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Glossary

The following is a description of the meanings of some of the oil and natural gas industry terms that are commonly used.

1P

Proved reserves.

 

2C

Contingent resources.

 

2P

Proved reserves plus Probable reserves.

 

3P

Proved reserves plus Probable reserves plus Possible reserves.

A   B   C   D   E   F   G   H   I   J   K   L   M   N   O   P   Q   R   S   T   U   V   W   X   Y   Z  
A
AFE

Authorization For Expenditure.

 
AVO

Amplitude Versus Offset.

 
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B
bbl

Barrel, 42 U.S. gallons of liquid volume, used in reference to crude oil or other liquid hydrocarbons.

 
bbls/d

Barrels per day.

 
bcf

Billion cubic feet of natural gas.

 
Behind-pipe

Reserves that are expected to be recovered from zones in existing wells which will require additional completion work or future re-completion prior to start of production.

 
Block

An oil and gas exploration and development area under license.

 
BML

Below Mud Line.

 
boe

Barrels of crude oil equivalent, determined using the ratio of six mcf of natural gas to one bbl of crude oil, condensate or natural gas liquids.

 
boepd

Barrels of crude oil equivalent per day, determined using the ratio of six mcf of natural gas to one bbl of crude oil, condensate or natural gas liquids.

 
bopd

Barrels of oil per day.

 
bscf

Billion standard cubic feet of natural gas.

 
BTU

British Thermal Unit. A measurement of energy equivalent to the heat needed to raise one pound of water one degree Fahrenheit.

 
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C
Capex

Capital expenditure.

 
CBM

Coalbed methane is a form of natural gas extracted from coal beds.

 
Christmas tree, or “tree.”

An assembly of valves, spools, and fittings used for an oil well, gas well, water injection well, water disposal well, gas injection well, condensate well and other types of wells. Christmas trees are used on both surface and subsea wells. The primary function of a tree is to control the flow, usually oil or gas, out of the well.

 
Completion

The process of treating a drilled well followed by the installation of permanent equipment for the production of natural gas or oil, or in the case of a dry hole, the reporting of abandonment to the appropriate agency.

 
Contingent resources

Quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable due to one or more contingencies.

 
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D
Development well

A well drilled within the proved area of a natural gas or oil reservoir to the depth of a stratigraphic horizon known to be productive.

 
Downthrown

The sinking of rocks on one side of a fault plane.

 
Drilling locations

Total gross locations specifically quantified by management to be included in the Company’s multi-year drilling activities on existing acreage. The Company’s actual drilling activities may change depending on the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, drilling results and other factors.

 
Dry hole

A well found to be incapable of producing either oil or gas in sufficient quantities to justify completion as an oil or gas well.

 
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E
Estimated Ultimate Recovery (EUR)

An approximation of the quantity of oil or gas that is potentially recoverable or has already been recovered from a reserve or well.

 
EUR

Estimated Ultimate Recovery.

 
Exploratory well

A well drilled to find and produce natural gas or oil reserves not classified as proved, to find a new reservoir in a field previously found to be productive of natural gas or oil in another reservoir or to extend a known reservoir.

 
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F
FEED

Front-End Engineering Design.

 
FIA

Farm-In Agreement.

 
Field

An area consisting of either a single reservoir or multiple reservoirs, all grouped on or related to the same individual geological structural feature and/or stratigraphic condition.

 
Formation

An identifiable layer of rock named after its geographical location and dominant rock type.

 
FPSO

Floating Production, Storage and Offloading vessel. Used in offshore oil production, treatment, storage and transport operations.

 
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G
GCoS

Geological Chance of Success.

 
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I
IP

Initial Production.

 
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J
JOA

Joint Operating Agreement.

 
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K
km2

Square kilometers. One square kilometer is the equivalent of approximately 247 acres.

 
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L
Leads

Leads are not sufficiently well defined to be drillable, and requires more data acquisition and/or evaluation in order to be classified as a prospect.

 
Lease

A legal contract that specifies the terms of the business relationship between an energy company and a landowner or mineral rights holder on a particular tract of land.

 
Leasehold

Mineral rights leased in a certain area to form a project area.

 
Logging While Drilling (LWD)

Technique of conveying well logging tools into the well borehole downhole as part of the bottom hole assembly. LWD tools transmit measurement results to the surface, and is widely used for drilling and formation evaluation.

 
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M
mbbls

Thousand barrels of crude oil or other liquid hydrocarbons.

 
mboe

Thousand barrels of crude oil equivalent, determined using the ratio of six mcf of natural gas to one bbl of crude oil, condensate or natural gas liquids.

 
mcf

Thousand cubic feet of natural gas.

 
mcfe

Thousand cubic feet equivalent, determined using the ratio of six mcf of natural gas to one bbl of crude oil, condensate or natural gas liquids.

 
mmbbls

Millions of barrels of crude oil or other liquid hydrocarbons.

 
mmboe

Millions of barrels of crude oil equivalent, determined using the ratio of six mcf of natural gas to one bbl of crude oil, condensate or natural gas liquids.

 
mmbtu

Million British Thermal Units.

 
mmcf

Million cubic feet of natural gas.

 
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N
Natural Gas Liquids (NGL)

Components of natural gas that are separated from the gas state in the form of liquids, such as propane, butane, ethane and pentane, among others.

 
NAV

Net Asset Value.

 
Net acres, net wells, or net reserves

The sum of the fractional working interest owned in gross acres, gross wells, or gross reserves, as the case may be.

 
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O
OML

Oil Mining Lease.

 
Opex

Operating expense.

 
Overriding royalty interest (ORRI)

Is similar to a basic royalty interest except that it is created out of the working interest. For example, an operator possesses a standard lease providing for a basic royalty to the lessor or mineral rights owner of 1/8 of 8/8. This then entitles the operator to retain 7/8 of the total oil and natural gas produced. The 7/8 in this case is the 100% working interest the operator owns. This operator may assign his working interest to another operator subject to a retained 1/8 overriding royalty of the 8/8. This would then result in a basic royalty of 1/8, an overriding royalty of 1/8 and a working interest of 3/4. Overriding royalty interest owners have no obligation or responsibility for developing and operating the property. The only expenses borne by the overriding royalty owner are a share of the production or severance taxes and sometimes costs incurred to make the oil or gas salable.

 
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P
P10

10% probability.

 
P50 or mean

50% probability.

 
P90

90% probability.

 
Play

A prospective trend of potential prospects, but which requires more data acquisition and/or evaluation in order to define specific leads or prospects.

 
Plugged and Abandoned (P&A)

Refers to the sealing off of fluids in the strata penetrated by a well so that the fluids from one stratum will not escape into another or to the surface. Regulations of all states require plugging of abandoned wells.

 
Possible reserves

Possible reserves are those additional reserves which analysis of geoscience and engineering data indicate are less likely to be recoverable than Probable reserves.

 
Present value of future net revenues (PV-10)

The present value of estimated future revenues to be generated from the production of proved reserves, before income taxes, of proved reserves calculated in accordance with Financial Accounting Standards Board guidelines, net of estimated production and future development costs, using prices and costs as of the date of estimation without future escalation, without giving effect to hedging activities, non-property related expenses such a general and administrative expenses, debt service and depreciation, depletion and amortization, and discounted using an annual discount rate of 10%.

 
Probable reserves

Probable reserves are those additional reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than Proved reserves, but more certain to be recovered than Possible reserves.

 
Production

Natural resources, such as oil or gas, taken out of the ground.

 
Productive well

A well that is found to be capable of producing either oil or gas in sufficient quantities to justify completion as an oil or gas well.

 
Project

A targeted development area where it is probable that commercial oil or gas can be produced from new wells.

 
Prospective resources

Quantities of petroleum that are estimated, as of a given date, to be potentially recoverable from undiscovered accumulations. Prospective resources have both an associated chance of discovery and a chance of development.

 
Prospects

Prospects are features that have been sufficiently well defined, on the basis of geological and geophysical data, to represent a viable drilling target.

 
Proved developed non-producing (PDNP) reserves

Reserves that include shut-in and behind-pipe reserves.

 
Proved developed producing (PDP) reserves

Reserves that are expected to be recovered from completion intervals that are open and producing at the time of the estimate.

 
Proved reserves

The estimated quantities of petroleum which geological and engineering data demonstrate with reasonable certainty to be commercially recoverable from known reservoirs under defined economic conditions, operating methods, and government regulations.

 
Proved undeveloped (PUD) reserves

Proved reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion.

 
PV-10

Pre–tax present value of estimated future net revenues discounted at 10%.

 
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R
Recompletion

The process of re-entering an existing well bore that is either producing or not producing and completing new reservoirs in an attempt to establish or increase existing production.

 
RENAV

Risked Exploration Net Asset Value.

 
Reserves

Reserves are those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Reserves must satisfy four criteria: they must be discovered, recoverable, commercial, and remaining based on the development project(s) applied.

 
Reservoir

A porous and permeable underground formation containing a natural accumulation of producible nature gas and/or oil that is confined by impermeable rock or water barriers and is separate from other reservoirs.

 
Royalty interest

A share of production or the value or proceeds of production, free of the costs of production, when and if there is production. A royalty interest is usually expressed as a fraction such as 1/8.

 
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S
Secondary recovery

A recovery process that uses mechanisms other than the natural pressure of the reservoir, such as gas injection, water injection, or water flooding, to produce residual oil and natural gas remaining after the primary recovery phase.

 
Shut-in

A well that has been capped (having the valves locked shut) for an undetermined amount of time. This could be for additional testing, awaiting pipeline or processing facility, or a number of other reasons.

 
Site Survey

Site surveys are performed to minimize the risk of harm to personnel and equipment, and to protect the natural environment. The objective of any site survey is to identify all possible constraints and hazards from man-made, natural and geological features which may affect the operational or environmental integrity of a proposed drilling operation, and to allow appropriate operational practices to be put in place to mitigate any risks identified. In addition, the proposed site survey area should be of adequate coverage to plan any potential relief well locations, and provide sufficient data to fully assess potential top-hole drilling hazards at these locations.

 
Spud

The process of beginning to drill a well.

 
SSTVD

Sub-Sea True Vertical Depth.

 
Standardized measure

The present value of estimated future cash inflows from proved oil and natural gas reserves, less future development, abandonment, production and income tax expenses, discounted at 10% per annum to reflect timing of future cash flows and using the same pricing assumptions as were used to calculate PV-10. Standardized measure differs from PV-10 because standardized measure includes the effect of future income taxes.

 
STOIIP

Stock Tank Oil Initially In Place.

 
Successful

A well is determined to be successful if it is producing oil or natural gas, or awaiting hookup, but not abandoned or plugged.

 
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T
Tcf

Trillion cubic feet of natural gas.

 
TD

Total depth.

 
TOC

Total Organic Carbon.

 
TVDSS

Total Vertical Depth Sub-Sea level.

 
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U
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 and natural gas regardless of whether such acreage contains proved reserves.

 
Upthrown

The upward movement or displacement of rocks on one side of a fault plane relative to rocks on the other side.

 
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W
Water flood

A method of secondary recovery in which water is injected into the reservoir formation to displace residual oil and enhance hydrocarbon recovery.

 
Water re-pressurization

A method of secondary recovery in which water is injected into the reservoir formation to increase reservoir pressure and enhance hydrocarbon recovery.

 
Working interest (WI)

The operating interest that gives the owner the right to drill, produce and conduct operating activities on the property and receive a share of production and requires the owner to pay a share of the costs of drilling and production operations.

 
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Resources Estimates

This Glossary refers to contingent and prospective resources. The Securities and Exchange Commission (“SEC”) permits oil and gas companies, in their filings with the SEC, to disclose only “reserves,” as that term is defined under SEC rules. Prospective resources are those quantities of petroleum estimated, as at a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Contingent resources are those quantities of petroleum estimated, at a given date, to be potentially recoverable from known accumulations, but the applied projects are not yet considered mature enough for commercial development due to one or more contingencies.

Prospective resources have both an associated chance of discovery and a chance of development, while contingent resources have an associated chance of development. Investors should not assume there will be any discovery associated with prospective resources, or that any discovery or any contingent resources will be economically drillable or ever be upgraded into reserves.

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Prospective and Contingent Resource Disclaimer

This Competent Person’s Report contains estimates of "prospective resources" and "contingent resources." The Securities and Exchange Commission ("SEC") permits oil and gas companies, in their filings with the SEC, to disclose only “reserves,” as that term is defined under SEC rules.

Prospective resources are those quantities of petroleum estimated, as at a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Contingent resources are those quantities of petroleum estimated, at a given date, to be potentially recoverable from known accumulations, but the applied projects are not yet considered mature enough for commercial development due to one or more contingencies.

Prospective resources have both an associated chance of discovery and a chance of development, while contingent resources have an associated chance of development. Investors should not assume there will be any discovery associated with prospective resources, or that any discovery or any contingent resources will be economically drillable or ever be upgraded into reserves.

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