HYDROCARBON

Organic chemical compound of hydrogen and carbon whose densities, boiling points and freezing points increase as their molecular weights increase.  Both crude oil and natural gas are hydrocarbons.

INFILL DRILLING

The process of drilling additional wells in a producing field thereby reducing the spacing between wells.

INJECTION WELLS

Wells drilled near an oil well through which water, gas or compressed air is pumped for the purpose of forcing the oil up.

JOINT VENTURE

A joint venture is a partnership for a common purpose.  Two or more companies combine part of their property, money, effort, skill, and knowledge in a single enterprise, usually as a means of spreading the risk or to avoid duplication of costs.

JOINT VENTURE BILLING

The invoicing to the joint venture partners of costs and revenues associated with an AFE, producing well or producing area.

LEASE

A legal document executed between the land owner or lessor and another party as lessee, granting the right to explore the premises for minerals or other products.  Also applied to a tract of land undergoing mineral development on which a lease has been obtained.

LEASE RENTAL PAYMENTS

Annual payments to the lessor by the lessee in order to retain a lease.  A lease can be surrendered by simply not making the annual payment.  Lease rental payments on Crown leases must continue to be paid even after production begins.

LESSEE

The individual or company who negotiates a petroleum and natural gas lease with the beneficial owner of the rights.

LESSOR

The beneficial owner of petroleum and natural gas rights underlying a given area.

LIFTING COSTS

Expenses incurred in the field in the production of oil or gas from a well and include labour and materials, well servicing, trucking, overhead, utilities and district office expenses.

LOG

A continuous vertical recording of natural or induced electrical, radioactive or sonic impulses of the formations which can be interpreted to ascertain rock type, porosity, permeability, and fluid content in varying degrees of accuracy.

M.C.F.

Measure of volume for natural gas is MCF (one thousand cubic feet 1,000 ft.3).  The volume is usually measured at 14.65 p.s.i. and 60oF.

The metric unit-of-measure is the cubic meter (1 mcf=28.174m³).

MMCF=1,000 MCR or 1 million C.F.

BCF=1,000 MMCF or 1,000,000 MCF or 1 billion C.F.

MINERAL RIGHTS

The sub surface rights attached to a lease permitting the holder thereof to explore for a develop hydrocarbons deposits.  These rights can be segregated by depth and geological zones or formations.

MINERAL TAXES

Taxes paid to provincial governments on oil production from freehold leases.  The operator of the well usually pays these taxes to the government on behalf of the owner of the lease.  These taxes are computed by reference to the underlying proven mineral or petroleum deposits.

NATURAL GAS

A highly compressible, highly expansible mixture of hydrocarbons having a definite specific gravity and occurring naturally in a gaseous form.

NATURAL GAS LIQUIDS ("NGL")

A mixture of hydrocarbons and varying quantities of non-hydrocarbons that exist either in the gaseous phase or in solution with crude oil in natural underground reservoirs.  Gas that contains no by-products such as propane, butane, or pentanes plus is called Dry Gas.  Gas that contains propane, butane or pentanes plus is called Wet Gas.

NET PAY

The vertical thickness of the productive rock in a reservoir.

NET PROFITS INTEREST

A contract with a lessee requiring the lessee to pay a certain percentage of the net profits from the operation of the property.

NET REVENUE FROM A WELL

A share of production from a property, measured by gross proceeds from the operation of the property after deducting mineral taxes, royalties and regular operating costs.

NON-OPERATOR

A party that has an interest in a well, but is not the operator.  They are billed by the operator for their share of costs and receive revenue statements and cheques for their share of production.

OFFSET WELL

Well location adjoining another well site.

OFFSHORE DRILLING

Drilling for petroleum in the waters of a sea, ocean or large lake.  Drilling platforms for offshore operations may be mobile, floating units with submersible bases, or permanent structures that are used as production platforms when drilling is completed.

OIL & GAS RIGHTS

The rights acquired from the Crown or a Freeholder to explore for and produce oil and gas from beneath its lands.

OILFIELD

A loosely defined term referring to an area where oil is found. May include the oil reservoir, the surface and wells, and production equipment.

OPERATOR

The person, whether proprietor or lessee, actually operating the well.  Generally the oil company by whom the drilling contractor is engaged.

OVERRIDING ROYALTY

Any royalty over and above that originally running to the land owner is usually described as an overriding royalty.  An example is a gross overriding royalty paid to the farmer, who farmed out the producing property, and who was leasing the land from a third party, the land owner.

PAYOUT

That time when all the costs incurred in drilling a well (or project) have been paid back out of the net operating revenue from a well (or project).  Most farmin/farmout agreements contain a payout conversion clause; at payout the farmor has the right to convert his overriding royalty to a working interest.

PERFORATE

To pierce holes through casing within an oil or gas-bearing formation by means of a perforating gun lowered down the hole and fired electrically from the surface.  The perforations permit production from a formation.

PERMEABILITY

Ability of a porous rock to transmit fluid through its pore spaces.  A rock may be highly porous and yet impermeable if it has no inter-connection pore network (communication).

PETROCHEMICALS

Chemicals manufactured from petroleum and natural gas, or from raw materials derived from petroleum and natural gas.

PETROLEUM

Oil or gas obtained from the rocks of the earth, usually by drilling down into a reservoir rock and piping them to the surface.

PLAY

An oil or gas prospect.

POOL

A natural underground reservoir containing or appearing to contain an accumulation of oil or gas or both separated or appearing to be separated from any other such accumulation.

POOLING

Pooling is the joining of small tracts of land for the purpose of allowing a well permit to be granted under applicable spacing rules.

POROSITY

Volume of pore spaces between mineral gains expressed as a percentage of the total rock volume.  Thus porosity measures the capacity of the rock to hold oil, gas or water.

PRIMARY RECOVERY

Recovery of oil and gas using natural reservoir pressure or mechanical lifting devices.

PROBABLE RESERVES

Recoverable reserves interpreted to exist with reasonable certainty on the basis of geological, geophysical or similar information.

PRODUCTION INCOME

Production income is defined as gross production revenues less royalties, mineral taxes, lifting costs plus any phantom incomes.

PRODUCTION MONTH

The month in which a physical event occurs relating to drilling and production activity.  This is recognized in the recording of the data for financial purposes.

PROVED DEVELOPED RESERVE

Estimates of what is recoverable from existing wells with existing facilities from open, producing pay zones.

PROVED UNDEVELOPED RESERVES

Estimates of what is recoverable through new wells on un-drilled acreage, deepening existing wells, or secondary recovery methods.

PROVEN RESERVES

Reserves specifically proven by drilling, testing or production which are recoverable under present and anticipated economic conditions using current technology.

RATE OF TIME

The average daily rate of production of natural gas related to the volume of initial established reserves assigned to the reservoir or reservoirs from which that production is obtained.  For example, 1:7300 means one million standard cubic feet per day of production for each block of 7300 million standard cubic feet of initial established reserves.

RECLAMATION

The restoration of land to its original condition by regrading contours and replanting after the land has been mined, drilled, or otherwise has undergone alteration from its original state.

RE-COMPLETION

Work on a well to re-complete it in a different formation, either deeper or shallower than originally completed (see workover for the distinction).

RECOVERABLE RESERVES

That portion of reserves of oil and natural gas in place which are estimated to be capable of being produced.

RECOVERY

        Enhanced          A general term for the incremental volume of crude oil and natural gas recoverable over the volume recoverable by natural depletion processes only.  Enhanced recovery is the sum of secondary and tertiary recovery

         Pools              In gas pools, the fraction of the in-place reserves of gas expected to be recovered under the subsisting recovery mechanism

         Primary           The volume of crude oil and natural gas recoverable by natural depletion processes only

         Secondary     The incremental volume of crude oil and natural gas recoverable by conventional water flooding pressure maintenance or cycling

         Tertiary           The incremental volume of crude oil and natural gas recoverable by process after or in lieu of conventional water flooding, pressure maintenance or cycling.  A tertiary recovery process may be implemented without a preceding secondary recovery scheme

RESERVES

Proven Reserves

These reserves estimated as recoverable under current technology and existing economic conditions, from that portion of a reservoir which can be reasonably evaluated as economically productive on the basis of analysis of drilling, geological, geophysical and engineering data, including the reserves to be obtained by enhanced recovery processes demonstrated to be economic and technically successful in the subject reservoir.

Proven Producing Reserves

Those proved reserves that are actually on production or, if not producing, that could be recovered from existing wells or facilities and where the reasons fore the current non-producing status is the choice of the owner rather than the lack of markets or some other reason.  An illustration of such a situation is where a well or zone is capable but is shut-in because its deliverability is not required to meet contract commitments.

Proven Non-Producing Reserves

Those proved reserves that are not currently producing either due to lack of facilities and/or markets.

Probable Additional Reserves

Those reserves which analysis of drilling, geological, geophysical and engineering data does not demonstrate to be proved under current technology and existing economic conditions, but where such analysis suggests the likelihood of their existence and future recovery.  Probably additional reserves to be obtained by the application of enhanced recovery processes will be the increased recovery over and above that estimated in the proved category which can be realistically estimated for the pool on the basis of enhanced recovery processes which can be reasonably expected to be instituted in the future.

REVISIONS

Changes in earlier estimates of proved reserves, except upward or downward, resulting from new information (except for an increase in proved acreage).  Revisions for a given year also include À increase in proved reserves associated with the successful installation of improved recovery technique and Á an amount which corrects the effect on proved reserves of the different between production for the previous year and actual production for that year.

RESEVOIR

Porous, permeable sedimentary rock structure or trap containing oil and/or gas.  A reservoir can contain more than one pool (accumulation of oil or gas).

RESOURCE ALLOWANCE

A deduction available in calculating income taxes equal to 25% of the taxpayers resource profits.  The deduction is allowed in lieu of any deduction for royalties paid to the Crown.

RIG

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

RIG RELEASE DATE

Usually the date that the rig has finished drilling to the contract depth.  After this date the operator does not have control over the rig.

ROAD ALLOWANCE

The Province of Saskatchewan has deemed that 1.88% of all production comes from reserves under road allowances in Saskatchewan.  A net 1% royalty is payable to the crown.

ROTARY DRILLING

Method of drilling in which the drill pipe is rotated in order to rotate the bit.

ROYALTY

The part of the oil or gas paid to the land owner or to one who has acquired possession of the royalty rights.  The amount paid by the lessee or operator to the owner of the property worked (ordinarily 1/8 to the original owner of freehold leases).  A royalty right can be bought and sold independent of surface rights.  Any royalty over the above that originally running to the land owner is usually termed overriding royalty.

SEISMOGRAPH

A device for detecting vibrations in the earth.  It is used in prospecting for possible oil-bearing structures.  In this application vibrations are created by discharging explosives in shallow bore holes.  The nature and velocity of the vibrations as recorded by the seismograph indicate the general nature of the section of earth through which the vibrations pass.

SHOOTING

The term "shooting" is used in connection with geophysical work to describe the process of exploding charges of dynamite at various locations and observing its effect with seismographic instruments for the purpose of discovering the nature of the underlying formations.

SHRINKAGE FACTOR (OIL)

The volume occupied by one cubic meter of oil from a pool, measured at standard conditions after flash gas liberation consistent with the surface separation process, as a ratio of the volume occupied by the same oil and gas at the pressure and temperature of a pool upon discovery.

SHUT-DOWN WELL

A term denoting a well on which work has been temporarily stopped.

SPUD DATE

The date that the bit first touches the ground in the drilling operations.

STEP-OUT WELL

A step-out well is a well drilled adjacent to a proven well but located in an unproven area in an effort to ascertain the extent and boundaries of a producing formation.

TANGIBLES

The physical assets associated with producing petroleum and natural gas properties (i.e. pumpjacks, storage tanks, flow lines, processing and gathering facilities).

TAKE-IN-KIND ("T.I.K")

Non-operators market their share of petroleum and natural gas production directly, rather than rely on the operator of the producing property to act in this capacity on their behalf.

TAKE-OR-PAY

The amount of gas a buyer must either take and pay for, or pay for now and take delivery in the future.

UNDEVELOPED LAND

Land owned by a company which, to date, has no proven or probable reserves; the land may have dry holes on it.

UNITIZATION

A term denoting a common operation of separately owned producing leases in an oil or gas pool or reservoir.  A legal process which defines operatorship, ownership, working interest, royalties, etc.  and provides for more economical operation and subsequent secondary recovery.

WATER INJECTION

Pumping of water into a reservoir to establish production pressure.

WATERFLOOD

The increase in recovery from a pool through replacement of produced fluid with water.  A pattern is usually formed with injection wells surrounded by producing wells.  This process re-pressures the reservoir and displaces oil otherwise unrecoverable to producers.

WELL LOGGING

Recording information about subsurface geological formations; method includes records (logs) kept by the driller, mud and cutting analysis, core analysis, drill stem tests, electric and radioactivity procedures.

WELL LOG

The well log is a record covering the principal changes in the various formations encountered from the surface to the bottom of the hole, including casing points, water sands, sands showing indications of oil, gas or other unusual material.

WELLHEAD

The equipment used to maintain surface control of a well.  It is formed of the casing head, tubing head, and christmas tree.  Also, it refers to various parameters as they exist at the wellhead, such as wellhead pressure, wellhead price of oil, etc.

WET GAS

A gas containing a relatively high proportion of hydrocarbons which can be separated in liquid form.

WILDCAT

See exploratory well.

WORKING INTEREST

The percentage interests in a lease or well which carries with it the rights and obligations to develop and operate an oil or gas property.

The operating interest under an oil and gas lease entitling the holder, at his expense, to conduct drilling and production operations on the leased property and to receive the net revenues from such operations.

WORKOVER

To perform one or more of a variety of remedial operations on a producing well with the hope of restoring or increasing production.  Examples of workover operations are deepending, plugging back, pulling and resetting the liner, squeeze cementing, shooting and acidizing.