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DRILL BIT ECONOMICS

Advanced Drilling Solutions

Drill Bit Economics

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Drill Bit Economics

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Drill bit economics consists of drilling curves, cost-per-interval and breakeven
analysis; all of w hich possess significant differences.

There are tw o types of drilling curves:

1. Depth vs. Time
2. Depth vs. Costs

Drilling costs are comprised of three different components:

Time
Rotating Time
Drilling / on bottom time
Non-drilling
Reaming / back reaming
Non-Rotating Time
Connections
Tripping
Circulating
Running Casing
Logging
Maintenance / Repair
Fishing
Bit Cost
Dow nhole Tool / BHA Costs
Standby Charges
In-Hole Costs
Up-Front Charges
Indirect Costs
Borehole Quality
Trajectory
Shape
Open-Hole Risk
Borehole Integrity
Formation Damage
Pressure Risk
W ireline and Cement Unit Rentals

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Basic Cost-Per-Interval

CI = RR x (HR + TT) + (DT x HR) + BC

INT

CI = Cost-Per-Interval (Currency)
RR = Rig Rate (Hourly)
HR = Drilling Time (Hours)
TT = Trip Time (Hours)
BC = Bit Cost (Currency)
INT = Interval Drilled (feet or meters)

Historical Versus Projected Cost-Per-Interval

Historical
Uses information from an actual w ell or w ells
Cost-Per-Interval is actual
Projected
Used for selection and comparison
Calculated based on planned or target w ell
Calculated based on projected hours and interval drilled

Breakeven Analysis

Breakeven analysis demonstrates rate of penetration or interval required to

meet or exceed offset cost-per-interval.

Assumed Footage
ROP BE = RR / CL O [((R(TT)) + BC) / INT]

Assumed Penetration Rate

INTBE = [RR (TT) + BC] / [CL O (RR / ROP)

ROP BE
INTBE

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= Breakeven Penetration Rate

= Breakeven Interval

CL O

= Offset Cost-Per-Interval (Currency)

RR

= Rig Rate (Hours)

TT

= Trip Time (Hours)

BC

= Bit Cost (Currency)

ROP

= Assumed Rate of Penetration

INT

= Assumed Interval Drilled

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