SilverStars Energy

OIL AND GAS GLOSSARY

Abandonment of a Well: Conversion of a drilled well to a condition that can be left indefinitely without further attention and which will not damage fresh water supplies or potential petroleum reservoirs.

AFE: Authority for Expenditure

Associated Gas: Natural gas found in association with oil in a reservoir, either dissolved in the oil or as a cap above the oil.

Bcf: 1,000,000,000 ft3; billion cubic feet.

Barrel: A unit of measure for oil and petroleum products that is equivalent to 40 U.S. gallons.

Barrel of Oil Equivalent (BOE): The volume of natural gas that when burned produces the same amount of heat as a barrel of oil (typical conversion 6,000 ft3of gas equals one barrel of oil), typically: 6:1.

Bitumen: Crude oil in semi-solid or solid forms.

British Thermal Units (BTU): A measure of the heating value of the fuel.

Condensates: Hydrocarbons in the gaseous state under reservoir conditions which become liquid when temperature or pressure is reduced, and include a mixture of pentanes and higher hydrocarbons.

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

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Distillates: The products of condensation during the fractional distillation process (includes gaseous fuels, naphtha, gasoline, kerosene and gas oils).

Distillation: The basic process carried out in an oil refinery and entails successive vaporization and condensation of crude oil to separate out the lighter products, leaving a residue of fuel oil or bitumen.

Downstream: Activities which take place between the loading of crude oil at the export terminal and the use of the oil by the end-user, including transport, supply, trading, refining. distributing and marketing.

Dry Hole: An unsuccessful well, drilled without finding commercial quantities of oil or gas.

Exploration and Production (E&P): The ‘upstream’ sector of the oil and gas industry.

Enhanced Oil Recovery (EOR): The recovery of hydrocarbons from a reservoir other than by the use of natural reservoir pressure. This can involve increasing the pressure (secondary recovery), heating or increasing the pore size of the reservoir (tertiary recovery).

Exploratory Well: A hole drilled to find and produce oil or gas in an area previously considered unproductive, to find a new reservoir in a known field or to extend the limit of a known oil or gas reservoir.

Farm-in: When a company acquires an interest in a reserve by taking over all or part of the financial commitment for drilling an exploration well.

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Field: An area consisting of single or multiple reservoirs all related to the same individual geological structural feature or stratigraphic condition.

Flare: A means of safely disposing of waste gases through the use of combustion.

Fracturing: A method of breaking down a formation by pumping fluid at very high pressures in order to increase production rates from a reservoir.

Held By Production: Typically, a lease payment holds the lease on the oil and gas property until drilling and production occur, and thereafter, the lease is held by production until production stops.

Lease: A legal document conveying the right to drill for oil and gas, or the tract of land on which a lease has been obtained where the producing wells and production equipment are located.

Lifting Costs: The cost of producing oil from a well or lease.

mcf: 1000 ft3; thousand cubic feet.

MMSCFD: Million Standard cubic feet of gas per day, usually specified at 60F and 14.7 psia.

Operator: A company or individual responsible for managing an exploration, development or production operation.

Pay Zone/Pay Thickness: Rock in which oil and gas are found in exploitable quantities.

Permeability: A measure of the ability of a rock to transmit fluid through pore spaces.

Play: An area in which hydrocarbon accumulations or prospects of a given type occur.

Pool: A subsurface oil accumulation.

Prospect Lands: Lands considered being potentially prolific.

Recoverable Crude: The proportion of the crude in a reservoir that can be removed using currently available techniques.

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Recovery Factor: The ratio of recoverable oil or gas reserves to the estimated oil or gas in place in the reservoir.

Reserves: An economically recoverable quantity of crude oil and gas that has not yet been produced from reservoirs.

Proven Reserves: Those reserves which geological, geophysical and engineering data indicate to be in place and recoverable with a high degree (>90%) of certainty.

Probable (Estimated) Reserves: Those reserves which are not yet proven but have a better than 50% chance of being produced, based on technical and economic factors.

Reservoir: A porous, permeable, sedimentary rock formation containing oil and/or natural gas enclosed or surrounded by layers of less permeable or impervious rock.

Seismic Acquisition (2-D, 3-D, 4-D): Data used to map subsurface formations. A 2-D survey reveals a cross section of the subsurface, a 3-D survey creates a three-dimensional image of the subsurface based on data gathered in the inline and crossline directions and a 4-D or time-lapse 3-D survey includes a repetitive 3-D survey over time to track fluid movement in the reservoir.

Spud: The initial penetration of the ground or seafloor at the start of the drilling operation

Tcf: 1,000,000,000,000 ft3; trillion cubic feet.

Tight Hole:

1. [Drilling] A section of a wellbore, usually openhole, where larger diameter components of the drillstring, such as drillpipe tool joints, drill collars, stabilizers, and the bit, may experience resistance when the driller attempts to pull them through these sections.

2. A well that the operator requires be kept as secret as possible, especially the geologic information. Exploration wells, especially rank wildcats, are often designated as tight. Unfortunately, this designation is of questionable benefit in keeping the data secret.

Upstream: Activities relating to the exploration, drilling, production and delivery to a sales point for crude oil or natural gas.

Wellhead: The equipment at the surface of a well used to control the pressure and where hydrocarbons and water exit the ground.

Working Interest: The interest in a mineral property that entitles the owner to a portion of the production from the property and may entitle the owner to royalty payments.

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Glossary Terms adopted from the following sources, as at 19 December 2003.
Baker Hughes http://www.bakerhughes.com/investor/resources/oil_glossary_s_z.htm#w
PetroAssist.com http://www.petroassist.com/Tech%20Know/techknow.asp
Petroleum Communication Foundation http://www.pcf.ab.ca/glossary/default.asp
Schlumberger Limited http://www.glossary.oilfield.slb.com/Default.cfm
Society of Petroleum Engineers http://www.spe.org/spe/jsp/basic/0,2396,1104_1710_0,00.html
United Kingdom Offshore Operators Association http://www.ukooa.co.uk/ukooa/glossary.htm