Unlike an insurance policy, which is a contract between two parties dealing with a fortuitous event, a surety bond is a contract between three parties, the Principal (owner), the Surety (bonding company) and an Obligee (the person or entity requiring the bond). A surety bond obligates the Surety, in the event of non-performance by the Principal, to perform the Principal’s obligation to the Obligee. If the obligation is not performed by the Principal, the Surety may perform the obligation or pay the penalty amount of the bond to the Obligee; however, the Surety retains the right to pursue the Principal for the amount of its loss and expenses. Bonds usually terminate when the principal’s obligations have been fulfilled.
To secure bonding, EnRisk must present the Surety with the financial information it requires. This information will be kept in the strictest confidence by our office as well as the Surety’s. The following is a list of information that the Surety:
Will Require
May Require
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Personal financial statement
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Personal indemnification
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Bank reference letter
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Report on proven reserves
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Economics of wells
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Resume on all principals
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Schedule of existing bonds
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Schedule of potential bonds
**Once all of the information is submitted to the Surety for review, collateral may be required in the form of Irrevocable Letter of Credit, Certificate of Deposit, etc. **