Glossary of Terms
Key terms and definitions for understanding oil and gas investments.
Accredited Investor
An individual or entity that meets SEC requirements to invest in private placements, including income thresholds of $200,000 individually or $300,000 jointly, or net worth exceeding $1 million excluding primary residence.
Blanket Reservoir
A widespread, laterally continuous reservoir formation that extends over a large geographic area with consistent properties.
Completion
The process of finishing a well so that it is ready to produce oil or gas, including casing, cementing, perforating, and installing production equipment.
Conventional Reservoir
A reservoir where oil and gas can flow naturally through porous rock to the wellbore, as opposed to unconventional reservoirs like shale that require stimulation.
Decline Curve
A graphical representation of how oil or gas production from a well decreases over time, used to estimate future production and reserves.
Depletion Allowance
A tax deduction that allows investors to recover the cost of a wasting asset (oil and gas reserves) as they are produced and sold.
Horizontal Drilling
A drilling technique where the wellbore is directed horizontally through the producing formation to maximize contact with the reservoir.
Intangible Drilling Costs (IDC)
Expenses for drilling that have no salvage value, such as labor, chemicals, and mud. These costs are typically up to 92% of total drilling costs and are tax-deductible.
Lateral
The horizontal portion of a wellbore that extends through the producing formation.
Multi-Lateral Well
A well with multiple horizontal branches (laterals) drilled from a single vertical or deviated wellbore to maximize reservoir contact.
Net Revenue Interest (NRI)
The share of production revenues an investor receives after royalties and other burdens are deducted from the working interest.
Oswego Formation
A Pennsylvanian-age limestone formation in Oklahoma known for conventional oil and gas production with predictable decline curves and long well lives.
Private Placement Memorandum (PPM)
A legal document providing detailed information about an investment offering to prospective investors, including risks, terms, and use of proceeds.
Regulation D
SEC rules that provide exemptions from registration requirements for private securities offerings, commonly used for oil and gas investments.
Spud
The commencement of drilling operations, when the drill bit first breaks ground.
Type Curve
A representative production profile based on historical data from similar wells, used to estimate expected production from a new well.
Working Interest
The percentage of ownership in an oil and gas property that obligates the owner to pay their proportionate share of drilling and operating costs.