Common Drilling Questions and Terms

What is a Revenue Statement and why is it important?

A revenue statement is a monthly statement sent by the Operator to the interest holders within an oil or gas producing property. These statements detail production volumes and pricing for hydrocarbons that are produced and sold each month, but most importantly they show how much money you receive for that production.

Locke uses these statements, amongst other tools, to help accurately evaluate mineral rights.

Commercial Well - A well that produces oil and/or gas in sufficient quantities such that proceeds from the sale of production exceeds directly related costs. 

Decline Curve - A graphic representation that shows how hydrocarbon production rate changes over time.

Drilling Rig - The equipment used to drill aka bore into the earth.

Horizontal Drilling - This type of drilling has had a major impact on the oil and gas industry over the last 10 years as it gives the operator access to much more of the oil- and natural gas-bearing rock than vertical drilling. Horizontally drilled wells can have spacing units of up to 1,280 acres.

Hydraulic Fracturing (Fracing) - aka what they’re always talking about on the news. The process of using high pressure to pump sand along with water and other fluids into subsurface rock formations to improve flow of oil & gas into a well bore.

Pooled Unit - A unit created by combining and consolidating leased land with adjoining leased tracts into one single pool (under the pooling clause of a lease or agreement) so the production company can utilize one common geological reservoir.

Spacing Unit - A legally described area designated for the drilling and production of a well.