Contractual Allocation

Using a cable tool rig to drill a well by pounding the chisel-shaped bit up and down thereby pulverizing the rock.  This original well drilling method is now largely replaced by the rotary drilling where the drill bit rotates to grind, rather than pulverize, the rock.

The amount of heat (energy) needed to raise one kilogram of water one degree celcius.

A free ride on expenses up to a point in time or up to the occurrence of the event.

The maximum volume a well is capable of producing in a unit of time.  Generally expressed per hour.  Capacity may also refer to a maximum volume of fluid for a given container or reservoir.

An agreement under which one party (carrying party) agrees to pay for a specified portion or for all of the development and operating costs of another parry (carried party) on a property in which both own a portion of the working interest.  The carrying party may be able to recover a specified amount of costs from the carried party's share of the revenue from the production of petroleum, if any, from the property.

The party for whom funds are advanced in a carried interest arrangement.

The party advancing funds in a carrying interest arrangement.

A non-operating interest, often an overriding royalty (ORRI) sometimes a production payment, carved-out of a working interest.  For example the owner of a 20 percent working interest (WI) with a 15 percent net revenue interest (NRI) may carve out and convey to a key employee an ORRI with one percent NRI leaving the WI owner with a 20 percent share of well costs and a 14 percent share of revenues.

The method of paying cash, in lieu of delivering gas, to eliminate a gas imbalance.  Terms for cash balancing may be set out in a separate gas balancing agreement or in the joint operating agreement.

Steel pipe placed in an oil or gas well as drilling and completion progresses.  The function of casing is to prevent the wall of the hole from caving in during drilling and to facilitate safe oil and gas production if the well is productive.

A wet gas produced along with crude oil from oil wells.  The dissolved gas or solution gas is dissolved in the reservoir’s crude oil but bubbles out of the oil when exposed to normal atmospheric pressures.  Casinghead refers to the top of the well’s casing.

When well drilling operations cease and the well owners must decide whether well completion should begin or the well should be plugged and abandoned.  At casing point the well has been drilled to the objective depth and well logs, drill stem tests, and other tests of productivity are analyzed to judge whether probable production is sufficient to economically justify completion costs including the installation of production casing.  A joint venture owner that is carried to casing point does not pay drilling costs, only completion costs.  Casing point may also refer to the depth to which casing is set in a well.

The refining process whereby hydrocarbons with heavier molecular weights are broken down into hydrocarbons with lighter molecular weights.

Pumping cement slurry down the well bore to fill the space created between the rock walls and the casing.  Various types of cementing jobs include primary, secondary, squeeze, plug-back or multistage.

Machine in which samples of oil are placed and whirled at high speed to break out sediment.

Methane

Mineral interests situated in a checkerboard pattern.

A term applied to the wellhead, i.e., the valves and fittings assembled at the top of a well to control the flow of production.

Carried Interest

Cost, Insurance, Freigt, Term refers to a sale in which they buyer agrees to pay a price that includes the FOB (Free On Board) value at the port of origin plus all costs of insurance and transportation.

Costs incurred to clean out a well in order to maintain its productive capacity or to restore it to original capacity

Compressed Natural Gas

Carbon Dioxide

A high-methane natural gas adsorbed to underground coal and not substantially produced until the late 1980s when special federal income tax credits (IRC Section 29 tax credits) sparked a drilling boom.

The refining process in which heavier products of the distillation process (residuals) are converted to lighter products known as petroleum coke.

Production from multiple producing horizons into a single tank or meter, that must be allocated due to different ownership.

Law that evolved as a result of social customs and precedents rather than legislative action.

Compressor Charge Exemption

Refers to the work performed and the installation of permanent equipment for the production of oil or gas from a recently drilled well.

Damage payment to a landowner for injuring his property.

Equipment on a gas pipeline to raise gas pressure to keep gas flowing.

Services provided to a drilling operation priced based on time, effort, and performance on-site and not determinable ahead of time.

An offshore rig in which the legs are designed to move with the current in order to prevent breakage.

A mineral rights arrangement with a foreign government that allows an energy company to drill for and extract minerals for a specific period of time.

A light hydrocarbon liquid, generally natural gasoline (C5 to C10), that condenses to a liquid (i.e., falls out of wet gas) as the wet gas is sent through a mechanical separator near the well.

Water in the producing formation.

The right if a state to determine the rules and regulations under which wells can be drilled in order to obtain  Maximum Efficient Recovery (MER).

PDI classes hosted by one company and shared by many to maximize participation and minimize cost.

Future price of commodity greater than spot price.

Leases which have a common boundary line.

Pad put into an AFE to absorb overruns.

Reserves that have evidence to support a reasonable timetable for development, a reasonable assessment of the future economics of such development, a reasonable expectation that there will be a market for related production and that there will be production and transportation facilities and that other considerations are being evaluated.

Leases which have a common boundary line.

Refining process that changes the size of the hydrocarbon molecule.

The assignment or transfer of mineral rights to another person.

Council of Petroleum Accountants Societies.

The Operating Agreement's exhibit that establishes joint venture accounting practices using one of several standard forms developed by COPAS and found in various COPAS Accounting Bulletins.

A cylindrical sample of rock taken from a formation during drilling for purposes of determining the formation's permeability, porosity, hydrocarbon saturation, and other characteristics of petroleum productivity.

A study of the core in a laboratory to determine the following properties of the formation from which the core was taken: porosity, permeability, fluid content, angle of dip, geological age, lithology, and probable productivity.

That which can be held - Ownership in place.

The right of a mineral estate owner to develop and enjoy his/her minerals.

Corrosion monitoring and control techniques that can be utilized by industries to solve corrosion problems according to their requirements. With such measures, the harmful effects and negative consequences of corrosion can be avoided.

The limit placed on the carrying value of oil and gas property in a cost center pursuant to FASB Standards or SEC Rule 4-10(i).

The geological, geographical, or legal unit by which cost and revenues are identified and accumulated.  Examples are the lease, the field, and the country.

The dollar per barrel value of a product versus the crude cost. Used to roughly determine the gross margin for processing a barrel of crude oil in a refinery.

Maps of cross-section of underground formation.

Liquid petroleum as it comes out of the ground, as distinguished from refined oils manufactured from it.  

Pipelines that transport natural gas and crude oil from production to refineries and from refineries to terminals.

Compliant Tower

Terminal in Oklahoma at which crude oil prices are quoted.

Point at which expenses are debited to individual owners from the Outside Owner Share (OOS) account.

Pieces of formation brought to the surface by drilling fluid.

A primary recovery method by which condensate is recovered from gas produced from a condensate gas reservoir, i.e., rich in condensate, and the residue gas is compressed and returned to the reservoir from which it was originally produced.  The return of the residue gas serves to maintain the reservoir pressure so that the condensate remains in a gaseous state in the reservoir.  If reservoir pressure dropped low enough for the condensate to liquefy in the reservoir, substantially less condensate could be recovered.

Twenty-four hour on-site report indicating all-important events which occurred in drilling a well.

Payments made to the surface landowner by the oil or gas operator for damages to the surface, to growing crops, to streams, or to other assets of the landowner.

An agreement between a drilling rig contractor and an operator wherein an agreed upon amount of money per day will be paid to the drilling contractor until a well is drilled to an agreed upon depth.

Depletion, Depreciation, and Amortization

A buried anchor to which guide wires are tied to steady the derrick, boiler stacks, etc.

The process of recovering oils from refinery residues. High-value oils are recovered through this process.

Metric equivalent of MMBTU.

The plot of oil and/or gas production over length of time.  Used to extrapolate the expected future production of a well as a basis for estimating proved reserves.

A document that transfers title to a property from one property to another.

A lease bonus payable in installments over a period of years.  The deferred bonus is distinguishable from delay rentals because the deferred bonus payments are due even if the lease is dropped, whereas delay rentals are discontinued with the dropping of the lease.

The process of removing water content from a gas stream to reduce the formation of hydrates (solid, crystalline compounds of water (90%) and hydrocarbons (10%) that can disrupt natural gas movement).  Usually performed at the wellsite(s) by use of a dehydrator which may treat commingled gas from several wells.

Amounts paid to the lessor (subsequent to the payment of any bonus) for the privilege of deferring the commencement of a well or the commencement of commercial production on the lease.  Normally, rentals are paid prospectively on an annual basis.

A “deleted interest” is the term used when distributing revenue to only some of the owners of the property because the others have already been paid and their share has already been deducted from the money you received. (i. e. you only received the monies for the interests that you are responsible for distributing).

A well to define, or delineate, the boundaries of the reservoir.

The actual flow of gas or oil through a meter.

The pressure of the gas from a well to be delivered into a pipeline.

Tax term allowing relief for diminishment of mineral reserves. Amortization of capitalized costs of a mineral property.  The deduction is based upon minerals produced.  For federal income tax purposes, depletion may be based in part on the amount of gross income from the property.

Bank account to which a lease bonus or delay rental is made instead of to an individual.

A tax deduction for tangible (equipment) costs whereby part of the purchase price is deducted every year until an amount equal to the cost of the item has been deducted.

A financial instrument whose characteristics and value depend upon the characteristics and value of a commodity, bond, equity, or currency - (future options).

An intensive geological and geophysical exploration of an area of interest.

One on which wells have been drilled and production equipment has been installed.

Crude oil or gas reserves which can be produced from existing facilities.

A well drilled at an angle from the vertical.

A well drilled within the proved area of an oil or gas reservoir to the depth of a stratigraphic horizon known to be productive.

Intentionally drilling a well at an angle from the vertical.

An exploratory well which discovers a new oil field.  

A well through which salt water is pumped to subsurface reservoirs to dispose of salt water produced with oil and gas.

Codes established by state regulatory agencies that indicate how a product was disposed of.

Codes established by state regulatory agencies that indicate how a product was disposed of.

The refining process in which crude oil components are separated from each other through the heating and subsequent cooling and condensing of the fractions.

A contract between all of the owners of an oil and gas property and the company purchasing production from the property.  The contract sets forth the interest of each owner and serves as the basis on which the purchasing company pays each owner's respective share of the proceeds of the oil and gas purchased.

A small house on the rig floor used for keeping records, storage, etc.

Department of Energy

Division of Interest. A list of ownership in a cost center (usually a well).

Two lengths of joints of drill or other pipe joined together.

Below the surface equipment and operations.

The part of energy concerned with the transformation of hydrocarbons into a useful product.

Estimated Future Dismantlement Costs

The end of the drill string that does the cutting.

A type of deal in which shares are sold instead of interests-covers many wells instead of just a single project.

A permit issued by a governmental body (usually a state) which gives permission to drill on a specified location to be a specified depth, and which commits the operator to conform to all other requirements of the state regulations on drilling.

The derrick, drawworks, and attendant surface equipment of a drilling or workover unit.

A daily report produced by the operator to the WI owners logging the progress (or lack thereof) when a well is being drilled.

A test through a drill pipe to see if there is oil or gas.

The joints of drill pipe attached to each other with a drill bit at the lower end.

Natural gas composed of over 90 percent (some say 95 percent) methane and suitable for use by customers of local gas distribution companies.

An exploratory or development well that does not produce oil or gas in commercial quantities.

Money or property paid by adjoining property owners to another operator drilling a well on property in which the payers have no property interest.  Such contributions are payable only in the event the well reaches an agreed depth and is found to be dry. The payers may be entitled to proprietary information on the well.

A well that simultaneously drains two reservoirs of oil or gas at different depths, with the production from each zone separated from the other by some type of tubing installation.

Rule in which the owner of a fractional mineral interest reserves a fractional share of the mineral estate without also stating in the deed that there are outstanding mineral interests. The effect of the rule is to stop the grantor, by his warranty, from claiming the total fractional share of the minerals he reserved in the deed.