Glossary of Useful Oil & Gas Terms                

Acidizing - a technique for increasing the flow of oil and/or gas our of a well.  hydrochloric acis is pumped into the oil-bearing rock.  Teh acid dissolves limestone in the producing limestone in the producing zone which increases porosity thus the oil and/or gas can flow into the well bore with less restrictions.[top of page]

Assignment - The legal instrument whereby Oil and Gas Leases or Overriding Royalty interests are assigned and conveyed. [top of page]

Assignor - Person conveying Oil and Gas Leases or Overriding Royalty in an assignment.[top of page] 

Assignee - The person to whom Oil and Gas Leases of Overriding Royalty are assigned. [top of page]

Blowout Preventer - A large specially designed vlave that is mounted on top of the wall during the drilling and completion stages of operation.  The operator can close this vlavle to stop the flow of oil or gas in case of emergency. [top of page]

Bonus - Cash consideration paid to a landowner or mineral owner on the execution of an Oil, Gas, and Mineral Lease. [top of page]

Bottom Hole Pressure - Reservoir pressure at the bottom of the well.
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Casing - Steel pipe which screws together and is lowered into the hole after drilling is complete.  It is used to seal off fluids and keeps the hole from caving in. 
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Casing Point - Point in time after a well has been drilled to its objective depth where the Operator must decide whether to commit additional dollars to "setting pipe" and attempt a completion or to abandon the well as non-commercial.  [top of page]

Cement or "Set Pipe" - A process whereby cement is pumped into the hole between the walls of the hole and the outside of the casing.  Upon hardening, the cement holds the pipe in place and prevents fluid movement in the hole.  [top of page]

Commercial Well - A well that is capable of producing enough oil and gas to be ecomonically viable to operate.  [top of page]

Completion - A general term referring to all activities necessary to put a well into production after it has been drilled to casing point.  [top of page]

Delay Rental - Yearly payments paid during primary term to Lessor to delay drilling.[top of page] 

Depletion -The reduction in value of mineral deposits as it is produced.
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Depletion Allowance - An allowance granted on taxable income from oil and gas by the Federal and most State Governments.  [top of page]

Deposit -An accumulation of oil, gas or other minerals that is capable of production.   [top of page]

Development Prospect - A project that extends production of a producing oil or gas field including drilling additional wells or enhancing production of current wells. 
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Developmental Well - A well drilled to a known producing formation in an existing oil field.  [top of page]

Depository Bank - A bank designated in an Oil, Gas, and Mineral Lease to receive and distribute delay rentals.[top of page]

Discovery Well - An exploratory well that encounters production in a previously unknown deposit.  [top of page]

Division Order - A schedule of owners and their decimal share in revenues of the well derived from the sale of oil or gas. [top of page]

Electric Log - An electrical survey made on uncased holes.  A special tool is lowered into the hole that ejects an electrical current into the rock and records its resistance to the  current.  Geologists use the survey data to determine the nature of the rock and its contents.  [top of page]

Fracturing or Fraqing - The process of pumping fluids into a productive formation at high rates of injection to hydraulically break the rock.  The "fractures" which are created in the rock act as flow channels for the oil and gas.  [top of page]

Gas Well - A well that produces natural gas which is not associated with crude oil.  [top of page]

Grantor - A person who grants or conveys lands, minerals etc.[top of page]

Grantee - The person receiving the grant of lands, minerals, etc.[top of page]

Gross Working Interest - Same as Working interest.[top of page]

Intangible Drilling Costs (IDC) - All costs incurred in drilling a well other than equipment or leasehold.  [top of page]

Joint Operating Agreement - An agreement among working interest owners describing how a well is to be operated.[top of page]

Landman - The person who secures leases and handles damages for oil companies who are drilling new wells or laying pipelines.[top of page]

Landowner - The person who generally owns all or part of the minerals under his land and is entitled to lease the same.[top of page]

Lease - Another name for Oil, Gas and Mineral Lease.[top of page]

Lessor - The party who grants an Oil, gas and Mineral Lease.[top of page]

Lessee - The purchaser of an Oil, Gas and Mineral Lease.[top of page]

Minerals - Same as Participating Royalty. (also Mineral Interest) [top of page]

Mineral Owner - Generally one who owns only minerals under a tract of land (but no surface) along with the right to execute a lease on the same.[top of page]

Operating Expenses - the costs of operating a well.[top of page]

Operating Interest - A working interest owner who is also the well oprerator.
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Operator - The individual or company responsible for the drilling, completion, and production of operations of a well, as well as the physical maintenance of the leased property. [top of page]

Overriding Royalty - Revenues evolve when an individual/company leases the Royalty right from the Mineral rights owner.[top of page]

Paid-Up Lease - An Oil and Gas Lease where rental payments are paid along with bonus.[top of page]

Participating Royalty - A royalty interest giving its owner the right to "participate" in bonuses received in leasing along with the right to "participate" in any oil or gas found.[top of page]

Pay out - When the costs of drilling, producing, and operating have been recouped from the sale of oil and/or gas from a well.  [top of page]

Permeability - Measure of the resistance of rock to movement of fluids.  Rocks may have holes in them (porosity) but if these holes do not connect, the permeability can be drastically reduced.  [top of page]

Porosity - A measure of the relative volume of void space in rock to the total rock volume.  These spaces or pores are where oil and gas accumulate; therefore, a formation containing a high percentage of porosity can contain more hydrocarbons.  [top of page]

Primary Term - The initial period in an Oil and Gas Lease to develop the property.[top of page]

Proven Reserves - Oil and gas that have not been produced but has been located and has been determined recoverable.  [top of page]

Pugh Clause - A clause added to an Oil Lease to limit holding non-producing lands or depths beyond primary term of lease.[top of page]

Reservoir -Rocks with the potential to store fluids such as oil and natural gas.  
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Rework - To restore production from an existing formation when it has fallen off substantially or ceased altogether.  [top of page]

Royalty - A payment to a landowner or mineral rights owner by a leaseholder.
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Run Stub - Stub attached to a check disclosing month of production, gas or oil, price received, and total volumes produced.[top of page]

Salt Water Disposal Well -Oftentimes, the salt water produced during oil production is pumped back into a formation that is deep enough not to pollute shallow water sands.  Many wells which are no longer commercial are converted to salt water disposal wells.   [top of page]

Secondary Recovery -A broad term encompassing any method of extracting oil from a reservior after a well or field has exhausted its primary production. [top of page]

Severance Tax - A tax due the state on oil or gas produced or "severed" from the earth.[top of page]

Seperation - The process of separating liquid and gas hydrocarbons and water.  This is typically accomplished in a pressure vessel at the surface, but newer technologies allow separation to occur in the wellbore under certain conditions. [top of page]

Severed Minerals - Minerals whose title has been severed from the surface title.[top of page]

Shut-in - An oil or gas well which is inactive.[top of page]

Surface Pipe -Pipe which is set with cement through the shallow water sands to avoid polluting the water and keep the sand from caving in while drilling a well.   
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Surface Owner - Usually a landowner who owns no minerals under his land.
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Tank Battery - A group of tanks at a well site used to store oil prior to sale to a pipeline company.  [top of page]

Testing - When each new well is completed, a series of tests are run on the well to estimate the daily deliverability, payout and reserves.  [top of page]

Tubing -Small diameter pipe which is installed in the casing. Oil is produced through tubing because it increases the viscosity of fluid and a well's flow capabilities.   
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Turnkey Contract - A contract in which an operator agrees to furnish all labor and materials necessary to drill a well to a certain depth or stage of completion for a specified sum of money.  The operator or contractor assumes all of the responsibility and risks involved in completing the operation.  [top of page]

Unleasehed Mineral Interest - a mineral interest not subject to an Oil Lease.
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Viscosity - The resistance of fluid to flow.  A high viscosity fluid will not flow as easily as a low viscosity fluid.  [top of page]

Wildcat - A well driller in an area where no oil or gas production exists. 
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Working Interest - An interest created by the execution of an oil and gas lease.[top of page]