Louisiana’s Oil Well Lien Act

With the continued presence of low prices in the oil, gas and associated hydrocarbons markets, many service companies and some operators are experiencing financial challenges. Operators are unfortunately finding that liens are being filed against their wells by parties performing work on said wells. La. R.S. 9:4861, also known as the “Oil Well Lien Act”, authorizes contractors, subcontractors, laborers and suppliers to file liens against the well on which the work was performed. A filing is not required for the privilege to be created, the privilege is created simply by performing the work. Generally, unless notice of the privilege is provided to the operator within one hundred eighty (180) days, the privilege expires. Similarly, unless the privilege is perfected by filing a statement of privilege or lien in the mortgage records of the proper parish within one hundred eighty (180) days, the privilege expires as to third parties. One common misconception is that a privilege perfected under the Oil Well Lien Act grants the claimant the right to force third party purchasers of hydrocarbons from the subject well, or a holder of payments attributable thereto, to withhold production from the subject well from sales or withhold payments from the operator; however, that is not accurate. There are many ways to address a lien being filed against your well. However, with proper planning the situation can almost always be avoided. If you have concerns involving an oil well lien or want to learn more about avoiding such a situation, please contact one of our experienced attorneys.