To understand how hydrocarbons shows come into being it is necessary at this point to understand the drilling process.

To discover or develop hydrocarbons it is necessary to drill a cylindrical hole (wellbore) down through rock layers to the reservoir that is prognosed to contain the hydrocarbons. A reservoir may lie anywhere from 50 metres to 5,000 metres below the surface of the earth and be anywhere from less than 1 metre to several hundreds of metres thick. To create the wellbore a drilling rig rotates a drill bit on the end of drill pipe. The drill bit grinds and chips away at the rock. To progress downwards the drill bit has to continually completely destroy the rock in front of the drill bit. Drilling rates are typically 1-5 feet per hour. To lubricate and cool the bit, to lubricate the drill pipe against the borehole wall and to carry the drilled rock chips and dust from the bottom of the hole to the surface, drilling fluid (mud) is continuously pumped down the drill pipe, out of the drill bit and back up the well bore to the surface. At the surface the mud is then agitated to remove any gasses and then the mud flows over sieves to remove the rock chips. To remove the finer rock particles the mud then passes through centrifuges and it is then returned to the mud pits for temporary storage and cooling before being once again pumped down the drill pipe.

Now that the drilling process has been described, hydrocarbon shows can be explained. Regarding hydrocarbons shows in a gaseous state; if hydrocarbons are present in a subsurface porous rock section, the act of drilling through that porous section will cause some of the hydrocarbons to be released from the destroyed rock into the mud in the wellbore. The hydrocarbons will typically come from the section that has been drilled because the act of drilling breaks down a cylindrical section of rock thereby liberating any hydrocarbons from the pores in the rock and mixing them with the mud. Sometimes hydrocarbons can flow into the wellbore from the reservoir as it is being drilled but this is termed a drilling kick because the volume of fluid in the wellbore increases, which is usually an undesirable consequence and indicates that the mud is not holding back the reservoir pore pressure. Pressure in the mud decreases as it approaches the surface as part of the natural hydraulic process. The decrease in mud pressure results in any gas being carried in the mud to expand and break out of the mud (in a similar fashion to CO2 being liberated from a soft drink when the top is unscrewed). At the surface the mud passes through an agitator that enhances liberation of the hydrocarbon gases from the mud. The released gases from the agitator are continuously sucked and fed through a gas detector and analyser. The gas detector and analyser splits the gas into its chemical components and a continuous readout of the composition of the sampled gases is provided. The gas detector is also a critical safety device as high concentrations of gas or dangerous gases (such as hydrogen sulphide) will set off an alarm and the rig will then take appropriate action to manage the high concentrations of gas in the mud. Hydrocarbon shows measured by this process are in the gaseous phase and are reported as parts per million relative to the total volume that is being sucked and fed into the gas detector and analyser. Regarding hydrocarbon shows in a liquid state; liquid hydrocarbons, such as oil or condensate, may be immediately released into the borehole as the rock is destroyed by the drill bit. This oil or condensate may be visible in the mud as it reaches the surface.

In addition, as gas expands with the reduction in mud pressure as the mud rises in the borehole, any oil or condensate contained in the rock chips will be forced out of the rock chips and into the mud (in a similar fashion to a wet sponge on a bench). Inspection of the rock chips under natural light in a rig-side laboratory may reveal oil or condensate to be seeping out of the rock chips. The oil or condensate can also be forced to seep out of the rock chips by the application of a solvent. To enhance the observation of oil or condensate, ultra-violet light can be used because oil and condensate give a fluorescent response under ultraviolet light, which makes it easier to see the oil or gas. Hydrocarbon shows observed by this process are in the liquid phase and are reported by description colour, quantity, bleed rate from the rock chips. Hydrocarbon shows may be as subtle as a very small elevated gas concentration up to a massive increase in gas concentration associated with observations of oil or condensate in rock chips. On occasions oil may even be observed flowing over the mud cleaning sieves as the mud exits from the well bore. It must be noted that the occurrence of hydrocarbon shows only informs the geologist that hydrocarbons are present in the system and cannot be used as an infallible indication of the presence of producible hydrocarbons or of their economically viability. Hydrocarbon shows can be observed from rock sections that have live hydrocarbons (producible from the reservoir), from rock sections that are tight (not producible from the reservoir) or residual hydrocarbons (the smear of hydrocarbons left in the rock after hydrocarbons have drained out of the reservoir either by production or natural leakage - these hydrocarbons are not producible). There are many instances of oil fields being discovered but not having any hydrocarbon shows whilst drilling and, at the other end of the spectrum, instances of extremely strong shows being associated with non-productive reservoirs. In general, although there may be a very weak trend of increasing show with increasing potential of a discovery, this is not an infallible indicator. Knowledge of a hydrocarbon system is very important in calibrating the significance of any hydrocarbon shows. Hydrocarbon shows are the first step in the evaluation of a reservoir and can be rarely used in isolation to determine if an economic discovery has been made. The interval over which the shows are recorded can be used to assist the geologists and petrophysicists to focus in on the area that is potentially hydrocarbon bearing, which may assist in the technical evaluation of the reservoir. The rock chips may also be used to give an indication of how porous a section may be but that does not necessarily mean it is permeable or productive. Any conclusion regarding the productivity of the reservoir or the estimation of volume will usually be dependent upon further data acquisition and measurement. Electric and nuclear logging, pressure measurements and especially flow testing (other tests) are usually required and desired to confirm that an economic discovery has been made. Oil companies will usually announce hydrocarbon shows because that is the first indication of the presence of hydrocarbons a potentially material event. Care should be taken by the oil company however not to over-inflate the announcement because, although spirits may be high because the presence of hydrocarbons have been observed, the implication of the hydrocarbon show may not yet be fully understood. At this stage, no inference regarding the size, producibility or economic viability should be made unless the hydrocarbon show has been benchmarked in the area of interest and a direct and proven inference can be made.

Following completion of the other tests noted above, a company should have a better idea if it has made an economic discovery or not and then this should be announced to the market in an appropriate manner. Due to the very technical nature of the industry, a company usually has to provide an overview of both the data and the interpretation of that data in the announcement otherwise the announcement would mean nothing to the general public and would be very open to interpretation. Companies must ensure that the announcement spells out the data facts and what this could mean both positive and negative, thereby avoiding a false market in securities. Investors should be wary of buying too early on a hydrocarbon show announcement. The corollary of this however is that if an investor waits until the other tests have been completed then the share price may have moved and the buying opportunity may have been missed. The investor must consider their individual investment situation and the potential for a hydrocarbon show to result in a future disappointment or success caveat emptor.