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Basic Energy Servs., L.P. v. Petro. Res. Mgmt., Corp.

Supreme Court of Wyoming

February 19, 2015

BASIC ENERGY SERVICES, L.P., Appellant (Plaintiff),
v.
PETROLEUM RESOURCE MANAGEMENT, CORP., and PRM PARTNERS I, LLC, Appellees (Defendants)

As Amended February 25, 2015.

Appeal from the District Court of Fremont County. The Honorable Marvin L. Tyler, Judge.

For Appellant: Gregory C. Dyekman and Justin N. Hesser of Dray, Dyekman, Reed & Healey, P.C., Cheyenne, Wyoming. Argument by Mr. Dyekman.

For Appellees: Scott P. Klosterman of Williams, Porter, Day & Neville, P.C., Casper, Wyoming.

Before BURKE, C.J., and HILL, KITE, DAVIS, and FOX, JJ.

OPINION

Page 784

FOX, Justice.

[¶1] In this dispute over equipment damaged in an oil well fire, the district court granted summary judgment to the owner and operator of the well and against the equipment owner, Basic Energy Services, L.P. (Basic Energy). The district court found that neither the owner nor the operator of the well could be held liable for the actions of the independent contractor hired to perform the day-to-day operations of the well. The district court also found that, though there was a valid contract between the operator Petroleum Resource Management, Corp. (PRM) and Basic Energy, PRM did not

Page 785

breach the terms of that contract. We affirm in part and reverse in part, and remand for further proceedings consistent with this opinion.

ISSUES

[¶2] The parties raise four issues on appeal, which we restate as follows:

1. The district court determined that the Daily Work Ticket created a valid and enforceable contract between PRM and Basic Energy. Is there a question of material fact concerning whether PRM breached the terms of that contract?

2. Did PRM have a duty to use reasonable care in hiring Hot Oil Services, Inc. (Hot Oil) as its independent contractor?

3. Did Basic Energy raise the issue of apparent agency in the district court?

4. Should the well owner, PRM Partners I, LLC (PRM Partners), be dismissed from the appeal?

FACTS

[¶3] PRM Partners is a leaseholder of lands which cover an oil well identified as Fuller Federal No. 5-18 (No. 5-18) near Shoshoni, Wyoming. PRM Partners designated PRM[1] as operator of No. 5-18 on January 1, 2000. PRM later contracted with Hot Oil to " furnish all necessary labor and equipment to perform in a good and workmanlike manner the pumping services. .. on [No. 5-18.]" [2] The Well Pumping Contract between PRM and Hot Oil declared:

In the performance of the services hereunder, Contractor shall act as, and conclusively be for all purposes, an independent contractor free and clear of any dominion or control by PRM of the manner in which such services are to be performed, it being understood that PRM is interested only in the final results obtained.

The district court held that Hot Oil was an independent contractor, and this finding was not appealed.

[¶4] Hot Oil managed the day-to-day operations of the well at the " field level" on behalf of PRM, which included:

[M]aximizing production. .., switching tanks, treating oil and gas as necessary to place it in merchantable condition; preparing daily gauge and production reports and delivering same to PRM; making pipeline deliveries; operating, lubricating and maintaining mechanical equipment supporting the operation of the [well]; policing and upkeeping the leases on which the [well is] located and making such adjustments, repairs and performing such services as are customarily made or performed by a lease pumper, as well as such particular lease operating, maintenance or operational services as may be periodically requested by PRM.

In addition, Hot Oil often engaged other independent contractors to perform services on various wells covered by the contract, including No. 5-18. In such situations, Hot Oil would contact an independent contractor to provide services, approve of the work performed by a signature on the invoice, and the invoice would be forwarded to PRM, which would then make payment directly to the independent contractor. Basic Energy was one such independent contractor, which provided services and received payment in the manner described.[3]

[¶5] In the fall of 2009, Hot Oil requested that Basic Energy perform workover operations[4] on No. 5-18. In ...


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