Prior articles in our series demonstratedways to stretch a borrowing base and how to address defaults on oil and gasloans. If a producer ultimately finds itself with a shrunken borrowing base andlimited liquidity, the producer in turn might not be able to pay balances dueto its contractors. An unpaid contractor may be able to file a mechanic’s andmaterialman’s (“M&M”) lien on the producer’s mineral property. An M&Mlien will encumber the producer’s oil and gas property, and by extension, itssecured lender’s collateral. Depending upon the facts, the M&M lien couldprime the secured lender’s lien. In any event, the existence of an M&M liencould violate a negative covenant in the producer’s credit agreement, resultingin a default. This alert provides an overview of the process for filing M&Mliens on mineral property in Texas.

To read the full alert, click on the PDF linked below.

Mechanics-and-Materialmans-Liens-on-Oil-and-Gas.pdf

For more information contact:

Buddy Clark
713.547.2077
buddy.clark@haynesboone.com

Liz Klingensmith
713.547.2592
[email protected]

Chris Wolfe
713.547.2024
[email protected]

Please click here to view prior articles in our series.