Cobalt Annual Report 2015 - page 85

“Net pay
The vertical extent of the effective hydrocarbon-bearing rock (expressed in feet). The net pay thickness
encountered by an exploration well may differ from the mean net pay thickness of the prospect due to several
factors, including the relative location of the exploration well on the structure, potential thickness variations that
may occur across the prospect and the extent to which potential reservoir horizons are penetrated.
Naturally occurring radioactive materials.
Netherland, Sewell & Associates, Inc.
“Oil and natural
gas lease”
A legal instrument executed by a mineral owner granting the right to another to explore, drill, and produce
subsurface oil and natural gas. An oil and natural gas lease embodies the legal rights, privileges and duties
pertaining to the lessor and lessee.
Organization of the Petroleum Exporting Countries.
A party that has been designated as manager for exploration, drilling, and/or production on a lease. The operator
is the party that is responsible for (a) initiating and supervising the drilling and completion of a well and/or (b)
maintaining the producing well.
A project associated with a prospective trend of potential prospects, but which requires more data acquisition
and/or evaluation in order to define specific leads or prospects.
Porosity is the percentage of pore volume or void space, or that volume within rock that can contain fluids.
Porosity can be a relic of deposition (primary porosity, such as space between grains that were not compacted
together completely) or can develop through alteration of the rock (secondary porosity, such as when feldspar
grains or fossils are preferentially dissolved from sandstones).
“Productive well”
A well that has been drilled to the targeted depth and proves, in our opinion, to be capable of producing either oil
or gas in sufficient quantities that will justify completion as an oil or gas well.
Potential trap which may contain hydrocarbons and is supported by the necessary amount and quality of geologic
and geophysical data to indicate a probability of oil and/or natural gas accumulation ready to be drilled. The five
required elements (generation, migration, reservoir, seal and trap) must be present for a prospect to work and if
any of them fail neither oil nor natural gas will be present, at least not in commercial volumes.
“Proved reserves”
Estimated quantities of crude oil and natural gas which geological and engineering data demonstrate with
reasonable certainty to be economically recoverable in future years from known reservoirs under existing
economic and operating conditions, as well as additional reserves expected to be obtained through confirmed
improved recovery techniques, as defined in SEC Regulation S-X 4-10(a)(2).
Production Sharing Agreement.
A subsurface body of rock having sufficient porosity and permeability to store and to allow for the mobility of
fluids/hydrocarbons included in its pores.
A fractional undivided interest in the production of oil and natural gas wells, or the proceeds therefrom to be
received free and clear of all costs of development, operations or maintenance.
Reserves Process Chair.
United States Securities and Exchange Commission.
“Shut in”
To close the valves on a well so that it stops producing.
The very beginning of drilling operations of a new well, occurring when the drilling bit penetrates the surface
utilizing a drilling rig capable of drilling the well to the authorized total depth.
The present value of estimated future net cash inflows from proved oil and natural gas reserves, less future
development and production costs and future income tax expenses, discounted at 10% per annum to reflect
timing of future net cash flows.
“Working interest”
An interest in an oil and natural gas lease entitling the holder at its expense to conduct drilling and production
operations on the leased property and to receive the net revenues attributable to such interest, after deducting the
landowner’s royalty, any overriding royalties, production costs, taxes and other costs.
Operations on a producing well to restore or increase production.
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