This paper summarizes studies of water-in-oil emulsions, their stability, and modelling of their formation. Studies show that water-in-oil emulsions might be characterized into three categories (stable, mesostable and unstable). These categories mere established by visual appearance, elasticity and viscosity differences. It was also shown that water content mas not an important factor. A fourth category of water-in-oil exists, that of water entrainment, which is not an emulsion. Water-in-oil emulsions made from crude oils have different classes of stabilities as a result of the asphaltene and resin contents. The differences in the emulsion types are readily distinguished both by their rheological properties, and simply by appearance. The apparent viscosity of a stable emulsion at a shear rate of one reciprocal second, is at least three orders-of-magnitude greater than the starting oil. An unstable emulsion usually has a viscosity no more than one order-of-magnitude greater than that of the starting oil. A stable emulsion has a significant elasticity, whereas an unstable emulsion does not. Stable emulsions have sufficient asphaltenes (> similar to 7%) to establish films of these compounds around water droplets. Mesostable emulsions have insufficient asphaltenes to render them completely stable. Stability is achieved by visco-elastic retention of water and secondarily by the presence of asphaltene or resin films. Mesostable emulsions display apparent viscosities of about 80-600 times that of the starting oil and true viscosities of 20-200 times that of the starting oil. Mesostable emulsions have an asphaltene and resin content greater than 3%. Entrained mater occurs when a viscous oil retains larger water droplets, but conditions are not suitable for the formation of an emulsion. Entrained water may have a viscosity that is similar or slightly greater (similar to 2-10 times) than the starting oil. It was found that emulsion formation occurs at a threshold energy, however this energy has not been accurately defined. Emulsions from many oils have been characterized. This information is used to describe how this process can be accurately modelled and what information gaps exist for complete description of the physical process. The modelling of emulsions is reviewed. A new modelling scheme based on the new physical findings, is suggested.