CWD Business Operations & Contract Management Flashcards

Which document legally defines the scope of work, payment terms, and liability for a well drilling project?

Answer: Written contract or work order

A written contract or work order is the legally binding document that specifies the scope of work, pricing, payment schedule, warranties, and liability allocation between the driller and client.

A driller's 'mobilization cost' in a bid refers to:

Answer: Expense of moving equipment to and setting up at the job site

Mobilization cost covers the expense of transporting the drilling rig and equipment to the job site and setting it up, which is typically a fixed charge separate from per-foot drilling costs.

When bidding a well drilling project on a time-and-materials basis, the contractor's risk compared to a lump-sum bid is:

Answer: Lower, because actual costs plus markup are reimbursed

In a time-and-materials contract, the contractor is reimbursed for actual costs plus an agreed markup, so unexpected formation difficulties are passed to the owner, reducing the contractor's financial risk.

General liability insurance for a well drilling contractor primarily protects against:

Answer: Third-party bodily injury and property damage claims

General liability insurance covers third-party claims for bodily injury or property damage caused by the contractor's operations, such as a rig damaging a client's property or injuring a bystander.

A certificate of insurance (COI) is typically requested from a well driller by:

Answer: A client or property owner before work begins to verify coverage

Clients and property owners request a COI before work begins to verify that the well driller carries adequate general liability and workers' compensation insurance, protecting the owner from liability.

Which business structure provides the strongest personal liability protection for a well drilling business owner?

Answer: Limited Liability Company (LLC) or Corporation

An LLC or Corporation creates a legal separation between the owner's personal assets and business liabilities, providing the strongest protection if the business faces lawsuits or debt.