Lexicon of Terms

Learn how to talk like an Oilman
417 Oil & Gas and related investment terms defined.
 
Royalty Funds — Generally speaking, a royalty fund is when royalty interests are being bought, sold and held by the funds sponsors. In nearly all leasing situations, once a lease has been developed, it provides a revenue stream. A portion of the revenue stream is set aside for royalty which generally amounts to 12.5% and overriding royalty &/or carried working interest of 2-5%. In a royalty fund the objective of the fund is to generate it's revenue from royalties that are held from different producing fields throughout the country. The main feature to owning a percentage of a royalty fund is that with an oil royalty the royalty owner (or interest owner) pays no percentage of operating or developmental costs associated with the production of the oil or gas. Royalty programs generally offer a low risk factor along with a relatively low return. However, their main feature is that these types of programs last for many many years.

Refiner — A person or company that has any part in the control or management of any operation by which the physical or chemical characteristics of petroleum or petroleum products are changed.

Reserve — That portion of the identified resource from which a usable mineral and energy commodity can be economically and legally extracted at the time of determination.

Roughnecks — Members of the drilling crew.

Reamer — A tool used to enlarge or straighten a borehole.

Reservoir — A porous, permeable sedimentary rock formation containing quantities of oil and/or gas enclosed or surrounded by layers of less permeable or impervious rock. Also called a "horizon."

Roof rock — A layer of impervious rock above a porous and permeable formation that contains oil or gas.

Relief well — A well drilled in a high-pressure formation to control a blowout.

Refining — Manufacturing petroleum products by a series of processes that separate crude oil into its major components and blend or convert these components into a wide range of finished products, such as gasoline or jet fuel.

Risk — The possibility of loss or injury. A level of uncertainty is associated with the various possible outcomes of the undertaking. Risk usually refers to a numerical estimate of the likelihood of the occurrence to these various possible outcomes.

Run ticket — A record of the oil run from a lease tank into a connecting pipeline. An invoice for oil delivered.

Round trip — Pulling the drillpipe from the hole to change the bit, then running the drillpipe and new bit back in the hole.

R&D — Research and development.

Ram — A closure mechanism on a blowout-preventer stack.

Running the tools — Putting the drillpipe, with the bit attached, into the hole in preparation for drilling.

Roustabout — A semi-skilled hand who looks after producing wells and production facilities. Royalty

Reservoir pressure — The pressure at the face of the producing formation when the well is shut-in. It equals the shut in pressure at the wellhead plus the weight of the column of oil in the hole.

Rotary drilling — A method of well-drilling that employs a rotating bit and drilling mud to cut through rock formations.

Reef — A buildup of limestone formed by skeletal remains of marine organisms. It often makes an excellent reservoir for petroleum.

Re-entry — A well was abandoned, but subsequent drilling and production in the area suggests that a potential pay zone in the well was missed or passed over.

Reversionary interest — An interest in a well or property that becomes effective at a specified time in the future or on the occurrence of a specified future event.

Retained Interest — A fractional interest reserved by the owner of a whole interest when the balance of the whole interest is transferred to another party.

Reserve (pool) — A porous and permeable underground formation of producible oil and/or natural gas, confined by impermeable rock or water barriers, and characterized by a single natural pressure system.

Recoverable resources — An estimate of resources, including oil and/or natural gas, both proved and undiscovered, that would be economically extractable under specified price-cost relationships and technological conditions.

Reclamation — The restoration of land to its original condition by regrading contours and replanting after the land has been mined, drilled, or otherwise has undergone alteration from its original state.

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