ALL PB10

Abbreviaton for technical evaluation agreement.

TEA

The gas accumulated on the surface of a solid material, such as a grain of a reservoir rock, or more particularly the organic particles in a shale reservoir. Measurement of adsorbed gas and interstitial gas, which is the gas contained in pore spaces, allows calculation of gas in place in a reservoir.

adsorbed gas

An agreement between the parties to a well and a host country regarding the percentage of production each party will receive after the participating parties have recovered a specified amount of costs and expenses.

production sharing contract

The amount of production, after deducting cost oil production allocated to costs and expenses, that will be divided between the participating parties and the host government under the production sharing contract.

profit oil

The amount of acreage, determined by governmental authority that can be efficiently and economically drained by a well at a particular depth or horizon.

proration unit

A legal instrument of conveyance that is usually used in title curative work to allow an owner or claimant to quit or give up their claim to a title.

quitclaim

The geographic area in which the government allows a company to operate.

concession

Abbreviation for gas initially in place, the volume of gas in a reservoir before production.

GIIP

Abbreviation for held by production.

HBP

Predictable variation of a property of a material with the direction in which it is measured, which can occur at all scales. For a crystal of a mineral, variation in physical properties observed in different directions is aeolotropy (also known as anisotropy). In rocks, variation in seismic velocity measured parallel or perpendicular to bedding surfaces is a form of aeolotropy. Often found where platy minerals such as micas and clays align parallel to depositional bedding as sediments are compacted, aeolotropy is common in shales.

aeolotropy

An example used for comparison. In oil and gas exploration, geoscientists and engineers compare new prospects and fields with fields and surface exposures thought to be similar in depositional environment and reservoir character to guide predictions. Wide variations in shale reservoirs create doubt about the utility of analog comparisons.

analog

Having directionally dependent properties. For a crystal of a mineral, variation in physical properties observed in different directions is anisotropy. In rocks, variation in seismic velocity measured parallel or perpendicular to bedding surfaces is a form of anisotropy. Often found where platy minerals such as micas and clays align parallel to depositional bedding as sediments are compacted, anisotropy is common in shales.

anisotropic

Predictable variation of a property of a material with the direction in which it is measured, which can occur at all scales. For a crystal of a mineral, variation in physical properties observed in different directions is anisotropy. In rocks, variation in seismic velocity measured parallel or perpendicular to bedding surfaces is a form of anisotropy. Often found where platy minerals such as micas and clays align parallel to depositional bedding as sediments are compacted, anisotropy is common in shales.

anisotropy

A frac tree in which multiple frac valves are contained in a single large body such that the overall height of the frac tree is reduced.

composite frac tree

The direction in which a deviated or horizontal well is drilled relative to magnetic north. Most horizontal wells in shale reservoirs are drilled in the direction of the minimum horizontal stress. This allows for the creation of multiple hydraulic fractures that are normal to the wellbore.

azimuth

The right to receive a reversionary interest at some future time, upon fulfillment of contractually specified conditions. This clause allows a lease-owner, lessee or a nonparticipating partner to reserve the option to participate in a well after it has produced enough to pay the operators expenses of drilling and completing that well. This clause is typically used in farmout agreements to convert the overriding royalty interest of a lease-owner, lessee or nonparticipating partner into a working interest upon payout of the well. When the election to convert the overriding royalty to working interest takes place, it is known as a back-in after payout (BIAPO).

back in

The right to receive a reversionary interest at some future time, upon fulfillment of contractually specified conditions. This clause allows a lease-owner, lessee or a nonparticipating partner to reserve the option to participate in a well after it has produced enough to pay the operators expenses of drilling and completing that well. This clause is typically used in farmout agreements to convert the overriding royalty interest of a lease-owner, lessee or nonparticipating partner into a working interest upon payout of the well. When the election to convert the overriding royalty to working interest takes place, it is known as a back-in after payout (BIAPO).

back-in

A depression in the crust of the Earth, caused by plate tectonic activity and subsidence, in which sediments accumulate. Sedimentary basins vary from bowl-shaped to elongated troughs. Basins can be bounded by faults. Rift basins are commonly symmetrical; basins along continental margins tend to be asymmetrical. If rich hydrocarbon source rocks occur in combination with appropriate depth and duration of burial, then a petroleum system can develop within the basin. Most basins contain some amount of shale, thus providing opportunities for shale gas exploration and production.

basin

An agreement between two or more parties to review technical data prior to deciding whether to bid on a concession. The agreement also specifies the interests and the procedure for bidding between the parties in the event that the parties decide to bid on the concession.

bid and study agreement

The fraction of naturally occurring, inflammable organic matter that is extractable from rock using organic solvents. Many petroleum precursors are composed of bitumen, but most are formed from kerogen in the process of petroleum generation. Bitumen includes hydrocarbons such as asphalt and mineral wax. Typically solid or nearly so, brown or black, bitumen has a distinctive petroliferous odor. Laboratory dissolution with organic solvents allows determination of the amount of bitumen in samples, an assessment of source rock richness. Burial and heating of kerogen yield bitumen, then liquid hydrocarbons, and then hydrocarbon gas. Understanding organic content is especially important in shale reservoirs because the shale is both the source rock and the reservoir rock in the petroleum system.

bitumen

A monetary incentive given by the lessee (either an individual or company) to the lessor (mineral owner) for executing or ratifying an oil, gas and mineral lease.

bonus consideration

A flow cross installed on top of a frac tree where treating iron is connected and treatment fluid enters the frac tree.

buffalo head

A working interest generally paid in consideration for work related to the prospect. This interest is paid, or carried, for the drilling and or completion costs as specified in the contract between the parties, by another working interest owner typically until casing point is reached, or through the tanks, meaning through completion of the well, as agreed upon contractually.

carried working interest

The physical and chemical alteration of sediments and pore fluids at temperatures and pressures higher than those of diagenesis. Catagenesis involves heating in the range of 50 to 150 degC [122 to 302 degF]. At these temperatures, chemical bonds break down in kerogen and clays within shale, generating liquid hydrocarbons. At the high end of this temperature range, secondary cracking of oil molecules can generate gas molecules.

catagenesis

A trailer in which fracturing engineers can monitor formation pressures and other critical information pertaining to the fracturing process.

command trailer

The combining of smaller federal tracts of land to total the acreage required by the US Bureau of Land Management and/or state regulations to form a legal spacing and proration unit.

communitization

A generic term used to describe the events and equipment necessary to bring a wellbore into production once drilling operations have been concluded, including but not limited to the assembly of downhole tubulars and equipment required to enable safe and efficient production from an oil or gas well. Completion quality can significantly affect production from shale reservoirs.

completion

A prediction of how effectively rock may be stimulated using hydraulic fracturing. Completion quality (CQ) is an engineering assessment of factors that determine the effectiveness of hydraulic fracture treatments and includes the ability to initiate and create an induced fracture network, the degree of reservoir contact of the newly created fractures, the level of connection to the natural fracture system of those created fractures and ability of the stimulated reservoir to deliver gas or oil into the well.

completion quality (CQ)

A type of areally extensive reservoir that contains hydrocarbon throughout, rather than containing a water contact or being significantly affected by a water column or a defined structural closure. The areal extent of a continuous reservoir, such as a shale reservoir, can be as large as the extent of the sedimentary basin in which the shale was deposited.

continuous reservoir

A reservoir in which buoyant forces keep hydrocarbons in place below a sealing caprock. Reservoir and fluid characteristics of conventional reservoirs typically permit oil or natural gas to flow readily into wellbores. The term is used to make a distinction from shale and other unconventional reservoirs, in which gas might be distributed throughout the reservoir at the basin scale, and in which buoyant forces or the influence of a water column on the location of hydrocarbons within the reservoir are not significant.

conventional reservoir

A written contract between a grantor and grantee, used to transfer title or rights to real estate or property. Typical conveyances include oil, gas and mineral leases; assignments; deeds and rights of way.

conveyance

Laboratory study of a sample of a geologic formation, usually reservoir rock, taken during or after drilling a well. Economic and efficient oil and gas production is highly dependent on understanding key properties of reservoir rock, such as porosity, permeability, and wettability. Geoscientists have developed a variety of approaches, including log and core analysis techniques, to measure these properties. Core analysis is especially important in shale reservoirs because of the vertical and lateral heterogeneity of the rocks. Core analysis can include evaluation of rock properties and anisotropy; organic matter content, maturity, and type; fluid content; fluid sensitivity; and geomechanical properties. This information can be used to calibrate log and seismic measurements and to help in well and completion design, well placement, and other aspects of reservoir production.

core analysis

A portion of produced oil that the operator applies on an annual basis to recover defined costs specified by a production sharing contract.

cost oil

The total amount of oil and gas recovered from a reservoir as of a particular time in the life of the field. Cumulative production can be referenced to a well, a field, or a basin.

cumulative production

Consideration paid to the lessor by a lessee to extend the terms of an oil and gas lease in the absence of operations and/or production that is contractually required to hold the lease. This consideration is usually required to be paid on or before the anniversary date of the oil and gas lease during its primary term, and typically extends the lease for an additional year. Nonpayment of the delay rental in the absence of production or commencement of operations will result in abandonment of the lease after its primary term has expired.

delay rental

The intentional deviation of a wellbore from the path it would naturally take. This is accomplished through the use of whipstocks, bottomhole assembly (BHA) configurations, instruments to measure the path of the wellbore in three-dimensional space, data links to communicate measurements taken downhole to the surface, mud motors and special BHA components and drill bits, including rotary steerable systems, and drill bits. The directional driller also exploits drilling parameters such as weight on bit and rotary speed to deflect the bit away from the axis of the existing wellbore. In some cases, such as drilling steeply dipping formations or unpredictable deviation in conventional drilling operations, directional-drilling techniques may be employed to ensure that the hole is drilled vertically. Common in shale reservoirs because it allows drillers to place the borehole in contact with the most productive reservoir rock.

deviated/directional/horizontal drilling

The physical, chemical or biological alteration of sediments into sedimentary rock at relatively low temperatures and pressures that can result in changes to the rock's original mineralogy and texture. After deposition, sediments are compacted as they are buried beneath successive layers of sediment and cemented by minerals that precipitate from solution. Grains of sediment, rock fragments and fossils can be replaced by other minerals during diagenesis. Porosity usually decreases during diagenesis, except in rare cases such as dissolution of minerals and dolomitization. Diagenesis does not include weathering processes. Hydrocarbon generation begins during diagenesis. There is not a clear, accepted distinction between diagenesis and metamorphism, although metamorphism occurs at pressures and temperatures higher than those of the outer crust, where diagenesis occurs.

diagenesis

An agreement between the operator and net revenue interest (NRI) owner in which the parties specify the fractional type of interest attributed to the NRI owner by the operator after an examination of title.

division order

The process of examining a seller's property and records before a prospective buyer commits to its purchase. In the oil and gas business, due diligence may entail scrutiny of financial records, geological maps, well logs, surveyor notes, geophysical records, well tests, production statistics, legal records and other data pertaining to a well or lease.

due diligence

The point at which all costs of leasing, exploring, drilling and operating have been recovered from production of a well or wells as defined by contractual agreement.

payout

An agreement between the parties to a well or wells and a host country to utilize specified goods and services from that country.

production service contract

The amount of oil and gas expected to be economically recovered from a reservoir or field by the end of its producing life. Estimated ultimate recovery can be referenced to a well, a field, or a basin.

estimated ultimate recovery

An area in which hydrocarbon accumulations or prospects of a given type occur. For example the shale gas plays in North America include the Barnett, Eagle Ford, Fayetteville, Haynesville, Marcellus, and Woodford, among many others. Outside North America, shale gas potential is being pursued in many parts of Europe, Africa, Asia, and South America.

exploration play

The party that acquires the rights to drill and earn an assignment of the leasehold interest, receiving a farm-in.

farmee

The party that originally owns the leasehold interest and assigns the farmout.

farmor

A contractual agreement with an owner who holds a working interest in an oil and gas lease to assign all or part of that interest to another party in exchange for fulfilling contractually specified conditions. The farmout agreement often stipulates that the other party must drill a well to a certain depth, at a specified location, within a certain time frame; furthermore, the well typically must be completed as a commercial producer to earn an assignment. The assignor of the interest usually reserves a specified overriding royalty interest, with the option to convert the overriding royalty interest to a specified working interest upon payout of drilling and production expenses, otherwise known as a back-in after payout (BIAPO).

farmout

Ownership of the entire and absolute right or interest to use or exploit a tract of land from the center of the earth to the stars, including the air, surface and minerals.

fee simple interest

Ownership of the entire and absolute right or interest to use or exploit a tract of land from the center of the earth to the stars, including the air, surface and minerals.

fee-simple interest

The amount of foreign personnel, material and services that working interest owners are permitted to employ, as defined under the terms of a concession when drilling and operating a well.

foreign content

Shale that produces natural gas. A shale that is thermally mature enough and has sufficient gas content to produce economic quantities of natural gas

gas shale

The geologic specialty that deals with understanding how rocks, stresses, pressures, and temperatures interact. This understanding is used to solve oilfield problems, such as optimizing hydraulic fracturing treatments of shale reservoirs. Geomechanics specialists typically work with experts in geophysics, geology, petrophysics, reservoir engineering, drilling engineering, and rock physics to solve geomechanical problems and address production challenges in shale reservoirs.

geomechanics

A flow cross installed on top of a frac tree where treating iron is connected and treatment fluid enters the frac tree.

goat head

The total amount of revenue that a host government receives from production. This amount can include taxes, royalties and government participation.

government take

A provision in an oil, gas and mineral lease that perpetuates a companys right to operate a property or concession as long as the property or concession produces a minimum paying quantity of oil or gas. Also abbreviated as HBP.

held by production

A method to convey or reserve oil, gas or mineral rights at specific depths or geologic horizons.

horizontal severance

A percentage share of production, or the value derived from production, which is granted to the lessor in the oil and gas lease, and which is free of the costs of drilling and producing.

lessor royalty

An occasion when a governmental body offers exploration acreage for leasing by exploration and production companies, typically in return for a fee and a performance or work obligation, such as acquisition of seismic data or drilling a well. Exploration licenses are initially of limited duration (about 5 years) after which there might be a requirement to return half or more of the licensed acreage to the state. If hydrocarbons are discovered, a separate production license or production-sharing agreement is usually drawn up before development can proceed.

licensing round

The amount of local personnel, material and services that working interest owners are required to employ when drilling and operating a well, as specified under the terms of a concession agreement.

local content

An agreement by which a party sells production on behalf of a producing company and then remits the proceeds, minus agreed-upon costs and expenses, to the producing company.

marketing agreement

The proportion of exploration and production costs each party will bear and the proportion of production each party will receive, as set out in an operating agreement.

participating interest

Ownership of the right to exploit, mine or produce all minerals lying beneath the surface of a property. In this case, minerals include all hydrocarbons. Mineral interests include: 1. the right to use as much of the surface as is reasonably necessary to access the minerals, 2. the right to execute any conveyances of mineral rights, 3. the right to receive bonus consideration, 4. the right to receive delay rentals and 5. the right to receive royalty. Any or all of the above five rights of mineral ownership may be conveyed by the mineral owner.

mineral interest

A contract between a host country and an operator that specifies the services and costs of services that the operator must use in the development of a concession.

multiple service contract

A share of net proceeds from production paid solely from the working interest owners share. It is sometimes granted in lieu of a royalty interest.

net profits interest

A share of production after all burdens, such as royalty and overriding royalty, have been deducted from the working interest. It is the percentage of production that each party actually receives.

net revenue interest

A percentage share of production, or the value derived from production, which is free of the costs of drilling and producing, created by the lessor or royalty owner and borne by the lessor or royalty owner out of the lessor royalty. This royalty is paid to nonparticipating interest holders who do not share or participate in bonus or rentals, or a right to explore, or a right to execute oil and gas leases.

nonparticipating royalty

Ownership in a share of production, paid to an owner who does not share in the right to explore or develop a lease, or receive bonus or rental payments. It is free of the cost of production, and is deducted from the royalty interest.

nonparticipating royalty interest

A contract between mineral owner, otherwise known as the lessor and a company or working interest owner, otherwise known as the lessee in which the lessor grants the lessee the right to explore, drill and produce oil, gas and other minerals for a specified primary term and as long thereafter as oil, gas or other minerals are being produced in paying quantities. This lease gives the lessee a working interest. The oil and gas lease is granted in exchange for royalty payments to the lessor.

oil and gas lease

An agreement between parties who own a working interest in a well that sets out responsibilities and duties of the operator and nonoperators, including drilling the test well and subsequent wells, and sharing of expenses and accounting methods.

operating agreement

Ownership by a lessee, company or working interest owner, which is burdened with the costs of leasing the acreage and drilling and operating a well.

operating interest

The company that serves as the overall manager and decision-maker of a drilling project. Generally, but not always, the operator will have the largest financial stake in the project. At the successful completion of logging the target zones, the decision to complete or plug and abandon generally has partner input and potential override clauses. As far as the drilling contractor and service companies are concerned, the designated operator is paying for the entire operation, and the operator is responsible for recouping some of that expense from the partners.

operator

A percentage share of production, or the value derived from production, which is free of all costs of drilling and producing, and is created by the lessee or working interest owner and paid by the lessee or working interest owner.

overriding royalty

Ownership in a percentage of production or production revenues, free of the cost of production, created by the lessee, company and/or working interest owner and paid by the lessee, company and/or working interest owner out of revenue from the well.

overriding royalty interest

An oil and gas lease in which delay rentals for the entire primary term are paid in advance with the bonus consideration.

paid up lease

An oil and gas lease in which delay rentals for the entire primary term are paid in advance with the bonus consideration.

paid-up lease

The creation of holes in the casing or liner to achieve efficient communication between the reservoir and the wellbore. This process is integral to the optimal creation of hydraulic fractures. Geomechanical analysis is commonly conducted before perforating shale reservoirs to account for the relationship between formation stresses and productivity.

perforate

The accumulation of smaller tracts of land, the sum total acreage of which are required for a governmental agency to grant a well permit or assign a production quota or allowable to an operator.

pooling

The right that a party has reserved or acquired to operate a lease, well, unit and/or concession.

preferential right to operate

The right that nonselling participating parties have in a lease, well or unit to proportionately acquire the interest that a participating party proposes to sell to a third party.

preferential right to purchase

The period of time during which an oil and gas lease will be in effect, in the absence of production, drilling or other operations specified by the lease. The oil and gas lease can be perpetuated past the primary term by production in paying quantities, drilling, operations and/or the payment of shut-in royalties specified by the lease.

primary term

Payment by a well operator to a host country upon achievement of certain levels of production.

production bonus

A portion of proceeds from production, specified by contract, and payable to the lessor or farmor, or host country until total payment has reached a predetermined limit specified by contract.

production payment

A fine paid to the host country for failure to attain specified production rates over a defined period of time.

production penalty

An organization appointed by the government or industry to establish standards and ensure their compliance.

regulatory body

The return of part or all of a lease or concession to a lessor, farmor or host government. The return may be voluntary or compelled contractually.

relinquishment

The right that other parties to a lease, well, unit and/or concession have to acquire the interest that a selling party owns prior to selling to any third party.

right of first refusal

A percentage share of production, or the value derived from production, paid from a producing well.

royalty

Ownership of a percentage of production or production revenues, produced from leased acreage. The owner of this share of production does not bear any of the cost of exploration, drilling, producing, operating, marketing or any other expense associated with drilling and producing an oil and gas well.

royalty interest

The term of an oil and gas lease in which the lease is held in force after expiration of the primary term. Production, operations, continuous drilling and/or shut-in royalty payments are often used to extend an oil and gas lease into its secondary term.

secondary term

The separation of mineral and/or royalty interest from fee-simple title. Severance of interests is usually accomplished by reservation in a deed or assignment or by conveyance in mineral or royalty deed, assignment or lease.

severance

A payment stipulated in the oil and gas lease, which royalty owners receive in lieu of actual production, when a gas well is shut-in due to lack of a suitable market, a lack of facilities to produce the product, or other cases defined within the shut-in provisions contained in the oil and gas lease.

shut in royalty

A payment stipulated in the oil and gas lease, which royalty owners receive in lieu of actual production, when a gas well is shut-in due to lack of a suitable market, a lack of facilities to produce the product, or other cases defined within the shut-in provisions contained in the oil and gas lease.

shut-in royalty

An area allotted to a well by regulations or field rules issued by a governmental authority having jurisdiction for the drilling and production of a well.

spacing unit

Ownership of the right or interest to exploit the surface of the land. Some landowners only have rights to the surface of their tract, while the government or other entity owns rights to any production obtained beneath that tract.

surface interest

An agreement between a host country and operator to allow the operator to evaluate geological, geophysical, engineering and transportation issues involving a concession. Also known as a TEA.

technical evaluation agreement

An oil and gas lease that expires after a specified period of time, regardless of whether oil, gas and/or other minerals are being produced.

term lease

An oil and gas lease wherein the bonus consideration is paid at the signing of the lease. However, this lease becomes effective only after the expiration or termination of an existing lease on the tract of land.

top lease

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unitization

A method to convey or reserve oil, gas, or mineral rights in a defined portion of land such as the Northwest Quarter of a tract.

vertical severance

A percentage of ownership in an oil and gas lease granting its owner the right to explore, drill and produce oil and gas from a tract of property. Working interest owners are obligated to pay a corresponding percentage of the cost of leasing, drilling, producing and operating a well or unit. After royalties are paid, the working interest also entitles its owner to share in production revenues with other working interest owners, based on the percentage of working interest owned.

working interest