Glossary

A

Abandoned well: a well no longer in use because it was either a dry hole, ceased to produce, or cannot be operated.
Abstract of title: a collection of all the recorded instruments affecting the title to a tract of land.
Acreage: the total area of land covered by a lease or operated by an oil and gas company for exploration and production.
Advance royalty: lease bonus treated as advance royalty, often for tax reasons. (Minimum rovalty is also referred to as advance royalty, for the lessee is obligated to pay certain sums in advance, subject to his right to recoup from rovalty oil).
Affidavit of heirship: A statement of facts relating to the death and heirship of the decedent which is sworn to before a notary public. Usually executed by someone who knew the decedent but is not an heir to the estate.
Allowable: the amount of production a well, leasehold, field or state is permitted by a state regulatory body.
Anniversary date: the date on which payment of delay rental or shut-in gas well royalty must be made to keep a lease effective under delay rental clauses or shut-in gas clauses.
API number: American Petroleum Institute number, a unique identifier for each oil and gas well.

B

Barrel of Oil Equivalent (BOE): A unit of measurement combining oil and gas based on energy content.
Block lease: a lease of separate tracts which provides that drilling of one or more test wells satisfies the delay rental clause of the lease of each of the tracts
Bonus Payment: An upfront payment made to a landowner or mineral interest owner when a lease is signed, often as a sign of good faith.

C

Capping: closing in a well. usually to prevent the escape of gas. (plugging)
Carried interest: specific interest in oil and gas properties, with no obligation for operating costs, which is paid by the owners of the remaining fraction from production. Used when one co-owner pays the cost of driling, usually ceases when all costs are paid. Then all parties share the working interest, its costs and receipts.
Cash bonus: money paid to lessor for lease purchase.
Casing: Steel pipes used to line and protect the wellbore.
Certificate of title: an abbreviated type of abstract of title.
Completion: The process of preparing a well for production after drilling, which may include installing equipment and conducting tests.
Concession: A grant or lease of land, often issued by a government, that allows the exploration and production of minerals, including oil and gas.
Condensate: liquid hydrocarbons recovered from natural gas.
Crude Oil: Unrefined petroleum extracted from the ground.

D

Deferred bonus: a landowner’s bonus, which is paid in instalments spread over a number of years, as distinguished from the usual mode of payment, which is in a lump sum on execution and delivery of the lease.
Delay rental: money paid annually in lieu of drilling a well.
Depletion Allowance: A tax deduction that allows oil and gas producers to recover some of the costs associated with depleting mineral reserves
Division Orders: Legal documents specifying the distribution of production revenue among interest owners.
Downstream: Refers to activities after oil and gas production, including refining and distribution.
Drilling: The process of creating a hole in the ground to access oil or gas reserves. More
Drilling contract: a contract between a lessee (operator) and a drilling contractor.
Dry hole clause: a provision specifying the means which a lessee may use to keep a lease alive after the drilling of a dry hole.
Dual completion: the completion of a well into two separate producing formations at different depths.

E

Easements: Definition: Easements in the oil and gas industry refer to legal rights granted by landowners to oil and gas companies to access and use a specific portion of their property for purposes such as drilling, pipeline construction, or road access.Usage: Easements allow oil and gas companies the necessary access and rights to extract resources from beneath the land surface without owning the land itself. They are legally binding agreements that define the terms and conditions for land use.
Environmental Impact Assessment: Evaluation of the environmental effects of oil and gas activities.
Exploration and Production (E&P): The process of searching for oil and gas reserves, drilling wells, and extracting hydrocarbons.

F

Farm out: agreement where the owner of a lease agrees to assign all or a part of the lease to another operator under the condition that one or more wells will be drilled.
Field: An area with multiple wells and facilities where oil or gas is being produced from the same geological formation.
First purchaser: party first purchasing oil or gas at the wellhead or off the leased premises.
Forced pooling: the bringing together, as required by law or a valid order or regulation, of separately owned or separate interests in small tracts sufficient to grant a well permit under applicable spacing rules.
Fracking (Hydraulic Fracturing): A technique to extract oil and gas by injecting fluids into rocks.
Free gas clause: a lease clause providing that lessor shall have the privilege of using gas from any gas well on his land for stoves and inside lights in his principal dwelling. This benefits the surface owner. It isn't included in the mineral estate.

G

Geologist: A scientist who studies the Earth's structure to locate oil and gas reserves.
Geophysical Survey: Studies using seismic and other methods to find oil and gas.
Gusher: A well that flows uncontrollably, often due to high pressure in the reservoir.

H

Held by Production (HBP): A lease that remains in effect as long as the well on the leased property continues to produce oil or gas.
Horizontal Wells: Wells that are drilled horizontally to access reservoirs more effectively. More
HSE (Health, Safety, and Environment): Practices and regulations for worker safety and environmental protection.

J

Joint Operating Agreement (JOA): A contract that outlines the rights and responsibilities of parties involved in the development and operation of an oil or gas property.

L

Landman: A professional who negotiates mineral leases and agreements on behalf of oil and gas companies.
Lease broker: a person who gets leases for either speculation or resale.
Leases: Agreements that grant the right to explore and produce oil and gas on a specific piece of land.
Legacy Book: Definition to come. More
Lessee: the person who is getting the oil and gas leasehold.
Lessor: mineral owner giving leasing rights.
LNG (Liquefied Natural Gas): Natural gas that has been cooled to a liquid state for transport.
Look Before You Lease (good book to read. Synopsis here (https://www.familymineralinterests.com/new-page-3)).: Definition to come.

M

Midstream: Refers to transportation and storage of oil and gas between upstream and downstream.
Mineral Deed: conveys ownership of the minerals “in place”.
Mineral Interest: Ownership rights to minerals, including oil and gas, beneath the surface of land.
Mineral Owner: a person who owns the right to enter the land to explore, drill, produce and otherwise carry on mining activities with rights, powers, privileges and immunities with regard to the minerals.
Mineral Rights: Ownership rights to minerals, including oil and gas, beneath the surface of land.
Mineral Rights Forum: Definition to come. More

N

Natural Gas: A hydrocarbon gas mixture found underground and used for energy.

O

Operator: The entity responsible for the day-to-day management and operation of oil and gas wells and facilities.

P

P&A (Plugged and Abandoned): The process of sealing off and closing an unproductive well.
Permitting: The process of obtaining government approvals for drilling and production.
Petroleum Engineering: The field of engineering focused on oil and gas production.
Pipeline: A system for transporting oil and gas over long distances.
Platform: An offshore structure for drilling and production.
Pooling: Combining small tracts of land into a larger unit for more efficient drilling and production.
Production: The extraction of oil and gas from wells.
Production Sharing Agreement (PSA): A contract that allows a government or landowner to share in the production and profits from oil and gas operations.

R

Reasonable Time: for example, eight (8) months for removal of fixtures from dry hole after end of lease.
Refinery: A facility where crude oil is processed into various petroleum products.
Reservoir: A subsurface rock formation containing oil and gas deposits.
Reservoir Engineer: An engineer who manages oil and gas reservoirs.
Retained Interest: an oil payment or overriding royalty reserved upon assignment of a working interest or other interest.
Reversionary interest: refers to the right of a property owner to regain ownership of mineral rights or leased land if certain conditions specified in the contract are not met by the lessee.
RI (Royalty Interest): RI, or "Royalty Interest," refers to a type of ownership interest in the production of minerals, typically oil and gas, from a specific piece of land or mineral rights. A royalty interest owner does not bear the costs of exploration, drilling, or production but is entitled to a portion of the revenue generated from the sale of the extracted minerals. Here's how it works: 1) Ownership Rights: The owner of a royalty interest, often referred to as a royalty owner, holds a legal claim to a percentage of the gross production from a well or mineral lease. This ownership can be associated with a specific piece of land or a set of mineral rights. 2) Revenue Share: The royalty owner receives a portion of the revenue generated from the sale of minerals, typically a percentage of the total production. This share is usually specified in a royalty agreement or lease and can vary depending on the terms negotiated. 3) No Operational Responsibilities: Unlike working interest owners or operators, who are actively involved in the drilling and operation of wells and bear associated costs, royalty interest owners have no direct operational responsibilities or financial obligations. 4) Passive Income: Royalty interest owners earn passive income from the production of minerals. They receive their royalty payments regardless of whether the well is profitable or not. 5) Lease Agreements: Royalty interests are often established through lease agreements between mineral owners (lessors) and oil and gas companies (lessees). These agreements outline the terms, including the royalty rate, duration, and other conditions.
Rig: Equipment used for drilling and completing oil and gas wells.
Royalties: Payments to mineral rights owners based on production.
Royalty: A share of the production or revenue paid to the mineral interest owner, typically a percentage of the gross value of oil and gas produced.
Royalty barrel: In oil and gas terms, is a unit of production for which the landowner or mineral rights owner receives a royalty payment based on a percentage of the produced hydrocarbons.
Royalty Owner: a person who owns a royalty interest in production,
Royalty Trust: when owners of oil and gas interests deposit royalty deeds to a trustee in return, usually, for participatory, distribution: bearing certificates.
Rule 37: the state-wide well spacing regulations of Texas.
Run ticket: shows the amount of oil run from lease tanks into gathering lines.

S

S*pacing Unit: area allocated to a well by a spacing order.
Saltwater disposal (SWD) or salt water deposits: the management of produced water, which is water that comes up along with oil and gas during extraction. This water is often salty and may contain various contaminants. SWD facilities are used to safely dispose of or inject this produced water back into the ground, typically into deep underground formations, to prevent environmental contamination and manage the water generated during production.
Satellite Images: Images from satellites used for geological and environmental assessments. More
Secondary term: lease extension because of active drilling or production, as (5) years and "and so long thereafter as oil or gas is produced in paying quantities.”
Seismic Survey: The use of seismic waves to explore subsurface geology.
Severed Royalty Interest: interest in minerals other than that of the surface owner that entitles the owner to a share of the production, but often no rentals or bonus.
Shut-in: Temporarily closing a well without sealing it to save resources.
Shut-in Royalty: A payment made to a mineral interest owner when a well is temporarily closed due to operational reasons.
Side-by-side comparisons (Jimbo generates these to compare each partnership’s returns and catch discrepancies).: Definition to come.
Sliding Scale Royalty: payment linked to incremental increases, such as 12.5 percent for first 10 barrels, 18.75 percent for next 20 barrels, etc.
Sour Crude: Crude oil with high sulfur content.
Step Scale Royalty: payment rate calculated to increase along with average production.
Stripper Well: ten barrels a day or less qualifies as stripper production.
Surface Damage Clause: a lease provision that requires the lessee to pay compensation for damages. It could be important to lessor in a pooling or community lease, where the well is drilled on his land but he receives only a small proportion of the royalties.
Surface Rights: Ownership rights to the land's surface, which may or may not include mineral rights.
Surveys: Definition: Surveys in the oil and gas industry typically refer to land surveys or geological surveys conducted to gather essential information about the land and subsurface conditions at a drilling or exploration site.Usage: These surveys help in determining the suitability of a location for drilling, assessing geological formations, identifying potential oil and gas reserves, and ensuring compliance with environmental regulations. Geological surveys, in particular, provide valuable insights into subsurface structures and help guide exploration and drilling efforts.
Sweet Crude: Low sulfur crude oil.

T

Take-or-pay clause: a clause in a gas purchase contract requiring the buyer to pay for a quantity specified, whether taken or not.
Term Interest: a mineral or royalty interest of less than perpetuity, such as for ten years.
Tertiary Recovery: enhanced recovery, or methods of production of crude oil or natural gas which cannot be recovered by conventional drilling methods.
Texas Railroad Commission: Regulatory body overseeing the oil and gas industry in Texas. More
Tickler: Definition to come.
Tight Hole: well information restricted at the order of the operator.
Top Lease: new or extension lease taken before previous lease term expired.

U

Unitization: joint operation of all or same parts of a producing reservoir.
Upstream: Refers to activities involved in oil and gas exploration and production.

W

Well by Wells: Created by PADMIN/Show our production.
Well Stimulation: Techniques to improve the flow of oil and gas from a well, including fracking.
Well test: Measuring oil, gas, and well production during a specific time period.
Wildcat Well: A well drilled in an unproven area hoping to discover new oil or gas reserves.
Windfall Profit Tax: an excise tax levied by the federal government that taxed old oil at 70%, stripper oil at 60°: and new oil at 30% of the difference between a base price and market price.
Working Interest: operating interest under an oil and gas lease bearing all exploration and development costs.
Workover Operations: interventions in a well to enhance or restore its production, integrity, or reservoir connectivity, typically including activities like wellbore cleaning, stimulation, or equipment maintenance.