Glossary of terms used on this site
There are 83 entries in this glossary.All
| Accelerated Termination:
If at any time after completing the minimum work schedule, the operating (investing) party were to find evidence of no crude oil in the Agreement Area, or that the potential crude oil bearing formations as exist or as are likely to be found are not capable of production because of the possible investment or necessary expenses required to undertake exploitation, the operating party may request the native party to approve the accelerated termination of the Agreement within a short time following the date of such request. |
| Actual Investment:
The actual amount of money not recovered by the investor at the end of a project year. |
| Administrative and General Expenses (A&G
Administrative expenses, such as keeping an office, salaries of workers and engineers, transportation, etc. In most C. I. S. countries, a large number of workers, which may reach 1,000 people in a medium-sized oilfield, are "inherited" with the oilfield. Recent changes in these countries allow some of these workers to be dismissed from service by the operator, but the procedures may take time and be quite difficult to realize. Extremely low salaries (US$20/month/worker) compensate for this extraordinary burden on the investor. As these countries fully adopt their systems to the market economy, this kind of "inheritance" will naturally disappear. As all other operating costs (OPEX), it is a part of the expenses to produce a barrel of oil. |
| Agreement Area:
The area within the territory of the native country; object of the Agreement to be described and outlined in Appendices to the Agreement. |
| Agreement Year:
A period of twelve (12) months starting on January 1st, and ending the following December, according to the Gregorian Calendar. For the first year of the Agreement, the Agreement Year means the period commencing the Effective Date of the Agreement until December 31 of the following Gregorian Calendar year. |
| Agreement:
The native language version of the joint venture Agreement, together with its appendices, which are incorporated. The English and any other language versions are used only as a reference and have no effect whatsoever. |
| Allowance for Funds Used During Construc
A noncash item representing the estimated composite interest costs of debt and a return on equity funds used to finance construction. The allowance is capitalized in the property accounts and included in income. |
| Already Producing Wells:
Current number of producing wells in the oilfield, before rehabilitation and drilling operations begin. In other words, the amount of producing wells at the time of the JV Agreement. |
| Applicable Law:
All the laws of the native country which will rule the interpretation, validity and compliance of the Agreement. If after the effective date applicable laws change and thus jeopardize the future profits of the operating party, a compensation in the form of shares and/or crude oil and/or natural gas will be negotiated with the native party immediately and be in effect the soonest to secure the rights of the operating party at the time of the effective date. |
| Appraisal Well :
A well drilled to follow up a discovery and evaluate its commercial potential |
| Arbitration:
Any dispute or controversy related to the Agreement that the parties cannot settle. There may be an Arbitration Board, the members of which can be assigned equally by the parties, plus a trusted third party member, or the arbitration can be directly submitted to the courts of a third country. |
| Associated Company:
With respect to a party to the Agreement, a company or other entity controlling or being controlled by the party; or a company controlling a third company or other entity controlling or being controlled by such party, it being understood that control means the ownership by a company or entity of at least 50% of: the voting shares, if the third company is a stock company; or the controlling rights or interests, if the other entity is not a stock company. Those companies or entities directly or indirectly controlled by a third company or entity controlling one of the parties shall also be considered an Associated Company. |
| Automatic Termination:
In the event that the production were interrupted at any moment after the first few Agreement years defined as the minimum work period for a period of six calendar months, except by reason of Force Majeure, the Agreement shall be automatically terminated, unless as otherwise agreed upon by the parties. |
| Average Delivered Price(ADP):
The weighted average of all contract-price commitments and market-price settlements in a delivery year. |
| Average Well Production, Bbls/Day/Well:
A production well's average daily output: |