British thermal unit (Btu): The quantity of heat needed to raise one pound of water one degree Fahrenheit. A Mcf of natural gas approximates one million Btu.
Block: A contiguous acreage position that also can be designated as a lease or permit. Development well: A well drilled in an area indicated to be productive by the presence of a successful, previously drilled exploratory well. Development wells are relatively low risk.
Dry hole: An unsuccessful well, an exploratory or development well incapable of producing either oil or natural gas in sufficient quantities to justify completion.
Exploitation: The optimization of oil and gas production or establishing additional reserves from producing properties through development drilling or the application of various technological methods.
Exploratory well: A well drilled to find and produce oil or natural gas in an unproved area, sometimes called a “wildcat.” Field: A geographical area encompassing a group of oil or gas wells.
Formation: A strata of rocks named after its geographical location and dominant rock type or combination of rock types. Gross acres or gross wells: The total number of acres or wells, as the case may be, in which a working or royalty interest is owned. Net acres or net wells: The fractional working or royalty interest in property or wells. The gross acres or wells are multiplied by the fractional interest.
Present value: The present value of proved reserves is an estimate of the discounted future net cash flows from properties owned at a given time period, usually at year-end. Net cash flow is defined as net revenues, after deducting production and ad valorem taxes, less future capital costs and operating expenses, but before deducting federal income taxes. Future net cash flows are discounted at an annual rate of 10% to determine their “present value.” The present value indicates the effect of time on the value of the revenue stream and should not be construed as the fair market value of the properties. In accordance with Securities and Exchange Commission (SEC) regulations, estimates are made using constant oil and gas prices and operating costs at year-end, or as otherwise indicated.
Production: Oil or gas removed from the ground
- Gross production: Production before deducting royalties.
- Net production: Gross production, less royalties, multiplied by the fractional working interest.
Productive or producing well: A well capable of producing oil or natural gas in economic quantities.
Prospect: A promising area where exploratory wells could be drilled.
Proved Reserves: The estimated quantities of crude oil, natural gas and natural gas liquids that have been discovered and determined to be economically recoverable but remain in the ground.
Recompletion: The modification of an existing well so that oil or gas can be produced from a different formation.
Reservoir: A porous, permeable sedimentary rock formation containing oil and/or natural gas. A structural trap; a stratigraphic trap.
Royalty or royalty interest: An interest in a property that entitles the mineral rights owner to a share of the value of the oil and/or natural gas produced on the property free of production costs.
Seismic: A tool for identifying oil or gas accumulations. Energy waves or sound waves are sent into the earth, and the wave reflections are recorded. Results can indicate the type, size, shape and depth of subsurface rock formations. 2D seismic provides two-dimensional pictures, and 3D seismic provides three-dimensional pictures.
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 or gas.
Working interest: The interest in an oil or gas lease that gives the owner the right to drill, produce and conduct operating activities on the property. The working-interest owner is entitled to a share of the production, subject to royalties, costs and risks.
Workover: Remedial work on a well to enhance or restore production.
Bbl: Barrel. A standard oil measurement that equals one 42 U.S. gallons. – MBbl: One thousand barrels. – MMBBls: One million barrels.
BOE: Barrel of oil equivalent. A method of equating oil, gas and natural gas liquids products. Gas is converted to oil at the rate of six Mcf of gas to one barrel of oil. NGLs are converted based on volume – one barrel of NGLs equals one barrel of oil.
- MBOE: One thousand barrels of oil equivalent.
- MMBOE: One million barrels of oil equivalent.
BOPD: Barrels of oil per day.
Mcf: A standard natural-gas volume measurement that equals one thousand cubic feet.
- MMcf: One million cubic feet.
- Bcf: One billion cubic feet.
- Tcf: One trillion cubic feet.
MMcfd: Million cubic feet of gas per day.