Plain-English definitions of 75 land, lease, evaluation, geology and engineering terms. Search for a word or pick a category.
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Ownership, title and the units wells are drilled in.
The sale, transfer or conveyance of all or part of an ownership interest or rights in real estate or other property. In oil and gas, the term is commonly used to convey working interest, leases, royalty, overriding royalty interest and net profits interest.
An agreement between the operator and a net revenue interest (NRI) owner that states the fractional interest the operator attributes to that owner after examining title.
The area of land a state regulator assigns to a well or group of wells producing from a reservoir. Owners inside the unit share in production from it.
Ownership of the entire and absolute right to use or exploit a tract of land from the center of the earth to the sky, including the air, surface and minerals.
State rules for spacing and production within a common reservoir covering a specific geographic area.
Being required by state law to participate in an oil and gas producing unit. Pooling is how operating companies organize a drilling unit when not every owner has signed a lease.
The person or entity receiving lands, minerals or another interest. The person or entity conveying it is the grantor.
A lease provision that keeps a lease in force for as long as a well produces a minimum quantity of oil or gas.
Spacing orders limit development to a set number of wells per unit. Operators can ask the state regulator, at a hearing, to allow more wells in a unit based on how the reservoir drains.
The owner of the rights and interest in a mineral estate that has been severed from the surface.
Ownership of the right to explore for, mine or produce the minerals beneath a property, including oil and gas. Mineral rights include: 1. the right to use as much of the surface as reasonably necessary to reach the minerals, 2. the right to convey the minerals, 3. the right to receive bonus, 4. the right to receive delay rentals and 5. the right to receive royalty. The owner may convey any or all of these rights.
The legal ownership of minerals within a specific tract of land.
A share of production revenue from a mineral estate, free of drilling costs, that does not include the right to lease the minerals or to receive bonus or delay rentals.
A fractional, undivided share of the proceeds from oil and gas sold from specific tracts. It is carved out of a lease, not the minerals, and ends when the lease ends.
A royalty interest that also gives its owner the right to share in bonus payments as well as in revenue from oil and gas produced.
A unit created by combining separate mineral interests under the pooling clause of a lease or agreement.
An order issued after a hearing before the state regulator that sets the terms of a forced pooling.
The act of confirming. Ratifying an oil and gas lease confirms its existence and terms.
Townships are divided into 36 sections. Each section is one mile square and contains 640 acres.
The separation of a mineral or royalty interest from the other interests in the same land.
A state tax charged to royalty and working interest owners on their share of oil and gas production.
A chronological history of the ownership of, and significant events affecting, a particular property.
Steps taken to fix defects in the chain of title (ownership history), including correcting documents and reconciling title with how the land is used and possessed.
An oil and gas lease that takes effect only after an existing lease on the same tract expires or terminates.
The grid that locates land in most western states. Townships and ranges are measured from a state's principal meridian and base line. You do not need to know where those lines are: any county land map shows the township and range.
A share of an oil and gas lease that gives its owner the right to explore, drill and produce. Working interest owners pay their share of the costs of leasing, drilling, producing and operating, and after royalties are paid they share in production revenue.
The contract between you and the company that drills.
A payment from the lessee to the lessor that keeps a lease alive for another year during its primary term when there is no drilling or production. If it is not paid and there is no production or drilling, the lease terminates.
The cash payment a lessee pays the mineral owner for signing an oil and gas lease.
A payment from the lessee to the lessor, due on or before the end of the primary term, that extends the lease when there is no drilling or production holding it.
The person or company receiving an oil and gas lease.
The person or entity granting an oil and gas lease, usually the mineral owner.
Your share of a well's revenue. It is calculated from your royalty rate, the well's spacing and its allocation: (net mineral acres / spacing acres) x allocation % x royalty rate.
The initial period an oil and gas lease gives the lessee to develop the property. Many leases add a secondary term, called an extension or kicker.
A lease clause that stops a lessee from holding non-producing lands or depths past the primary term. Also known as a Freestone rider.
The payment you receive from oil and gas production, as set out in your lease.
The percentage of gross or net production paid to the mineral owner. Also called royalty percentage.
A payment to royalty owners that lets the lessee keep a lease when a well can produce but is shut in, for example for lack of a market.
How minerals are valued, offered and sold.
Similar wells used for comparison to show the range of likely outcomes. Common attributes compared are geology, reservoir, well density, well design, first production date and completion method.
Proved developed non-producing reserves: wells and infrastructure are in place, but the reserves are not yet producing, so some execution risk remains.
Proved developed producing reserves: reserves that are producing oil or natural gas today. PDP has the highest value because development and execution risk is gone.
The value today of a future stream of cash flows, based on a discount rate. It reflects the idea that money today is worth more than the same money in the future.
Proved undeveloped reserves: the least valuable proved reserves, because substantial development and execution risk remains before production.
The legal document signed once an offer is accepted. It states the final price and all other terms of the sale.
A representative production profile for a well in a specific play or area: the best estimate of how a successful new well there would produce over time.
The rocks that hold oil and natural gas.
A porous, permeable sedimentary rock that contains oil and gas.
A distinct layer of rock, defined by how it was deposited or by its structure.
The ability of a rock to let fluids or gas flow through its pore spaces.
The percentage of a rock's volume that can hold oil, gas or water.
Rocks formed from pieces of older rock or once-living organisms that build up at the earth's surface. They often show distinct layers, like the mesas and arches of the desert southwest.
A trap formed by changes in rock type, or where a reservoir layer thins out, that seals oil and gas in place without folding or faulting.
How far heat and time have converted the organic matter in a source rock into oil and gas.
The amount of organic material in a source rock, measured as the weight percent of organic carbon.
A low-porosity, low-permeability sedimentary rock that contains oil and gas.
Drilling, completing and producing wells.
A budget, usually prepared by the operator, listing the estimated cost to drill a well to a set depth and then complete or abandon it.
The work and equipment needed to bring a well into production after drilling ends. Completion quality can strongly affect production from unconventional reservoirs.
The first period of production after a well comes online, when rates are much higher than they will be as the well ages.
A pipeline that collects oil and gas from wells in a field and brings it to a common point for transport to market.
An organic compound of hydrogen and carbon. Oil, natural gas and their derivatives are hydrocarbons.
Drilling new wells between existing producing wells to increase total recovery of oil and gas.
The early flow rate of oil or gas from a new well. Operators usually report IP as an average over the first 30 to 60 days.
A well used to inject fluids, usually produced water, into an underground formation.
One thousand cubic feet of natural gas, measured at a standard pressure and temperature. The standard unit for natural gas volumes in the United States.
Heavier hydrocarbons separated from natural gas as liquids, such as ethane, propane, butane, isobutane and pentane.
The company responsible for running a well under the rules set by the state regulator.
One of two IRS methods for calculating the depletion allowance on oil and gas income. Generally 15% of the gross value of the year's production, subject to limits.
Holes shot through the casing and cement into the producing formation so oil and gas can flow into the well.
Sealing a well at the end of its productive life with cement, removing the wellhead, cutting the casing below ground and welding a steel plate over the top.
The highest-risk category of unproved reserves, with at least a 10% chance of being recovered.
Reserves less certain than proved reserves but more likely than not to be recovered: a 50% or greater chance.
Oil and gas that has been located and is economically recoverable, with a 90% or greater chance of being produced under current conditions.
Completing an existing wellbore in a different formation from the one it originally produced.
A mature well near the end of its economic life.
Mechanically lifting liquids out of a wellbore.
Lease acreage where wells have not been drilled or completed to produce commercial quantities of oil and gas.
The drilled hole of a well, including any uncased section.
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