Geol - Ch. 5-6

Front 1

Mineral rights include:

Back 1

Petroleum and natural gas, valuable stone,minerals, and coal

Front 2

Mineral rights exclude:

Back 2

Surface rights

Front 3

Oil companies obtain only rights to:

Back 3

P&NG or only petroleum, or only natural gas

Front 4

“Surface to basement” includes:

Back 4

Anything below the surface to the Precambrian floor

Front 5

“Surface to basement” excludes:

Back 5

The surface rights and all rights to thebasement and below

Front 6

Surface rights include:

Back 6

Sand, gravel, clay, and marl

Front 7

Do oil and gas companies obtain only a portionof the mineral rights?

Back 7

Yes. They will obtain rights to only P&NG or P or NG

Front 8

Freehold mineral rights are:

Back 8

Mineral rights owned by individual or company

Front 9

Crown mineral rights are:

Back 9

Mineral Rights owned by the crown (Alberta Government)

Front 10

The Crown is a name given to______________.

Jurisdiction of the Crown is only____________

Back 10

Alberta Energy.

in Alberta.

Front 11

A royalty is:

Back 11

A royalty is a portion of the productionpaid directly to the P&NG rights owner from whom the oil company leased theP&NG rights.

Front 12

A Field is: ___________ designated by:

Back 12

a section of land designated by EUB

Front 13

A Pool is: __________ and storeshydrocarbon in:

Back 13

A pool is a formation underground that containsoil or gas or both.

Front 14

The area of section is ______ ha or _____ac

Back 14

256 hectares or 640 acres

Front 15

Ha __________.

Ac __________.

Back 15

hectares

acres

Front 16

Name 2 companies that ownland (mineral rights) freehold.

Back 16

Encana

BP Canada

Front 17

Do the companies in (who own their own land mineral rights) also leasecrown mineral rights?

Back 17

Yes

Front 18

Who is “the Board”?

Back 18

EUB, Energy and Utilities Board

Front 19

DSU______

Normal DSU for a gaswell _____________

Back 19

Drill Spacing Unit

1/section

Front 20

SU_____

Normal SU for an oilwell __________

Back 20

Spacing Unit

4/section

Front 21

Down spacing is:

Who allows companies to down space?

Back 21

When a company is allowed to drill morewells in a spacing unit into the same formation.

EUB

Front 22

For what reason will approval be given todownspace, a gas well ____ , an oil well _____

Back 22

Gas - low pressure

Oil - heavy oil

Front 23

Target areas are defined to _______________

Back 23

Target areas prevent one company fromdraining reserves from another companies spacing unit.

Front 24

Off target wells are subject to __________in the form of ____________

Back 24

Off target wells are subject to a penaltyin the form of reduced production allowables.

Front 25

The “lands we own” means _________________

Back 25

lease or license of P&NG rights

Front 26

Do most oil companies own their mineralrights?

Back 26

No - lease or license mostly

Front 27

Do most oil companies lease their mineralrights?

Back 27

Yes

Front 28

Define primary term:

What is the primary term for a crownlease?

Back 28

- Primary term is the amount of time granted to drill wells

- 5 years

Front 29

Lease continuation is:

How can a lease be continued and what willbe continued?

Back 29

- the ability to continue a lease

- must have a well that is productive or capable of producing

- only the productive spacing to the deepest productive zone will be continued

Front 30

What government regulation governs theformations in a continuance?

Back 30

DRR - deep rights reversion

Front 31

Split rights are ___________ and developdue to ______________

Back 31

split rights and due to DRR

Front 32

Rights say “surface to base Cardium” Whatis the Cardium? What is included in therights? What is excluded?

Back 32

- Cardium - formation

- P&NG rights from the surface to Cardium formation

- Surface rights and anything below the Cardium

Front 33

How many land sales occur in Alberta eachyear? How often are they held? Who can bid?

Back 33

24 sales every 2 weeks with around 200 parcels/sales, anyone can bid

Front 34

Is the company who made the postingrevealed to the public?

Back 34

No

Front 35

What is a parcel?

Back 35

A parcel is grouping of lands requested by anoil company.

Front 36

Are lands included that were not requestedby industry (in Alberta)?

Back 36

No, only industry requested postings.

Front 37

Can other companies buy the lands youposted?

Back 37

Yes anyone can bid

Front 38

What is the posting request composed of?

What is the minimum size of a postingrequest?

Back 38

- The posting request is composed of thelands requested and the rights requested.

- spacing unit

Front 39

Who is responsible for determining if anyspecial requirements will be tied to the surface use over the P&NG rights?

Back 39

The crown will flag the posting as havingsome special consideration but it is the responsibility of the bidding companyto clarify the special requirements.

Front 40

Who is responsible for determining theexact rights that are offered in a land sale notice?

Back 40

The bidding company is responsible to besure of exactly which zones are offered in the sale.

Front 41

Who wins the parcel?

Back 41

the highest bidder

Front 42

Licences are designed to allow:

Back 42

oil companies longer periods of time forexploration.

Front 43

At the end of a licence term what musthave happened if the company wants to continue the licence?

Back 43

A well must have been drilled, continuancewill be based on the well depth regardless of whether the well is productive ornot. The lands will be continued withthe original formations from the licence.

Front 44

What can be continued if the company hasmet the continuance requirements for a licence?

Back 44

The well depth will determine how many sectionsmay be continued. The Alberta Government(Alberta Energy) posts a table indicating how many sections will be continueddepending on the well depth

Front 45

What is the name given to a licence continuance?

Back 45

Intermediate licence

Front 46

Describe the terms of the intermediatelicence?

Back 46

5 years

Front 47

In northern Alberta a company has a leasefor 5 sections. What is the primary termof this lease? The company drilled 2wells during the primary term. One wellwas D&A, drilled to 600 m, the other was drilled to the Nisku, at 1200 m,and produces oil from Cardium. What canbe continued at the end of the primary term? For how long will the lands be continued?

Back 47

- 5 years

- The ¼ section spacing unit that containsthe Cardium well will be continued only to the base of the Cardiumformation. The continuance will be ineffect until the well is no longer productive.

Front 48

On offset requirement will only occurwhen:

Back 48

There is a productive well on a freeholdlease adjacent to a crown lease that is being held by an oil company.

Front 49

The Crown demands a ___________ with anoffset notice.

Back 49

Compensatory royalty.

Front 50

What is the major advantage of acquiringfreehold mineral rights?

Back 50

Confidentiality, the oil company does nothave to post the rights for other companies and the public to see.

Front 51

What is negotiable in a freehold mineralrights proposal?

Who negotiates the details?

Back 51

- Cash consideration, primary term, drillingobligation, and royalty.

- The freehold mineral rights owner and theoil company landman.

Front 52

Can an oil company force the freehold tolease the rights?

Back 52

No, the freehold owner does not have togrant the oil company a lease.

Front 53

What is an AMI?

Explain JV and why it might occur.

Back 53

Area of Mutual Interest - An area of land agreed upon by companiesparticipating in the agreement. Thecompanies agree to work with each other within the boundaries of the AMI

Joint Venture - It allows the oil companies to expose lesscapital per project

Front 54

Name a very common deal made between oilcompanies. Why do they enter into thisdeal?

Back 54

Farmin/Farmout - they cannot be forced to work together

Front 55

Define payout:

Back 55

The time in the life of a well when theproduction has been sufficient to pay for the capital costs of the drilling.

Front 56

Does an ORR owner pay operating costs?

Back 56

No

Front 57

What is a unit?

How many formations are included in aunit?

Back 57

- An agreement between a group of companiesthat pools each ones interest in a particular formation.

- one

Front 58

Who requests that a unit be formed?

Why request a unit?

Who registers the unit?

Back 58

- Any one of the companies with wells thatwill be in the unit

- To maximize production and minimizeoperating costs.

- All units are registered with the EUB

Front 59

Can any company with an interest refusethe terms of the unit?

If one or more companies cannot agree onterms what happens to the unit?

Back 59

- Yes

- The unit does not get formed

Front 60

Can a company sell their interest in aunit?

Back 60

Yes

Front 61

Who is the unit operator (usually)?

Back 61

Highest % interest

Front 62

Are unit boundaries fixed?

Back 62

Yes