GLOSSARY
of Oil Industry TermsA
American Petroleum Institute (“API”) Gravity:
A system of classifying oil based on its specific gravity, whereby the greater the gravity, the lighter the oil.
B
BBL:
One stock tank barrel, or 42 U.S. gallons liquid volume, used in reference to oil or other liquid hydrocarbons.
BOE:
One barrel of oil equivalent, calculated by converting natural gas to oil equivalent barrels at a ratio of six Mcf of natural gas to one Boe of oil.
BOE/D or BOEPD:
Barrels of oil equivalent per day.
BTU:
British thermal unit, the quantity of heat required to raise the temperature of a one‑pound mass of water by one degree Fahrenheit.
C
Completion:
The process of treating a drilled well followed by the installation of permanent equipment for the production of oil or natural gas, or in the case of a dry hole, the reporting of abandonment to the appropriate agency.
Condensate:
A liquid hydrocarbon with an API gravity of 50-100°.
D
Developed Acreage:
The number of acres that are allocated or assignable to producing wells or wells capable of production.
Development Costs:
Costs incurred to obtain access to proven reserves and to provide facilities for extracting, treating, gathering and storing the oil and natural gas.
More specifically, development costs, including depreciation and applicable operating costs of support equipment and facilities and other costs of development activities, are costs incurred to:
- Gain access to and prepare well locations for drilling, including surveying well locations for the purpose of determining specific development drilling sites, clearing ground, draining, road building, and relating public roads, gas lines, and power lines, to the extent necessary in developing the proven reserves
- Drill and equip development wells, development‑type stratigraphic test wells, and service wells, including the costs of platforms and of well equipment such as casing, tubing, pumping equipment, and the wellhead assembly
- Acquire, construct, and install production facilities such as lease flow lines, separators, treaters, heaters, manifolds, measuring devices, and production storage tanks, natural gas cycling and processing plants, and central utility and waste disposal systems
- Provide improved recovery systems
Development Project:
A development project is the means by which petroleum resources are brought to the status of economically producible. As examples, the development of a single reservoir or field, an incremental development in a producing field or the integrated development of a group of several fields and associated facilities with a common ownership may constitute a development project.
Development Well:
A well drilled within the proved area of an oil or natural gas reservoir to the depth of a stratigraphic horizon known to be productive.
Differential:
An adjustment to the price of oil or natural gas from an established spot market price to reflect differences in the quality and/or location of oil or natural gas.
Dry Hole:
A well found to be incapable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production would exceed production expenses and taxes.
E
Economically Producible:
The term economically producible, as it relates to a resource, means a resource that generates revenue that exceeds, or is reasonably expected to exceed, the costs of the operation.
F
Field:
An area consisting of a single reservoir or multiple reservoirs, all grouped on or related to the same individual geological structural feature and/or stratigraphic condition. The field name refers to both the surface and the underground productive formations.
G
Gross Acres or Gross Wells:
The total acres or wells, as the case may be, in which we have a working interest.
H
Horizontal Development:
A drilling technique used in certain formations where a well is drilled vertically to a certain depth and then drilled at a right angle within a specified interval.
I
Independent Exploration and Production Company:
A company whose primary line of business is the exploration and production of oil and natural gas.
M
MBBLs:
One thousand BBLs (barrels).
MBOE:
One thousand BOE (barrels of oil equivalent).
MCF:
One thousand cubic feet of natural gas.
MMBBLs:
One million BBLs (barrels).
MMBOE:
One million BOE (barrels of oil equivalent).
MMBTU:
One million BTU (British thermal units).
MMCF:
One million cubic feet of natural gas.
Mineral Interest:
A possessor’s interest over the minerals buried in their property. An owner of a mineral estate is entitled to the right to develop, lease, receive bonus payments, receive delay rentals, and receive royalty payments. The possessor shall have the right to develop the minerals by exploration, drilling, production, transportation, storage, and marketing. (https://definitions.uslegal.com/m/mineral-interest/)
N
NGLs:
Natural Gas Liquids; the combination of ethane, propane, butane, natural gasolines and other components that when removed from natural gas become liquid under various levels of higher pressure and lower temperature.
NYMEX:
New York Mercantile Exchange.
Net Acres or Net Wells:
Gross acres or wells, as the case may be, multiplied by our working interest ownership percentage.
Net Production:
Production that is owned by us less royalties and production due others.
O
Operator:
The individual or company responsible for the exploration and/or production of an oil or natural gas well or lease.
P
Possible Reserves:
Additional reserves that are less certain to be recovered than probable reserves.
Probable Reserves:
Additional reserves that are less certain to be recovered than proved reserves but that, in sum with proved reserves, are as likely as not to be recovered.
Production Costs:
Costs incurred to operate and maintain wells and related equipment and facilities, including depreciation and applicable operating costs of support equipment and facilities and other costs of operating and maintaining those wells and related equipment and facilities.
Proved Area:
The part of a property to which proven reserves have been specifically attributed.
Proved Developed Reserves:
Reserves that can be expected to be recovered through existing wells with existing equipment and operating methods.
Proved Developed Non-Producing Reserves:
Reserves that are expected to be recovered from completion intervals which are open at the time of the estimate but which have not yet started producing, wells which were shut-in for market conditions or pipeline connections, or wells not capable of production for mechanical reasons; reserves that are expected to be recovered from zones in existing well which will require additional completion work or future re-completion prior to start production.
Proved Oil and Natural Gas Reserves:
The estimated quantities of oil, natural gas and NGLs that geological and engineering data demonstrate with reasonable certainty to be commercially recoverable in future years from known reservoirs under existing economic and operating conditions.
PUDs:
Proved reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion.
PV10
The present value of estimated future oil and gas revenues net of estimated direct expenses and discounted at an annual discount rate of 10%. Used primarily in the energy industry, PV10 is helpful in estimating the present value of a corporation’s proven oil and gas reserves. (https://www.investopedia.com/terms/p/pv10.asp)
R
Realized Price:
The cash market price less all expected quality, transportation and demand adjustments.
Recompletion:
The action of reentering an existing wellbore to redo or repair the original completion in order to increase the well’s productivity.
Reserve:
That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.
Reservoir:
A porous and permeable underground formation containing a natural accumulation of producible oil and/or natural gas that is confined by impermeable rock or water barriers and is individual and separate from other reservoirs.
Resources:
Resources are quantities of oil and natural gas estimated to exist in naturally occurring accumulations. A portion of the resources may be estimated to be recoverable and another portion may be considered unrecoverable. Resources include both discovered and undiscovered accumulations.
S
Spacing:
The distance between wells producing from the same reservoir. Spacing is often expressed in terms of feet (e.g., 600 foot well-spacing) and is often established by regulatory agencies.
T
Trend:
A geographic area with hydrocarbon potential.
U
Undeveloped Acreage:
Lease acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and natural gas regardless of whether such acreage contains proved reserves.
Unproved Properties:
Properties with no proved reserves.
V
Volatile Oil:
A quality of oil with an API gravity of 42-55° with a gas‑to‑oil ratio of 900-3,500 cubic feet per barrel.
W
Working Interest:
An interest in an oil and gas lease that gives the owner of the interest the right to drill and produce oil and gas on the leased acreage–requires the owner to pay a share of the costs of drilling and production operations (https://definitions.uslegal.com/w/working-interest-oil-and-gas/)
WTI:
West Texas Intermediate oil.
