The lawyer must also have a firm understanding of the commercial/operational aspects of the target service company, the role of the target service company at the well site, and the pitfalls associated with oil field service agreements and compensation rules. Make sure you understand all the risks associated with your investment in the target service company and attribute those risks as much as possible to the target service company`s seller. In addition, a “less is more” approach can rewrite this responsibility to a service company. For example, a service agreement between an operator and a service company with standard knock-for-knock compensation may also include a seemingly harmless exception for all “losses” caused or attributable to the “serious negligence” of the service company. While this type of provision does not clearly indicate that “loss” contains “loss” of well damages, the net effect by omission is the same; the service company is contractually responsible for compensating and defending the operator from and against damages suffered by the operator, which are or are the result of all or part of the gross negligence of that service company. Second, you may be “forced” to accept a service contract suspending your Well Damages service business, which is likely if you want to work in this competitive market. In the absence of a significant portion of your expected earnings for policyholders, it would be desirable to limit (a) your liability to insurance products actually paid for under your policies and/or (b) to include in the service contract a provision that limits your maximum liability for different types of damages well, regardless of the cause. If your service company is not insured for certain damages well, it should take out an affordable liability limit given the P-L proform you modeled for the service contract, whether it is $100,000 or $1,000,000, and consider that amount as self-sustaining insurance. If you are insured for well damages, you contractually limit liability for damages well to a maximum amount below or below the CGL/Excess liability limit, but which, in any case, does not exceed the actual amount of insurance paid under your insurance policies. If a service company is on site and provides services, a simple error can result in millions of damage or even loss of life. When a service company provides services on the assumption that knock-for-knock compensation applies, it might mistakenly think that these potential liabilities are either covered by the operator or covered by the service company`s own insurance policies, although this may not be the case in real cases.