Oil & Gas Update: COVID-19
With the current state of the economy and events happening worldwide, it may be a good time to review your leases to determine the minimum obligations that must be met to maintain them in force and what protections they may provide in the event of business interruptions. Now, maybe more than ever, it is important to understand what events may allow you to utilize force majeure or other savings clauses in a lease, as well as those situations which could cause automatic lease termination. Additionally, contracts with vendors, and even other working interest owners, may also need to be reviewed and possibly updated to protect your interests during these times.
Other news: The wave that started in other states concerning whether contract employees should be considered employees or independent contractors in the oil and gas industry has reached Kansas. These cases assert that oil and gas producers are violating the Fair Labor Standards Act by not paying overtime. In the case of Hancock v. Lario Oil & Gas Co. currently pending in the Federal District Court, Judge Robinson recently granted the plaintiff the right to conditionally certify a class consisting of “All oilfield workers who were or are employed by [Lario] as a Wellsite/Drill Site Manager or ‘company man’ and who were classified as independent contracts and paid a day rate at any time within the three years preceding the present date.” In essence, Judge Robinson’s order allows the plaintiff to send a written notice to other individuals who fit the “requirements” in order to advise such individuals that they are entitled to join in the litigation. This ruling does not mean that the plaintiff (or putative plaintiffs) will be entitled to recover. But, it does broaden the scope of potential exposure.