Glossary · 40 terms
The language of the mineral estate
Every trade has its shorthand. These are the terms you'll meet in deeds, division orders, and lease negotiations — defined the way landmen actually use them.
A
- Ad Valorem Tax
- A county property tax on producing minerals, based on their appraised value. Common in Texas and other producing states.
- API Number
- A unique 10- to 14-digit identifier assigned to every oil and gas well in the U.S., used to track its permits, production, and history.
C
- Chain of Title
- The unbroken sequence of ownership transfers for a tract, from the original grant to the present owner, proving who owns the minerals.
- Completion
- The work done after drilling to make a well ready to produce — casing, perforating, fracturing, and tying in surface equipment.
D
- Decimal Interest
- An owner's fractional share of production in a well, written as a decimal — net acres divided by unit acres, times the royalty rate.
- Decline Curve
- A plot of a well's production over time. Oil and gas wells start strong and fall off, so the curve maps how fast output drops.
- Delay Rentals
- Periodic payments an operator makes to keep an undrilled lease in force during its primary term without losing the acreage.
- Depth Severance
- A split of mineral rights by formation or depth, so production from one zone doesn't hold the rights to deeper or shallower zones.
- Division Order
- A document from the operator stating each owner's decimal share of production from a well, used to set up royalty payments.
- Drilling Permit
- State approval an operator must obtain before drilling a well, naming the location, depth, and target formation. A public early signal.
E
- EUR (Estimated Ultimate Recovery)
- The total oil or gas a well is expected to produce over its life, from first flow to plug-and-abandon. Usually stated in barrels or Mcf.
- Executive Rights
- The right to lease the minerals — to sign an oil and gas lease and negotiate its terms — sometimes owned apart from the royalty.
F
- Flush Production
- The high initial output a new well delivers in its first months, before reservoir pressure drops and production declines.
- Frac
- Hydraulic fracturing — pumping water, sand, and chemicals at high pressure to crack the rock and release oil and gas from shale.
H
- Held by Production (HBP)
- A lease kept in force past its primary term because a well is producing in paying quantities, continuing into the secondary term.
- Horizontal Well
- A well that drills down to a target zone, then turns and runs sideways through it for thousands of feet to expose far more reservoir rock.
L
- Landman
- A professional who researches mineral title, negotiates leases, and tracks down owners. The boots-on-the-ground role in any oil and gas deal.
- Lateral Length
- The horizontal distance a well runs through the target formation. Longer laterals expose more rock and generally produce more.
- Lease Bonus
- A one-time, up-front payment to the mineral owner for signing an oil and gas lease, usually quoted per net mineral acre.
M
- Mineral Interest
- Ownership of the oil, gas, and other minerals beneath a tract, including the right to lease them and earn royalty or bonus income.
N
- Net Mineral Acre (NMA)
- The unit measuring how much of the mineral estate you own: gross tract acres multiplied by your fractional mineral interest.
- Net Royalty Acre (NRA)
- A net mineral acre normalized to a standard 1/8 royalty, letting buyers compare positions with different lease royalty rates.
- Non-Participating Royalty Interest (NPRI)
- A cost-free royalty carved out of the mineral estate whose owner cannot lease, sign, or collect bonus — only the royalty share.
O
- Oil and Gas Lease
- A contract where a mineral owner grants an operator the right to drill and produce, in exchange for a bonus, royalty, and other terms.
- Operator
- The company that drills and runs the wells on a lease — handling permits, production, and royalty payments to mineral owners.
- Overriding Royalty Interest (ORRI)
- A cost-free royalty carved out of the working interest under a lease. It pays during production but ends when the lease terminates.
P
- Pad Drilling
- Drilling several wells from one surface location, with the rig moving short distances between them, to cut cost and surface footprint.
- PDP (Proved Developed Producing)
- Reserves from wells already drilled and producing right now. The safest reserve category, since the well exists and is selling oil or gas.
- Pooling
- Combining acreage from several tracts into one drilling unit so a well can produce; each owner shares output by their acreage.
- Primary Term
- The fixed window — commonly 3 to 5 years — in which an operator must drill or otherwise establish production to keep an oil and gas lease alive.
- PUD (Proved Undeveloped)
- Reserves expected from wells not yet drilled but with strong evidence they'll produce. Real value, but it depends on future drilling.
- Pugh Clause
- A lease clause that releases acreage or depths not held by production, so one producing well can't tie up the whole tract.
R
- Royalty Interest
- A share of production revenue free of drilling and operating costs, paid to the mineral owner under a lease — commonly 1/8 to 1/4.
- Runsheet
- A landman's working document listing every recorded instrument affecting a tract in order, used to build the chain of title.
S
- Severed Mineral Estate
- A tract where the minerals have been legally separated from the surface, so different parties own what's above and below ground.
- Shut-in Royalty
- A payment that keeps a lease alive when a capable well is shut in — not selling production — usually due to no market or pipeline.
- Spud Date
- The date a rig first breaks ground and begins drilling a well — the official start of drilling on the record.
- Surface Rights
- Ownership of the land surface — buildings, crops, and soil — separate from the minerals beneath, which can be owned by someone else.
U
- Unitization
- Combining an entire reservoir or field — across many leases and owners — into one unit for efficient, coordinated recovery.
W
- Working Interest
- The operating interest in a lease that pays its share of drilling and operating costs in exchange for production revenue after royalties.
For buyers · investors · landmen
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Ownership records, fresh permits, production trends, and motivated-seller signals — organized into a working acquisition pipeline.