Glossary

Assignment

• The legal instrument used to assign or convey oil, gas, and mineral leases or overriding royalty interests.

Assignor

• The person who conveys oil, gas, and mineral leases or an overriding royalty in an assignment.

Assignee

• The person or people to whom the assignor conveys or assigns the oil, gas and mineral leases or overriding royalties.

Bonus

• A cash consideration paid to a landowner or mineral rights owner on the execution of an oil, gas or mineral lease.

Delay Rental

• A yearly payment paid during the primary term to the lessor to delay drilling.

Depository Bank

• A bank designated to receive and distribute delay rentals.

Division Order

• A schedule of owners and their share in the revenues of a well, derived from the sale of oil or gas.

Grantor

• A person who makes a grant of land, minerals, or other property.

Grantee

• The person receiving a grant.

Gross Working Interest

• Interest in a well which bears drilling and operating expenses.

Joint Operating Agreement

• An agreement among owners defining how a well will be operated.

Landowner

• A person who owns land and is usually permitted to sell or lease the minerals beneath it.

Lease

• In this context, usually refers to an oil, gas or mineral lease.

Lessee

• The party who purchases a lease.

Lessor

• The party who grants a lease.

Mineral Owner

• The party owning the minerals under a piece of land along with the right to execute a lease on the property.

Net Revenue Interest

• Interest in the revenues of a well.

Net Working Interest

• Share in well proceeds attributable to the working interest.

Non-Operating Working Interest

• A party who has an interest in a well, but is not the operator.

Non-Participating Royalty

• A royalty interest that participates in any oil, gas or mineral found but does not receive lease bonuses or rentals.

Norm

• Normally occurring radioactive material, which may cause environmental issues.

Oil, Gas and Mineral Lease

• An agreement outlining such basic terms as royalties, duration and description of the property.

Operating Agreement

• See joint operating agreement.

Operating Expenses

• The costs of operating a well.

Operating Interest

• A working interest operator who is also the well operator.

Operator

• The party designated in the operating agreement to operate the well.

Overriding Royalty

• A payment in excess of the royalty included in the oil lease usually added during an intervening assignment.

Paid-Up Lease

• An oil and gas lease that includes both rental and bonus payments.

Participating Royalty

• A royalty interest giving its owner the right to participate in bonuses received from leases as well as royalties from oil or gas.

Primary Term

• The initial period of development in an oil and gas lease.

Pugh Clause

• A clause limiting non-producing lands or depths beyond the primary term of the lease.

Royalty

• Funds received from the production of oil, gas or minerals.

Run Stub

• Stub attached to a check showing month of production, whether it is from gas or oil, price received and total volumes produced.

Salt Water Disposal Well

• A well where oil field salt water is disposed.

Severance Tax

• A tax paid on oil or gas that is produced, i.e. “severed” from the earth.

Severed Minerals

• Minerals that have been severed from the surface title.

Shut-In

• An inactive well.

Surface Owner

• An owner who does not have rights to the minerals under his land.

Unleased Mineral Interest

• A mineral interest that is not subject to an oil lease.

Working Interest

• Interest in a well, which includes drilling and operating expenses.