor. An example is a recent request to file suit on an operator for failure to pay for five frack jobs. When we pulled the production history, we found that these five wells had only produced 82,000 barrels of oil in 10 months and that the geologic literature expressed that the particular area was “improbable” for economic production. When confronted with the failure of the geologists — not the frack work — the situation was resolved.

OIL AND GAS/ENERGY SECTOR:

We have seen a significant recent uptick in the number of mineral lien requests. These requests generally fall in to the categories of actual job disputes, made-up job disputes, and just out-of-money issues.

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