training specialists to the upstream oil and gas industry

Well Cost Control & Forecasting

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Course outline

Drilling rig contract

Tendering for a drilling rig, spec
Rig contracts, key commercial terms, standard clauses difference between onshore and offshore contracting – rate and multi-year contracts
Impact of Gulf of Mexico spill on rig contracts
Recent case in London Commercial court

Building a well costing database

Financial commitments – contracts, purchase and service orders
Developing cost information relating to key day rate costs for equipment, services & personnel (restocking charge, repair/refurbishment costs)
Developing cost information relating to materials & supplies
Drilling supervision, safety, waste management and communications
Engineering support, overheads, insurance and site clean-up
Contractor help with costings, helicopter, telex, pay invoices

Building a robust well cost estimating model

Simple model
Main categories of cost
Introducing complexities
Reports and analysis, cumulative cost control

Cost tracking model

Specific to circumstances
AFE template, entering data, Using Enterprise Resource Planning (ERP) solutions to develop meaningful well cost control and variance reporting
Keeping an audit trail

What happens when it doesn't go to plan

Stuck pipe
Lost circulation
Impact of above on costing model

Risk management of drilling operations

Managing risk to raise the bar for operations and well management safety
Mitigation of risk is directly related to on-target performance and operational excellence
The role of well costing in OEMS

Controlling actual well costs

Controlling and reporting financial commitments
Role of the cost tracker in relation to well operations, drilling and the company man
Comparing invoiced costs to tracked costs and reporting variances
How to identify cost over-runs and prepare information for an AFE supplement

Post drilling reconciliations

Methodology for detailed well cost reconciliations to required industry standard
How to perform monthly materials usage stock reconciliations
Discussion of audit trails, reporting and liaison with accounting
Audit rights under JOA and preparation for JV audit
Final well cost review and materials usage reports

Accounting for well expenditure - financial accounting

Breakdown of costs – internal reporting to partners
Work in progress – accounting while drilling
Successful efforts v full costs accounting
Accounting depends on when you are in project lifecycle
Keeping well costs in pending – statutory auditors

Advantages of close cooperation with accounting staff while drilling

Areas where accountants add value
Five areas of improvement

How oil companies decide where to drill wells

Exploring for oil and gas, a process of reducing uncertainty
Objectives of drilling a well: presence, geology, and evaluation data 

Overview of well construction

Well drilling process from surface to reservoir
Formation evaluation
Well completion
Well design and preparation of the drilling plan
Roles of operator, contactor and company man
Technical reporting whilst drilling

Well cost reporting

Reporting daily, weekly and monthly estimated drilling cost report
Understanding the array of well cost reporting and how to analyse them
Preparing drilling cost reports
Graphs – cost plan v actual, Cost per foot
Other well reporting 

Role of the AFE

Preparing a well AFE, wetting up an AFE tracking system
Using project management techniques to plan, organise and control resources
Rig contract and support services for drilling
Materials and supplies used in well drilling
Typical well cost breakdown - onshore well
Typical well cost breakdown - offshore well

Well drilling cost

Overview of planning, preparation and drilling a well
Pre drill – well permitting, surface survey, access and site preparation
Rig related – inspection, mobilization, day work, standby and directional drilling
Crew related – travel, accommodation & subsistence
Power generation, fuel and water, transportation & logistics
Materials and supplies
Equipment, surface, casing handling, solids control and downhole tools
Site preparation – cellar construction, surface casing and intermediate hole

Formation evaluation costs

Mud logging, wellsite geologist and cutting samples
Surveys and electric logging
Drill stem testing

Well completing costs

Wellhead equipment, production casing & accessories
Logging / cement bond
Perforating, stimulation – acid or fracking
Testing, pressure surveys, gas/liquids analysis
Completion fluid
Snubbing, nitrogen

Miscellaneous & geology

Main components of well costs
Difference between and exploration and development wells
Geology and reservoir rocks
Acid type and fracking success

Designing a well

Geological prognosis and well design
Selecting the rig 
Drilling equipment rental
Casing and cementing program
Drilling muds and completion fluids
Formation and well evaluation information

Planning and drilling the well

Key contract awards and commitment timing
Monitoring drilling operations
Well control issues
Mud control and testing
Casing and cementing operations


Location Start Date End Date Cost Trainer Book
Kuala Lumpur 20 Mar 2018 22 Mar 2018 £1,750 Simon Law
Istanbul 10 Apr 2018 12 Apr 2018 £1,750 Simon Law
London 19 Jun 2018 21 Jun 2018 £1,750 Simon Law
Bali 24 Sep 2018 26 Sep 2018 £1,750 Simon Law
Atyrau 9 Oct 2018 11 Oct 2018 £1,750 Simon Law
Bahrain 6 Nov 2018 8 Nov 2018 £1,750 Simon Law

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"Essential course by means of best practice through project lifecycle."
- Leslie Tan, EPOMS, Malaysia

Website: Studio Beam Ltd