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Institute of Petroleum Management, Gandhinagar

Oil & Gas Glossary

Abandon

To plug permanently and salvage equipment from a well. A well is ordinarily abandoned if it is a dry hole or has ceased to produce for some reason, and this condition is believed permanent and beyond repair.

Acidize To treat a well with acid to dissolve some limestone or other carbonate materials in a producing zone, in order to increase the flow of oil and gas into the well bore.

Ammonia

A colourless gas with a pungent smell and strong alkaline reaction, nitrogen thrihydride NH3. The gas can be condensed to a liquid by severe cooling and pressure. Ammonia is one of the valuable products made principally from natural gas CH4.

Anticline A subsurface geological structure in the form of a sine curve or an elongated dome. This type of formation is most favourable to accumulation of oil and/or gas.

API Gravity Gravity of crude oil or other liquid hydrocarbons as measured by a system developed by the American Petroleum Institute.

Artificial Lift The application of power to lift oil mechanically or otherwise to surface from a producing well.

Barrel A unit of measure for crude oil and oil products equal to approx. 160 litres.

Basin A synclinal structure in the subsurface (concave upwards) of large area extent.

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Bed A recognisable sedimentary rock layer.

Bit The cutting or pulverising tool attached to the lower end of the drill string boring a hole in underground formations.

Block Valve

A large heavy-duty valve on a crude oil or products trunk line installed usually at intervals of from 8 to 32 kilometres. These valves can be used to isolate sections of the pipeline in an emergency and are called "block valves". The block valve and its fenced compound is know as a block valve station.

Blowout Preventer

A stack or assembly of heavy duty valves to the top of the casing to control well pressure.

Bottom-hole Pressure

The reservoir or formation pressure at the bottom of the hole.

Calcareous Composed of or containing some limestone material.

Cash Return $ Trading Cash Flow less economic depreciation.

Cash Return %

Cash Return % as a proportion of the gross investment base (being depreciating assets at historic Cost inflated by CPI plus net monetary assets).

Cash Return Spread

The difference between Cash Return % and WACC.

Casing Steel pipe run into a well to line the hole and protect it from caving and invasion from other formation waters.

Casing Point The objective depth in a drilling contract, either a specified depth or the depth at which a specific zero is penetrated.

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Cementing To fix the casing firmly in the hole with cement, which is pumped through the drill pipe to the bottom of the casing and up into the space between the hold and the casing.

Christmas Tree

The assemblage of valves and fittings at the top of a well used in the control of production.

Circulate To cycle drilling fluids down through drill pipe and up between the drill pipe and the wall of the hole to the surface.

Completion Steps used in attempting to bring a well into production.

Compressor Station

A place where gas is compressed or re-compressed for pipeline transmission. A compressor station is used to boost the gas pressure in gas transmission systems, in much the same way that pumps are used on liquids pipelines. And impeller shaft studded with hundreds of short, fixed blades rotates at speeds of 3,000-6,000 rpm, moving up to 300,000 cu ft per minute.

Condensate A light crude oil recovered during the production of natural gas, generally water-white, straw, or bluish in colour.

Confirmation Well

A second test well drilled to "prove" that the formation or producing zone encountered by an initial exploratory well extends beyond the limit of the initial drill and spacing unit.

Continental Shelf

The area of water around a coastline where the depth does not exceed about 200 metres. That area above the continental slope.

Core A cylindrical column of rock cut by using a special diamond bit, to sample an underground formation.

Crude Oil A fossil fuel in liquid form which can be refined to produce various oil products - unrefined petroleum.

Depletion The removal of a non-renewable resource from a known deposit that may be sold.

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Derrick A tapered mast of open steel framework used in drilling to support the drill string and other equipment.

Development Well

A well drilled in a productive reservoir underlying a geographical area of known oil or gas accumulation and within a definable trap. A development well is a well that is drilled after an exploration well has confirmed the presence of petroleum in the formation. Usually, it takes several development wells to efficiently produce hydrocarbons from a formation.

Deviated Hole A well bore which is off the vertical either by design or accident.

Dip The inclination or slope of the rocks, expressed as degrees from the horizontal.

Discovery Well

An exploration test well that encounters a new and previously untapped oil or gas reservoir.

Drill Collar A heavy wall component of the drill string placed between the bit and the drilling pipe to maintain vertical penetration of the bit and supply the weight necessary for drilling.

Drilling Contractor

A person or company whose business is drilling test wells on a contract basis for oil and gas companies.

Drilling Mud A mixture of clay, water and chemicals pumped down hole through the drill pipe and drill bit.

Drill Pipe High strength pipe, usually in 30 foot lengths, with threaded connections on each end.

Drill Stem The entire drilling assembly from the seivel to the bit; composed of the kelly, drill pipe, and drill collars, used to rotate the bit and to carry the mud or circulating fluid to the bit.

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Drill Stem Test

A method of obtaining a sample of fluid from a formation via a formation-tester tool attached to the drillstem. If the pressure is sufficient, fluid flows into the tester and up the drillpipe to the surface.

Dry Gas A mixture of methane, ethane and LPG and up to three percent of carbon dioxide.

Dry Hole

An unsuccessful well that has been drilled to a certain depth without finding oil or gas. The well may flow water, gas or even oil but not in sufficient quantities for production; a duster.

Dual Completion

The completion of a well in two separate reservoirs which are producing at the same time.

Electric Log Survey of an uncased hole which measures the resistivity and spontaneous potential of the rock formations penetrated.

Elevation Elevation above sea level of the derrick floor or rotary table.

Ethanol Also called ethyl alcohol and is the alcohol found in most spirituous beverages (C2H5OH). One component of gasohol.

Expected Case The case that the sponsors believe is the most likely outcome based upon their view of future events and development of the project.

Exploratory Well

A well drilled either in search of a new undiscovered pool of oil or gas, or to extend greatly the limits of a known pool.

Facies

The particular physical and lithologic characteristics of a rock horizon such as sandstone facies, shale facies, etc. As facies change laterally, (i.e. sandstone to shale) a stratigraphic trap may be developed.

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Farm-in

An arrangement where one oil operator buys into a lease owned by another operation where oil or gas has been discovered or is being produced. Farm-ins are often negotiated to assist the original owner with development costs or to secure a source of crude or natural gas for the buyer.

Farm-out The agreement made between oil operators where by the owner of a lease not interested in drilling at the present time agrees to assign the lease or part of it to another operator who wants to drill the acreage.

Fault A break or fracture zone in the rock in which adjacent rocks have moved relative to one another.

Fault Trap A trap for oil or gas in which the closure, forming the trap, results from the presence of one or more faults.

Field A test well or group of test wells defining the limit of an oil or gas pool.

Fishing The effort to recover tools, pipe or other objects from the well bore that may have become detached while in the well.

Flaring The burning of unwanted gas a means of disposing of it during completion operations.

Flash Point The temperature at which a given substance will ignite.

Fluid Injection The injection down the bore hold of a single test well or a group to test wells, or gas, water, or other liquid into a reservoir to force oil toward adjacent producing wells.

Formation An individual bed or group of beds distinctive in character and persisting over a fairly large area.

Fossil Fuel Energy derived from coal, crude oil, natural gas - combustible

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hydrocarbon formed from organic matter in the earth over millions of years.

Fracturing Application of hydraulic pressure to the reservoir to create or enlarge fractures through which oil and gas may be produced.

Gamma Ray

Minute quantities of radiation emitted by substances that are radioactive. Subsurface rock formations emit radiation quantum that can be detected by well-logging devices and that indicate the relative densities of the surrounding rock.

Gas A combustible or non-combustible fluid produced in a natural state from the earth and which maintains a gaseous or rarefied state at ordinary temperature and pressure conditions.

Gas Cap The portion of an oil reservoir occupied by free gas.

Gas-cap Drive A type of primary reservoir drive, in which expansion of a gas cap forces oil out of the reservoir and into the well bore.

Gas Cut Adjective applied to oil or mud which is mixed with some gas on a drill stem test or completion test.

Gas Lift A secondary recovery method in which high pressure gas is injected into test wells in order to displace oil to production wells.

Gas-oil Ratio The number of cubic feet of natural gas produced with a barrel of oil (GOR).

Geologist A scientist whose speciality consists of procurement and interpretation of data pertaining to the earths crust.

Geophysics

The science involving the measurement and recording of certain physical properties in the outer surface of the earth in order to determine that nature and contour of underground geologic horizons. (Magnetics, gravimetrics and seismic).

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Gigajoule One billion joules.

Gun Perforation A well completion method in which holes are made through casing and cement into the adjoining formation by the firing of steel bullets from a perforating gun.

High (anticlinal) A geologic term for the highest part of a structure where the likelihood of finding oil or gas is greatest.

Horizon A particular rock or marker zone which can be correlated from well to well.

Hydrocarbons Organic chemical compounds of hydrogen and carbon atoms forming the basis of all petroleum products. They may exist as gases, liquids, or solids. An example of each is methane, hexane, and asphalt.

Indigenous Energy

Energy produced from local resources.

Injection Well Well used for the injection of gas or water under pressure into a sub surface zone.

Jet Perforating A well completion method in which holes are cut through the casing and cement by means of a shaped charge of high pressure, high temperature gas.

Joule Unit of energy equal to approximately 0.7375 foot-pounds.

Kelly The heavy square or hexagonal shaped steel pipe used to transfer rotary drive from the rotary table to the drill stem.

Kick A surge in gas or mud pressure at the top of a well while drilling.

Limestone A sedimentary rock composed mainly of calcium carbonate.

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Lithology The details of rocks characteristics.

Location The well site or surface location where a well is to be drilled.

Log A record of activity or results of plans or surveys. In drilling a well there a number of different kinds of logs, e.g. Downhole density logs, mud logs, drillers logs etc.

Lost Circulation

An interruption in the circulation of drilling mud caused by the mud entering a porous zone, fracture or cavity, such that the mud fails to return to the surface.

Market Proxy An estimate of the value the share market would ascribe to a business based on an assumption that, over time, Cash Returns fade of the Cost of Capital.

Millidarcy Unit of measure of permeability (flow property) of rocks.

Methanol Also known as wood alcohol or methyl alcohol (CH3OH).

Mud Log A progressive analysis of the well bore cuttings and mud circulated up from the bottom of the hole.

Multiple Completion

The completion of a single well in more than one producing horizon.

Natural Gas

Gaseous forms of petroleum consisting of mixtures of hydrocarbon gases and vapours, the more important of which are methane, ethane, propane, butane, pentane and hexane; gas produced from a gas well. Natural Gas is usually classified as wet or dry depending on whether the proportions of gasoline constituents which it contains are large or small.

Net Present Value

Value of Net Cash Flows discounted at the Weighted Average cost of capital.

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Net Pay That portion of a formation considered to have enough permeability and oil and gas saturation to produce in sufficient paying quantities.

Octane Rating

A performance rating of gasoline in terms of antiknock qualities. The higher the octane number, the greater the antiknock quality; e.g. 94 octane gasoline is superior in antiknock qualities to a gasoline of 84 octane.

Offset Well A well drilled on the next closest location to the original well.

Oil-Cut Mud Term used to describe a mixture of oil and drilling mud.

Oil-In-Place The amount of crude oil estimated to exist in a reservoir underlying a pool or field area.

Oil String The string of casing set on top of, or through the producing formation.

Open Flow The maximum flow rate of a well with no restriction.

Open Hole An uncased well bore.

Pay Zone The rock strata which constitutes the oil and gas reservoir.

Perforations Holes made in the casing, cement, and formation through which formation fluids may blow into the well bore.

Permeability A measure of the ability of a rock to transmit fluids, usually measured in millidarcies (md).

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Petrochemicals Chemicals derived from petroleum; feedstocks for manufacturing a variety of plastics and synthetic rubbers.

Petroleum Petroleum is composed mainly of the elements carbon and hydrogen in chains as well as nitrogen and sulphur.

Perforating A method of shooting holes in casing to allow fluids into the well.

Pigs

"Pigs" in the industry nickname for devices that can be sent down gas or liquids pipelines for a variety of purposes e.g. cleaning pigs have wire brushes or scrapers to clean the inside of the pipeline, batching pigs are used on liquids pipelines to separate different products being pumped. Pigs are launched and received in pig (or scraper) launches and traps (or receivers) respectively. Intelligent pigs are used to inspect pipelines.

Plug A Well To fill the borehole of an abandoned well with mud and cement to prevent the flow of water or oil from one strata to another to the surface.

Porosity

The volume of the pore space expressed as a percent of the total volume of the rock mass; an important property of oil-bearing formations. Good porosity indicates an ability to hold large amounts of oil in the rock.

Pour Point Depressant

A chemical agent added to oil to keep it flowing to low temperatures.

Prospect Leases or other rights on a particular geographical area believed to like on specific geologic structural or stratigraphic trap believed to contain oil, gas or both.

Proved Reserves

Those quantities of crude oil, natural gas, and natural gas liquids which, upon analysis of geologic and engineering data, appear with reasonable certainty to be recoverable in the future from known oil and gas reservoirs under existing economic and operating conditions.

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Proved Developed Reserves

Reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. Additional oil and gas expected to be obtained through the application of fluid injection or other improved recovery techniques for supplementing the natural forces and mechanisms of primary recovery are included as "proved developed reserves" only after a testing by a pilot programme or after the operation of an installed programme has confirmed through production response that increased recovery will be achieved.

Proved Undeveloped Reserves

Reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion.

Pumping Well A well produced by artificial lift by a subsurface pump.

Reactor

The reactor is the central part of the petrochemical plant. It is in this part of the plan when the feedstock materials are chemically reacted and transformed into the desired end products. Catalytic crackers, regenerators, and fractionators are, broadly speaking, reactor vessels.

Reef A type of reservoir trap composed of rocks made of the skeletal remains of marine animals.

Refining The manufacturing process that turns crude oil into different petroleum products.

Reformer & Catalytic Reformer

The reformer is the first part of the ammonia-urea and methanol production process. The natural gas feedstock is combined with steam and converted to carbon dioxide and hydrogen prior to being further processed into ammonia or methanol. In a catalytic reformer a catalyst is used to aid the conversion process.

Reservoir-Rock (Geological)

A porous and permeable rock e.g. sandstone, limestone or dolomite, which contains petroleum in quantity.

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Reserves The unproduced oil or gas in place in a formation that remains but is still recoverable.

Resistivity A measure of the resistance of rock and its contained fluids to the passage of electrical current.

Rotary Drilling The common method of well drilling involving the cutting of a hole by rotating a bit at the bottom of a column of drill pipe.

Roughneck A drillers helper and worker on a drilling rig.

Sales Gas Dry gas after deducting own use and flared gas.

Salt Dome

A substance mound of salt that is either a piercement or a nonpiercement dome. Piercement domes thrust upward into the formations above them, causing faulting; nonpiercement domes are produced by local thickening of the salt beds and merely lift the overlying formations to form an anticline.

Sample Cuttings of a rock formation broken up by the drill bit and brought to the surface by the drilling mud.

Sandstone A sedimentary rock consisting almost entirely of sand sized grains of quartz.

Saturation The percentage of a rocks pore space occupied by a particular fluid, thus there is oil saturation, water saturation, and gas saturation.

Secondary Recovery

Any method of increasing ultimate recovery of oil or condensate by the application of outside energy.

Sedimentary Rock

Rock formed by the laying down of matter by the seas, streams, or lakes; sediment deposited in bodies of water through geological ages; limestone, sandstone and shale are sedimentary rocks.

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Seepage (Geological)

Over a period of geological time gas and/or oil can reach the surface through zones of weakness. Generally associated with faults.

Seismic Survey

Geophysical information on subsurface rock formations using a seismograph; the investigation of underground strata by recording and analysing shock waves artificially produced and reflected from subsurface bodies of rock.

Separator An apparatus for separating well fluids into gaseous and liquid components. Separators segregate oil, gas, and water with the aid, at times, of chemical treatment and the application of heat.

Shale A sedimentary rock composed of very small particles of clay, mud, and sand.

Show Of Oil A small amount of oil in a well or rock sample.

Shut-In Pressure Pressure measured after a well has been shut in for a period.

Sour Gas Gas containing acid gases, principally hydrogen sulphide and carbon dioxide.

Spud To begin the actual drilling of a well.

Step-Out Well A well in an unproved or semi-proved area in an attempt to extend the productive limits of a field.

Stimulation The technique of getting more production from a formation, by the use of acidizing, hydraulic fracturing, or other method.

Stratigraph Pertaining to rock strata and their characteristics and geometry.

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Stratigraph Traps

A type of reservoir capable of holding gas or oil that is formed by a change in characteristics of the formation - loss of porosity and permeability, or a break in its continuity - which forms the trap or reservoir.

Swab To clean out the bore hole of a well with a special tool attached to a wire line, and to attempt to start the well producing. The tool is called a RABBIT.

Sweet Oil Crude oil that contains virtually no sulphur or hydrogen sulfide and having a good colour.

Syncrude A crude oil made from coal or gas

Syngas Petrol made from coal or gas.

Tight Hole A drilling well in which all information is kept secret by the operator.

Total Shareholder Returns

Effective return to shareholders from combining share price movements with dividends received.

Trap

A type of geological structure that retards or hinders the free movement of oil and gas and concentrates it in a limited space. A mass or porous, permeable rock that is sealed on top and down both blanks by nonporous, impermeable rock, thus forming a trap such as an anticline, a fault, or a strategic traps.

Tubing A string of pipe, usually 2-2 " in diameter, run inside casing and through which oil and gas are produced.

Ultimate Recovery

The complete expected recovery of oil or gas from a well, pool or lease.

Urea A chemical, commonly used as a nitrogenous fertilizer.

Value Added

The economic "value" created in a single period after subtracting from Trading Cash Flow Economic Depreciation and the return required by investors (WACC). Alternatively expressed as Cash Return Spread multiplied by the investment base.

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Value Increment The period on period change in Value Added, which illustrates when the value created will be recognised.

Waterflooding A method of secondary recovery in which water is injected into an oil reservoir through which oil and gas are produced.

Wet Gas Gas containing recoverable liquid hydrocarbons.

Whipstock A special tool used at the bottom of the hole to change the direction of the drilling bit.

Wildcat Well

An exploratory well drilled some distance from known production. This distance from production determines whether the wildcat is low, medium, or high risk. An exploration well or wildcat is one that is drilled primarily for the purpose of determining that oil or gas actually exists in a subsurface rock formation. Before a well is drilled, it is at best an educated guess that petroleum exists in a formation. It is only after a well is drilled into the formation that the presence of oil or gas can definitely be confirmed or denied to be present.

Wire Line

Wire that is run in the hole through production tubing with tools at the end of the wire that either open valves, pull plugs or obtain data. When this wire parts and becomes lodged in the tubing then "fishing" is required with fishing tools run on yet more wire.

Wellhead Surface control equipment for a well that includes the casinghead, control valves, testing equipment, take-off piping, and the Christmas tree.

Xmas Tree The structure combining and supporting the various valves and pipelines on a completed well. Also known as a Christmas tree.

Zone An interval of a subsurface formation having particular rock characteristics.

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Abbreviations

M Thousand

MM Million

B Billion

T Trillion

2p Proved and probable

3p Proved and possible

ACQ Annual Contract Quantity.

AFE

Authority of expenditure. A form used to list proposed expenses and includes such items as department number, division, AFE numbers, description of the field and its location. Very similar (in theory) to the common purchase requisition used in the traditional office.

API American Petroleum Institute - measures density of oil (higher index indicates less density, range 14-60, average 40)

API Gravity

The gravity of crude oil or other liquid hydrocarbon as measured by a system recommended by the American Petroleum Institute. Gravity is the weight per unit of volume of a compound.

BBL Barrels

BCF Billion Cubic Feet. Unit to measure size of gas field (medium is 400 BCF); 6 BCF = 1 MMBOE

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BCPD Barrels of condensate per day.

BOE Barrels of oil equivalent (comparison of gas and oil quantities)

BPD Barrels of oil per day (world production 30 mill).

BS&W Bottom sediment and water.

BTU British Thermal Unit - the amount of heat needed to raise the temperature of one pound of water one degree Fahrenheit.

BWPD Barrels of Water Per Day.

CNG Compressed natural gas is a fuel. Natural gas is compressed to a high pressure of up to 3000 pounds per square inch and stored in high pressure cylinders.

CPI Capital Productivity Index (PI) The present value of cash as per the present value but excluding the initial capital cost divided by that initial capital cost.

DST Test of the productive capacity of a well when still full of drilling mud.

E&P, E/D&P

Exploration (development) and production.

ENPV Expected NPV - weighted by probability of outcome.

ERR Economically recoverable reserves.

FLT A trap for oil or gas in which the closure, forming the trap, results from the presence of one or more faults.

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FPSO Floating Production Storage Offloading Facility.

GJ Gigajoule 109 (unit of measure for gas equiv to barrel).

IMOH Imperfect market opportunity hypothesis

IRR Internal Rate of Return The after tax discount rate required to produce NPV of zero when applied to project cash flows excluding capital funding charges.

Joule Unit of Energy Equal to 1/3600 of a kilowatt-hour.

KFF/KSF Key failure (success) factor.

LNG Liquefied Natural Gas. Natural Gas becomes a liquid when it is cooled to 160 degrees centigrade at atmospheric pressure. Liquidification reduces its volume to a fraction of the original gas.

LPG

Liquid Petroleum Gas is mainly propane, butane or a mixture of both. These gases can be extracted from the natural gas and liquefied by compression to a pressure of up to 200 lbs psi and when stored in pressure cylinders its volume is reduced to a fraction of the original gas as is the case with LNG.

MCF Thousand cubic feet of gas at a specified temperature and pressure.

MGAL Thousand cubic feet of gas at a specified temperature and pressure.

MMBBL Million barrels.

MMBO Million barrels of oil.

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MMBOE Million barrels of equivalent.

MMCFD Million cubic feet of gas per day.

MMCFG Million cubic feet of gas.

NG Natural gas - Gaseous forms of petroleum consisting of mixtures of hydrocarbon gases and vapours; gas produced from a gas well.

NGL Gas Liquids such as propane, butane or pentane or a combination of them obtained from the processing of raw gas or condensate.

NOC National oil company.

OIIP Oil initially in place, normally not all recoverable.

OPEC Organisation of Petroleum Exporting Countries.

PDC BIT Polycrystalline diamond compact drill.

PEST Political, environmental, social, technological analysis.

PEP Petroleum Exploration Permit. An exclusive right to explore for petroleum within the licence area. Usually for a five year period.

PJ A unit of measure for gas reserves market A Petajoule = 1015 Joules.

PML Petroleum Mining Licence. An exclusive right to mine for petroleum within the licence area. This is generally a long term licence to enable field development.

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POGS Probability of geological success.

POCV Probability of creating value.

POCS Probability of commercial success.

PPD Pour point depressant - mixed with oil to keep it liquid at room temperature.

PPI Producer Price Index

PPL Petroleum Prospecting Licence. An exclusive right to prospect for petroleum within a licence area. This is generally short term, approximately five years, and is renewable for a second five year term.

SEC Securities Exchange Commission

SDG Strategic Decisions Group.

TCF Trillion Cubic Feet.

TJ Terajoule = 1012 Joules.

VMS Value Management System.

TPA Tonnes per annum measure of quantity of oil.

WACC Weighted Average Cost of Capital The total return required by both debt and equity investors expressed as a real post tax percentage on funds usage.

WTI West Texas Intermediate

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Note: This glossary has been compiled from various sources available in secondary databases. Though the information given here is assumed to be correct, it is always advisable that in case of doubt, cross checking may be carried out.

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