In a case that thoroughly reviews the question of whether the Texas Oilfield Anti-Indemnity Act (Chapter 127) excludes claims by third-party beneficiaries to enforce “knock-for-knock” agreements between operators and oilfield services contractors, the Eastland Court of Appeals has affirmed a trial court judgment in favor of a third-party contractor seeking indemnification pursuant to such an agreement.
Lone Star Well Service LLC v. RMTDC Operations d/b/a Total Energy Services, LLC and Daniel Ramirez (No. 11-24-00054-CV; February 12, 2026) arose from a personal injury sustained by an employee of Lone Star while working on a well owned and operated by Parsley Energy Operations, LLC in Glasscock County. Lone Star executed a master services agreement (Lone Star MSA) with Parsley to provide oilfield goods and services to the so-called Patterson Well. Total likewise executed an MSA (Total MSA) with Parsley that included an indemnity provision. Total is a placement service provider that locates qualified “Company Men” who are retained and become the well operator’s representative at the wellsite. In this case, Total assigned Ramirez to be Parsley’s “well consultant” or “Company Man” for the Patterson Well.
The parties agreed that the Lone Star MSA contains a “knock-for-knock” mutual indemnity provision under Chapter 127, CPRC. This provision obligated Lone Star to defend and indemnify the “Company Group,” defined as Parsley, its contractors and subcontractors, and its owners, affiliates, and employees, for personal injury claims asserted by members of the “Contractor Group,” defined as Lone Star and its various contractors, subs, owners, employees, and affiliates. The MSA further required each party to maintain in effect a $1 million primary general liability policy and a $10 million excess policy to support its mutual indemnity obligations. The Total MSA contained a similar mutual indemnity provision, though Total only agreed to defend and indemnify Parsley and its directors, employees, and affiliates from personal injury claims asserted by Total’s directors, officers, employees, or agents. This policy required $1 million in primary and $5 million in excess coverage.
Salmons, a Lone Star employee, was injured while working at the Patterson Well. He filed suit in Ector County against Parsley, Total, and others. Parsley later filed the underlying dec action, the subject of this appeal, against Lone Star, alleging that under the MSA Lone Star owed it a defense and indemnity for Salmons’ claims. Total intervened, asserting a claim against Lone Star for breach of contract and seeking declaratory relief and a defense and indemnification from Lone Star as “express third-party beneficiaries” of the Lone Star MSA. Parsley subsequently dismissed its claims against Lone Star. Lone Star, Total, and Ramirez filed competing motions for summary judgment, which the trial court denied. After a bench trial, the trial court found that Lone Star had an obligation to defend and indemnify Total in the Ector County suit, and awarded Total attorney’s fees incurred in the dec action and the Ector County suit, future contingent attorney’s fees, and court costs. Lone Star appealed.
In an opinion by Justice Trotter, the court of appeals affirmed in part and remanded in part. First, Lone Star argued that Chapter 127 voided Total’s claims for defense and indemnity because the parties had no written indemnity agreement, no mutual indemnity obligation, and no reciprocal insurance obligation to support indemnification. Lone Star argued further that the Total MSA excluded claims asserted against contractors and subs and that Total’s insurance obligations materially differed from those prescribed by the Lone Star MSA. Total responded that it was a third-party beneficiary of the Lone Star MSA and entitled to defense and indemnity. The court agreed with Total. The Lone Star MSA satisfied the safe harbor provision of § 127.005, CPRC, because it was a written agreement between Parsley and Lone Star that supported their mutual indemnity obligations with liability insurance.
The MSA further clearly expressed an intent that Lone Star would defend and indemnify the “Company Group,” which included Total as Parsley contractor. Looking to Chapter 127, the court found that the statute was “silent regarding the application of common law third-party beneficiary principles.” In fact, “[Chapter 127] contemplates that non-signatories should be included within the scope of permissible oilfield indemnity schemes, a practice which Texas courts have repeatedly recognized to be routinely followed in the oil and gas industry” (citations omitted). The statute also bars “only certain indemnification agreements and in turn included a wide variety of exceptions to the bar,” so the court declined to read the statute broadly to exclude contracts not specifically covered by the statute. Turning to the language of the indemnity provision itself, the court had no trouble finding that Total was Parsley’s contractor within the plain meaning of the agreement’s use of that term, retained to assign and place Ramirez to Parsley as the company man for the Patterson Well. Since the statute doesn’t exempt third-party beneficiaries from its protections, “and because the language of the mutual indemnity obligation provision in the Lone Star MSA specifically confers the benefit of defense and indemnification to Parsley’s contractors,” Total was indeed a third-party beneficiary of the Lone Star MSA. And there was plenty of reciprocal insurance coverage in the Lone Star MSA to back up the indemnity obligation. Total could enforce the defense and indemnification provision of the Lone Star MSA against Lone Star.
The court accordingly declined to reverse the attorney’s fee award to Total, since it prevailed on appeal. Lone Star did prevail on its request to remand to the trial court the issue of the specific indemnity amount it owed, which the trial court did not determine.
