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PASSED (00) AAPL DEF
AAPL CPL Test Glossary Appendix A
| Term | Definition |
|---|---|
| Abstract of Title | A collection of true copies of all of the recorded documents which affect the title to a tract of land. A complete "AOT" will contain full and complete copies of all recorded instruments. A "bob-tailed" AOT contain summaries. |
| Accretion | The imperceptible and gradual addition to land by the slow action of water. Heavy rain, river or ocean action would have this affect by either washing up sand or soil or by a permanent retreat of the high water mark. |
| Acknowledgment | A formal declaration made before a public officer (notary, judge) by a person who has signed a document that the action is his voluntary act and deed. |
| Adhesion Contract | A fine print consumer form contract which is generally given to consumers at point-of-sale, with no opportunity for negotiation as to its terms, in which, typically, sets out the terms and conditions of the sale, usually to the advantage of the seller. |
| Adverse Possession | Obtaining title to land by taking possession of land and staying in possession for certain number of years as set by law. |
| Affidavit | An instrument in writing by a sworn witness which recites certain facts as true |
| Affidavit of Non-Compliance | An affidavit filed by an owner of land as to the failure by a lessee to comply with the provisions of a lease, thus resulting in forfeiture of the lease. |
| Working Interest (WI) | The operating interest under an oil and gas lease. The owner of the working interest has the exclusive right to exploit the minerals on the land. |
| Will | A will is a gift of property that is to take affect on the giver's death, unless previously revoked. |
| Warranty Deed | The deed with which the grantor warrants title to the property being conveyed. This includes guarantees that the grantor is the property, has the authority to convey it and that there are no encumbrances on the land except those stated in the deed. |
| Warranty | A covenant of title by a grantor, lessor, or assignor |
| Usufruct | The right of enjoying a thing, the property of which is vested in another, and to draw from the same all of the profit, utility and advantages which it may bring. |
| Unitization | The combination of the leases covering more than one spacing unit, and typically covers and entire producing field. Unitization is usually accomplished for secondary recovery operations rather than for primary production. |
| Unit Agreement | An agreement or plan of development and operation for the recovery of oil and gas made subject thereto as a single consolidated unit without regard to separate ownerships and for the allocation of costs and benefits. |
| Undivided Interest | Two or more parties are owning fractional interest in a tract |
| Transfer Order | A direction to the purchaser under a division order to pay another person a share in the oil and gas produced. |
| Top Lease | A lease granted by a landowner (mineral owner) during the existence of a recorded mineral lease which is to become affective if and when the existing lease terminates or expires. |
| Title Opinion | A statement or opinion by an attorney, often in form of a letter, as to the state of the title to the land, minerals, royalty or working interests. |
| Testator/Testatrix | Person making a will. |
| Tenancy In Common | Ownership of real property by two or more people who each on an undivided interest in the entire property. |
| Tenancy By-The-Entireties | Like JT, but can only exist between husband and wife and by which together they hold title to a whole with right of survivorship. Upon the death of either, the other takes whole. |
| Surface Lease | A lease on the surface of the land for a grazing, agricultural, commercial or home site purposes. |
| Subordination Agreement | A title curative document that treats the oil and gas lease as if it existed prior to an earlier mortgage or other lien. |
| Special Warranty Deed | A warranty deed limited to the acts of the grantor |
| Spacing | Spacing is dictated by the states, generally with input from the public, and specifies density of drilling, such as 40 acres for oil and 320 acres for gas. Also legal locations, such as no closer than 330 feet from the nearest at lease line. |
| Severed Royalty Interest | A non-expense bearing interest in the minerals produced and saved from a given tract of land owned by a person other than the service owner. |
| Servitude | And easement in land. In Louisiana any servitude mineral or royalty interest, including the interest of an oil and gas lease, is called a servitude. |
| Seismometer (Geophone) | A device for receiving and recording impulses set up by a shock and reflected by the earth in the course of seismograph survey. |
| Seismograph Survey | A survey of an area, large or small, by means of an instrument which records the vibration of the earth, which geophysicist can approximate the underground structure. |
| Rule Of Capture | The owner of a tract of land acquires title to the oil and gas lease which he produces from wells drilled and they are on, though it may be proved that part of such oil and gas lease migrated from adjoining lands. |
| Royalty Deed | An instrument in writing conveying a royalty instrument. Note, there is a considerable difference between 1/8th royalty and 1/8th of royalty. The first gives the right to 1 out of every 8 barrels, the second 1 out or every 64 barrels. |
| Affidavit of Non-Development | An affidavit required when an unreleased lease of record is believed to have terminated by reason of non-development. The affidavit often contains a recitation regarding non-payment of rentals. |
| Affidavit Of Production | This affidavit describes the lease, is usually executed by the lease owner and recites that the required contingency to prolong the lease by production or operations has occurred. |
| After-Acquired-Title | Doctrine by which the title of real estate, previously unsuccessfully transferred because lack of possession by grantor, automatically passes to the buyer upon acquisition by the grantor and is based on the acquisition of title by estoppel. |
| After Payout (APO) | Point at which a well has paid out all costs to drill, complete and produce. |
| Assignee | The recipient of an interest in property or in a contract, the recipient of an interest in oil and gas lease or leases. |
| Assignment | As we will use this term - it will refer to a transfer of an interest in an oil and gas lease, usually refers to a transfer of a property interest or of a contract. |
| Assignment Clause | A standard clause in a contract allowing free transfer of an Assignor's interest. |
| Assignor | The transferor of an interest in property or in a contract, the transferor or giver of an interest in oil and gas lease or leases. |
| Avulsion | Land accretion that occurs by the erosion or addition of one's land by the sudden or unexpected change in a river stream such as a flash flood. |
| Back-In Provision | Interest obtained at payout. A provision in an agreement in which it is agreed that a specified retained non-operating interest of the grantor may be converted upon certain certain circumstances into specified undivided operating interest. |
| Barrel Of Oil | In the United States - 42 U.S. gallons of oil at 60 Fahrenheit. In Canada - 35 imperial gallons |
| Base Royalty | The royalty reserved by the owner of the leasing rights on the making of an oil and gas lease or the granting of an interest in oil and gas. |
| BCF | Billion Cubic Feet. A measurement of production of, or reserves in place for, natural gas. |
| Beneficial Interest | The proportion that the net acreage of a party's committed working interest or interests bears to the total net acreage of all the committed working interests of all parties to the agreement. |
| Bonus | Usually the cash consideration paid by lessee to the owner of the leasing rights upon the execution of an oil and gas lease. May take forms other than cash. |
| Bottom Hole Agreement | An agreement wherein one operator promises to contribute to the cost of a well drilled by another operator, regardless of the outcome of the well. Usually a specified count of money to be paid upon the well reaching a specified depth or formation. |
| Before payout (BPO) | Point before a well has paid out the costs to drill, complete and produce. |
| Carried Interest | A fractional interest in an oil and gas property which has no obligation for operating costs. Operating costs are borne by whom the owner or owners of the remaining interest in the property. |
| Carved Out Interest | An interest such as an oil payment or overriding royalty conveyed by the owner of a greater interest. For example, the grant of an overriding royalty out of a working interest |
| Cash Consideration | As we will consider it - the cash money paid in return for a promise or an act - such as the execution of an oil and gas lease. Also called "bonus." |
| Casinghead Gas Contract | A contract for the sale and purchase of casinghead gas. |
| Casinghead Gas | Gas produced with oil in oil wells or from wells located in oil reservoirs - not to be confused with gas well gas. |
| Certificate Of Title | An abbreviated type of abstract were in the abstractor reports his opinion as to the present owner(s) of the land, unreleased oil and gas leases, mineral or royalty conveyences, and outstanding liens or encumbrances. |
| Certification Of Abstract | A certificate signed by the abstractor reciting that the abstract contains a full and complete abstract of all recorded instruments affecting the title to the described lands for the periods covered by the abstract. |
| Civil Law (Civil Code) | Law inspired by old Roman law, the primary feature of which was that laws were written into a collection; Codified, and not determined, as in common law, by judges. |
| Commercial Wells | A well capable of making a profit over the cost of drilling, equipping, completing and operating it. In some instances the term means merely a well with sufficient production to cover current operations expenses, w/o regard to original drillings costs. |
| Committed Working Interest | A working interest which is owned by a party to an agreement in which is committed thereto. |
| Common Law | Judge-made law. Law which exists and applies to a group on a basis of historical legal precedents developed over hundreds of years. It is referred to as "unwritten" law. |
| Communitization | A synonym for pooling, generally involves federal and/or state leases. |
| Community Lease | A single lease covering two or more separately owned tracts of land. |
| Community Property | A form of marital property that exists and eight states. The community property system governs all property of married persons in these states and has an important effect on titles. |
| Compensatory Royalty | A royalty paid in lieu of drilling a well which would otherwise be required under the covenants of a lease, express or implied. |
| Compulsory Unitization | The bringing together, as required by law or valid order or regulation, of separately owned tracts into a unit constituting all or some portion of a producing reservoir and the joint operation of such unit. |
| Consideration | Bonus and another payments for execution and delivery of a lease or other contract. |
| Continuous Drilling Clause | At lease clause that provides the lease will be continued so long as drilling operations for oil and gas continue on the premises. |
| Contract | A binding agreement between two or more persons or parties; A writing made by both parties to evidence the terms and conditions of a contract. |
| Convertible Interest | An interest which is convertible into an interest of another kind. Example, an overriding royalty which may be converted into a working interest. |
| Covenant | Any promise, express or implied. In the law of oil and gas any instrument can contain one or more covenants. The typical OGL contains a number, some of which are implied. |
| Cross-Assignment | A multiple assignment of property address, whereby the assignor also receives an assignment from the assignee. |
| Curtsey | The interest that the husband has in the property of the wife at her death. |
| Declared Unit | A unit formed by the lessee acting under the provisions of the lease pooling clause. |
| Deed | A written instrument by which a landowner transfers ownership to another person or entity |
| Delay Rental | The sum of money payable to the lesser by the lessee for the privilege of deferring the commencement of drilling operations or the commencement of production during the primary term of the lease. |
| Delay Rental Division Order | A document giving instructions concerning the payment of delay rentals to persons having an interest therein. |
| Depository Bank | The bank to which payment of delay rental may be paid to the credit of lessor or his successors in interest. |
| Descent and Distribution | State laws that provide for distribution of property when a person dies without leaving a will. |
| Description | That part of a lease or other conveyance describing, tracing, and delineating the specific tracts of land in which the specific interest conveyed, leased, excepted, or reserved exists. |
| Development Well | A well drilled to a known producing formation in a previously discovered field |
| Devisee | Party receiving the gift from the will. |
| Divided Interest | A tract has been partitioned into two or three more sub-tracts and one party owns one sub-tract and the other party owns the other sub-tract. |
| Division Order | A contract of sale to the purchaser of oil or gas. This order directs the purchaser to make payment for the value of the products taken in the proportions set out in the order. |
| Doctrine of After Acquired Title | Unless there is a reservation or limitation in the document, the warranty deed conveys all you are now or ever will own in the property. |
| Dower | The interest that the wife has in the property of the husband at his death, usually a one-third life estate. Requires that the wife join in conveyances or dower doesn't pass. |
| Drilling Operations | Any work or actual operations undertaken or commenced in good faith for the purpose of carrying out any of the rights, privileges or duties of the lessee under a lease. |
| Drilling Permit | The authorization from the regulatory agency to drill a well (In those states that regulate well spacing). |
| Dry Hole Agreement | An agreement creating an obligation to be performed upon the drilling of a dry hole - usually a specified sum of money and usually based on a sum per foot drilled. |
| Duhig Rule | Basically says that if a conveyance by warranty deed does not mention prior reservation, the reservation in the warranty deed will be inclusive of prior reservations to the extent necessary to make the grantee whole based on the face of the deed. |
| Ejusdem Generis | After mentioning a specific mineral (oil and gas) the reference of a general (and other minerals) does not broaden the definition |
| Electric Logging | The process of lowering certain instruments into a well and shooting electric currents through such instruments for the purpose of testing formations |
| Electric Well Log (Electric log) | In electrical survey of an encased hole which reflects the resistivity of rock strata to electrical current and the spontaneous potential of the rock |
| Encumbrances | Burdens and other obligations on an interest. Royalty and overriding royalty are encumbrances. |
| Entirety Clause | A lease clause benefitting lessee which makes it clear to lessors, or transferees of lessor, that inside property lines created by later divisions of the fee ownership, or by royalty conveyances, won't affect the lessee's duties of devlopmt or operation |
| Excess Royalty | A royalty or overriding royalty in excess of the "usual" one-eight (1/8th) royalty. |
| Executive Right | The power to execute an oil and gas lease on an interest in minerals |
| Exemplified Copy | A certified copy that has been authenticated by verifying the identity and authority of the certifying officer. Copies of a foreign probate instruments are often required to be exemplified in order to be recordable. |
| Expense Bearing Interest | A property interest in oil and gas that is subject to the expense of production. A mineral fee interest and a working interest are expense bearing interests. |
| Expense Free Interest | roperty interest in oil and gas that doesn't share in burden of production expense. Royalty, ORRI, oil payments, production payments, net proceeds and carried working interest are expense free. Though subject to ad valorum and production tax. |
| Exploratory Well | A well drilled in unproven or semi proven territory for the purpose of ascertaining the presence underground of a commercial petroleum deposit. |
| Express Covenant | A written promise in a lease, assignment or other instrument. |
| Extrinsic Evidence | Evidence relating to a contract but not appearing on the face of the contract because it comes from other sources, such as statements between the parties or the circumstances surrounding the agreement. |
| Farmee | The term applied to a person to him a transfer is made under a Farmout Agreement. |
| Farmor | The term applied to one who has made a transfer under a Farmout Agreement. |
| Farmout Agreement | An agreement by which the owner of a lease (farmor) agrees to assign all or part of the lease to another party (Farmee) in return for drilling a well on the lease. |
| Fee simple | Owner of the property in its entirety. Surface, minerals, water, gravel, dirt, grass, etc. |
| Force Majeure Clause | A lease clause providing that the performance of lessee's covenants shall be excused when due to causes such as acts of God, strikes, etc. as specified in the clause. |
| Gas Purchase Contract | A contract for the sale and purchase of gas entered into by the purchaser and the owners of interest in the lease as produced. |
| Grantee | The person to whom the property is conveyed. |
| Granting Clause | The lease clause that defines the rights given by the lessor to the lessee. |
| Grantor | The person conveying a property. |
| Gross Acres | The total acres contained in the land described in the lease or other conveyance. |
| Gross Working Interest (GWI) | Generally, a Working Interest owner's Gross Working Interest is a decimal equal to its Working Interest (expense) decimal. |
| Habendum Clause | The lease primary term. The clause in a deed or lease setting forth the duration of a grantees or Lessee's interest in the premises. |
| Horizon | A zone of a particular formation, such as the reservoir horizon, being that portion of a formation of sufficient porosity and permeability to form a petroleum reservoir. |
| Impenetrable Substance | A stratum that cannot be drilled through. |
| Implied Covenants | Obligations imposed by the courts on Lessees, derived by implication from the lease. The courts usually state that these obligations are implied, in fact, by the intent of the parties. |
| Intestate Succession | If there is no Will or no Will is accepted by the court, the estate will pass by the laws of Descent and Distribution of the state which the property is located. There are cases which the law of the state of residence is applied to non-resident property. |
| Join Operating Agreement (JOA) | An agreement between or among concurrent owners for the operation of a concurrently owned tract or leasehold for oil and gas and other minerals. |
| Joint Tenancy | Essentially the same as TIC, except upon death, the property passes to the survivor outside of any will. A will cannot devise JT property. All that is needed to vest the property is a death certificate. |
| Jurat | Affiant swears and affirms the statement, adding the penalty of perjury as a possible remedy for misrepresentation. |
| LMI | Leased Mineral Interest, or landowners mineral interest, or lessors mineral interest. |
| Leasehold Interest (Working Interest) | The interest of one holding as a grantee or lessee under an oil and gas lease. Such interest includes the right to drill and produce, and is subject to the payment to the lesser of a royalty of a stated fraction of the production |
| Legal Subdivision | A quarter-quarter section of land (1/16th of a section or 40 acres). |
| Lessee | The person entitled under an oil and gas lease to drill and operate wells, paying the lessor a royalty and retaining the remainder, often times 7/8ths of the production, known as "working interest." Lessee pays all production costs out of his fraction. |
| Lessor | The owner of mineral rights who has executed a lease. He is normally entitled to a payment of royalty on production, free and clear of the cost of developing and operating the property, except taxes on his share of production. |
| Lessor's Royalty | A share of the gross production of minerals free of the costs of production, arising under an oil and gas lease. |
| Location | The well site. |
| Location Damages | Compensation paid by an operator to the surface owner for injury to the surface or to growing crops caused by the drilling of a well. |
| Metes and Bounds Description | Method of describing a tract of land by calls and distances from an established beginning point and following boundary lines. |
| Mineral | Scientifically refers to a chemical element or compound occurring naturally as a product of inorganic processes. |
| Mineral Acre | The full mineral interest and one acre of land. |
| Mineral Deed | A conveyence of an interest in the minerals in, on and under a described tract of land. The grantee is given operating rights on the land |
| Minerals | Oil and gas on, in, and under. |
| Net Acres | The gross acres multiplied by the mineral interest. |
| Net Profits Interest | A share of gross production from a property, measured by net profits from operation of a property. It is carved out of the working interest |
| Net Revenue Interest (NRI) | 1.) The portion of production proceeds owned. 2.) The share of revenue, expressed in fractions or decimals, according to the working interest after deducting all lease burdens of royalty, overriding royalty, production payments or similar burdens. |
| Non-Executive Mineral Interest | A term used to describe an interest in oil and gas which lacks the right to join in the execution of oil and gas and leases. It does have a right to a share of the bonus, delay rentals as well as royalty under existing or future leases. |
| Non-Participating Royalty | An expense free interest in oil and gas, as if and when produced. The interest does not share (participate) in bonus or rental, nor the right to execute lease or explore or develop. |
| Offset Royalty (referred to as Compensatory Royalty) | 1.) Sometimes referred to as Compensatory Royalty. 2.) A royalty payable under the provision of a lease in lieu of drilling in offset well. |
| Offset Well | A well drilled on one tract of land to prevent drainage of oil and gas to an adjoining tract of land on which a well is being drilled or is already in production. |
| Oil Payment (Production Payment) | A share of the oil or gas produced from a described tract of land, free of the cost of production, terminating when a specified sum from the sale of which search production has been realized. |
| Operating Expenses | Expenses incurred in the operation of a producing property. |
| Operating Interest | The mineral interest minus the royalty interest. Normally created by an oil and gas lease. |
| Overriding Royalty | A fractional interest in gross production of oil and gas carved out of the lessee's share of the oil and gas (the WI) and which is free and clear of all expenses for exploration, drilling, development, operating, marketing, or other costs. |
| Paid Up Lease | A lease effective during the primary term without further payment or delay rentals. |
| Participating Interest | The percentage of costs and benefits under a unit operating agreement borne and to be received by the various parties to the agreement. |
| Payout | Generally, the point in time when production revenues from a well, equal expenses. Payout can be calculated for expenses associated with small or large operations. |
| Personal Property | Portable and tangible objects that are not permanently affixed to, and part of, the real estate. |
| Pooled Unit | A unit formed by the bringing together of separately owned interests under the provisions of pooling clauses in the leases or of some special agreement. |
| Pooling | Generally refers to the combining or consolidation of more than one tract in order to fill or make a spacing unit. Think a single spacing unit. |
| Primary Term | The initial term of the lease, often expressed in years (3yr or 5yr) |
| Probate | 1.) The process of submitting a will to the court to establish that the will is valid. 2.) The proof and admission (by the court) of a will as real and valid. |
| Producing On A Lease Basis | A well which is producing oil and/or gas from a non-unitized tract. |
| Production In Paying Quantities | Production in such quantity as to enable the operator to realize a profit. Has different meaning for different purposes. |
| Proportionate Reduction Clause | A clause providing for the reduction of payments to a lesser if his interest is less than that which he has purported to lease. |
| Pugh Clause | A type of pooling clause which provides that drilling operations on, or production from a pooled unit or units, shall maintain the lease in force only as to lands included within such unit or units. |
| Quitclaim Deed | A deed that conveys only the grantor's present interest in the property, if any at all |
| Ratification Of A Lease | An agreement ratifying and confirming a lease executed by a concurrent owner other than the original lessor - or conduct by such person which by implication ratifies and confirms the lease. |
| Real Property | All interests, benefits, and rights inherent in the ownership of physical real estate. The bundle of rights associated with ownership of real estate |
| Recording | The filing of a copy of a legal document (deed, lease) in a government office, usually county, to create a public record of the document and to give constructive notice of the document to public. |
| Release | A statement in writing filed by the lessee indicating that the lease has terminated or expired or has been surrendered or forfeited. |
| Rental Due Date | The date during the primary turn on or before which rental payments are due and payable if the lease is to be kept alive by the payment of such rentals. |
| Riparian Land | Land that includes part of the bed of a watercourse (river, lake). |
| Royalty | 1.) The landowners share of production, free of expenses of production 2.) "Oil and gas produced and saved" |
| Royalty Acre | A full lease royalty on one acre of land. In a 100 acre tract at least for a 1/8 royalty, ownership of 1/2 of the royalty interest, or of a 1/16 royalty, is equivalent to owning 50 royalty acres. |
| Relinquishment Act Lands (Mineral Classified Lands) | Land in which the minerals were reserved by the state of Texas on grant to private owners and in which a share of the proceeds leasing were released to the private owners by the Relinquishment Act. |
| Completed Well | A dry hole; A well capable of producing oil and/or gas. A well drilled to such depths that oil or gas is not likely to be found at greater depths. |
| Compulsory Drilling | The bringing together, as required by law or valid order or regulation, of sufficient separately owned small tracts to qualify for the granting of a well permit. Now available in 21 states. |
| Special Warranty Clause | A covenant of title in a deed, lease or assignment, the effect of which is to guarantee title against all defects arising out of claims of the grantor, lessor, or assignor. |
| Severed Mineral Interest | An expense bearing interest in the minerals in, on and under a given tract of land owned by a person other than the mineral owner. |
| Secondary Recovery | Recovery of oil or gas which may be obtained by the injection of liquids or gases into the reservoir for the purposes of augmenting reservoir energy. |
| Have Fun and Enjoy Life | Remember, I was doing this 14 years ago in college, not knowing that one day I'd be doing the same, in a new state, with all new friends, and no girlfriend. Things change. Enjoy the journey. |
| Practical Construction | ONLY substances produced in conjunction with oil and gas are likely to be minerals, IF the negotiations ONLY concerned oil and gas rights. |
| Duhig Problem | An over conveyance problem in which the total of fractions reserved is greater than 100%. |
| Accommodation Doctrine | The severed mineral owner must accommodate other surface uses, which included the digging of cellars for the pump jacks to allow circular irrigation system to pass over the well locations. |
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