What is the petroleum cycle?

It begins with the acquisition (through direct negotiation or competitive auction) of oil and gas exploration rights. The owners of mineral rights are usually states, with which oil companies have to draw up contracts stipulating the rights of the respective parties. In particular, the contract must stipulate the area where exploration is to be carried out, the duration of the contract, minimum work and expenditure commitments, how any resulting production profit will be split between the parties, and how much tax the company will have to pay.
Generally speaking, since the Second World War states have no longer been content to issue exploration and production licences on the basis of royalties alone. They almost alwayswant a direct share of the company's profits from the operation in hand.
There are also production sharing and service contracts. Here, companies do not own the mineral rights but instead work on contract for the host country's state-owned oil company.
The next stages in the petroleum cycle are exploration, development, production and marketing

Exploration
Exploration begins with geophysical prospecting, which includes locating  traps (reservoir rocks that enable oil and gas to form and accumulate). The purpose of exploratory drilling is to identity the type and features of the trap and to ascertain whether hydrocarbons and are present and in what quantity.

Development
To extract oil and gas the deposit has to be brought on line by drilling the right number of wells and installing equipment to separate out and deal with unwanted components (solid particles, water, salts, etc.).

Production
Once the development stage is complete, production can begin. Hydrocarbons are extracted, processed and exported for sale by pipeline or ship.

Marketing
Oil and gas are sold internationally on the basis of market demand and daily price.
Gas is usually sold through long-term contracts which are often drawn up before reserves are developed.