What To Do When An Operator Won't Pay
In the Texas oilfield, unpaid invoices can cripple an otherwise successful service company. Whether you provide services, rentals, or oilfield labor, your business depends on getting paid on time. Unfortunately, many contractors and vendors eventually face the same frustrating situation: the operator simply refuses to pay.
If your oil company customer is ignoring invoices, delaying payment, disputing charges without justification, or continually making excuses, it is important to act quickly. Texas law provides powerful remedies for oilfield service companies, but many of those rights depend on strict deadlines and prompt action.
The attorneys at Allen Bryson Lamar regularly help oilfield companies recover money owed through demand letters, mineral liens, lawsuits, and post-judgment collections. Below are several important steps companies should consider when dealing with an operator that will not pay.
1. Stop Performing Additional Work
One of the biggest mistakes oilfield service companies make is continuing to perform work for an operator that is already significantly behind on payment.
Many companies believe that continuing the relationship will eventually result in payment. In reality, continuing to provide labor, materials, equipment, or services often increases the unpaid balance and exposes the vendor to even greater losses.
If an operator is consistently failing to pay invoices, refusing to communicate, or making repeated broken promises, your company should strongly consider:
Suspending ongoing work
Refusing additional mobilizations
Halting equipment rentals
Ceasing material deliveries
Requiring payment before future work
Continuing to extend credit to a nonpaying operator can jeopardize your business and may complicate future collection efforts.
An experienced Texas oil and gas attorney can help evaluate your contracts, master service agreements, and payment terms before you suspend operations.
2. Send a Formal Demand Letter
Before filing suit, many companies benefit from sending a formal demand letter to the operator or oil company.
A properly drafted demand letter from an oil and gas attorney can:
Place the operator on formal notice of the debt
Establish deadlines for payment
Preserve certain legal claims
Increase leverage in negotiations
Demonstrate seriousness before litigation
Encourage voluntary payment
Demand letters are often most effective when they specifically reference:
Outstanding invoices
Field tickets
Contract terms
Personal guaranties
Interest provisions
Attorney’s fees provisions
Potential lien rights
Operators frequently take collection matters more seriously once legal counsel becomes involved.
The attorneys at Allen Bryson Lamar routinely prepare demand letters for oilfield service companies throughout Texas and across the country.
3. File Mineral Liens and Oil & Gas Liens
Texas law provides important protections for companies that furnish labor, services, materials, or equipment to oil and gas operations.
If properly perfected, a Texas mineral lien or oil & gas lien may attach to:
Mineral leaseholds
Wells
Pipelines
Equipment
Related oilfield property
However, Texas lien laws contain strict notice and filing deadlines. Missing a deadline may permanently destroy your lien rights.
An oil and gas attorney can assist with:
Preparing lien notices
Filing mineral liens
Determining lien priority
Enforcing liens through foreclosure
The earlier a lien claim is evaluated, the more options may be available to protect your company’s rights.
4. File a Lawsuit to Recover Unpaid Invoices
When an operator refuses to pay despite demands and lien filings, litigation may become necessary.
Oilfield collection lawsuits may include claims for:
Breach of contract
Suit on sworn account
Quantum meruit
Enforcement of guaranties
Foreclosure of mineral liens
Fraud or misrepresentation in certain cases
A Texas oil and gas attorney can also pursue recovery of:
Attorney’s fees
Interest
Court costs
Post-judgment remedies
Many operators only begin taking collection matters seriously after suit is filed.
The attorneys at Allen Bryson Lamar aggressively represent oilfield service companies in collection litigation throughout Texas.
Do Not Wait to Protect Your Rights
Waiting too long to act can seriously damage your ability to recover payment. Important evidence can disappear, lien deadlines can expire, and operators facing financial distress may become increasingly difficult to collect from.
If your company is dealing with:
An operator not paying invoices
An oil company not paying vendors
Unpaid oilfield invoices
Outstanding field tickets
Oil & gas collection disputes
Mineral lien issues
the attorneys at Allen Bryson Lamar can help evaluate your options and pursue aggressive collection strategies.
Contact Allen Bryson Lamar
For more than a decade, the attorneys at Allen Bryson Lamar have represented oilfield service companies, contractors, suppliers, and vendors in Texas oilfield collection matters.
If your company needs assistance with unpaid invoices, mineral liens, demand letters, or collection lawsuits, contact us at 903-212-9300 today.
The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation.
This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.