Small Business Program

Designed exclusively for upstream oilfield services contractors, equipment rental, equipment distribution, and equipment manufacturing businesses.
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Streamlined Underwriting

Oil and gas non-operating working interest (NOWI) partners may appear passive because they fund projects, review statements, and collect revenues. However, this perception is inaccurate.

Under a Joint Operating Agreement (JOA), operators handle day-to-day operations, while non-operating partners typically retain financial and legal liability. In the event of incidents such as blowouts or contamination, legal actions often trace financial responsibility back to all funding partners.

Historically, smaller oil and gas investors assumed the operator's corporate structure would protect them from liability. In the current legal and operational environment, this is no longer sufficient. Major incidents can quickly deplete the operator's primary insurance, leaving NOWI owners responsible for their share of remaining costs, including litigation, cleanup, and remediation.

To manage these risks, non-operators should understand required insurance coverages, the impact of the JOA, and current market conditions. Their risk is significant, and insurance coverage must be sufficient.

Falcon West Energy Expertise

The financial relationship begins with an Authorization for Expenditure (AFE), which is governed by the JOA. The operator issues the AFE to outline the projected budget for drilling, completion, or workover activities. It serves as a formal request for non-operating partners to approve the capital project.

A common misconception is viewing the AFE as a fixed quote. In reality, it is a good-faith estimate. By signing an AFE, non-operating partners are legally obligated to pay their proportional share of the actual final costs, regardless of any increases due to delays, challenging geology, or major incidents.

Signing the AFE formally commits a partner's financial resources to the wellsite's risks. This declaration of participation is critical in the event of a claim and activates the liabilities that insurance is intended to address. Once signed and operations begin, estimated budgets become enforceable financial obligations.

Ongoing Service & Support

Understanding liability requires knowledge of how operational expenses are managed. The Joint Interest Billing (JIB) is the monthly invoice and expense statement that the operator sends to NOWI partners.

The operator pays third-party contractors upfront for expenses such as drilling, completions, chemicals, and Lease Operating Expenses (LOE). At the end of each billing cycle, these costs are allocated among partners based on their working interest percentages under the JOA.

If JIBs go unpaid, the operator may place liens on production or deduct unpaid costs from revenues. JIBs track financial obligations and document each partner's involvement, serving as evidence in potential litigation.

What companies qualify?

"Small Business" doesn't feel small unless your comparing it to Big Red or Big Blue.

  • Business Type: Oilfield services contractors, equipment rental, equipment distribution, and equipment manufacturing businesses
  • Operational Focus: Must not have diverse industries;
  • Power Units: 15 or less
  • Direct Bill and/or Paperless Enrollment may be required

The Core of the Quote: Why the JOA Dictates Your Terms

Brokers often encounter quoting delays because underwriters require a review of the JOA. The JOA determines how operator and non-operator insurance respond to claims. Underwriters review it to confirm the operator maintains "primary and non-contributory" coverage, ensuring the operator's policy is exhausted before the non-operator's policy applies.

Without clear terms, the non-operator's insurer may be required to defend claims, increasing risk. As a result, underwriters from both direct and E&S carriers require the JOA as a mandatory condition. Brokers may obtain non-binding terms, but no policy can be bound until underwriting approves the signed JOA as part of their risk review.

Additional quoting requirements often include resumes for the non-operating partners, a complete well schedule with API numbers and depths, confirmation of Named Insureds, and verification of no known losses for new ventures.

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A Better Way to Build Your Insurance Program

Falcon West Energy works with energy businesses that need more than a generic insurance quote. We take time to understand your services, contracts, client base, and operating environment before recommending a path forward.

Our process is built around practical risk discovery:

  1. Discovery: We learn about your firm, services, contracts, field exposure, and client requirements.

  2. Review: We evaluate your existing insurance program, coverage limits, exclusions, endorsements, and certificate requirements.

  3. Strategy: We identify potential gaps, market considerations, and coverage priorities.

  4. Placement: We help pursue insurance options that align with your business and risk profile.

  5. Ongoing Support: We stay close as your contracts, clients, projects, and operations evolve.

For consultants and engineers, insurance is often tied directly to winning work. Falcon West Energy helps you approach coverage as a business tool, not just a compliance checkbox.

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