The short and plain version
- Behind almost every oilfield injury case is a second fight behind the scenes that the worker usually never sees. In the background, the companies argue over which of them pays.
- That fight hinges on the Master Service Agreement (the "MSA"). The MSA holds the indemnity clauses and the insurance rules.
- "Indemnity" means one company agrees to cover another company's losses. A Texas law, the Oilfield Anti-Indemnity Act, limits how far that can go.
- But the law has an insurance exception, and the companies build their deals around it. That keeps these fights alive.
- These fights can slow your case down even if you're not actively or directly involved in them. They can also change how much insurance money is there for you.
- A lawyer who knows these contracts can keep your recovery from getting lost in the companies' fight.
1. The fight behind the case: who pays
While you’re trying to heal, the companies are arguing and pointing fingers. Nobody in that argument is asking whether you got hurt or asking whether somebody messed up. They’re arguing about which one of them has to pay for it, and the whole argument hinges on a contract you’ve never read and have absolutely no power over.
That contract is the Master Service Agreement, the MSA. There’s a whole page in this guide about what an MSA is and how it works, and if you haven’t read it yet, I suggest you start there. The short and sweet version: the MSA is the standing contract between the oil company that runs the lease (the “operator”) and each contractor it hires, and inside it are the rules the companies wrote, years in advance, about whose insurance eats the loss when a worker goes down.
This page is about what happens when those rules get tested. Because after a serious injury, the companies don’t just shake hands and pay. Somebody gets sued, and that company sends the other one a “tender” (a formal letter demanding that the other company take over the defense and pay the loss under the MSA). The other company’s insurance carrier reads the same contract and finds a reason to say no, or to say “only part of it.” The letters turn into coverage lawyers. The coverage lawyers turn into a separate lawsuit, called a “declaratory judgment action” (a case asking a court to declare what the contract and the insurance policies actually mean). And all of that can run alongside your injury case, mostly out of your sight.
Here is a real example, straight out of the federal courts. In 2015, a worker named Johnny Trent was severely burned in a flash fire at a well operated by Cimarex Energy. He sued, and Cimarex settled his case for $4.5 million. Then the second fight started. Cimarex demanded that its contractor cover the settlement under the MSA’s indemnity clause. The contractor paid $3 million and refused to pay the last $1.5 million, so the companies litigated that piece all the way to the federal court of appeals, which finally ruled in 2022. Seven years after the fire. The worker’s case was long over, and the companies were still fighting about who pays.
A version of that fight sits behind more oilfield injury cases than anyone ever tells the worker. This page explains how it works, what Texas law says about it, and what it means for you.
2. How indemnity clauses are supposed to work
"Indemnity" means one company agreeing, in writing, to cover another company's losses. Say Company A indemnifies Company B, and Company B gets sued over an injury. Company A has to step up and pay what Company B owes, often including Company B's defense costs.
The "indemnitor" is the company making the promise, the one that pays. The "indemnitee" is the company receiving the promise, the one that gets covered. Keep those two words straight and half of this subject stops being confusing.
In the oil patch, the standard arrangement is “knock-for-knock” indemnity: each company covers its own people and its own equipment no matter who actually caused the harm. Under knock-for-knock, each company is an indemnitor and an indemnitee at the same time, each one promising to cover the other for injuries to its own crew. The MSA page explains why the industry likes that trade, and why it lands hardest on the companies at the bottom of the chain.
On paper, the clause is supposed to make the “who pays” question automatic. The label on your hard hat says which company covers the loss, the tender gets accepted, the insurers sort it out, done. In real life it goes sideways all the time, and Texas law is a big reason why.
Texas courts start out skeptical of any clause where one company gets covered for its own negligence. So the Texas Supreme Court built two protections, together called the “fair notice” requirements.
The first is the “express negligence” rule, from a case called Ethyl Corp. v. Daniel Construction Co. (Tex. 1987). If a company wants indemnity for its own negligence, the contract has to say so in specific terms, within the “four corners” of the document (the actual written text of the contract). Courts won’t read that intent into vague, general language.
The second is “conspicuousness,” from Dresser Industries, Inc. v. Page Petroleum, Inc. (Tex. 1993). The clause has to stand out on the page so a reasonable person would notice it: capital letters, bold or contrasting type, something that catches the eye. In Dresser itself, the provisions were buried on the back of a work order in a run of numbered paragraphs with no headings and no contrasting print, and the court held they failed as a matter of law. (One catch: if the indemnitee, the company seeking coverage, can prove the indemnitor actually knew about the provision, the fair notice rules may not apply.)
So round one of a lot of indemnity fights is about drafting and formatting. Is the intent spelled out? Does the clause stand out on the page? Millions of dollars can turn on whether some lawyer used bold type ten years ago. I wish I were exaggerating.
3. The Texas Oilfield Anti-Indemnity Act and its insurance exception
Even a clause that passes fair notice has to get through a statute written specifically for the oil patch.
The Texas Oilfield Anti-Indemnity Act (lawyers shorten it to "TOAIA") lives at Chapter 127 of the Texas Civil Practice and Remedies Code. It applies to agreements pertaining to a well for oil, gas, or water (and to mines for minerals). Under the Act, an indemnity provision is void (legally unenforceable) if it makes one company pay for death, injury, or property damage caused by the other company's own negligence. That is true whether that negligence was the whole cause or just part of it. The void rule is codified at Tex. Civ. Prac. & Rem. Code § 127.003.
The legislature wrote its reason directly into the statute: “an inequity is fostered on certain contractors” by these provisions. Strip away the statute-speak and it says the smaller companies at the bottom of the chain were getting squeezed by the bigger ones at the top, in writing, and the State of Texas decided to step in.
The bottom of the chain is exactly where the dying happens. From 2014 through 2019, about three fourths of the workers killed in U.S. oil and gas extraction worked for contractors. Only about 5 percent worked for the operator that ran the lease. Broken down: 60.4 percent worked for well servicing companies, 17.9 percent for drilling contractors, 5.1 percent for operators. So the MSA pushes the cost of injuries onto the same companies whose workers are doing the bleeding.
Source: CDC, Morbidity and Mortality Weekly Report, "Fatalities in Oil and Gas Extraction Database, United States, 2014-2019" (Sept. 1, 2023).If the law stopped there, most of this page would not exist. It does not stop there.
Section 127.005 is the exception the modern oil patch is built on. The Act does not apply if the companies agree in writing that the indemnity promise will be backed by liability insurance the indemnitor buys. For one-way ("unilateral") indemnity, the insurance that can be required is capped at $500,000. For two-way ("mutual") indemnity, the knock-for-knock kind, there is no set dollar cap. Instead, the indemnity is enforceable up to the coverage and dollar limits each company agreed to buy for the other's benefit.
Read that exception again, because it explains how every modern MSA gets written. Texas didn’t ban the blame-shifting. It said the blame-shifting is allowed if insurance stands behind it. So the industry paired knock-for-knock indemnity with mutual insurance requirements, and the standard MSA has been built around the exception ever since. The Texas Supreme Court confirmed the basic mechanics under the prior version of the statute in Ken Petroleum Corp. v. Questor Drilling Corp. (Tex. 2000): the two companies didn’t have to buy identical amounts of insurance, and when the amounts differed, the enforceable indemnity was capped at the lower amount. The legislature amended the statute in 1999, and federal courts applying the current text have continued to wrestle with how it works in practice.
That word “capped” is where the newest fights live, and this is a part your lawyer had better understand, because the federal appeals court that covers Texas (the Fifth Circuit) has gone two different directions with it in the last few years.
The open question sounds small. When the MSA says each company must carry “a minimum of” or “not less than” some amount of insurance, and a company actually buys more than that, how much indemnity does it owe? The floor number written in the contract? Or everything it actually bought?
In Cimarex Energy Co. v. CP Well Testing, L.L.C. (5th Cir. 2022), the burned worker’s case from Section 1, the MSA required the contractor to carry a minimum of $3 million in coverage and the operator a minimum of $26 million. The contractor actually carried $11 million. The court said the MSA’s “minimum” language set a floor but was silent on a ceiling, so it turned to the contractor’s actual insurance policy to see how much coverage had been bought “for the benefit of” the operator. That policy contained a clause capping the coverage owed at the lesser of the policy’s own limits or the MSA’s stated minimum. The minimum was lower. Result: indemnity capped at $3 million, and the last $1.5 million of the settlement stayed where it fell.
Two years later, in Century Surety Co. v. Colgate Operating, L.L.C. (5th Cir. 2024), the MSA required both companies to carry “not less than $5 million,” and the operator actually carried $76 million in total coverage. This time the court held the $5 million figure was both the floor and the ceiling, and it declined to dig through the insurance policies at all. The court distinguished the earlier case because that MSA had listed two different amounts for the two companies. But the two decisions take different roads to the answer, and lawyers on both sides know it.
Why should an injured worker care about federal judges disagreeing over the word “minimum”? Two reasons. First, nobody can glance at the MSA in your case and just know how big the indemnity obligation is. The answer can turn on a few words in one insurance paragraph, read against two decisions that pull in different directions. Second, unsettled law makes companies fight longer. A question that used to get resolved with a phone call now gets briefed and appealed, while your case waits on the outcome.
A short, plain summary of the key decisions in this area. This is legal background, not a prediction about any specific case.
Ethyl Corp. v. Daniel Construction Co., 725 S.W.2d 705 (Tex. 1987): adopted the express negligence rule. Intent to cover a company for its own negligence must be stated in specific terms within the four corners of the contract.
Dresser Industries, Inc. v. Page Petroleum, Inc., 853 S.W.2d 505 (Tex. 1993): added conspicuousness. The clause must visibly stand out on the page, through capitals, bold, or contrasting type. Fine print on the back of a work order failed as a matter of law.
Getty Oil Co. v. Insurance Co. of North America, 845 S.W.2d 794 (Tex. 1993): the promise to name a company as an additional insured can be a separate obligation from the indemnity promise, depending on how the contract is written, and the Anti-Indemnity Act does not reach insurance agreements unless they exist to support an indemnity obligation.
Ken Petroleum Corp. v. Questor Drilling Corp., 24 S.W.3d 344 (Tex. 2000): mutual indemnity supported by insurance is enforceable even when the two sides carry different amounts. Under the version of the statute then in force, the obligation was limited to the lower amount. The statute was amended in 1999, and federal courts have since split over how the current text treats insurance floors versus ceilings.
In re Deepwater Horizon, 470 S.W.3d 452 (Tex. 2015): the insurance policy controls the scope of additional insured coverage, and when the policy's own language ties that coverage to what the underlying service contract requires or "obliges," the contract's limits end up defining the coverage. BP was denied coverage for the subsurface spill because the drilling contract only required insurance for above-surface pollution risks.
Cimarex Energy Co. v. CP Well Testing, L.L.C., 26 F.4th 683 (5th Cir. 2022), and Century Surety Co. v. Colgate Operating, L.L.C., 116 F.4th 345 (5th Cir. 2024): the live fight over whether a "minimum" insurance requirement sets only a floor, or both a floor and a ceiling, on mutual indemnity under the Act's insurance exception. The two opinions resolve it differently, which keeps the question open.
The takeaway: every one of these rules gets argued in real cases over real money. The MSA, the certificates, the policies, and the endorsements have to be read together, against all of it.
A note from me. Before I started my firm, I spent years as in-house corporate counsel: first as Associate General Counsel for an AR/VR/SaaS tech company, then as General Counsel for a global publishing company. Drafting and negotiating indemnity provisions and insurance requirements was a core part of that work. Different industries, same contractual architecture. So when two oilfield companies start arguing about whether a clause was "conspicuous" enough, or whether an insurance paragraph set a floor or a ceiling, they're arguing about the exact kind of language I spent years writing and negotiating. I know why those clauses get drafted the way they do, and I know where the drafting tends to fall apart once a real person gets hurt.
4. Additional insured disputes
The indemnity clause is only half the private fight. The other half is about the insurance itself.
An "additional insured" is a company that gets added onto another company's liability insurance policy. It usually happens through a short add-on page called an endorsement. The added company doesn't pay the premium, but it can demand a defense and coverage from that policy. Oilfield MSAs almost always require the contractor to name the operator as an additional insured on the contractor's policy, and often the companies above the operator too.
Texas law can treat that promise as its own separate obligation. But whether it actually is separate depends on how the specific contract is written. In Getty Oil Co. v. Insurance Co. of North America (Tex. 1993), the Texas Supreme Court held that the additional insured requirement in that contract was a separate obligation from the indemnity clause, and that the Anti-Indemnity Act does not reach insurance agreements unless they exist to support an indemnity obligation. In plain words: a company can sometimes lose the indemnity fight and still collect as an additional insured. Which means the companies and their carriers fight this second front just as hard as the first one.
Most additional insured fights are about scope. The carrier’s argument is some version of: yes, that company is on the policy, but not for this loss. The biggest Texas case on the question came out of the Deepwater Horizon disaster. In In re Deepwater Horizon (Tex. 2015), BP claimed additional insured coverage under Transocean’s policies for the subsurface pollution from the 2010 blowout. The Texas Supreme Court held that the scope of additional insured coverage is controlled by the insurance policy. And because Transocean’s policies extended coverage only as far as the drilling contract “obliged,” the contract’s limits ended up defining the coverage. That contract only required insurance protecting BP for above-surface pollution risks, so BP got no coverage for the subsurface spill. The rule from that case now runs through many oilfield coverage fights in Texas: when the policy’s own language ties additional insured coverage to what the underlying contract requires, the endorsement, the policy, and the MSA get read together, and a mismatch between them can move enormous money on or off the table.
There is also a fight about order. MSAs usually require the contractor’s coverage to be “primary and non-contributory” (the contractor’s policy pays first, and the operator’s own insurer doesn’t have to chip in until that policy is used up). Carriers argue over whether the endorsement actually delivers what the MSA promised, and over which policy’s “other insurance” wording controls when two policies each claim the other should pay first. Those arguments happen between insurance companies, over your head. But the answer decides which pile of money your case draws from first, and how the other piles line up behind it. How policies, limits, and layers work in these cases has its own page in this guide: insurance coverage in oilfield injury cases (coming soon).
If some of this sounds like your case, defendants pointing at each other while nobody says plainly who covers what, it may be worth a free conversation, no pressure and no obligation.
Call or text (210) 460-05695. What these fights mean for the injured worker
Start with time. Companies that can’t agree on who funds a settlement are usually slower to make one. A defendant may sit on real numbers until it knows whether its tender was accepted, or until a coverage court says whose policy pays first. Meanwhile your medical bills don’t wait, and the missed paychecks don’t wait either. The delay lands on the person least able to afford it. That’s you. And some companies count on exactly that, because a worker under financial pressure is a worker who might take less.
Then money. These fights can change how much insurance actually stands behind your case. An indemnity clause that fails fair notice can vanish from the picture. A floor-versus-ceiling ruling can swing the funding by millions. An additional insured endorsement that doesn’t match the MSA can knock a policy out of the case, or pull one in. What happened to your body stays the same through all of it. What changes is which policies respond, in what order, and how hard the companies fight before they pay.
There’s also posture. A defendant that believes another company’s insurance will cover the loss behaves differently than one that knows the loss lands on its own policy. When the coverage picture shifts, the settlement conversation usually shifts with it.
One more piece of the same machine: whose employee you legally counted as on the day you got hurt. The oil patch borrows workers constantly, and there’s a doctrine called “borrowed servant” that can decide which company answers for you. That answer feeds straight back into the same indemnity and insurance fight, and it has its own page in this guide: the borrowed servant doctrine (coming soon).
Now the important part. These fights belong to the companies, but you’re not powerless in front of them. The documents that control the fight, the MSA, the work orders, the insurance certificates, the policies, the endorsements, can be obtained and read, and the Texas law on all of it is public. A lawyer who gets those documents early and reads every word of them can see the whole board: which companies are exposed, which policies are in play, and how much money sits behind the case. A lawyer who never asks for them is working the visible half of your case and leaving the rest in somebody else’s filing cabinet.
6. What this means for you and your family
Here is the plain version of this whole page.
When you got hurt, a second fight started, between the companies, about which of them pays. It runs on the MSA and on insurance policies you’ve never seen. You’ll probably never watch it happen. But it’s real, and it can affect the two things your family cares about most: how fast your case moves, and how much insurance money is on the table at the end.
Texas referees that fight with a law called the Oilfield Anti-Indemnity Act. The law kills the worst blame-shifting clauses, but it has an insurance exception, and the companies write their contracts to fit through it. Then the courts argue over what the clauses mean, sometimes down to a single word like “minimum.”
You can’t control any of that, and you shouldn’t have to. The companies have coverage lawyers whose entire job is this fight. What you can control is whether somebody reads those same documents just as closely for your side, with no loyalty to anybody but you and your family.
And I’ll say this part plainly. What your recovery is worth should be decided by what happened to you: your injuries, your medical care, your lost wages, what this took from your life. It should never shrink because two insurance companies had a disagreement with each other. Keeping the companies’ bookkeeping war out of your recovery is a big part of what a qualified oilfield injury lawyer is for.
You don't have to figure this out alone. If you were hurt on an oil and gas site and nobody has explained who's actually supposed to pay for it, call me. The conversation is free, and I'll be straight with you about what the contracts in your case might mean and whether there's insurance in the picture nobody has mentioned to you yet.
Call or text (210) 460-05697. Questions to ask any lawyer you are considering
You shouldn’t take anybody’s word on this, including mine. Ask questions and watch how the lawyer handles them. These will tell you fast whether they know this corner of the law.
- Ask them what a "tender" is and why it matters in an oilfield case. They should be able to explain it in one breath.
- Ask when they plan to request the MSA, the insurance certificates, the actual policies, and the endorsements. The honest answer is right away, not "if we need them."
- Ask them what the Texas Oilfield Anti-Indemnity Act is and what its insurance exception does, in plain words.
- Ask them to explain the difference between an indemnity promise and additional insured coverage, because Texas law can treat them as two separate obligations.
- Ask whether they read the actual insurance policies or just the certificates. (A certificate is a one-page summary. The policy is the contract. The fights live in the policy.)
- Ask how a coverage fight between the companies could affect the timing of your case, and how they keep a case moving while the companies argue.
- Ask about their oilfield case experience, whether they associate with experienced co-counsel to add strength and resources to your case, and exactly how the fee works.
A lawyer who knows this work will welcome every one of those questions. A lawyer who gets vague or defensive just answered them.
If you want help, here is how to get it.
Free consultation. No fee unless we win. We can talk by phone, or in person by appointment in San Antonio. The conversation is confidential and there is no obligation.
Call or text (210) 460-0569Or use the contact form on this page.
For the ones who keep going.
Common questions
Why do the companies fight over who pays? +
The money is big, and the contracts give them something to fight about. The MSA and its insurance rules decide which company's insurer pays for the defense and for any settlement or judgment. After a serious injury, each company reads those documents and looks for a way to put the loss on somebody else. Those fights can run for years. Sometimes they outlive the worker's own case.
What is an indemnity clause? +
It is a written promise by one company to cover another company's losses. In oilfield MSAs the standard version is called "knock-for-knock." Each company covers injuries to its own workers, no matter who caused the harm. The company that makes the promise is the indemnitor. The company that receives it is the indemnitee. Texas courts enforce these promises only when they are written clearly and printed so they stand out. A Texas law also limits how far they can go.
What is the Texas Oilfield Anti-Indemnity Act? +
It is a Texas law in Chapter 127 of the Civil Practice and Remedies Code. It makes certain indemnity clauses in oil and gas well agreements void. The target is a clause that makes one company pay for harm caused by the other company's own negligence. The legislature passed it because those clauses squeezed the smaller companies at the bottom of the chain. The law is real. But it has a big exception for indemnity backed by insurance.
What is the insurance exception? +
Section 127.005 of the Act says the ban does not apply if the companies agree in writing to back the indemnity with liability insurance bought by the indemnitor. Two-way, mutual indemnity is enforceable up to the insurance limits each company agreed to buy for the other's benefit. One-way indemnity can only be backed by up to $500,000 in required coverage. The industry writes its contracts around this exception. That is why knock-for-knock indemnity is still everywhere.
Do these disputes slow down my case? +
They can. Defendants who are fighting each other over coverage are often slower to talk real settlement numbers. Sometimes a separate coverage lawsuit runs next to the injury case. Your own deadlines keep running the whole time. So the companies' fight is never a reason to sit on your claim. A lawyer who understands the coverage fight can keep your case moving while the companies argue.
Can these fights reduce what I recover? +
They can affect it. The main way is by changing how much insurance is available, and how hard the companies fight before paying. A failed indemnity clause, a capped obligation, or a knocked-out endorsement can shrink or reshuffle the money behind a case. What happened to you sets the value of your claim. The coverage fight affects the collecting side. That is exactly why your lawyer needs the contract documents early.
Keep reading
Master Service Agreements: The Oilfield Contract That Helps Decide Who Pays When You Get Hurt
An MSA is the contract that helps decide who pays when an oilfield worker is hurt. Here is how it works and why it matters.
Part 1What Is Chapter 95? The Texas Law That Protects Oil Companies (and Others) from Lawsuits
Chapter 95 can make a Texas oilfield injury case against the property owner harder, not impossible. Learn when it applies and the two ways past it.
Part 3Who Is Responsible When an Oilfield Worker Gets Hurt?
A well site is crowded with companies. Here is how to figure out who is actually responsible when an oilfield worker is hurt or killed.