author: GOLDEN, Justice.

text:
    2004 WY 35
    EOG RESOURCES, INC., formerly Enron Oil and Gas Corporation, a Delaware corporation, Appellant (Petitioner), v. DEPARTMENT OF REVENUE, State of Wyoming, Appellee (Respondent).
    No. 02-231.
    Supreme Court of Wyoming.
    March 31, 2004.

      Representing Appellant: Lawrence J. Wolfe and John P. Glode of Holland & Hart, LLP, Cheyenne, Wyoming; Judith M. Mat-lock of Davis, Graham & Stubbs, LLP, Denver, Colorado; Steven P. Williams, Assistant General Counsel-North America, EOG Resources, Inc., Denver, Colorado. Argument by Mr. Wolfe.
    Representing Appellee: Patrick J. Crank, Wyoming Attorney General; Michael L. Hubbard, Deputy Attorney General; Martin L. Hardsocg, Senior Assistant Attorney General. Argument by Mr. Hardsocg.
    Before HILL, C.J., and GOLDEN, LEHMAN, KITE, and VOIGT, JJ.
   GOLDEN, Justice.

[¶ 1] Appellant EOG Resources, Inc. (EOG) paid severance and ad valorum tax for severance of minerals as part of a financing arrangement known as a volumetric production payments (VPP) agreement. The Department of Revenue (Department) reviewed the several transactions comprising the VPP agreement and determined that an arm’s length sale of minerals had occurred. It calculated a valuation based on contract pricing and assessed additional tax and interest. The Board of Equalization (Board) affirmed the Department’s actions although it limited the interest assessment. EOG appealed on the basis that the entirety of the VPP agreement constituted a financing agreement warranting treatment as a non-arm’s length sale.

[¶ 2] We affirm the Board’s order.

ISSUES

[¶ 3] EOG presents this statement of the issues for our review:

A. Under Wyo. Stat. § 39-14-203(b)(v), only gas “sold” in a bona fide arm’s length sale at or prior to the point of valuation is valued on the basis of such a sale. Cactus financed EOG’s Wyoming oil and gas development by advancing EOG $326,775,000 in return for an ownership interest in, and the production from, a portion of EOG’s Wyoming reserves. To repay this advance, EOG exchanged gas in Colorado and Texas for Cactus’s Wyoming oil, gas, and condensate production. Did the Board err in concluding that the transfer of title to Cactus’s production in Wyoming to EOG was an “arm’s length sale” subject to valuation under Section 39-14-203(b)(v)?
B. Article 15, Section 11 of the Wyoming Constitution requires a uniform tax valuation for Wyoming oil and gas production. By treating the exchange of Cactus’s Wyoming oil, gas, and condensate production for EOG’s oil, gas and condensate in Texas and Colorado as an arm’s length sale, the Board disregarded the full terms of the financing transaction between Cactus and EOG. Instead, the Board valued Cactus’s Wyoming gas on the basis of index prices in distant markets without accounting for EOG’s repayment obligations to Cactus. Under Article 15, Section 11 is it proper to value Wyoming oil, gas and condensate production on the basis of the index value of gas in distant markets?
C.Under § 39-14-203(b)(vi) the Department of Revenue is required to utilize one of four prescribed alternative valuation methods when the first arm’s length sale of Wyoming oil and gas production occurs downstream of a brightline point of valuation defined for gas in §§ 39-14-203(b)(iv) as the outlet of the initial dehydrator. The delivery of Cactus’s Wyoming gas production to EOG occurred downstream of this point. EOG therefore used the comparable value method to value its gas production. Was the Department required to apply one of the alternative valuation methods found in § 39-14-203(b)(vi)?

The Department presents the following statement of the issues:

A. Did the Board of Equalization correctly affirm the Department’s valuation of EOG’s production of “volumetric production payment” gas, which was conveyed arms-length by Cactus to EOG at the wellhead for valuable consideration, pursuant to Wyo. Stat. § 39-2-208(e)?
B. Did owner Cactus’s conveyance of the Wyoming gas at the wellhead to EOG through an exchange for equivalent gas at locations in Texas and Colorado, which was ascribed a value equal to the index prices at the points in Texas and Colorado, and which was actually sold for the index prices at the locations in Texas and Colorado, constitute a taxable transaction pursuant to Wyo. Stat. § 39-2-208(c)?
C. May Cactus convey arms-length full title and ownership of extracted natural gas for valuable consideration at the wellhead as part of a purported financing transaction and thereby avoid tax liability?
D. Assuming Cactus conveyed gas arms-length to EOG for valuable consideration as part of a purported financing arrangement (“volumetric production payment”), is the sale of Wyoming gas within said financing arrangement exempt from severance and ad valorem taxation pursuant to WYO. STAT. § 39-2-208?
E. Was the Department of Revenue authorized to identify as the taxable value an arms-length sale for Wyoming gas at the wellhead pursuant to Wyo. Stat. § 39-2-208(c), in which the parties attributed a value to the gas equal to index prices from other localities, which were on the average higher than the sales prices of other Wyoming gas?
F. Did the Board of Equalization correctly reject EOG’s efforts to raise untimely claims and issues regarding the point of valuation and the presence of dehydrators?
G. Did the Board of Equalization correctly conclude that EOG’s untimely claim and argument that the presence of dehydrators inches or feet before the custody transfer meters within the same enclosure (“combo unit”) were legally and factually inconsequential and did not render improper the application of Wyo. Stat. § 39-2-208(c)?

FACTS

[¶4] EOG and its predecessors in interest have owned and operated wells in Lincoln and Sublette Counties since the 1950s and produce primarily from the LaBarge Platform and the Moxa Arch formations. In 1992, EOG owned and operated over 800 wells in Sublette and Lincoln Counties. EOG had a significant lease position and a huge reserve base but, because of low gas prices, EOG was unable to finance additional development of the reserves. In 1992, in order to finance the development of its oil and gas reserves, EOG made the decision to enter into a volumetric production payment transaction.

[¶ 5] A volumetric production payment is a common form of an oil and gas financing-transaction that has been used for decades. A producer sells its production for a limited duration in exchange for capital funds. The buyer receives a share of oil and gas produced for a limited time, free and clear of any of the costs of production, and its production payment interest is a real property interest of limited duration. Because the buyer owns the production, it has protection from the bankruptcy of the producer if the conveyance does not create a mortgage. Generally, production payment transactions consist of three documents, namely, a purchase and sales agreement, a conveyance, and a production and delivery agreement.

[¶ 6] In this case, the VPP transaction was entered into between EOG and Cactus Hydrocarbon 1992-A Limited Partnership II (Cactus) on September 25, 1992. The VPP transaction contained all three documents referenced above as well as another agreement providing for an exchange (Exchange Agreement). Under the purchase and sales agreement, Cactus gave EOG $326,775,000 in exchange for a production payment interest in reserves in the ground. EOG operated the properties subject to the VPP agreement and produced the oil and gas, including the oil and gas now owned by Cactus. Although Cactus’ ownership made it responsible for reporting and paying taxes on its share of product, the VPP agreement provided that EOG would assume all responsibility for reporting and paying all applicable taxes.

[¶ 7] Of particular significance to this case is that the VPP transaction also included an Exchange Agreement where Cactus delivered the minerals back to EOG and, simultaneously, EOG agreed to deliver gas to Cactus at four locations in Colorado and Texas. The VPP documents specified that delivery from Cactus back to EOG was accomplished at meters close to the well site. This variation of the standard VPP agreement raised questions whether this exchange of product altered the VPP agreement’s nature from a standard financing arrangement to an exchange on terms equivalent to cash, i.e., a sale. The amounts of gas delivered at the Colorado and Texas downstream locations were equivalent on an MMBTU basis to the volumes of oil, gas and condensate delivered by Cactus to EOG at the Wyoming locations. More facts relating to the Exchange Agreement are provided below in the discussion section.

[¶ 8] Cactus executed a fifth document simultaneously with the Exchange Agreement. The fifth document, however, was between Cactus and a third party, Enron Gas Marketing, Inc. (EGM). Under the fifth document (EGM Purchase Agreement), Cactus sold the Colorado and Texas gas to EGM and priced it based on index pricing specific to those locations. The Board found that index pricing in those Colorado and Texas locations was generally higher than for Wyoming.

[¶ 9] The existence of this Exchange Agreement in conjunction with the EGM Purchase Agreement caused the Department to determine that this VPP transaction was something more than a financing arrangement. The Department’s review of all five documents led to its conclusion that this Exchange Agreement resulted in an arm’s length sale of natural gas and based the fair market value on the index pricing referenced in the agreement. The Department also determined that the sale occurred at a point of valuation that required application of § 39-2-208(c). EOG had reported a non-arm’s length exchange of natural gas at the well head and applied an alternative tax method as provided in § 39-2-208(d). The Department assessed additional severance tax liability in the amount of $1,723,952.02 and additional interest in the amount of $1,187,608. The increased ad valorem taxable value was calculated and certified to Sublette and Lincoln Counties for application of mill levies.

[¶ 10] Cactus, as owner of the oil and gas, was responsible for tax liabilities; however, the VPP transaction provided that EOG would report and pay all taxes, and it was EOG that appealed the Department’s assessment to the Board. At a hearing before the Board, the Department contended that a sale had occurred at the meters and the valuation should be based on the fair market value of a bona fide arm’s-length sale as provided by § 39-2-208(c). EOG contended that an exchange, not a sale, had occurred at the wellhead; however, if the Board determined that a sale had occurred at meters, EOG then contended that the Board must find that point was downstream and the valuation method would be determined by § 39-2-208(d).

[¶ 11] The Board held that a sale at the meters had occurred, and although EOG alleged that the correct valuation should have been pursuant to § 39-2-208(d), the Board ruled otherwise because EOG had failed to raise the issue during the audit and it was untimely to now raise the issue at hearing. The Board further found that the Department’s determination should be upheld because the distance of the meters from the wellhead was too insignificant to allow downstream valuation. The Board did find, however, that EOG should not be assessed interest for the entire period. Other than that change, the Board affirmed the Department in all respects. EOG now appeals the Board’s decision to this Court.

DISCUSSION

Standard of Review

[¶ 12] Considerable deference is accorded to the findings of fact of the agency, and this Court does not disturb them unless they are contrary to the overwhelming weight of the evidence. Amoco Production Co. v. Wyoming State Bd. of Equalization, 12 P.3d 668, 671 (Wyo.2000). An agency’s conclusions of law can be affirmed only if they are in accord with the law. Id. at 672. Our function is to correct any error that an agency makes in its interpretation or application of the law. In addition, during our judicial review, we will invalidate agency findings or actions made without authority. Id.

Valuation by Transaction Type

[¶ 13] Natural gas is valued for taxation at its fair market value after the production process is completed. § 39-2-208(a). The production process for natural gas is completed “after extracting from the well, gathering, separating, injecting and any other activity which occurs before the outlet of the initial dehydrator.” § 39 — 2—208(b)(ii) (emphasis added). If natural gas is sold to a third party at or prior to this point of valuation, then the fair market value shall be the value established by bona fide arm’s-length transaction. § 39-2-208(c). If natural gas is sold after that point, then an alternative method of valuation listed in the statute applies. § 39-2-208(d). The primary question for us is whether a sale occurred at all. The statute defines a bona fide arm’s-length sale as “a transaction in cash or terms equivalent ... after reasonable exposure in a competitive market between a willing, well-informed and prudent buyer and seller with adverse economic interests.” Wyo. Stat. Ann. § 39-14-201(a)(ii) (LexisNexis 2003). As the analysis that follows shows, we do find that a sale occurred and that sale occurred after the point of valuation.

[¶ 14] In its first issue, EOG contends that the Department erred in determining that the VPP transaction was an arm’s-length sale and not a financing arrangement subject to lower valuation because the Department wrongly concluded that the exchange was a sale on terms equivalent to cash. EOG disagrees that the exchange of product that occurred was a critical variation. Although EOG contends that the exchange was a production payment, our review causes us to agree with the Department’s conclusion that a sale occurred.

[¶ 15] Generally, a VPP transaction provides that in exchange for a large infusion of capital upfront, a producer conveys ownership of production to the buyer for a limited duration. The buyer benefits primarily by gaining reliability in delivery and the buyer’s ownership of the production protects it from a producer’s bankruptcy. For federal income tax purposes, the seller is seen as borrowing money and mortgaging the minerals as security for the loan. The VPP financing transaction is often available to a producer when bank or mezzanine financing is not. Additional benefits gained by a producer are that the VPP is treated as a sale of revenue rather than debt and, because the producer retains control of operations, after the agreed upon production is delivered the producer receives still more capital from production after the VPP ends.

[¶ 16] Based on this description it is easy to see that the parties did enter into a financing transaction when Cactus exchanged over $326,000,000 for production ownership. Under this standard arrangement, the Department, the Board and EOG all correctly determined that § 39-2-208(d) would have applied for valuation purposes. However, the parties did not limit this transaction to that of a standard VPP arrangement, whereby Cactus received Wyoming production in exchange for upfront cash to EOG.

[¶ 17] The parties entered into a second agreement, the Exchange Agreement, entitling Cactus to receive higher priced Texas and Colorado production as repayment for its upfront cash to EOG. At the custody transfer meter, the minerals owned by Cactus were delivered by Cactus back to EOG. Simultaneously, EOG was required to deliver an equivalent amount of gas to Cactus at four locations in Colorado and Texas. The Exchange Agreement provided that if EOG failed to deliver product to Cactus in Colorado and Texas, EOG would pay the equivalent amount in cash. The value would be determined by index pricing relevant to those markets. Simultaneously to the Exchange Agreement, Cactus, which is composed of investors, sold the product received in Colorado and Texas to a third party (EGM) and valued that product by index pricing. The Cactus/EGM transaction was entered into on September 25, 1992, referenced the VPP agreement and required EGM to pursue EOG in the event of any default. The VPP agreement was transferred to another group (Cactus III) and terminated in 1999.

[¶ 18] EOG reported and paid taxes pursuant to § 39-2-208(d) and in reliance upon a memo sent by the Department instructing all oil and gas producers to use the comparable value method to value the sales of production that were not sold by arm’s length sales at the wellhead. In 1997, the Department began an audit of EOG’s Lincoln and Sublette County production. Unfamiliar with a VPP as a form of financing, the representatives of the Department and the Attorney General’s office met with EOG’s representatives in Houston, Texas, and reviewed the VPP transaction documents. These documents revealed that after Cactus acquired title to EOG oil and gas production in exchange for cash, Cactus and EOG again exchanged product that Cactus sold to a third party, EGM.

[¶ 19] Based upon information from these documents, the Department determined that it must view the entire transaction as an arm’s-length sale and based valuation on the index pricing referenced in the Cactus/EGM transaction where Cactus simultaneously resold the Texas and Colorado product to a third party for profit. Under this arrangement, Cactus was repaid faster by EOG, never had to take possession of any product, and its risk was further reduced by a clause in the exchange agreement that provided that if EOG failed to deliver the Texas and Colorado product, EOG would make a cash payment to Cactus in accordance with regional index pricing. That same regional index pricing controlled the sale between Cactus and EGM.

[¶ 20] EOG defends the Exchange Agreement transaction as the agreed upon repayment method required under the refinancing arrangement and argues vigorously that the exchange was not a bona fide arm’s-length transaction as defined by statute, and therefore the Department was not permitted to base the valuation upon index pricing. Viewing the VPP transaction in its entirety, we agree with the Department that the VPP transaction was a variation of the standard financing arrangement that was not simply intended to provide financing, but was intended ultimately as a sale of product.

[¶ 21] Under the statute, valuation is determined by the type of transaction associated with the severance. § 39-2-208(c), (d). By this language, the legislature has directed that the Department and the Board view this transaction in its entirety. That review revealed that this transaction intended something beyond mere financing. A sale was intended based upon the “index pricing” referenced in the Exchange Agreement and the Department properly relied upon that index pricing as the parties’ valuation of the product’s fair market value. Our review agrees with this assessment of the transaction and neither those entities nor this Court is permitted to ignore legislative intent because the contracting parties designated the transaction as a financing arrangement. Producing natural gas by means of complex financing, brokering, and sales agreements may well warrant different valuation treatment; however, the present statutory scheme does not permit it and changing that scheme is a matter for the legislature and beyond the purview of this Court.

Constitutional Requirement of Uniformity

[¶22] EOG’s second issue disputes the Department’s use of index pricing from the distant regions of Colorado and Texas without accounting for its repayment obligations to Cactus. The Department tells us that it routinely uses index pricing whenever an agreement references index pricing to determine contract price. The Board also found it routine and EOG fails to explain why this method is inappropriate for a sales transaction. We find that EOG’s argument is relevant only if we had determined that a financing, rather than a sales, agreement existed. Our decision is otherwise, and we do not further consider the issue.

Point of Valuation

[¶ 23] Finally, EOG complains that if a sale did occur, it was not a sale at or prior to the point of valuation and the proper method of valuation was under § 39-2-208(d). The Board found:

In its Motion for Reconsideration, Petitioner indulged in a hyper-technical argument that if the Department’s position was correct that an arm’s length sale took place at the custody transfer meter under the VPP documents, then the Department should have used an alternative valuation method under the statute because technically the gas sold a few feet away from the outlet of the dehydrator which is downstream from the statutory point of valuation. The Board finds this argument to be both breathtakingly ingenious and nonsensical at the same time. The reason why the Wyoming Legislature deemed it necessary to establish a point of valuation was because it was important to separate upstream production costs from downstream transportation costs, the latter being deductible from the gross value received by the producer at the wellhead. Many times this becomes important in gas fields where the wellheads, dehydrators and custody transfer meters are located miles apart. When the custody transfer meter and the outlet of the dehydrator are located virtually side-by-side as they are in this case, the distance is of no significance whatsoever. The Board found Petitioner’s argument to be irrelevant at the hearing and after further reviewing the record, we find it to be irrelevant still.

EOG contends that the Board has no evidence supporting its legislative intent assertion, the point of valuation defined in § 39-2-208(b) is unambiguous and the definition establishes a legislative intent to draw a bright line as to when the Department may use arm’s-length sales at or before this point and when it must resort to alternative valuation methods. -

[¶ 24] The Department and the Board determined that a sale from Cactus back to EOG occurred after the outlet of the initial dehydrator at the custody transfer meter. Finding that the transfer occurred at the meter factored into the overall assessment that the production payment was a sale and not an exchange. Despite the statutory language indicating that this distinction would determine whether § 208(c) or (d) applied, the close physical proximity of the two points prompted the Board to deduce that the legislature intended for § 208(c) to apply. Legislative intent, however, must be derived from the plain language of the statute unless ambiguity exists. Parker Land and Cattle Co. v. Wyoming Game and Fish Comm’n, 845 P.2d 1040, 1042-43 (Wyo.1993). In this case, the statutory language unambiguously distinguishes between these two points with no reference to physical proximity. This provision, however, must be read as part of the whole statute. Id. at 1043-44. If § 208(d) applies, then the fair market value is the arms length sales price less processing and transportation fees. The Department advises us that finding error is pointless because the comparative value methodology will apply and no significant difference in valuation will result for EOG. The Board also concluded that because the custody transfer meters were next to the outlet, it was immaterial which valuation method was applied.

[¶ 25] EOG ignores this de minimis argument, contends that the statute’s plain language must be enforced and requests that this court reverse and remand with instructions to determine which, if any, of the “sales” took place at or before the point of valuation. Based upon this response, we believe that although EOG is correct in its assertion that the Department did not correctly determine the point of valuation under § 208(b), we will uphold the Board’s decision under the de minimis doctrine. Without any indication that the distance of the meter from the outlet measurably increased processing and transportation and any other costs dealt with by the comparative value method of § 208(d), a reversal and remand for recalculation is unnecessary.

CONCLUSION

[¶26] A standard volumetric production payment is a financing arrangement; however, this VPP transaction included a series of exchanges for terms equivalent to cash based upon index pricing that produced an arms length sale. The point of valuation- for the sale did require application of § 208(d); however, that error was not brought to the Department or Board’s attention until well after the audit. At that point, the Board properly determined that the error was de minimis and it was not required to remand for a recalculation. The order of the Board is.affirmed.

      . The statute governing this transaction was Wyo. Stat. Ann. § 39-2-208 (Michie 1997). That statute has been revised and renumbered and is now found at Wyo. Stat. Ann. § 39-14-203 (Lex-isNexis 2003).

      . EOG explains that MMBTUs are a measure of the heating content or energy available in a fuel and constitute one million British Thermal Units. Gas is measured in MMBTUs but oil and condensate are normally measured in barrels.

      . The Department audit did not dispute the valuation method of any other type of mineral and none were at issue at the Board hearing.

      . Wyo. Stat. Ann. § 39-2-208(c) (Michie 1997) provides:
      If [natural gas is] sold to a third party, or processed or transported by a third party at or prior to the point of valuation provided in subsection (b) of this section, the fair cash market value shall be the value established by bona fide arms-length transaction.

      .Wyo. Stat. Ann. § 39-2-208(d) (Michie 1997) provides:
      In the event the [natural gas] is not sold at or prior to the point of valuation by bona fide arms-length sale ... [t]he department shall determine the fair cash market value by application of one (1) of the following methods:
      (i) Comparable sales — ...
      (ii) Comparable value — ...
      (iii) Netback — ...
      (iv) Proportionate profits — ....

      . Wyo. Stat. Ann. § 39 — 14—201 (a)(ii) states: " 'Bona fide arm's-length sale' means a transaction in cash or terms equivalent to cash for specified property rights after reasonable exposure in a competitive market between a willing, well informed and prudent buyer and seller with adverse economic interests and assuming neither party is acting under undue compulsion or duress[J”


source: Caselaw Access Project

author: KITE, Justice.

license: Public Domain

text:
    2004 WY 36
    UNION PACIFIC RESOURCES COMPANY, Appellant (Cross-Claim Plaintiff), v. William DOLENC, d/b/a Dolenc Welding Service, Appellee (Cross-Claim Defendant.).
    No. 03-75.
    Supreme Court of Wyoming.
    April 2, 2004.

      Representing Appellant: Richard H. Ho-naker of Honaker Law Offices, LC, Rock Springs, Wyoming.
    Representing Appellee: J. Kent Rutledge and Kevin C. Cook of Lathrop & Rutledge, P.C., Cheyenne, Wyoming.
    Before HILL, C.J., and GOLDEN, LEHMAN, KITE, and VOIGT, JJ.
   KITE, Justice.

[¶ 1] Union Pacific Resources Company (UPRC) sought indemnification from Dolenc Welding Service (Dolenc) when an injured employee of a subcontractor working on a UPRC water line sued to recover for his injuries. The district court granted summary judgment in favor of Dolenc holding the indemnification provision of the contract between UPRC and Dolenc was void and unenforceable pursuant to Wyo. Stat. Ann. § 30-1-131 (LexisNexis 2003). We reverse and hold that the anti-indemnity statute did not cover a contract involving work on a water plant used for purposes of secondary recovery in an oil field because it was not an agreement pertaining to an oil or gas well within the meaning of the statute.

ISSUES

[¶ 2] UPRC states the issue as:

Is the modification of water piping in a water plant directly related to an oil, gas or water well itself, such that Wyoming’s anti-indemnity statute applies to void an agreement indemnifying an indemnitee against its own negligence?
[¶ 3] The issues as stated by Dolenc are:
1. Does the agreement for services pertain to any well for oil, gas, or water, as described in W.S. § 30-1-131?
2. Is the provision in the contract between the parties void and unenforceable because it is otherwise against public policy?

STANDARD OF REVIEW

[II4] Summary judgment is appropriate when there is no genuine issue of material fact and the prevailing party is entitled to judgment as a matter of law. Wyoming Rules of Civil Procedure, 56(c). A genuine issue of material fact exists when a disputed fact, if proven, would have the effect of establishing or refuting an essential element of the cause of action or defense asserted by the parties. Baker v. Pena, 2001 WY 122, 36 P.3d 602 (Wyo.2001). This case involves cross-motions for summary judgment in which neither party disputes the relevant facts. Therefore, this Court must only determine whether summary judgment was proper as a matter of law. Cities Service Oil and Gas Corp. v. State, 838 P.2d 146 (Wyo.1992). We review matters of law de novo without affording any deference to the decision of the district court. Wadi Petroleum, Inc. v. Ultra Resources, Inc., 2003 WY 41, 65 P.3d 703 (Wyo.2003).

FACTS

[¶ 5] UPRC operates an oil field near Patrick Draw in southwest Wyoming. As is typical in many oil fields, water known as “raw water” is produced with the oil. One way of handling the raw water is to treat it and then re-inject it into the field as part of a water flood operation, which improves and enhances the production of oil. During such an operation, the raw water is separated from the oil and transported from the field to a water plant through a system of pipes. The plant combines the raw water with fresh water produced from a water well, treats the water to remove excess sediment, and then stores it in a clear water tank. Pipes then carry the water to injection pumps where it is pumped under high pressure back to the oil field and down into the formation. The re-injection accomplishes two purposes — disposal of the raw water and enhancement of oil production by moving oil through the formation to a producing well bore where it can be brought to the surface. In a water flood operation, the operator takes steps to prevent bacteria, which can produce dangerous hydrogen sulfide gas, from forming in the water. This is accomplished by injecting chemicals into the raw water tanks, and keeping oxygen out of the tanks by piping natural gas into the water tanks to form a blanket on top of the water.

[¶ 6] UPRC’s operation included a water plant, however, it had not been functioning consistently due to leaking and dilapidated tanks and engines. Two of the engines had been out of service for over ten years because the clear water tank they were con-neeted to had developed leaks and, therefore, UPRC had the pipelines leading to and from the tank blocked off with valves. The other three engines were either out of service or in such a state of disrepair that they were frequently shut down. In an effort to improve operation of the plant, UPRC decided to modify the piping so that engines one and two could be connected to the functional tank, thus relieving the other three dilapidated engines.

[¶ 7] Dolenc contracted with UPRC through a Master Service Contract to perform welding services as necessary. The terms of the contract provided Dolenc would indemnify UPRC for any “loss, cost, damage or expense ... arising out of bodily injury ... to ... any subcontractor ... arising out of the performance of the work, WHETHER OR NOT RESULTING IN WHOLE OR IN PART FROM THE SOLE, CONCURRENT, OR COMPARATIVE NEGLIGENCE, OR STRICT LIABILITY OF THE UPRC GROUP.” Another contractor, Elk-horn Construction, entered into a similar contract with UPRC to provide labor on an as-needed, day-to-day basis.

[¶ 8] Pursuant to the contract, UPRC directed Dolenc to make the piping changes required in the water plant. Before welders undertook work in which they could potentially come into contact with hydrocarbons or other explosive material, UPRC typically issued them a “hot work permit.” None was issued for Dolenc’s work on the water plant piping because UPRC did not consider the water plant “a hot work permit area in that it was a water facility.” Ordinarily, when a welder like Mr. Dolenc performs work, he has an assistant called a firewatch, who is equipped with a fire extinguisher. One of the firewateh’s job duties is to make sure sparks thrown from the welder’s torch do not start a fire. On this job, Luis Gomez, an employee of Elkhorn Construction, served as Mr. Dolenc’s firewatch. When Mr. Dolenc started to cut the first pipe with his welding torch, there was an explosion. Mr. Gomez was knocked unconscious and suffered lacerations, burns, and other injuries. He filed suit against Dolenc and UPRC alleging both were negligent in failing to discover the water lines contained hydrocarbons and claiming damages for the injuries he suffered in the explosion.

[¶ 9] UPRC filed a cross-claim against Dolenc seeking indemnification pursuant to the Master Service Contract in effect at the time of the explosion. Mr. Gomez entered into a stipulation with UPRC to dismiss it from the case leaving Dolenc as the only defendant. Dolenc then moved for summary judgment against UPRC claiming the anti-indemnification statute prevented UPRC from enforcing the indemnification provision of the contract. UPRC filed a cross-motion for summary judgment seeking a determination that the statute did not apply and the contract was enforceable. The district court granted summary judgment in favor of Do-lenc and UPRC filed this appeal.

DISCUSSION

[¶ 10] UPRC argues the anti-indemnity statute does not apply to the facts in this case because the work being performed was not “in connection with any well” drilled for purposes of producing oil, gas or water as required by the anti-indemnification statute, which it asserts must be strictly construed because it constricts the common law right of freedom to contract. UPRC relies upon Reliance Insurance Co. v. Chevron U.S.A. Inc., 713 P.2d 766 (Wyo.1986) and Gainsco Insurance Co. v. Amoco Production Co., 2002 WY 122, 53 P.3d 1051 (Wyo.2002), in which we held contracts for work related to oil and gas production, but not to the wells themselves, were not covered by the statute.

[¶ 11] In response, Dolenc contends the language of the statute, which includes work done “in connection with” oil and gas wells, is broad enough to cover work performed on the water plant because the ultimate purpose was enhancement of oil production. With regard to Reliance and Gainsco, Dolenc claims they are factually different from this case and are not controlling.

[¶ 12] The anti-indemnification statutes provide:

§ 30-1-131. Provisions for indemnity in certain contracts; invalidity
(a) All agreements, covenants or promises contained in, collateral to or affecting any agreement pertaining to any well for oil, gas or water, or mine for any mineral, which purport to indemnify the indemnitee against loss or liability for damages for:
(i) Death or bodily injury to persons;
(ii) Injury to property; or
(iii) Any other loss, damage, or expense arising under either
(i) or (ii) from:
(A) The sole or concurrent negligence of the indemnitee or the agents or employees of the indemnitee or any independent contractor who is directly responsible to such indemnitee; or
(B) From any accident which occurs in operations carried on at the direction or under the supervision of the indemnitee or an employee or representative of the in-demnitee or in accordance with methods and means specified by the indemnitee or employees or representatives of the indem-nitee, are against public policy and are void and unenforceable to the extent that such contract of indemnity by its terms purports to relieve the indemnitee from loss or liability for his own negligence. This provision shall not affect the validity of any insurance contract or any benefit conferred by the Worker’s Compensation Law [§§ 27-14-101 through 27-14-805] of this state.
§ 30-1-132. Provisions for indemnity in certain contracts; definition
The term “agreement pertaining to any well for oil, gas, or water, or mine for any mineral” as used in section 1 hereof [§ 30-1-131], means any agreement or understanding, written or oral, concerning any operations related to drilling, deepening, reworking, repairing, improving, testing, treating, perforating, acidizing, logging, conditioning, altering, plugging, or otherwise rendering services in or in connection with any well drilled for the purpose of producing or disposing of oil, gas or other minerals, or water, and designing, excavating, constructing, improving, or otherwise rendering services in or in connection with any mine shaft, drift, or other structure intended for use in the exploration for or production of any mineral, or an agreement to perform any portion of any such work or services or any act collateral thereto, including the furnishing or rental of equipment, incidental transportation, and other goods and services furnished in connection with any such service or operation. (emphasis added)

[¶ 13] In interpreting these statutes, we apply well-known and accepted rules of statutory construction.

This court interprets statutes by giving effect to the legislature’s intent.... We begin by making an inquiry relating to the ordinary and obvious meaning of the words employed according to their arrangement and connection.... We give effect to every word, clause, and sentence and construe together all components of a statute in pari materia. ... Statutory interpretation is a question of law.... We review questions of law de novo without affording deference to the district court’s decision.” Worcester v. State, 2001 WY 82, ¶ 13, 30 P.3d 47, 52 (Wyo.2001). If a statute is clear and unambiguous, we simply give effect to its plain meaning. Wesaw v. Quality Maintenance, 2001 WY 17, ¶ 13, 19 P.3d 500, 506 (Wyo.2001) (quoting In re Claim of Prasad, 11 P.3d 344, 347 (Wyo.2000)). Only when we find a statute to be ambiguous do we resort to the general principles of statutory construction. Wesaw, 2001 WY 17, ¶ 13, 19 P.3d at 506 (quoting In re Claim of Prasad, 11 P.3d at 347). An ambiguous statute is one whose meaning is uncertain because it is susceptible to more than one interpretation. Pierson v. State, 956 P.2d 1119, 1125 (Wyo.1998) (quoting Amrein v. State, 836 P.2d 862, 864-65 (Wyo.1992)).
It is a basic rule of statutory construction that courts may try to determine legislative intent by considering the type of statute being interpreted and what the legislature intended by the language used, viewed in light of the objects and purposes to be accomplished....
We are guided by the full text of the statute, paying attention to its internal structure and the functional relation between the parts and the whole. In re Worker’s Compensation Claim of Johnson, 2001 WY 48, ¶ 8, 23 P.3d 32, 35 (Wyo.2001) (quoting In re Hernandez, 8 P.3d 318, 321 (Wyo.2000) and Parker Land and Cattle Co. v. Wyoming Game and Fish Com’n, 845 P.2d 1040, 1045 (Wyo.1993)). Each word of a statute is to be afforded meaning, with none rendered superfluous. Jessen v. Burry, 13 P.3d 1118, 1120 (Wyo.2000). Further, the meaning afforded to a word should be that word’s standard popular meaning unless another meaning is clearly intended. Soles v. State, 809 P.2d 772, 773 (Wyo.1991). If the meaning of a word is unclear, it should be afforded the meaning that best accomplishes the statute’s purpose. Radalj v. Union Savings & Loan Ass’n, 59 Wyo. 140, 138 P.2d 984, 996 (1943).

Rodriquez v. Casey, 2002 WY 111, ¶¶ 9-10, 50 P.3d 323, ¶¶ 9-10 (Wyo.2002).

[¶ 14] Applying these rules, we conclude the anti-indemnity statute is awkward and contains an ambiguous description of the nature of the work or services to which it applies. Section 30-l-131(a) of the statute states that it applies to “any agreement pertaining to any well for oil, gas or water”, suggesting the work or activity must be involved with the well itself. Section 30-1-132, however, defines the term “agreements pertaining to any well” as including any operations related to specific work, such as drilling, repairing, testing or plugging, “or otherwise rendering services in or in connection with any well drilled.” Dolenc argues this catch-all phrase broadens the scope of the statute to include work beyond the well itself. Section 30-1-132 goes on to create even further ambiguity by including in the definition, “an agreement to perform any portion of any such work or services (referring back to the list and the catchall phrase) or any act collateral thereto, including the furnishing or rental of equipment, incidental transportation, and other goods and services furnished in connection with any such service or operation.” This last provision inserts the concept of any act “collateral” to work on the well, including the use of rental equipment and “incidental transportation” presumably of equipment and services to the well. The plain language of the statute fails to unambiguously answer the question presented by this case of how far beyond the well the anti-indemnity statute reaches. We, therefore, must resort to the rules of statutory construction to determine its meaning.

[¶ 15] The legislative history of the statutes sheds little light on the question of legislative intent. The statute was adopted in 1969 and amended in 1977. (1969 Wyo. Sess. Laws, ch. 46, § 1; 1977 Wyo. Sess. Laws, ch. 145, § 1). However, the amendment is not relevant to the issue before us. The bill contained no statement of purpose. As we noted in Mountain Fuel Supply Co. v. Emerson, 578 P.2d 1351, 1354 (Wyo.1978), the mineral industry in general involves ul-trahazardous work, and by adoption of this statute the legislature was most likely addressing the safety issues raised by contracts which indemnify the indemnities from their own negligence which could have the effect of insulating persons responsible for such work from the consequences of unsafe practices in the workplace. However, we can only speculate as to why the legislature limited the statute to contracts for work performed on oil, gas and water wells. Absent legislative history, a statement of purpose or some other evidence of legislative intent, we are left to examine the statutory language to discern legislative intent.

[¶ 16] This is not the first time this Court has considered the language of the anti-indemnity statutes in the context of determining the scope of the work and services intended to be covered. In Reliance, 713 P.2d 766, we determined work performed to construct holding ponds for collecting waste oil and water on the site of an oil and gas separator that had exploded and burned was not work “pertaining to” an oil and gas well and, therefore, the statute did not apply. The contract in that case was similar to the UPRC-Dolenc Master Service Contract in that it did not specify the type of work to be performed, only that the contractor would provide labor, materials and equipment “as needed.” Chevron directed the contractor to dig holding ponds to prevent waste water and oil from entering adjacent drainages. In the performance of that work, the contractor struck a high-pressure propane line, which caused a fire, damaged equipment, and caused personal injuries to the contractor’s employee. Id. at 768, 769. We concluded the work was not covered by the statute, stating:

The relevant first portion of § 30-1-132 contains a list of activities to which an agreement must “relate” before that agreement can be said to pertain to a well for oil or gas. At the end of the list, the statute includes a catchall phrase which indicates that some unlisted contractual activities could also be included. Reliance does not attempt to link Searle’s pit digging activities to any of the specifically listed activities. Instead, Rebanee argues that by digging the pits Searle was “otherwise rendering services in or in connection with any well drilled for the purpose of producing or disposing of oil, gas or other minerals, or water.”
We disagree. We do not think that one who digs pits to collect waste fluids from a fire at a separation plant is rendering services in connection with an oil well. This is true even if the separation plant processes gas which is eventually reinjected into the oil field to repressivnze oil wells. Searle was digging the pits so that waste from the fire would not flow into local drainages. It was not involved in actual fire fighting which would enable the plant to resume repressurization.
The catchall phrase, “rendering services ⅜ * * * in connection with any well,” follows a list of specific activities which are closely related to well drilling. Under the rule of statutory construction, ejusdem generis, a general term, which concludes a list of specifically enumerated terms, should be restricted to the same genus as the things enumerated. Green River Development Company v. FMC Corporation, Wyo., 660 P.2d 339, 353 (1983). Therefore, the phrase, “rendering services * ⅜ * in connection with any well,” should be construed to cover only those services closely related to well drilling. Not covered are services or activities having a remote or indirect connection to the kinds of services enumerated in § 30-1-132, supra
Finally, we note that the statutory scheme created by §§ 30-1-131 and 30-1-132 restricts the freedom to contract, a common law right. Statutes, which preempt common law rights, must be strictly construed. Mahaney v. Hunter Enterprises, Inc., Wyo., 426 P.2d 442, 444 (1967).

Id. at 772 (emphasis added).

[¶ 17] Our reasoning in Reliance remains sound and compels us to reach the same conclusion in this case. When the catch-all phrase is considered in the context of the list of specific activities preceding it, all of which are activities conducted upon the well itself, the intent of the legislature is clear. The anti-indemnity statute applies only to contracts for work performed directly on oil, gas, and water wells. No valid distinction can be drawn between the facts in this case and those present in Reliance. That case involved work performed on a plant that separated gas from the produced oil and then returned the gas to the field to be reinjected for purposes of enhancing production. Do-lenc performed the welding work in this case on piping in a water plant that separated water from produced oil and then returned the water to the field for reinjection for disposal of the water and enhancement of production. In either case, we cannot determine what distance the plants were located from the wells, but we can assume those plants were centrally located some distance away from the wells they served. The statutory construction rule of ejusdem generis instructs us that the legislature must have intended the catch-all phrase to include work similar to the activities specifically listed, all of which are performed on the well itself, not on processing equipment downstream of the well. In Reliance, we held work that was remote or indirectly related to work on the well itself was not covered by the language of the statute and we see no reason to deviate from that reasoning in this case.

[¶ 18] Reliance refers to the fact that the work did not involve actual fire fighting “which would enable the plant to resume re-pressurization.” Dolene further argues this language suggests that if the work somehow affects oil and gas well production, it is covered. Dolene argues that because the work in this case improved and enhanced oil production, it should be considered “in connection with” the oil well. We see two problems with Dolene’s argument. First, it ignores the specific types of well work listed by the legislature as being covered, none, of which relate to the processing of gas or water after production from the well has occurred. Second, the interpretation urged by Dolenc would extend coverage of the statute to any work, no matter how distant from the well or how indirectly related to the well. Under that theory, work anywhere in the course of oil and gas production, processing, transportation or distribution could be covered. We find no indication in the language of the statute that the legislature contemplated that result.

[¶ 19] We also addressed the reach of this statute in Gainsco, in which the work in question involved transporting oil skimmed from settling ponds to an oil storage tank. Again applying the rule of ejusdem generis, we held “ ‘or otherwise rendering services in or in connection with any well’ was limited to those services similar to ‘drilling, deepening, reworking, repairing, improving, testing, treating, perforating, acidizing, logging, conditioning, altering, [or] plugging’ Wyo. Stat. Ann. § 30-1-132. Without doubt, those terms are directly related to the well itself, and not to general oil field work.” Id. at ¶ 88. The similarities between the Gainsco facts and those before us in this case are also striking. The Gainsco contractor performed work on facilities that handled oil after it was produced from the well and separated from drilling fluids. Likewise, Dolenc was working on water lines that transported water after it had been separated from oil produced at the well.

[¶ 20] In both Reliance and Gainsco, we noted the statute restricts the common law right to contract and, therefore, must be strictly construed Mahaney v. Hunter Enterprises, Inc., 426 P.2d 442, 444 (1967). Limiting the statute’s application to only contracts for work performed on the wells follows that rule.

[IT 21] Dolenc raises, and we recognize, the public policy concerns associated with contracts purporting to indemnify parties against their own negligence. In Mountain Fuel Supply Co., 578 P.2d at 1354, we noted such contracts may remove or reduce the incentives to protect workers and others from personal injury and the anti-indemnity statute would help to insure that persons responsible for the work were properly motivated to provide safe working conditions. In finding the anti-indemnity statute constitutional, we concluded the legislature had a reasonable basis for singling out the mineral business as particularly hazardous and declaring unenforceable contracts involving that type of work which purported to relieve parties from liability for their own negligence.

It is generally known that the minerals industry is the single most dominant economic factor in the state. ([FN4]) There were projected to be 22,991 workers in the “Mining” sector in Wyoming in 1977, representing 11.5% of the total state work force. Mining employment figures were exceeded only by the services, trade and government sectors. ([FN5]) The growing significance of energy development in the state, and the parallel increase in the relative importance of mining employment are also noted. ([FN6]) It is also generally known that the drilling and completion of oil and gas wells is always a hazardous undertaking (Pan American Petroleum Corporation v. Like, Wyo., 381 P.2d 70, 74), and that it can be characterized as a particularly hazardous type of work.

Id. at 1355 (footnotes omitted). See Davis v. Commonwealth Edison Co., 61 Ill.2d 494, 336 N.E.2d 881 (1975). For those reasons, we joined the many jurisdictions that require contracts purporting to indemnify parties against them own negligence to be strictly construed. Wyoming Johnson, Inc. v. Stag Industries, Inc., 662 P.2d 96, 99 (Wyo.1983); Northwinds of Wyoming, Inc. v. Phillips Petroleum Co., 779 P.2d 753 (Wyo.1989). However, we decline Dolenc’s invitation to declare all contracts indemnifying parties against their own negligence void as against public policy. We do so for two reasons: first, Dolenc did not raise the issue in the district court, and second the legislature has established public policy in this arena and we will not second guess the wisdom of their decisions in that regard. Whether the statute represents sound public policy is not our concern. As we noted in Gainsco, “We are not free to legislate. While the public policy of worker safety might be enhanced if the anti-indemnity statute applied to all work done in the oil field, or elsewhere, for that matter, the legislature has not chosen to take that step. We certainly cannot do so in its stead.” Gainsco, ¶ 88, n. 13. Also, we have consistently refrained from invalidating contracts between competent parties on the basis of public policy “unless the policy is well settled, unambiguous and not in conflict with another public policy equally or more compelling.” Goglio v. Star Valley Ranch Association, 2002 WY 94, 48 P.3d 1072 (Wyo.2002).

[¶ 22] Reversed and remanded.

      . In its reply brief, UPRC raises the issue of whether Mr. Gomez was an "Employee,” "Subcontractor”, “Invitee” or "Licensee” of Dolenc. The district court found questions of material fact existed on this issue. In addition, the summary judgment in favor of Dolenc was limited to the application of §§ 30-1-131 and 132. Therefore, the issue of Mr. Gomez’ status is not properly before us and we will not address it.

      . If we had misinterpreted the legislature’s intent in either Reliance (1986) or Gainsco (2002), we presume the legislature would have acted to correct our interpretation and it has not done so. We also note Northwinds of Wyoming, Inc., 779 P.2d 753, dealt with a contract indemnifying the indemnitee against its own negligence and no suggestion was made that work on a natural gas pipeline would trigger the anti-indemnification statute.