This document summarizes a presentation given at the University of Texas School of Law on Louisiana Oil Well Liens and their significance in energy-related bankruptcies. The presentation was given by Judge Marvin Isgur of the Southern District of Texas Bankruptcy Court and Benjamin Kadden, a shareholder at Lugenbuhl Wheaton Peck Rankin & Hubbard. It discusses what LOWLA is, how it works, how it intersects with bankruptcy, and provides sample test questions to assess understanding. Biographies of the presenters are also included at the end.

1. PRESENTED AT
The University of Texas School of Law
2016 Jay L. Westbrook Bankruptcy Conference
November 17-18, 2016
Austin, Texas
Drilling Deeper into the Significance of
Louisiana Oil Well Liens in Energy-Related Bankruptcies
Presented by:
The Honorable Marvin Isgur, U.S. Bankruptcy Judge for the Southern District of Texas
and
Benjamin Kadden, Shareholder, Lugenbuhl Wheaton Peck Rankin & Hubbard
The University of Texas School of Law Continuing Legal Education ▪ 512.475.6700 ▪ utcle.org
Materials prepared by:
Benjamin W. Kadden and Erin R. Rosenberg
Lugenbuhl, Wheaton, Peck, Rankin & Hubbard
New Orleans, Louisiana

2. Pop Quiz!
Facts: You represent a vendor who is owed money
for goods and services provided to an operator at a
well site located on the Outer Continental Shelf off of
the coast of Louisiana, but the operator just filed for
bankruptcy.

3. Pop Quiz
QUESTION: What should Vendor do to best increase its chance of
recovery in the bankruptcy?
MULTIPLE CHOICE :
(A) File a proof of claim for the amount owed.
(B) File a notice of lien in order to perfect statutory lien rights under
the Louisiana Oil Well Lien Act (“LOWLA”)
(C) File a notice of perfection of interests under section 546 of Title
11 of the United States Code (the “Bankruptcy Code”)
(D) All of the above

4. Answer: (D) All of the Above
• As will be discussed in greater detail, the LOWLA provides significant
tools for vendors that provide services, materials or equipment in
connection with the drilling, development, operation and abandonment
of oil and gas properties located in the State of Louisiana and in federal
waters adjacent to the State of Louisiana. These rights (and the
associated requirements to perfect such rights) are not lost simply
because the company files for bankruptcy.
• Note: Section 362(b)(3) specifically provides that the automatic stay
imposed by section 362 of the bankruptcy code does stay any act
necessary to perfect, or to maintain or continue the perfection of, an
interest in property of the estate.

5. Overview
Part One: What is LOWLA?
Part Two: How Does it Work?
Part Three: Intersection of LOWLA and Bankruptcy
Part Four: Test Time
Part Five: Appendix

6. THING #2
What is LOWLA?

7. • Louisiana Oil Well Lien Act, La. R.S. § 9:4861 et seq.
• Grants those who provide goods and services to a well
site a lien and privilege securing the costs of their work
• Analogous to the Texas mineral lien law, Tex. Prop.
Code Ann. § 56.001 et seq.
What is LOWLA?

8. THING #2
How does it work?

9. How does it work?
Timeline for Perfecting and Enforcing LOWLA Lien
• Statement of Privilege: 180 days from last date services/goods provided
to file Statement of Privilege in Parish where well site is located
• Operator Notice: 180 days from last date of services/goods provided to
give notice of privilege to the operator of the subject well site
• Filing suit: 1 year from filing Statement of Privilege to file suit to
recognize and enforce LOWLA lien
• Notice of Lis Pendens: 30 days after filing suit to file Notice of Lis
Pendens
• May give notice to any purchasers of the hydrocarbons from the subject
well site, demanding that the purchaser withhold payment of proceeds to
the operator of the subject well site. All other deadlines are mandatory.

10. How does it work?
What amounts does a LOWLA lien secure?
• Costs of contract or goods/services provided;
• Interest due on underlying obligation;
• Cost of preparing and filing necessary documents; and
 NOTE: Necessary documents include the statement of
privilege, operator letter, notice of lis pendens, etc.
• Reasonable attorneys’ fees not to exceed 10% of principal
 NOTE: In a bankruptcy case, claimant may be limited in its
ability to recover attorneys’ fees incurred post-petition.
La. R.S. § 9:4862(B)

11. La. R.S. § 9:4863(A)
How does it work?
What is subject to the LOWLA Lien?
• Operating interests in the well site; and
• Interest of lessee(s) in the following:
 Well, building, tank, leasehold pipeline, other construction or facility on the
well site;
 Movables delivered to a well site that are used in operations;
 Leased properties/servitudes;
 Drilling or other rig located on well site, if owned by operator or contractor;
 Interest of the operator and participating lessees in hydrocarbons produced
from the well site and the interest of non-participating lessee in hydrocarbons
produced from that part of his operating interest subject to the privilege; and
 Proceeds received by or owed to operating interest holders from purchaser.

12. La. R.S. § 9:4864(A)
How does it work?
When is it established?

13. La. R.S. § 9:4864(B)
How does it work?
When is it extinguished?
• Upon extinction of the obligation it secures;
• By written consent of the claimant; or
• Failure to comply with notice requirements or act
within certain prescriptive/limitations periods.

14. How does it work?
La. R.S. § 9:4870
Ranking of LOWLA Liens
• All LOWLA liens are of equal rank
o except that a contractor’s LOWLA lien is subordinate to any
party with whom the contractor is contractually bound (i.e.,
subcontractor)
• Established (perfected) LOWLA privileges outrank all other
privileges, security interests or mortgages, except:
 Tax liens;
 Pre-existing mortgages or vendors’ privileges;
 Pre-existing perfected security interests; and
 Lien by LA Dep’t of Natural Resources.

15. How does it work?
See Appendix for additional information on
how LOWLA works …

16. THING #3
Intersection of LOWLA
and Bankruptcy

17. Effect of Operator’s Bankruptcy on LOWLA Lien
If claimant filed its Statement of Privilege prior to bankruptcy:
• A claimant may file a Notice of Perfection in the bankruptcy case
pursuant to section 546(b) of the Bankruptcy Code;
• A claimant may act as a secured creditor of the bankrupt to the extent
of the value of encumbered property, less any pre-existing security
interests;
• A claimant may act as an unsecured creditor for the remaining portion
of its claim;
• A claimant may not institute any litigation to enforce the LOWLA
privilege without first seeking to modify the automatic stay with the
bankruptcy court.
Intersection of LOWLA and Bankruptcy

18. Intersection of LOWLA and Bankruptcy
If claimant has not filed its Statement of Privilege prior to bankruptcy:
• May still file Statement of Privilege within the pertinent time period and
may send notice of the lien to the Operator (see 11 U.S.C. §
362(b)(3));
• May file a Notice of Perfection in the bankruptcy case pursuant to 11
U.S.C. § 546(b);
• May act as a secured creditor of the bankrupt to the extent of the value
of encumbered property, less any pre-existing security interests.
• May act as an unsecured creditor for the remaining portion of claim;
• May not institute any litigation to enforce the LOWLA lien without first
seeking to modify the automatic stay with the bankruptcy court.
Effect of Operator’s Bankruptcy on LOWLA Lien (continued)

19. Intersection of LOWLA and Bankruptcy
• Post-Petition Attorneys’ Fees + Interest (are you over-secured?)
• Cash Collateral; Entitlement to Adequate Protection/
Replacement Lien and Preservation of Lien Priority and Validity
• Plan Confirmation
• Suit Against Non-Bankrupt Working Interest Owners
• Lien Priority + the Importance of “Relation Back”
Other Oil Well Lien and Bankruptcy Issues for Discussion

20. THING #4
Test Time!
I hope you were paying attention . . .

21. Question #1
FACTS: An E&P company (the “Debtor”) with a long-standing
operational history files for bankruptcy in November 2016. Your
client (“Vendor”) has been working continuously for the Debtor on
the same oil and gas property beginning in January 2011. In
August 2012, the Debtor incurred secured debt from a lender (the
“Secured Lender”) in the principal amount of $100 mm. As of the
filing of the bankruptcy case, the oil and gas property to which
Vendor provided services and materials is valued at $70 mm.
Vendor is currently owed $17k on account of services and
materials provided to the Debtor’s property prior to the
bankruptcy filing.

22. Question #1
QUESTION: How will Vendor’s claim be treated in the
bankruptcy?
MULTIPLE CHOICE :
(A) Unsecured
(B) Secured
(C) Who cares?

23. Answer: (B) Secured
• Because the inception date of Vendor’s statutory lien is prior to the date on which
granting of a lien in favor of Secured Lender and the value of the subject asset
exceeds the amount of Vendor’s claim, such claim will be treated as a secured claim.
• Important Note: When considering the ranking of a lien under LOWLA vis-à-vis a lien
or security interest granted in favor of a lender or other third party, it is critical to
remember that the inception date of a LOWLA lien relates back to the first date of
service (subject to the provision of continuing services/materials) regardless of
whether the claimant was paid for a portion of the services. This can be important
when a Debtor has been working with vendors consistently for a number of years
and incurs secured debt during those same years, as such vendors may actually
have a LOWLA lien that primes the secured debt notwithstanding that the claim
relates to services and materials provided after the inception date of the secured
debt.

24. Question #2
FACTS: An E&P company (the “Debtor”) with a long-standing
operational history files for bankruptcy in November 2016. Your
client (“Vendor”) has been working continuously for the Debtor on
the same oil and gas property beginning in October 2015. In
August 2012, the Debtor incurred secured debt from a lender (the
“Secured Lender”) in the principal amount of $100 mm. As of the
filing of the bankruptcy case, the oil and gas property to which
Vendor provided services and materials is valued at $70 mm.
Vendor is currently owed $17k on account of services and
materials provided to the Debtor’s property prior to the
bankruptcy filing.

25. Question #2
QUESTION: How will Vendor’s claim be treated in the
bankruptcy?
MULTIPLE CHOICE :
(A) Unsecured
(B) Secured
(C) I’m ready for happy hour.

26. Answer: (A) Unsecured
Because the inception date of Vendor’s statutory lien is
subsequent to the date on which the Debtor granted a lien in
favor of Secured Lender and the value of the subject asset is less
than the amount of Secured Lender’s claim, such claim will be
treated as a unsecured claim.

27. Question #3
FACTS: An E&P company (the “Debtor”) with a long-standing
operational history files for bankruptcy in November 2016. Your
client (“Vendor”) has been working continuously for the Debtor on
the same oil and gas property beginning in October 2015. In
August 2012, the Debtor incurred secured debt from a lender (the
“Secured Lender”) in the principal amount of $100 mm. As of the
filing of the bankruptcy case, the oil and gas property to which
Vendor provided services and materials is valued at $150 mm.
Vendor is currently owed $17k on account of services and
materials provided to the Debtor’s property prior to the
bankruptcy filing.

28. Question #3
QUESTION: How will Vendor’s claim be treated in the
bankruptcy?
MULTIPLE CHOICE :
(A) Unsecured
(B) Secured
(C) Please tell me this is the last question.

29. Answer: (B) Secured
Notwithstanding the fact that the inception date of Vendor’s
statutory lien is subsequent to the date on which the Debtor
granted a lien in favor of Secured Lender, the value of the subject
asset exceeds the cumulative amount of the Secured Lender’s
claim and Vendor’s claim. Therefore, Vendor’s claim will be
treated as a secured claim.

30. Question #4
After your client (“Vendor”) provides services to a well site
located in Louisiana but prior to receiving payment,
Vendor’s E&P customer files for bankruptcy. Given the
filing of the bankruptcy, Vendor is precluded from
perfecting its statutory lien by the automatic stay.
MULTIPLE CHOICE :
(A) True
(B) False

31. Answer: (B) False
The filing of a bankruptcy case and the imposition of the
automatic stay does not preclude a non-debtor from taking
an action necessary to perfect, or continue or maintain the
perfection of, a statutory privilege, which would include the
filing of a lien statement. 11 U.S.C. §§ 362(b)(3) and 546.

32. Question #5
After your client (“Vendor”) provides services to a well site, the operator
files for bankruptcy. Thereafter, you assist your client in perfect its LOWLA
lien through the filing of a Statement of Privilege and Notice of Perfection
under 11 U.S.C. § 546. Assuming Vendor has taken the steps required to
perfect its LOWLA lien and timely files a proof of claim, no further action is
required to protect the validity, rank and priority of Vendor’s lien and
privilege.
MULTIPLE CHOICE :
(A) True
(B) False

33. ANSWER: (B) False
• May need to file objection to Cash Collateral/DIP Order
• Entitled to adequate protection/replacement lien to
account for diminution in value (see Sample Language
on following slide)
• Request cash collateral weekly reporting and other
notices provided to lenders and official committees

34. Sample Language
“Preservation of Prepetition Priorities. Nothing in this Order is intended to change or otherwise modify
the prepetition priorities among secured creditors of the Debtors, including (i) any operators’ or non-
operators’ lien or recoupment rights to the extent their liens or rights are valid, enforceable, non-
avoidable and perfected, and (ii) any claims of the lienholders or any other mechanic or materialmen or
mineral state lien claimants to the extent their liens are valid, enforceable, non-avoidable and
perfected, and nothing in this Order, including the granting of adequate protection liens, shall be
deemed to have changed or modified such prepetition priorities, all of which are hereby expressly
preserved.”
“Lienholders. Notwithstanding anything to the contrary in this Order, to the extent that any lienholder
has a valid prepetition lien on any collateral, such interest shall be entitled to adequate protection, to
secure payment of an amount equal to the diminution in value of such lienholder’s interest in such
collateral, as follows: (i) postpetition replacement liens against such collateral (and the proceeds
thereof) on which such lienholder holds a valid prepetition lien; (ii) super-priority adequate protection
claims against the Debtor, including, without limitation, the proceeds of property recovered in respect of
any avoidance actions; and (iii) reasonable professional fees, expenses, and disbursements to the
extent allowed under § 506(b) of the Bankruptcy Code.”
See Final Cash Collateral Order in In re Energy XXI Ltd., Case No.
16-31928 (Bankr. S. D. Tex. May 19, 2016) [Doc. 319, ¶¶ 33-34]

35. Conclusion
• Have clients stay on top of their claims and
keep you informed of potential financial instability
• Need to act quickly on first-day motions and
monitor developments throughout bankruptcy case
to avoid prejudice to rights
• Monitor and comply with all statutory deadlines and
filing requirements

36. Biographies
A Shareholder with Lugenbuhl, Wheaton, Peck, Rankin & Hubbard in New Orleans, Benjamin Kadden focuses on several practice areas including
bankruptcy, restructuring, and creditors’ rights; corporate and commercial law, mergers and acquisitions; litigation; and asset-based finance. After graduating
from Louisiana State University in 2002, Benjamin earned his law degree from Tulane University Law School in 2005. During law school, he served as a
judicial clerk for the Honorable Magistrate Judge Alma Chasez, United States District Court for the Eastern District of Louisiana (2004-2005), and as a
volunteer clerk for the Honorable Judge Sarah Vance, United States District Court for the Eastern District of Louisiana (2003).
Some of the Chapter 11 proceedings where Benjamin acted as debtor’s counsel include Gulf Fleet Holdings, Inc., East Cameron Partners, L.P., and Bender
Shipbuilding & Repair Co. He has also served as counsel for various official committees of unsecured creditors, including acting as lead counsel in the
Chapter 11 cases of Saratoga Resources, Inc., A&B Valve and Piping Systems, L.L.C., Graham Gulf, Inc., and Virgin Oil Company, Inc., and as special
counsel to the Official Committee of Unsecured Creditors in the Trico Marine bankruptcy.
Benjamin has also actively participated in a number of merger and acquisition transactions pertaining to numerous businesses based in the Gulf Coast, with
a focus upon representation of non-public buyers and sellers in equity and asset sales. Because of his experience in complex Chapter 11 bankruptcy cases,
Benjamin has direct experience and knowledge regarding the purchase or sale of assets by distressed companies, including navigating the process while a
buyer or seller is in bankruptcy.
In addition to his private practice, Benjamin regularly provides pro bono services for the Propeller Network, which efforts were recognized by the Louisiana
State Bar Association in 2015 by his receipt of the Pro Bono Publico Award. He has also been a member of the Intersession Faculty for Tulane Law
School’s annual Civil Litigation Boot Camp since the program’s inception in 2012. Other awards include an AV Preeminent Rating by Martindale-Hubbell,
and was recognized as a Super Lawyers Rising Star (2014-2016) and Top Lawyer by New Orleans Magazine in Insolvency and Reorganization Law (2014-
2016).
Benjamin W. Kadden
Lugenbuhl. Wheaton, Peck, Rankin & Hubbard
601 Poydras Street, Suite 2775
New Orleans, LA 70130
Phone: (504) 568-1990
bkadden@lawla.com

37. Biographies
Erin Rosenberg is an Associate in Lugenbuhl’s New Orleans Office. Her practice focuses on commercial litigation, appeals, and bankruptcy.
Prior to joining the firm, she served as a Staff Counsel for the United States Court of Appeals for the Fourth Circuit and as Law Clerk to the Honorable
Martin L.C. Feldman of the United States District Court for the Eastern District of Louisiana.
She earned her B.A. from the University of Miami, where she graduated summa cum laude and was a member of Phi Beta Kappa. She earned her
J.D. from Tulane University Law School, where she served as a member of the Tulane Law Review, graduated magna cum laude, and was elected to
the Order of the Coif.
Since joining the firm, she has worked on a variety of matters including various Chapter 11 cases representing debtors, creditors, and unsecured
creditors committees, including Saratoga Resources, Inc., A&B Valve and Piping Systems, L.L.C., and Whistler Energy II, L.L.C. She also routinely
represents creditors in enforcing their rights under LOWLA.
In addition to her private practice, she also serves on the Orleans Public Defenders’ Conflicts Panel, providing representation to indigent criminal
defendants in New Orleans.
She is admitted to practice before the Supreme Court of Louisiana, the U.S. Fifth Circuit, U.S. Fourth Circuit, U.S. District Court for the Eastern District
of Louisiana, and the U.S. District Court for the Western District of Louisiana.
Erin R. Rosenberg
Lugenbuhl. Wheaton, Peck, Rankin & Hubbard
601 Poydras Street, Suite 2775
New Orleans, LA 70130
Phone: (504) 568-1990
erosenberg@lawla.com

38. THING #4
Appendix
Additional information on how LOWLA works

39. How does it work?
Who gets a LOWLA lien?
La. R.S. § 9:4862(A)

40. La. R.S. § 9:4863
How does it work?
What is NOT subject to the LOWLA Lien?
• Movables temporarily on well site for repair, testing, etc.
• “The privilege that results from operations on a voluntary or compulsory unit affects only
that part of a non-participating lessee's interest in the operating interest located within
the boundaries of the unit and only insofar as the unit covers and affects the unitized
zone or formation. The privilege affects only the interest of the non-participating lessee
in the other property described in Subsection (A)(1) and (2) of this Section that is used
in the operations of the unit well.” La. R.S. § 9:4863(B).
• Hydrocarbons produced from operating interest owned by lessor, sublessor, ORRI
owner, or other non-lessee, as well as any proceeds derived therefrom
• Rigs, machinery, appliances, equipment, etc. used for P&A work on wells or closing
associated pits
• Casing, tubing, pipe and other tubular goods recovered from the drill hole as a result of
P&A work

41. La. R.S. § 9:4865
How does it work?
When does it cease to have effect against third parties?
• Failure to Perfect by Recordation: LOWLA privilege ceases to have effect as
to 3rd persons 180 days after the last date of service unless:
 All Property Subject to Privilege Except a Rig: Claimant files a Statement of
Privilege in the mortgage records of the Parish where the well site is located.
 If the Property is a Rig: Claimant files a UCC financing statement.
• Failure to Timely Enforce: LOWLA privilege also ceases to have effect as to 3rd
persons if claimant doesn’t file suit to enforce privilege within 1 year of filing privilege.
• Failure to Timely File Notice of Lis Pendens: LOWLA privilege also
ceases to have effect as to 3rd persons if claimant fails to file a Notice of Lis Pendens in the
mortgage records of the Parish in which the Statement of Privilege was filed within 30 days
of claimant instituting litigation to enforce the privilege.

42. La. R.S. § 9:4866
How does it work?
Special Rule for Certain Moveable Property
Additionally, a LOWLA lien over movable property
(other than hydrocarbons, related proceeds and
rigs) is extinguished when the moveable is
transferred by onerous transaction to a good faith
third party and removed from the well site.

43. La. R.S. § 9:4868(B)(2), (C)-(D)
How does it work?
Delivery of Notice to Operator
• Notice is properly delivered if it is delivered to the operator designated on the Statement
of Privilege.
• “Delivery” takes place:
 Upon mailing, but only if mailed by certified or registered mail, return receipt
requested;
 Upon receipt by addressee or at office of addressee if not mailed by certified or
registered mail.
• Return receipt indicating delivery or proof of mailing by USPS will be prima facie proof of
mailing the requisite notice.

44. La. R.S. § 9:4868(A), (B)(1), E
How does it work?
Form and Substance of Statement of Privilege
• Form
 In writing; and
 Signed by or on behalf of the claimant.
• Substance
 Claimant’s name and address;
 Amount and nature of underlying obligation;
 Name and address of obligated person;
 Name and address of operator as designated by Louisiana Department of Natural Resources
(Louisiana State Lease) or Bureau of Ocean Energy Management (Outer Continental Shelf Lease);
 Description of operating interest over which privilege is claimed or the pertinent well site.
o A well site description is adequate if it includes:
 The name and serial or other identification number;
 The name of the field where it is located.
• Exception to Substance Requirements: A statement of privilege is not invalid, in
spite of missing certain of the information set forth above, so long as it “fairly apprises the recipient or
person against whom the privilege is asserted of the privilege claimed and of the operating interest,
hydrocarbons, or other property upon which the privilege is claimed.” La. R.S. § 9:4868(E).

45. How does it work?
Importance of Proper Invoicing Procedures
• Invoices should include a specific designation of the well site
(well, lease, field, parish) to which the vendor provided
services and/or materials
• By including this information directly on the invoice, a vendor
can more easily establish the precise well site over which its
LOWLA lien applies both for purposes of preparing and filing
its Statement of Privilege and also for enforcing the privilege
in subsequent litigation

46. La. R.S. § 9:4869(A)(1)(b), (B)
How does it work?
Effect of LOWLA Lien on Third Party Purchasers of Hydrocarbons
• Once a claimant delivers notice to a purchaser of a LOWLA lien, the
claimant may enforce the lien against either the hydrocarbons in the
purchaser’s possession or any amounts owed for their price.
• A purchaser that has received notice of a lien may retain any proceeds
without liability to the claimant or the operator until:
o Claimant directs purchaser in writing of extinguishment of lien;
o Operator instructs purchaser to pay amounts to claimant;
o Claimant AND Operator instruct purchaser to deliver the amounts to
some agreed-upon third party; or
o Purchaser receives instructions by a court of competent jurisdiction.

47. La. R.S. § 9:4869(A)
How does it work?
When LOWLA Lien on Hydrocarbons and Proceeds is Extinguished
• If hydrocarbons are sold or transferred in a bona fide onerous
transaction to a third party before such party is notified of the
asserted privilege;
• Hydrocarbons are commingled with, processed with, or transformed
into other hydrocarbons or substances that are not subject to the
asserted privilege; or
• Proceeds are commingled with other funds that are not subject to the
asserted privilege.

48. How does it work?
La. R.S. § 9:4871
Enforcement by Writ of Sequestration
A claimant may enforce a LOWLA privilege by seeking the
issuance of a writ of sequestration during the pendency of
any enforcement action, without the necessity of furnishing
security.

49. La. R.S. § 9:4872
How does it work?
Cancellation of Statement of Privilege or Notice of Lis Pendens
Any interested person may seek the cancellation of a statement of
privilege or a notice of lis pendens by filing a bond with the
recorder of mortgages in an amount representing at least 125% of
the face amount of the lien.