Essential Terms Used In Oil And Gas

The Most Essential Terms Used In Oil And Gas 

Get into the global industry of oil and gas with Venergy Momentum’s full list of common terms used in the field. We strive to help you understand the sometimes  complicated lingo  because of our experience in mineral rights valuation in Texas and our extensive knowledge of Texas mineral rights. Want to find out more? Check out our Frequently Asked Questions page for more information and answers.

  1. Abandoned Well: A well that is not in use anymore, either due to being a dry hole or ceasing to produce economically viable quantities.
  2. Abstract of Title: A historical record showing ownership and significant events like sales or inheritance is crucial for proving mineral ownership.
  3. Assignee/Assignor: The entities involved in the transfer of oil and gas leases or overriding royalties.
  4. Bonus (or Lease Bonus): An upfront payment made to a lessor by the lessee after signing a lease, granting the right to develop the minerals.
  5. Check Stub: A document detailing the production, pricing, and net interest from a producing well.
  6. Clear or “Marketable” Title: Indicates unquestionable legal ownership of specific minerals, free from any claims or liens.
  7. Cloud on Title: Any issue that puts property ownership into question, such as liens or foreclosures, requiring curative work.
  8. Conveyance: The legal transfer of property title, typically through a deed.
  9. Delay Rental: Annual payments made to a lessor to delay drilling during the lease’s primary term.
  10. Depth Rights: Mineral rights specified to a certain depth below the surface.
  11. Division Order: A document listing all parties with revenue interest in a well, along with their share.
  12. Dry Hole: An unsuccessful well that isn’t economically viable.
  13. Executive Rights: The right to grant or execute an oil and gas lease covering the mineral estate.See our Comprehensive Guide to Understanding Mineral Rights.
  14. Extension Bonus: Additional payment made after the lease’s primary term to extend it.
  15. Grantee/Grantor: Parties involved in the transfer of land or minerals.
  16. Gross Mineral Acres: The total acreage of a land tract, including mineral rights.
  17. Held by Production (HBP): A lease condition allowing an operator’s Exclusive Right to operate as long as they produce commercially.
  18. Joint Operating Agreement: Details how a well will be operated among interest owners.
  19. Landman: A professional who negotiates and researches on behalf of others in oil and gas dealings.Learn the differences between a Landman, Lawyer, and Trustee.
  20. Lease (or ‘Lease Agreement,’ ‘Mineral Lease’): A legal document outlining the terms of a mineral rights agreement between owner and operator.
  21. Legal Location: The geographical description of property for legal transactions.
  22. Lessee/Lessor: The parties involved in a lease agreement.
  23. Mineral Deed: A legal document transferring ownership of specific mineral rights.

25. Mineral Interests or Rights: Rights to oil, gas, and other minerals below the surface.

26. Minerals: Various geological elements or compounds, including oil, gas, gemstones, and metals.

27. Net Mineral Acres (NMA): The actual acreage owned by a mineral owner within a land tract.

28. Net Royalty Acres (NRA): A measurement used by buyers to price mineral or royalty interests.

29. Net Revenue Interest (NRI): An owner’s share in the revenues from a well.

30. Non-Participating Royalty Interest (NPRI): A royalty interest without decision-making rights on leases. See our Comprehensive Guide to Understanding Mineral Rights.

31. Operator: The party responsible for managing and operating oil and gas wells.

32. Overriding Royalty Interest (ORRI): A royalty interest reserved from the operator’s share. See our Comprehensive Guide to Understanding Mineral Rights.

33. Paid-up Lease: A lease where all potential delayed rentals are paid upfront.

34.Participating Royalty: A royalty interest that includes rights to leasing bonuses and revenues.

35. Primary Term: The initial development period in an oil and gas lease.

36. Producing Well: A well actively extracts oil or gas.

37. Pugh Clause: A lease clause limiting an operator’s rights to non-producing lands or depths.

38. Purchase and Sale Agreement (PSA)/Letter of Intent (LOI): Contracts defining the terms for mineral transactions.

39. Ratification: formal approval of a contract or agreement.

40. Revenue Check: Monthly payments to mineral owners from well production.

41. Royalty: A share of production revenue paid to the mineral owner.

42. Royalty Deed: A document transferring ownership of specific royalty rights.

43. Saltwater Disposal Well: A well used for disposing of oilfield-produced saltwater.

44. Severance Tax: A tax levied on extracted oil and gas products at the wellhead.

45. Shut-in Royalty: Payments made under a lease allowing the lessee to defer production.

46. Surface Owner: A party owning surface rights but not necessarily mineral rights.

47. Surface Rights: Rights to use the land surface, excluding mineral extraction activities.

48. Unit: A combined leased area for operational efficiency and regulatory compliance.

49. Working Interest Owner: The party, typically the operator, responsible for the well’s operational costs and receiving a share of the production revenue.

Your Partner In Navigating Mineral Rights And Royalties

For all of your needs in the oil and gas industry, including mineral rights valuation in Texas, turn to Venergy Momentum. Our top-notch services and dedication to excellence, as shown by our A+ BBB rating and great Google reviews, are meant to help you make smart choices. For personalized help, call (713) 855-9548 or email [email protected].

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