Abstract
Due to falling oil and gas prices and the lack of a market for the natural gas reserves usually discovered in deeper wells, oilfield suppliers are increasingly faced with the situation where they have not been paid for the materials or labor supplied in conjunction with the drilling of a well. In many instances these suppliers are filing oil and gas liens against the well, the leasehold, and the associated equipment of machinery. Where a marginal well or a dry hole has been drilled the proceeds from the foreclosure of the oil and gas lien may not satisfy the supplier's claim, and the supplier may look to the operator or non-operator to satisfy the deficiency.
In many instances, the operator is given control of the developmental activities on the leasehold under the provisions of the Standard Form A.A.P.L. Joint Operating Agreement. The operator is therefore the working interest party which actually negotiates and executes the contracts entered into with the oilfield suppliers. When a supplier's claim has not been satisfied by the operator, and the foreclosure of the oil and gas lien does not yield sufficient funds to satisfy the supplier, the supplier may look to the non-operator for payment. The issue thus presents itself as to whether a non-operator is jointly liable for debts incurred by the operator in the development of the leasehold.
