Share Name Share Symbol Market Type Share ISIN Share Description
Union Jack LSE:UJO London Ordinary Share GB00B814XC94 ORD 0.025P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.002p +1.90% 0.1075p 0.105p 0.11p 0.11p 0.1055p 0.1055p 46,907,390 15:53:29
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Oil & Gas Producers 0.0 -0.7 -0.0 - 9.08

Union Jack Oil PLC Proposed Farm-in and Fundraising

03/10/2018 7:00am

UK Regulatory (RNS & others)


Union Jack (LSE:UJO)
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RNS Number : 7620C

Union Jack Oil PLC

03 October 2018

3 October 2018

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement

Union Jack Oil plc

("Union Jack" or the "Company")

Proposed Farm-in for a 16.667% Interest in the Major West Newton Gas Discovery

Oversubscribed Placing and Subscription to raise GBP2.25 Million

The Directors of Union Jack Oil plc (AIM: UJO) are pleased to announce that the Company has agreed terms with Rathlin Energy (UK) Limited ("Rathlin"), a wholly owned subsidiary of Canadian registered Connaught Oil & Gas Ltd ("Connaught"), on a proposed farm-in for a 16.667% licence interest in PEDL183 ("Proposed Farm-in"). PEDL183 is located onshore UK in East Yorkshire and within the Western sector of the Southern Zechstein Basin and contains the significant West Newton A-1 gas discovery (Best Estimate Contingent Resource 189 Bcfe or 31.5 MMboe gross), where the drill-ready West Newton conventional appraisal well is planned to be drilled in Q1 2019.

Proposed Farm-in Highlights

-- Acquiring a 16.667% interest in the large 176,000 acre PEDL183 licence containing the significant West Newton A-1 UK onshore gas discovery

-- Attractive farm-in terms with no cash costs up front with all funding going towards drilling and licence costs

-- Best Estimate Contingent Resources of 189 Bcf of gas equivalent or 31.5 million barrels of oil equivalent (gross) assigned to West Newton in a Competent Persons Report

   --     West Newton A-1 gas discovery is on-trend with the prolific offshore Hewett gas complex 
   --     Proximity to existing gas pipelines and infrastructure 

-- Drill-ready conventional appraisal well planned to be drilled in Q1 2019 to appraise the gas discovery

   --     Compelling immediate and future economic value from a development of the gas discovery alone 
   --     Operator's NPV10% of US$247 million and 52.5% ROR for the gas discovery alone 

-- Attractive acquisition metrics of less than US$0.30 per barrel of oil equivalent for the gas discovery alone

-- Considerable upside potential from the lower Cadeby Reef oil exploration target underlying the gas reservoir that will also be drilled with Best Estimate Prospective Resources of 79.1 million boe (gross)

   --     Further significant upside potential from other numerous prospects and leads 

-- A successful appraisal well in Q1 2019 is expected to deliver a major onshore gas development

Fundraising and Commercial Partner Highlights

-- GBP2.25 million raised before expenses in an oversubscribed Fundraising to fund the Proposed Farm-in and associated well costs

-- Union Jack's Commercial Partner, Humber Oil & Gas Limited ("Humber"), has participated on identical terms in the Proposed Farm-in and will result in it also acquiring a 16.667% interest

-- Humber director has a beneficial interest in 13% of the pre-placing issued share capital of Union Jack held by G.P. (Jersey) Limited which has increased its shareholding to 15% of the Company's share capital as enlarged by the Fundraising

David Bramhill, Executive Chairman of Union Jack, commented:

"The Proposed Farm-in to PEDL183 containing the material West Newton gas discovery represents a significant project technically and is compelling financially for Union Jack and we are grateful for the continuing support of our existing shareholders and new investors who have participated in this oversubscribed fundraising".

"The funds raised will allow us to acquire a 16.667% interest in PEDL183 on attractive farm-in terms, and progress the drilling of the material West Newton conventional appraisal well, where success is expected to deliver a significant onshore gas development going forward and be transformational for Union Jack."

"We look forward to working with Rathlin and Humber, drilling the West Newton conventional appraisal well to firm up the project's significant potential and, upon a successful appraisal well, progress to a field development plan. Union Jack will book 5.3 million barrels of oil equivalent Contingent Resources to its existing reserve and resource portfolio on acquisition and once a field development plan is in place, West Newton's Contingent Resources can be converted to Reserves."

"Given our ongoing commitment to develop the Wressle oil discovery, and plans to commence drilling of the material Biscathorpe oil appraisal well during Q4 2018, the Proposed Farm-in and drilling of West Newton in Q1 2019 puts Union Jack in an even stronger position to deliver growth in reserves, production and asset value while adhering to our principles of strict financial and technical discipline."

Frazer Lang, Director of Humber and Union Jack's Commercial Partner, commented:

"PEDL183 is one of the largest onshore licences within the UK and we are delighted to be investing in parallel in this project alongside our Commercial Partner, Union Jack.

"The conventional West Newton appraisal well is planned to be drilled in Q1 2019 and, if successful, the effect will be transformational for both Union Jack and Humber.

"As Union Jack's Commercial Partner, I feel extremely positive about its future and I am also delighted to be beneficially interested in an increased 15% strategic equity investment in the enlarged issued share capital of Union Jack."

The Placing and Subscription

The Company has raised GBP2.25 million before expenses by way of a placing and subscription of 2,647,058,823 new ordinary shares of 0.025p each ("New Ordinary Shares") at a price of 0.085p per New Ordinary Share (the "Fundraising"). The placing comprises 2,474,117,652 New Ordinary Shares ("Placing") and the subscription of 172,941,171 New Ordinary Shares ("Subscription"). SP Angel Corporate Finance LLP acted as sole broker on the Placing.

Further information on PEDL183 and the Proposed Farm-in

Pursuant to the Proposed Farm-in, UJO has entered into a Heads of Agreement ("HOA") with Connaught, a private company incorporated in Canada and its wholly-owned subsidiary Rathlin, a private company incorporated in England and Wales whom are the Operator of PEDL183 ("Operator").

Union Jack will acquire a 16.667% interest in PEDL183 by paying 25% of the West Newton appraisal well cost, expected to be circa GBP4.6 million gross.

The transaction is subject to contract and regulatory approvals. The Company is not required to make any immediate up-front cash payment.

PEDL183 is located onshore UK in East Yorkshire and within the Western sector of the Southern Zechstein Basin and contains the major West Newton gas discovery and numerous other prospects and leads.

The West Newton gas discovery is on-trend with the prolific Hewett gasfield complex which had Original Gas in Place of 419 Bcf. Regionally, West Newton and Hewett are located in the Southern Permian Basin which contains approximately 24 Tcf of gas and 250 MMbbls of oil combined in production areas in Poland, Germany and the Netherlands.

The West Newton conventional appraisal well is defined from 3 Component 3D seismic. The West Newton conventional appraisal well is planned to be drilled in Q1 2019.

The West Newton A-1 gas discovery well was drilled and logged in 2014. Best Estimate Contingent resources are 189 Bcf of gas equivalent ("Bcfe") or 31.5 million barrels of oil equivalent ("boe") (gross). Reflecting its status as an existing gas discovery, the West Newton conventional appraisal well has a combined geological and commercial Probability of Success of 60%.

The Operator's estimated unrisked project economic evaluation indicates NPV10% before tax of US$247 million or $7.84 per boe and yields a 52.5% rate of return. Based on Union Jack's share of the drilling cost and the Operator's NPV10%, Union Jack is acquiring an interest in a gas discovery with Contingent Resources for less than $0.30 per boe.

Cadeby Reef Oil and Other Prospects

The Operator has identified a significant oil exploration target in the Cadeby Reef formation located below the existing discovered gas Contingent Resources. As part of the proposed West Newton appraisal well, the Cadeby Reef oil exploration target will also be drilled as a secondary target. The Cadeby Reef has Best Estimate Prospective Resources of 79.1 million boe (gross). The Cadeby Reef oil prospect has an estimated geological Chance of Success of 26%.

The Operator's estimated unrisked project economic evaluation indicates NPV10% before tax of US$850 million or US$10.75 per boe and yields a 104.8% rate of return. Based on Union Jack's share of the drilling cost and the Operator's estimated NPV10%, Union Jack is acquiring an interest in both a material gas discovery with Contingent Resources and an attractive oil target with Prospective Resources for a combined $0.08 per boe.

In addition, the Operator has also mapped a number of additional attractive prospects and leads on the licence that would add to the significant Prospective Resources mentioned previously.

Deloitte CPR

A Competent Person's Report dated 25 July 2017 was prepared for Connaught by Deloitte LLP, an independent petroleum engineering firm, that conforms to SPE-PRMS guidelines ("Deloitte CPR"). The Deloitte CPR incorporates data from a proprietary three component 3D seismic survey, acquired in 2014 following the drilling of the West Newton discovery well, and Deloitte has assigned Contingent Resources to the West Newton discovery.

In this announcement, all volumetric data disclosed under the Contingent Resource and Prospective Resource categories in relation to the West Newton gas discovery and PEDL183 have all been sourced from the Deloitte CPR.

The Executive Summary extracted from the Deloitte CPR will be available on the Union Jack website at www.unionjackoil.com

A glossary of technical terms is attached to this announcement.

Proposed West Newton Appraisal Well

The proposed West Newton appraisal well will involve conventional drilling to appraise the West Newton A-1 gas discovery within a Permian age Carbonate reservoir and a deeper secondary oil target and, for clarity, the operations at the site will not either now or in the future involve the process of hydraulic "fracking" for shale gas or shale-oil.

Commercial Partner Participation

Union Jack has an established relationship with Humber which forms the basis of an ongoing Commercial Partnership whereby both parties seek to co-invest in UK onshore hydrocarbon opportunities. The first such commercial collaboration was the acquisition of a combined 20% economic interest in PEDL253 containing the Biscathorpe-1 oil discovery where a conventional appraisal well Biscathorpe-2 is planned to be drilled Q4 2018. Humber's sole director, Frazer Lang, is also beneficially interested in 754,482,736 Ordinary Shares of the Company held by G.P. (Jersey) Limited representing 13% of the issued ordinary shares prior to the Fundraising.

The second such significant commercial collaboration between Union Jack and Humber is the Proposed Farm-in for a combined 33.3% economic interest in PEDL183, where Humber has also entered into a HOA on identical terms to that of Union Jack that will result in each of Union Jack and Humber acquiring a 16.667% interest.

In addition to the commercial collaboration between Humber and Union Jack, G.P. (Jersey) Limited has also acquired a further 513,123,802 New Ordinary Shares in the Fundraising and will hold in aggregate 1,267,606,538 Ordinary Shares representing a 15% interest in the Company's share capital as enlarged by the Fundraising.

Details of the Director Subscriptions

Joseph O'Farrell and Raymond Godson intend, following this announcement, to subscribe for a total of 47,058,822 New Ordinary Shares at a price of 0.085p per share ("Director Subscriptions").

Of this, Joseph O'Farrell, Executive Director of Union Jack, intends to subscribe GBP30,000 for 35,294,117 New Ordinary Shares, following which he will have a beneficial interest in 212,987,709 Ordinary Shares, representing approximately 2.52% in the Company's share capital as enlarged by the Fundraising.

Raymond Godson, Non-Executive Director of Union Jack, intends to subscribe GBP10,000 for 11,764,705 New Ordinary Shares, following which he will have a beneficial interest in 42,529,411 Ordinary Shares, representing approximately 0.05% in the Company's share capital as enlarged by the Fundraising.

Use of Proceeds

The net proceeds from the Fundraising will be used to fund the Company's drilling obligation on the West Newton conventional appraisal well in Q1 2019.

Fundraising and Admission

Completion of the Fundraising is conditional, inter alia, upon admission of the New Ordinary Shares to trading on AIM.

The New Ordinary Shares will rank pari passu in all respects with the existing ordinary shares. Application has been made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM and admission is expected to take place on or around 8 October 2018.

Total Voting Rights

Following admission, the Company's share capital and total voting rights will comprise 8,450,710,254 Ordinary Shares. The Company does not hold any shares in treasury. Consequently, 8,450,710,254 is the figure which may be used by shareholders as the denominator for the calculation by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure and Transparency Rules.

Related Party Transactions

Humber is a substantial shareholder of the Company, and Joseph O'Farrell and Raymond Godson are directors of the Company. Therefore Humber, Joseph O'Farrell and Raymond Godson are related parties to Union Jack as defined in the AIM Rules for Companies. Humber's participation in the Fundraising, and the Director Subscriptions, are related party transactions for the purposes of Rule 13 the AIM Rules ("Related Party Transactions").

David Bramhill and Graham Bull, being the independent Directors for the purposes of the Related Party Transactions consider, having consulted with the Company's nominated adviser, SP Angel Corporate Finance LLP, that the terms and conditions of Humber's participation in the Placing and the Director Subscriptions are fair and reasonable insofar as the shareholders of the Company are concerned.

Presentation

Further details on PEDL183 and the West Newton gas discovery can be found in the "Rathlin Opportunity" presentation that is available on the Union Jack website at www.unionjackoil.com.

Competent Person's Statement

In accordance with the "AIM Rules - Note for Mining and Oil and Gas Companies", the information contained within the announcement has been reviewed and signed off by Graham Bull, Non-Executive Director, who has over 46 years of international oil and gas industry exploration experience.

For further information, please contact:

 
 Union Jack Oil plc                +44 (0)7787 160 682 
 David Bramhill 
 
 SP Angel Corporate Finance LLP    +44 (0)20 3470 0470 
 Nominated Adviser and Broker 
 Lindsay Mair 
 Richard Hail 
 
 Allerton Communications           44 (0) 20 3633 1730 
 Media Enquiries 
 Peter Curtain 
 

Glossary of Oil and Gas Terms

(Extract from the Deloitte CPR)

The following glossary of terms is presented to assist the reader in understanding technical terms with which they may not be familiar. The glossary is intended to be general and not all terms may be present within this report. Definitions are from the 2011 SPE-PRMS guidelines.

 
 1c                              Denotes low estimate scenario of Contingent Resources. 
 2C                              Denotes low estimate scenario of Contingent Resources. 
                                -------------------------------------------------------------- 
 3C                              Denotes high estimate scenario of Contingent 
                                  Resources. Accumulation 
                                -------------------------------------------------------------- 
                                 An individual body of naturally occurring petroleum 
                                  in a reservoir. 
                                -------------------------------------------------------------- 
 Aggregation                     The process of summing reservoir (or project) 
                                  level estimates of resource quantities to higher 
                                  levels or combinations such as field, country, 
                                  or company totals. Arithmetic summation of incremental 
                                  categories may yield different results from probabilistic 
                                  aggregation of distributions. 
                                -------------------------------------------------------------- 
 Approved for                    All necessary approvals have been obtained; capital 
  Development                     funds have been committeed, and implementation 
                                  of the development project is underway. 
                                -------------------------------------------------------------- 
 Analogous Reservoir             Analogous reservoirs, as used in resources assessments, 
                                  have similar rock and fluid properties, reservoir 
                                  conditions (depth, temperature, and pressure) 
                                  and drive mechanisms, but are typically at a 
                                  more advanced stage of development than the reservoir 
                                  of interest and thus may provide concepts to 
                                  assist in the interpretation of more limited 
                                  data and estimation of recovery. 
                                -------------------------------------------------------------- 
 Assessment                      See Evaluation. 
                                -------------------------------------------------------------- 
 Associated                      Associated Gas is a natural gas found in contact 
  Gas                             with or dissolved in crude oil in thereservoir. 
                                  It can be further categorized as Gas-Cap Gas 
                                  or Solution Gas. 
                                -------------------------------------------------------------- 
 Barrels of                      See Crude Oil Equivalent. 
  Oil Equivalent 
  (Boe) 
                                -------------------------------------------------------------- 
 Best Estimate                   With respect to resource categorization, this 
                                  is considered to be the best estimate of the 
                                  quantity that will actually be recovered from 
                                  the accumulation by the project. It is the most 
                                  realistic assessment of recoverable quantities 
                                  if only a single result were reported. If probabilistic 
                                  methods are used, there should be at least a 
                                  50% probability (P50) that the quantities actually 
                                  recovered will equal or exceed the best estimate. 
                                -------------------------------------------------------------- 
 Chance                          Chance is 1- Risk. (See Risk.) 
                                -------------------------------------------------------------- 
 Commercial                      When a project is commercial, this implies that 
                                  the essential social, environmental, and economic 
                                  conditions are met, including political, legal, 
                                  regulatory, and contractual conditions. In addition, 
                                  a project is commercial if the degree of commitment 
                                  is such that the accumulation is expected to 
                                  be developed and placed on production within 
                                  a reasonable time frame. While 5 years is recommended 
                                  as a benchmark, a longer time frame could be 
                                  applied where, for example, development of economic 
                                  projects are deferred at the option of the producer 
                                  for, among other things, market-related reasons, 
                                  or to meet contractual or strategic objectives. 
                                  In all cases, the justification for classification 
                                  as Reserves should be clearly documented. 
                                -------------------------------------------------------------- 
 Committed Project               Projects status where there is a demonstrated, 
                                  firm intention to develop and bring to production. 
                                  Intention may be demonstrated with funding/financial 
                                  plans and declaration of commerciality based 
                                  on realistic expectations of regulatory approvals 
                                  and reasonable satisfaction of other conditions 
                                  that would otherwise prevent the project from 
                                  being developed and brought to production. 
                                -------------------------------------------------------------- 
 Completion                      Completion of a well. The process by which a 
                                  well is brought to its final classification- 
                                  basically dry hole, producer, injector, or monitor 
                                  well. A dry hole is normally plugged and abandoned. 
                                  A well deemed to be producible of petroleum, 
                                  or used as an injector, is completed by establishing 
                                  a connection between the reservoir(s) and the 
                                  surface so that fluids can be produced from, 
                                  or injected into, the reservoir. Various methods 
                                  are utilized to establish this connection, but 
                                  they commonly involve the installation of some 
                                  combination of borehole equipment, casing and 
                                  tubing, and surface injection or production facilities. 
                                -------------------------------------------------------------- 
 Completion                      The specific reservoir interval(s) that is (are) 
  Interval                        open to the borehole and connected to the surface 
                                  facilities for production or injection, or reservoir 
                                  intervals open to the wellbore and each other 
                                  for injection purposes. 
                                -------------------------------------------------------------- 
 Concession                      A grant of access for a defined area and time 
                                  period that transfers certain entitlements to 
                                  produced hydrocarbons from the host country to 
                                  an enterprise. The enterprise is generally responsible 
                                  for exploration, development, production, and 
                                  sale of hydrocarbons that may be discovered. 
                                  Typically granted under a legislated fiscal system 
                                  where the host country collects taxes, fees, 
                                  and sometimes royalty on profits earned. 
                                -------------------------------------------------------------- 
 Condensate                           A mixture of hydrocarbons (mainly pentanes and 
                                       heavier) that exist in the gaseous phase at original 
                                       temperature and pressure of the reservoir, but 
                                       when produced, are in the liquid phase at surface 
                                       pressure and temperature conditions. Condensate 
                                       differs from natural gas liquids (NGL) in two 
                                       respects: 
                                       1) NGL is extracted and recovered in gas plants 
                                       rather than lease separators or other lease facilities; 
                                       and 
                                       2) NGL includes very light hydrocarbons (ethane, 
                                       propane, butanes) as well as the pentanes-plus 
                                       that are the main constituents of condensate. 
                                       Compare to Natural Gas Liquids (NGL) 
                                -------------------------------------------------------------- 
 Conditions                      The economic, marketing, legal, environmental, 
                                  social, and governmental factors forecast to 
                                  exist and impact the project during the time 
                                  period being evaluated (also termed Contingencies). 
                                -------------------------------------------------------------- 
 Contingency                     See Conditions. 
                                -------------------------------------------------------------- 
 Contingent                      Development and production of recoverable quantities 
  Project                         has not been committed due to conditions that 
                                  may or may not be fulfilled. 
                                -------------------------------------------------------------- 
 Contingent                      Those quantities of petroleum estimated, as of 
  Resources                       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. Contingent Resources are 
                                  a class of discovered recoverable resources. 
                                -------------------------------------------------------------- 
 Cost Recovery                   Under a typical production-sharing agreement, 
                                  the contractor is responsible for the field development 
                                  and all exploration and development expenses. 
                                  In return, the contractor recovers costs (investments 
                                  and operating expenses) out of the gross production 
                                  stream. The contractor normally receives payment 
                                  in oil production and is exposed to both technical 
                                  and market risks. 
                                -------------------------------------------------------------- 
 Crude Oil                       Petroleum that exists in the liquid phase in 
                                  natural underground reservoirs and remains liquid 
                                  at atmospheric conditions of pressure and temperature. 
                                  Crude Oil may include small amounts of nonhydrocarbons 
                                  produced with the liquids but does not include 
                                  liquids obtained from the processing of natural 
                                  gas. 
                                -------------------------------------------------------------- 
 Crude Oil Equivalent            Conversion of gas volumes to their oil equivalent, 
                                  customarily done on the basis of the nominal 
                                  heating content or caloric value of the fuel. 
                                  Before aggregating, the gas volumes first must 
                                  be converted to the same temperature and pressure. 
                                  Common industry gas conversion factors usually 
                                  range between 1 barrel of oil equivalent (Boe) 
                                  = 5,600-6,000 standard cubic feet of gas. (Also 
                                  termed Barrels of Oil Equivalent.) 
                                -------------------------------------------------------------- 
 Cumulative                      The sum of production of oil and gas to date 
  Production                      (see also Production). 
                                -------------------------------------------------------------- 
 Current Economic                Establishment of current economic conditions 
  Conditions                      should include relevant historical petroleum 
                                  prices and associated costs and may involve a 
                                  defined averaging period. The SPE guidelines 
                                  recommend that a one-year historical average 
                                  of costs and prices should be used as the default 
                                  basis of "constant case" resources estimates 
                                  and associated project cash flows. 
                                -------------------------------------------------------------- 
 Deposit                         Material that has accumulated due to a natural 
                                  process. In resource evaluations it identifies 
                                  an accumulation of hydrocarbons in a reservoir 
                                  (see Accumulation). 
                                -------------------------------------------------------------- 
 Deterministic                   The method of estimation of Reserves or Resources 
  Estimate                        is called deterministic if a discrete estimate(s) 
                                  is made based on known geoscience, engineering, 
                                  and economic data. 
                                -------------------------------------------------------------- 
 Developed Reserves              Developed Reserves are expected to be recovered 
                                  from existing wells including reserves behind 
                                  pipe. Improved recovery reserves are considered 
                                  "Developed" only after the necessary equipment 
                                  has been installed, or when the costs to do so 
                                  are relatively minor compared to the cost of 
                                  a well. 
                                  Developed Reserves may be further subclassified 
                                  as Producing or Non- Producing. 
                                -------------------------------------------------------------- 
 Developed Producing             Developed Producing Reserves are expected to 
  reserves                        be recovered from completion intervals that are 
                                  open and producing at the time of the estimate. 
                                  Improved recovery reserves are considered producing 
                                  only after the improved recovery project is in 
                                  operation. 
                                -------------------------------------------------------------- 
 Developed Non-producing         Developed Non-Producing Reserves include shut-in 
  reserves                        and behind-pipe Reserves. Shut-in Reserves are 
                                  expected to be recovered from (1) completion 
                                  intervals that are open at the time of the estimate 
                                  but which have not yet started producing, (2) 
                                  wells that were shut in for market conditions 
                                  or pipeline connections, or (3) wells not capable 
                                  of production for mechanical reasons. 
                                  Behind- pipe Reserves are also those expected 
                                  to be recovered from zones in existing wells 
                                  that will require additional completion work 
                                  or future recompletion prior to start of production. 
                                  In all cases, production can be initiated or 
                                  restored with relatively low expenditure compared 
                                  to the cost of drilling a new well. 
                                -------------------------------------------------------------- 
 Development                     A discovered accumulation for which there are 
  not Viable                      no current plans to develop or to acquire additional 
                                  data at the time due to limited production potential. 
                                  A project maturity sub- class that reflects the 
                                  actions required to move a project toward commercial 
                                  production. 
                                -------------------------------------------------------------- 
 Development                     A discovered accumulation where project activities 
  Pending                         are ongoing to justify commercial development 
                                  in the foreseeable future. A project maturity 
                                  subclass that reflects the actions required to 
                                  move a project toward commercial production. 
                                -------------------------------------------------------------- 
 Development                     The design specifications, timing, and cost estimates 
  Place                           of the development project that can include, 
                                  but is not limited to, well locations, completion 
                                  techniques, drilling methods, processing facilities, 
                                  transportation and marketing. (See also Project.) 
                                -------------------------------------------------------------- 
 Development                     A discovered accumulation where project activities 
  Unclarified                     are on hold and/or where justification as a commercial 
  or on Hold                      development may be subject to significant delay. 
                                  A project maturity subclass that reflects the 
                                  actions required to move a project toward commercial 
                                  production. 
                                -------------------------------------------------------------- 
 Discovered                      A discovery is one petroleum accumulation, or 
                                  several petroleum accumulations collectively, 
                                  for which one or several exploratory wells have 
                                  established through testing, sampling, and/or 
                                  logging the existence of a significant quantity 
                                  of potentially moveable hydrocarbons. In this 
                                  context, "significant" implies that there is 
                                  evidence of a sufficient quantity of petroleum 
                                  to justify estimating the in-place volume demonstrated 
                                  by the well(s) and for evaluating the potential 
                                  for economic recovery. (See also Known Accumulations.) 
                                -------------------------------------------------------------- 
 Discovered                      Discovered Petroleum Initially-in-Place is that 
  Petroleum Initially-in-Place    quantity of petroleum that is estimated, as of 
                                  a given date, to be contained in known accumulations 
                                  prior to production. Discovered Petroleum Initially-In-Place 
                                  may be subdivided into Commercial, Sub- Commercial, 
                                  and Unrecoverable, with the estimated commercially, 
                                  recoverable portion being classified as Reserves 
                                  and the estimated subcommercial recoverable portion 
                                  being classified as Contingent Resources. 
                                -------------------------------------------------------------- 
 Economic                        In relation to petroleum Reserves and Resources, 
                                  economic refers to the situation where the income 
                                  from an operation exceeds the expenses involved 
                                  in, or attributable to, that operation. 
                                -------------------------------------------------------------- 
 Economic Interest               An Economic Interest is possessed in every case 
                                  in which an investor has acquired any Interest 
                                  in mineral in place and secures, by any form 
                                  of legal relationship, revenue derived from the 
                                  extraction of the mineral to which he must look 
                                  for a return of his capital. 
                                -------------------------------------------------------------- 
 Economic Limit                  Economic limit is defined as the production rate 
                                  beyond which the net operating cash flows (after 
                                  royalties or share of production owing to others) 
                                  from a project, which may be an individual well, 
                                  lease, or entire field, are negative. 
                                -------------------------------------------------------------- 
 Entitlement                     That portion of future production (and thus resources) 
                                  legally accruing to a 
                                  lessee or contractor under the terms of the development 
                                  and production contract with a lessor. 
                                -------------------------------------------------------------- 
 Entity                          A legal construct capable of bearing legal rights 
                                  and obligations. In resources evaluations this 
                                  typically refers to the lessee or contractor 
                                  which is some form of legal corporation (or consortium 
                                  of corporations). In a broader sense, an entity 
                                  can be an organization of any form and may include 
                                  governments or their agencies. 
                                -------------------------------------------------------------- 
 Estimated Ultimate              Those quantities of petroleum that are estimated, 
  Recovery (EUR)                  on a given date, to be potentially recoverable 
                                  from an accumulation, plus those quantities already 
                                  produced therefrom. 
                                -------------------------------------------------------------- 
 Economic Limit                  Economic limit is defined as the production rate 
                                  beyond which the net operating cash flows (after 
                                  royalties or share of production owing to others) 
                                  from a project, which may be an individual well, 
                                  lease, or entire field, are negative. 
                                -------------------------------------------------------------- 
 Entitlement                     That portion of future production (and thus resources) 
                                  legally accruing to a lessee or contractor under 
                                  the terms of the development and production contract 
                                  with a lessor. 
                                -------------------------------------------------------------- 
 Entity                          A legal construct capable of bearing legal rights 
                                  and obligations. In resources evaluations this 
                                  typically refers to the lessee or contractor 
                                  which is some form of legal corporation (or consortium 
                                  of corporations). In a broader sense, an entity 
                                  can be an organization of any form and may include 
                                  governments or their agencies. 
                                -------------------------------------------------------------- 
 Estimated Ultimate              Those quantities of petroleum that are estimated, 
  Recovery (EUR)                  on a given date, to be potentially recoverable 
                                  from an accumulation, plus those quantities already 
                                  produced therefrom. 
                                -------------------------------------------------------------- 
 Evaluation                      The geosciences, engineering, and associated 
                                  studies, including economic analyses, conducted 
                                  on a petroleum exploration, development, or producing 
                                  project resulting in estimates of the quantities 
                                  that can be recovered and sold and the associated 
                                  cash flow under defined forward conditions. Projects 
                                  are classified and estimates of derived quantities 
                                  are categorized according to applicable guidelines. 
                                  (Also termed Assessment.) 
                                -------------------------------------------------------------- 
 Evaluator                       The person or group of persons responsible for 
                                  performing an evaluation of a project. These 
                                  may be employees of the entities that have an 
                                  economic interest in the project or independent 
                                  consultants contracted for reviews and audits. 
                                  In all cases, the entity accepting the evaluation 
                                  takes responsibility for the results, including 
                                  Reserves and Resources and attributed value estimates. 
                                -------------------------------------------------------------- 
 Exploration                     Prospecting for undiscovered petroleum. 
                                -------------------------------------------------------------- 
 Field                           An area consisting of a single reservoir or multiple 
                                  reservoirs all grouped on, or related to, the 
                                  same individual geological structural feature 
                                  and/or stratigraphic condition. There may be 
                                  two or more reservoirs in a field that are separated 
                                  vertically by intervening impermeable rock, laterally 
                                  by local geologic barriers, or both. The term 
                                  may be defined differently by individual regulatory 
                                  authorities. 
                                -------------------------------------------------------------- 
 Flow Test                       An operation on a well designed to demonstrate 
                                  the existence of moveable petroleum in a reservoir 
                                  by establishing flow to the surface and/or to 
                                  provide an indication of the potential productivity 
                                  of that reservoir (such as a wireline formation 
                                  test). 
                                -------------------------------------------------------------- 
 Fluid Contact's                 The surface or interface in a reservoir separating 
                                  two regions characterized by predominant differences 
                                  in fluid saturations. Because of capillary and 
                                  other phenomena, fluid saturation change is not 
                                  necessarily abrupt or complete, nor is the surface 
                                  necessarily horizontal 
                                -------------------------------------------------------------- 
 Forecast Case                   Modifier applied to project resources estimates 
                                  and associated cash flow when such estimates 
                                  are based on those conditions (including costs 
                                  and product price schedules) forecast by the 
                                  evaluator to reasonably exist throughout the 
                                  life of the project. Inflation or deflation adjustments 
                                  are made to costs and revenues over the evaluation 
                                  period. 
                                -------------------------------------------------------------- 
 Fuel Gas                        See Lease Fuel. 
                                -------------------------------------------------------------- 
 Gas/Oil Ratio                   Gas to Oil Ratio (GOR) in an oil field, calculated 
  (GOR)                           using measured natural gas and crude oil volumes 
                                  at stated conditions. The gas/oil ratio may be 
                                  the solution gas/oil ration (Rs); produced gas/oil 
                                  ratio (Rp); or another suitably defined ratio 
                                  of gas production to oil production. 
                                -------------------------------------------------------------- 
 High Estimate                   With respect to resource categorization, this 
  (Resources)                     is considered to be an optimistic estimate of 
                                  the quantity that will actually be recovered 
                                  from an accumulation by a project. If probabilistic 
                                  methods are used, there should be at least a 
                                  10% probability (P10) that the quantities actually 
                                  recovered will equal or exceed the high estimate. 
                                -------------------------------------------------------------- 
 Hydrocarbons                    Chemical compounds consisting wholly of hydrogen 
                                  and carbon. 
                                -------------------------------------------------------------- 
 Justified for                   Implementation of the development project is 
  Development                     justified on the basis of reasonable forecast 
                                  commercial conditions at the time of reporting 
                                  and that there are reasonable expectations that 
                                  all necessary approvals/contracts will be obtained. 
                                  A project maturity subclass that reflects the 
                                  actions required to move a project toward commercial 
                                  production. 
                                -------------------------------------------------------------- 
 Kerogen                         Naturally occurring, solid, insoluble organic 
                                  material that occurs in source rocks and can 
                                  yield oil or gas upon subjection to heat and 
                                  pressure. Kerogen is also defined as the fraction 
                                  of large chemical aggregates in sedimentary organic 
                                  matter that is insoluble in solvents (in contrast, 
                                  the fraction that is soluble in organic solvents 
                                  is called natural bitumen). (See also Oil Shales.) 
                                -------------------------------------------------------------- 
 Known Accumulation              An accumulation is an individual body of petroleum-in-place. 
                                  The key requirement to consider an accumulation 
                                  as "known," and hence containing Reserves or 
                                  Contingent Resources, is that it must have been 
                                  discovered, that is, penetrated by a well that 
                                  has established through testing, sampling, or 
                                  logging the existence of a significant quantity 
                                  of recoverable hydrocarbons. 
                                -------------------------------------------------------------- 
 Lead                            A project associated with a potential accumulation 
                                  that is currently poorly defined and requires 
                                  more data acquisition and/or evaluation in order 
                                  to be classified as a prospect. A project maturity 
                                  subclass that reflects the actions required to 
                                  move a project toward commercial production. 
                                -------------------------------------------------------------- 
 Low/Best/High                   The range of uncertainty reflects a reasonable 
  Estimates                       range of estimated potentially recoverable volumes 
                                  at varying degrees of uncertainty (using the 
                                  cumulative scenario approach) for an individual 
                                  accumulation or a project 
                                -------------------------------------------------------------- 
 Low Estimate                    With respect to resource categorization, this 
                                  is considered to be a conservative estimate of 
                                  the quantity that will actually be recovered 
                                  from the accumulation by a project. If probabilistic 
                                  methods are used, there should be at least a 
                                  90% probability (P90) that the quantities actually 
                                  recovered will equal or exceed the low estimate. 
                                -------------------------------------------------------------- 
 Marginal Contingent             Known (discovered) accumulations for which a 
  Resources                       development project(s) has been evaluated as 
                                  economic or reasonably expected to become economic 
                                  but commitment is withheld because of one or 
                                  more contingencies (e.g., lack of market and/or 
                                  infrastructure). 
                                -------------------------------------------------------------- 
 Measurement                     The process of establishing quantity (volume 
                                  or mass) and quality of petroleum products delivered 
                                  to a reference point under conditions defined 
                                  by delivery contract or regulatory authorities. 
                                -------------------------------------------------------------- 
 Mineral Interest                Mineral Interests in properties including (1) 
                                  a fee ownership or lease, concession, or other 
                                  interest representing the right to extract oil 
                                  or gas subject to such terms as may be imposed 
                                  by the conveyance of that interest; (2) royalty 
                                  interests, production payments payable in oil 
                                  or gas, and other non- operating interests in 
                                  properties operated by others; and (3) those 
                                  agreements with foreign governments or authorities 
                                  under which a reporting entity participates in 
                                  the operation of the related properties or otherwise 
                                  serves as producer of the underlying reserves 
                                  (as opposed to being an independent purchaser, 
                                  broker, dealer, or importer). 
                                -------------------------------------------------------------- 
 Monte Carlo                     A type of stochastic mathematical simulation 
  Stimulation                     that randomly and repeatedly samples input distributions 
                                  (e.g., reservoir properties) to generate a resulting 
                                  distribution (e.g., recoverable petroleum volumes). 
                                -------------------------------------------------------------- 
 Natural Gas                     Natural Gas is the portion of petroleum that 
                                  exists either in the gaseous phase or is in solution 
                                  in crude oil in natural underground reservoirs, 
                                  and which is gaseous at atmospheric conditions 
                                  of pressure and temperature. Natural Gas may 
                                  include some amount of nonhydrocarbons. 
                                -------------------------------------------------------------- 
 Natural Gas                     A mixture of light hydrocarbons that exist in 
  Liquids (NGL)                   the gaseous phase at reservoir conditions but 
                                  are recovered as liquids in gas processing plants. 
                                  NGL differs from condensate in two principal 
                                  respects: (1) NGL is extracted and recovered 
                                  in gas plants rather than lease separators or 
                                  other lease facilities; and (2) NGL includes 
                                  very light hydrocarbons (ethane, propane, butanes) 
                                  as well as the pentanes-plus (the main constituent 
                                  of condensates). 
                                -------------------------------------------------------------- 
 Natural Gas                     Natural gas liquids to gas ratio in an oil or 
  Liquids to                      gas field, calculated using measured natural 
  Gas Ratio                       gas liquids and gas volumes at stated conditions. 
                                -------------------------------------------------------------- 
 Net-back                        Linkage of input resource to the market price 
                                  of the refined products. 
                                -------------------------------------------------------------- 
 Net Profits                     An interest that receives a portion of the net 
  Interest                        proceeds from a well, typically after all costs 
                                  have been paid. 
                                -------------------------------------------------------------- 
 Net Working                     A company's working interest reduced by royalties 
  Interest                        or share of production owing to others under 
                                  applicable lease and fiscal terms. (Also called 
                                  Net Revenue Interest.) 
                                -------------------------------------------------------------- 
 Non-Associated                  Non-Associated Gas is a natural gas found in 
  Gas                             a natural reservoir that does not contain crude 
                                  oil. 
                                -------------------------------------------------------------- 
 Normal Production               Production practices that involve flow of fluids 
  Practices                       through wells to surface facilities that involve 
                                  only physical separation of fluids and, if necessary, 
                                  solids. Wells can be stimulated, using techniques 
                                  including, but not limited to, hydraulic fracturing, 
                                  acidization, various other chemical treatments, 
                                  and thermal methods, and they can be artificially 
                                  lifted (e.g., with pumps or gas lift). Transportation 
                                  methods can include mixing with diluents to enable 
                                  flow, as well as conventional methods of compression 
                                  or pumping. Practices that involve chemical reforming 
                                  of molecules of the produced fluids are considered 
                                  manufacturing processes. 
                                -------------------------------------------------------------- 
 On Production                   The development project is currently producing 
                                  and selling petroleum to market. A project status/maturity 
                                  subclass that reflects the actions required to 
                                  move a project toward commercial production. 
                                -------------------------------------------------------------- 
 Operator                        The company or individual responsible for managing 
                                  an exploration, development, or production operation. 
                                -------------------------------------------------------------- 
 Penetration                     The intersection of a wellbore with a reservoir. 
                                -------------------------------------------------------------- 
 Petroleum                       Petroleum is defined as a naturally occurring 
                                  mixture consisting of hydrocarbons in the gaseous, 
                                  liquid, or solid phase. Petroleum may also contain 
                                  nonhydrocarbon compounds, common examples of 
                                  which are carbon dioxide, nitrogen, hydrogen 
                                  sulfide, and sulfur. In rare cases, nonhydrocarbon 
                                  content could be greater than 50%. 
                                -------------------------------------------------------------- 
 Petroleum Initially-in-Place    Petroleum Initially-in-Place is the total quantity 
                                  of petroleum that is estimated to exist originally 
                                  in naturally occurring reservoirs. Crude Oil-in-place, 
                                  Natural Gas- in-place and Natural Bitumen-in-place 
                                  are defined in the same manner (see Resources). 
                                  (Also referred as Total Resource Base or Hydrocarbon 
                                  Endowment.) 
                                -------------------------------------------------------------- 
 Play                            A project associated with a prospective trend 
                                  of potential prospects, but which requires more 
                                  data acquisition and/or evaluation in order to 
                                  define specific leads or prospects. A project 
                                  maturity subclass that reflects the actions required 
                                  to move a project toward commercial production. 
                                -------------------------------------------------------------- 
 Pool                            An individual and separate accumulation of petroleum 
                                  in a reservoir. 
                                -------------------------------------------------------------- 
 Possible Reserves               An incremental category of estimated recoverable 
  (P3)                            volumes associated with a defined degree of uncertainty. 
                                  Possible Reserves are those additional reserves 
                                  that analysis of geoscience and engineering data 
                                  suggest are less likely to be recoverable than 
                                  Probable Reserves. The total quantities ultimately 
                                  recovered from the project have a low probability 
                                  to exceed the sum of Proved plus Probable plus 
                                  Possible (3P), which is equivalent to the high 
                                  estimate scenario. When probabilistic methods 
                                  are used, there should be at least a 10% probability 
                                  that the actual quantities recovered will equal 
                                  or exceed the 3P estimate. 
                                -------------------------------------------------------------- 
 Primary Recovery                Primary recovery is the extraction of petroleum 
                                  from reservoirs utilizing only the natural energy 
                                  available in the reservoirs to move fluids through 
                                  the reservoir rock to other points of recovery. 
                                -------------------------------------------------------------- 
 Probability                     The extent to which an event is likely to occur, 
                                  measured by the ratio of the favorable cases 
                                  to the whole number of cases possible. SPE convention 
                                  is to quote cumulative probability of exceeding 
                                  or equaling a quantity where P90 is the small 
                                  estimate and P10 is the large estimate. (See 
                                  also Uncertainty.) 
                                -------------------------------------------------------------- 
 Probabilistic                   The method of estimation of Resources is called 
  Estimate                        probabilistic when the known geoscience, engineering, 
                                  and economic data are used to generate a continuous 
                                  range of estimates and their associated probabilities. 
                                -------------------------------------------------------------- 
 Probable Reserves               An incremental category of estimated recoverable 
                                  volumes associated with a defined degree of uncertainty. 
                                  Probable Reserves are those additional Reserves 
                                  that are less likely to be recovered than Proved 
                                  Reserves but more certain to be recovered than 
                                  Possible Reserves. It is equally likely that 
                                  actual remaining quantities recovered will be 
                                  greater than or less than the sum of the estimated 
                                  Proved plus Probable Reserves (2P). In this context, 
                                  when probabilistic methods are used, there should 
                                  be at least a 50% probability that the actual 
                                  quantities recovered will equal or exceed the 
                                  2P estimate. 
                                -------------------------------------------------------------- 
 Production                      Production is the cumulative quantity of petroleum 
                                  that has been actually recovered over a defined 
                                  time period. While all recoverable resource estimates 
                                  and production are reported in terms of the sales 
                                  product specifications, raw production quantities 
                                  (sales and nonsales, including nonhydrocarbons) 
                                  are also measured to support engineering analyses 
                                  requiring reservoir voidage calculations. 
                                -------------------------------------------------------------- 
 Production-Sharing              In a production-sharing contract between a contractor 
  Contract                        and a host government, the contractor typically 
                                  bears all risk and costs for exploration, development, 
                                  and production. In return, if exploration is 
                                  successful, the contractor is given the opportunity 
                                  to recover the incurred investment from production, 
                                  subject to specific limits and terms. Ownership 
                                  is retained by the host government; however, 
                                  the contractor normally receives title to the 
                                  prescribed share of the volumes as they are produced 
                                -------------------------------------------------------------- 
 Profit Split                    Under a typical production-sharing agreement, 
                                  the contractor is responsible for the field development 
                                  and all exploration and development expenses. 
                                  In return, the contractor is entitled to a share 
                                  of the remaining profit oil or gas. The contractor 
                                  receives payment in oil or gas production and 
                                  is exposed to both technical and market risks. 
                                -------------------------------------------------------------- 
 Project                         Represents the link between the petroleum accumulation 
                                  and the decision- making process, including budget 
                                  allocation. A project may, for example, constitute 
                                  the development of a single reservoir or field, 
                                  or an incremental development in a producing 
                                  field, or the integrated development of a group 
                                  of several fields and associated facilities with 
                                  a common ownership. In general, an individual 
                                  project will represent a specific maturity level 
                                  at which a decision is made on whether or not 
                                  to proceed (i.e., spend money), and there should 
                                  be an associated range of estimated recoverable 
                                  resources for that project. (See also Development 
                                  Plan) 
                                -------------------------------------------------------------- 
 Property                        A volume of the Earth's crust wherein a corporate 
                                  entity or individual has contractual rights to 
                                  extract, process, and market a defined portion 
                                  of specified in-place minerals (including petroleum). 
                                  Defined in general as an area but may have depth 
                                  and/or stratigraphic constraints. May also be 
                                  termed a lease, concession, or license. 
                                -------------------------------------------------------------- 
 Prospect                        A project associated with a potential accumulation 
                                  that is sufficiently well defined to represent 
                                  a viable drilling target. A project maturity 
                                  sub-class that reflects the actions required 
                                  to move a project toward commercial production. 
                                -------------------------------------------------------------- 
 Prospective                     Those quantities of petroleum that are estimated, 
  Resources                       as of a given date, to be potentially recoverable 
                                  from undiscovered accumulations. 
                                -------------------------------------------------------------- 
 Proved Economic                 In many cases, external regulatory reporting 
                                  and/or financing requires that, even if only 
                                  the Proved Reserves estimate for the project 
                                  is actually recovered, the project will still 
                                  meet minimum economic criteria; the project is 
                                  then termed as "Proved Economic." 
                                -------------------------------------------------------------- 
 Proved Reserves                 An incremental category of estimated recoverable 
                                  volumes associated with a defined degree of uncertainty 
                                  Proved Reserves are those quantities of petroleum 
                                  which, by analysis of geoscience and engineering 
                                  data, can be estimated with reasonable certainty 
                                  to be commercially recoverable, from a given 
                                  date forward, from known reservoirs and underdefined 
                                  economic conditions, operating methods, and government 
                                  regulations. If deterministic methods are used, 
                                  the term reasonable certainty is intended to 
                                  express a high degree of confidence that the 
                                  quantities will be recovered. If probabilistic 
                                  methods are used, there should be at least a 
                                  90% probability that the quantities actually 
                                  recovered will equal or exceed the estimate. 
                                  Often referred 
                                  to as 1P, also as "Proven." 
                                -------------------------------------------------------------- 
 Purchase Contract               A contract to purchase oil and gas provides the 
                                  right to purchase a specified volume of production 
                                  at an agreed price for a defined term. 
                                -------------------------------------------------------------- 
 Pure-Surface                    A pure-service contract is an agreement between 
  Contract                        a contractor and a host government that typically 
                                  covers a defined technical service to be provided 
                                  or completed during a specific period of time. 
                                  The service company investment is typically limited 
                                  to the value of equipment, tools, and expenses 
                                  for personnel used to perform the service. In 
                                  most cases, the service contractor's reimbursement 
                                  is fixed by the terms of the contract with little 
                                  exposure to either project performance or market 
                                  factors. 
                                -------------------------------------------------------------- 
 Range of Uncertainty            The range of uncertainty of the recoverable and/or 
                                  potentially recoverable volumes may be represented 
                                  by either deterministic scenarios or by a probability 
                                  distribution. (See Resource Uncertainty Categories.) 
                                -------------------------------------------------------------- 
 Raw Natural                     Raw Natural Gas is natural gas as it is produced 
  Gas                             from the reservoir. It includes water vapor and 
                                  varying amounts of the heavier hydrocarbons that 
                                  may liquefy in lease facilities or gas plants 
                                  and may also contain sulfur compounds such as 
                                  hydrogen sulfide and other nonhydrocarbon gases 
                                  such as carbon dioxide, nitrogen, or helium, 
                                  but which, nevertheless, is exploitable for its 
                                  hydrocarbon content. Raw Natural Gas is often 
                                  not suitable for direct utilization by most types 
                                  of consumers. 
                                -------------------------------------------------------------- 
 Reasonable                      If deterministic methods for estimating recoverable 
  Certainty                       resource quantities are used, then reasonable 
                                  certainty is intended to express a high degree 
                                  of confidence that the estimated quantities will 
                                  be recovered. 
                                -------------------------------------------------------------- 
 Reasonable                      Indicates a high degree of confidence (low risk 
  Expectation                     of failure) that the project will proceed with 
                                  commercial development or the referenced event 
                                  will occur. 
                                -------------------------------------------------------------- 
 Reasonable                      Indicates a high degree of confidence in predictions 
  Forecast                        of future events and commercial conditions. The 
                                  basis of such forecasts includes, but is not 
                                  limited to, analysis of historical records and 
                                  published global economic models. 
                                -------------------------------------------------------------- 
 Recoverable                     Those quantities of hydrocarbons that are estimated 
  Resources                       to be producible from discovered or undiscovered 
                                  accumulations. 
                                -------------------------------------------------------------- 
 Recoverable                     A numeric expression of that portion of in- place 
  Efficiency                      quantities of petroleum estimated to be recoverable 
                                  by specific processes or projects, most often 
                                  represented as a percentage. 
                                -------------------------------------------------------------- 
 Reference Point                 A defined location within a petroleum extraction 
                                  and processing operation where quantities of 
                                  produced product are measured under defined conditions 
                                  prior to custody transfer (or consumption). Also 
                                  called Point of Sale or Custody Transfer Point. 
                                -------------------------------------------------------------- 
 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 further satisfy four criteria: 
                                  They must be discovered, recoverable, commercial, 
                                  and remaining (as of a given date) based on the 
                                  development project(s) applied. 
                                -------------------------------------------------------------- 
 Reservoir                       A subsurface rock formation containing an individual 
                                  and separate natural accumulation of moveable 
                                  petroleum that is confined by impermeable rocks/formations 
                                  and is characterized by a single-pressure system. 
                                -------------------------------------------------------------- 
 Resources                       The term "resources" as used herein is intended 
                                  to encompass all quantities of petroleum (recoverable 
                                  and unrecoverable) naturally occurring on or 
                                  within the Earth's crust, discovered and undiscovered, 
                                  plus those quantities already produced. Further, 
                                  it includes all types of petroleum whether currently 
                                  considered "conventional" or "unconventional" 
                                  (see Total Petroleum Initially- in-Place). (In 
                                  basin potential studies, it may be referred to 
                                  as Total Resource Base or Hydrocarbon Endowment.) 
                                -------------------------------------------------------------- 
 Resources Categories            Subdivisions of estimates of resources to be 
                                  recovered by a project(s) to indicate the associated 
                                  degrees of uncertainty. Categories reflect uncertainties 
                                  in the total petroleum remaining within the accumulation 
                                  (in- place resources), that portion of the in- 
                                  place petroleum that can be recovered by applying 
                                  a defined development project or projects, and 
                                  variations in the conditions that may impact 
                                  commercial development (e.g., market availability, 
                                  contractual changes) 
                                -------------------------------------------------------------- 
 Resources Classes               Subdivisions of Resources that indicate the relative 
                                  maturity of the development projects being applied 
                                  to yield the recoverable quantity estimates. 
                                  Project maturity may be indicated qualitatively 
                                  by allocation to classes and subclasses and/or 
                                  quantitatively by associating a project's estimated 
                                  chance of reaching producing status. 
                                -------------------------------------------------------------- 
 Revenue-Sharing                 Revenue-sharing contracts are very similar to 
  Contract                        the production-sharing contracts described earlier, 
                                  with the exception of contractor payment. With 
                                  these contracts, the contractor usually receives 
                                  a defined share of revenue rather than a share 
                                  of the production. 
                                -------------------------------------------------------------- 
 Reversionary                    The right of future possession of an interest 
  Interest                        in a property when a specified condition has 
                                  been met. 
                                -------------------------------------------------------------- 
 Risk                            The probability of loss or failure. As "risk" 
                                  is generally associated with the negative outcome, 
                                  the term "chance" is preferred for general usage 
                                  to describe the probability of a discrete event 
                                  occurring. 
                                -------------------------------------------------------------- 
 Risk and Reward                 Risk and reward associated with oil and gas production 
                                  activities stems primarily from the variation 
                                  in revenues due to technical and economic risks. 
                                  Technical risk affects a company's ability to 
                                  physically extract and recover hydrocarbons and 
                                  is usually dependent on a number of technical 
                                  parameters. Economic risk is a function of the 
                                  success of a project and is critically dependent 
                                  on cost, price, and political or other economic 
                                  factors. 
                                -------------------------------------------------------------- 
 Risked-Serviced                 These agreements are very similar to the production-sharing 
  Contract                        agreements with the exception of contractor payment, 
                                  but risk is borne by the contractor. With a risked- 
                                  service contract, the contractor usually receives 
                                  a defined share of revenue rather than a share 
                                  of the production. 
                                -------------------------------------------------------------- 
 Royalty                         Royalty refers to payments that are due to the 
                                  host government or mineral owner (lessor) in 
                                  return for depletion of the reservoirs and the 
                                  producer (lessee/contractor) for having access 
                                  to the petroleum resources. Many agreements allow 
                                  for the producer to lift the royalty volumes, 
                                  sell them on behalf of the royalty owner, and 
                                  pay the proceeds to the owner. Some agreements 
                                  provide for the royalty to be taken only in kind 
                                  by the royalty owner. 
                                -------------------------------------------------------------- 
 Sales                           The quantity of petroleum product delivered at 
                                  the custody transfer (reference point) with specifications 
                                  and measurement conditions as defined in the 
                                  sales contract and/or by regulatory authorities. 
                                  All recoverable resources are estimated in terms 
                                  of the product sales quantity measurements. 
                                -------------------------------------------------------------- 
 Solution Gas                    Solution Gas is a natural gas that is dissolved 
                                  in crude oil in the reservoir at the prevailing 
                                  reservoir conditions of pressure and temperature. 
                                  It is a subset of Associated Gas. 
                                -------------------------------------------------------------- 
 Stochastic                      Adjective defining a process involving or containing 
  Estimate                        a random variable or variables or involving chance 
                                  or probability such as a stochastic stimulation 
                                -------------------------------------------------------------- 
 Subcommercial                   A project is subcommercial if the degree of commitment 
                                  is such that the accumulation is not expected 
                                  to be developed and placed on production within 
                                  a reasonable time frame. While 5 years is recommended 
                                  as a benchmark, a longer time frame could be 
                                  applied where, for example, development of economic 
                                  projects are deferred at the option of the producer 
                                  for, among other things, market-related reasons, 
                                  or to meet contractual or strategic objectives. 
                                  Discovered subcommercial projects are classified 
                                  as Contingent Resources. 
                                -------------------------------------------------------------- 
 Submarginal                     Known (discovered) accumulations for which evaluation 
  Contingent                      of development project(s) indicated they would 
  Resources                       not meet economic criteria, even considering 
                                  reasonably expected improvements in conditions. 
                                -------------------------------------------------------------- 
 Taxes                           Obligatory contributions to the public funds, 
                                  levied on persons, property, or income by governmental 
                                  authority. 
                                -------------------------------------------------------------- 
 Technical Uncertainty           Indication of the varying degrees of uncertainty 
                                  in estimates of recoverable quantities influenced 
                                  by range of potential in-place hydrocarbon resources 
                                  within the reservoir and the range of the recovery 
                                  efficiency of the recovery project being applied. 
                                -------------------------------------------------------------- 
 Total Petroleum                 Total Petroleum Initially-in-Place is generally 
  Initially-in-Place              accepted to be all those estimated quantities 
                                  of petroleum contained in the subsurface, as 
                                  well as those quantities already produced. This 
                                  was defined previously by the WPC as "Petroleum-in-place" 
                                  and has been termed "Resource Base" by others. 
                                  Also termed "Original-in-Place" or "Hydrocarbon 
                                  Endowment." 
                                -------------------------------------------------------------- 
 Uncertainty                     The range of possible outcomes in a series of 
                                  estimates. For recoverable resource assessments, 
                                  the range of uncertainty reflects a reasonable 
                                  range of estimated potentially recoverable quantities 
                                  for an individual accumulation or a project. 
                                  (See also Probability.) 
                                -------------------------------------------------------------- 
 Unconventional                  Petroleum accumulations that are pervasive throughout 
  Resources                       a large area and that are not significantly affected 
                                  by hydrodynamic influences (also referred to 
                                  as "continuous- type deposits"). Examples include 
                                  coalbed methane (CBM), basin-centered gas, shale 
                                  gas, gas hydrate, natural bitumen (tar sands), 
                                  and oil shale deposits. Typically, such accumulations 
                                  require specialized extraction technology (e.g., 
                                  dewatering of CBM, massive fracturing programs 
                                  for shale gas, steam and/or solvents to mobilize 
                                  bitumen for in-situ recovery, and in some cases, 
                                  mining activities). Moreover, the extracted petroleum 
                                  may require significant processing prior to sale 
                                  (e.g., bitumen upgraders). 
                                -------------------------------------------------------------- 
 Undeveloped                     Undeveloped Reserves are quantities expected 
  Reserves                        to be recovered through future investments: (1) 
                                  from new wells on undrilled acreage in known 
                                  accumulations, (2) from deepening existing wells 
                                  to a different (but known) reservoir, (3) from 
                                  infill wells that will increase recovery, or 
                                  (4) where a relatively large expenditure (e.g., 
                                  when compared to the cost of drilling a new well) 
                                  is required to (a) recomplete an existing well 
                                  or (b) install production or transportation facilities 
                                  for primary or improved recovery projects. 
                                -------------------------------------------------------------- 
 Unproved Reserves               Unproved Reserves are based on geoscience and/or 
                                  engineering data similar to that used in estimates 
                                  of Proved Reserves, but technical or other uncertainties 
                                  preclude such reserves being classified as Proved. 
                                  Unproved Reserves may be further categorized 
                                  as Probable Reserves and Possible Reserves. 
                                -------------------------------------------------------------- 
 Unrecoverable                   That portion of Discovered or Undiscovered Petroleum 
  Resources                       Initially-in-Place quantities that are estimated, 
                                  as of a given date, not to be recoverable. A 
                                  portion of these quantities may become recoverable 
                                  in the future as commercial circumstances change, 
                                  technological developments occur, or additional 
                                  data are acquired. 
                                -------------------------------------------------------------- 
 Well Abandonment                The permanent plugging of a dry hole, an injection 
                                  well, an exploration well or a well that no longer 
                                  produces petroleum or is no longer capable of 
                                  producing petroleum profitably. Several steps 
                                  are involved in the abandonment of a well: permission 
                                  for abandonment and procedural requirements are 
                                  secured from official agencies; the casing is 
                                  removed and salvaged if possible; and one or 
                                  more cement plugs and/or mud are placed in the 
                                  borehole to prevent migration of fluids between 
                                  the different formations penetrated by the borehole. 
                                  In some cases, wells may be temporarily abandoned 
                                  where operations are suspended for extended periods 
                                  pending future conversions to other applications 
                                  such as reservoir monitoring, enhanced recovery, 
                                  etc. 
                                -------------------------------------------------------------- 
 Wet Gas                         Wet (Rich) gas is natural gas from which no liquids 
                                  have been removed prior to the reference point. 
                                  The wet gas is accounted for in resource assessments, 
                                  and there is no separate accounting for contained 
                                  liquids. It should be recognized that this is 
                                  a resource assessment definition and not a phase 
                                  behavior definition. 
                                -------------------------------------------------------------- 
 Working Interest                A company's equity interest in a project before 
                                  reduction for royalties or production share owed 
                                  to others under the applicable fiscal terms. 
                                -------------------------------------------------------------- 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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