Well Cost Control and Forecasting: Aberdeen, Aberdeen, Monday, 25. November 2019

Course outline
How oil companies decide where to drill wells
Exploring for oil and gas, a process of reducing uncertaintyObjectives of drilling a well: presence, geology, and evaluation data 
Overview of well construction
Well drilling process from surface to reservoirFormation evaluationWell completionWell design and preparation of the drilling planRoles of operator, contactor and company manTechnical reporting whilst drilling
Well cost reporting
Reporting daily, weekly and monthly estimated drilling cost reportUnderstanding the array of well cost reporting and how to analyse themPreparing drilling cost reportsGraphs – cost plan v actual, Cost per footOther well reporting 
Role of the AFE
Preparing a well AFE, wetting up an AFE tracking systemUsing project management techniques to plan, organise and control resourcesRig contract and support services for drillingMaterials and supplies used in well drillingTypical well cost breakdown - onshore wellTypical well cost breakdown - offshore well
Well drilling cost
Overview of planning, preparation and drilling a wellPre drill – well permitting, surface survey, access and site preparationRig related – inspection, mobilization, day work, standby and directional drillingCrew related – travel, accommodation & subsistencePower generation, fuel and water, transportation & logisticsMaterials and suppliesEquipment, surface, casing handling, solids control and downhole toolsSite preparation – cellar construction, surface casing and intermediate hole
Formation evaluation costs
Mud logging, wellsite geologist and cutting samplesSurveys and electric loggingCoringDrill stem testing
Well completing costs
Wellhead equipment, production casing & accessoriesLogging / cement bondPerforating, stimulation – acid or frackingTesting, pressure surveys, gas/liquids analysisCompletion fluidSnubbing, nitrogen
Miscellaneous & geology
Main components of well costsDifference between and exploration and development wellsGeology and reservoir rocksAcid type and fracking success
Designing a well
Geological prognosis and well designSelecting the rig Drilling equipment rentalCasing and cementing programDrilling muds and completion fluidsBitsFormation and well evaluation information
Planning and drilling the well
Key contract awards and commitment timingMonitoring drilling operationsWell control issuesMud control and testingCasing and cementing operations
Drilling rig contract
Tendering for a drilling  rig, specRig contracts, key commercial terms, standard clauses difference between onshore and offshore contracting – rate and multi-year contractsImpact of Gulf of Mexico spill on rig contractsRecent case in London Commercial court
Building a well costing database
Financial commitments – contracts, purchase and service ordersDeveloping cost information relating to key day rate costs for equipment, services & personnel (restocking charge, repair/refurbishment costs)Developing cost information relating to materials & suppliesDrilling supervision, safety, waste management and communicationsEngineering support, overheads, insurance and site clean-upContractor help with costings, helicopter, telex, pay invoices
Building a robust well cost estimating model
Simple modelMain categories of costIntroducing complexitiesReports and analysis, cumulative cost control
Cost tracking model
Specific to circumstancesAFE template, entering data, Using Enterprise Resource Planning (ERP) solutions to develop meaningful well cost control and variance reportingKeeping an audit trail
What happens when it doesn't go to plan
Stuck pipeOverpressuresLost circulationKicksImpact of above on costing model
Risk management of drilling operations
Managing risk to raise the bar for operations and well management safetyMitigation of risk is directly related to on-target performance and operational excellenceThe role of well costing in OEMS
Controlling actual well costs
Controlling and reporting financial commitmentsRole of the cost tracker in relation to well operations, drilling and the company manComparing invoiced costs to tracked costs and reporting variancesHow to identify cost over-runs and prepare information for an AFE supplement
Post drilling reconciliations
Methodology for detailed well cost reconciliations to required industry standardHow to perform monthly materials usage stock reconciliationsDiscussion of audit trails, reporting and liaison with accountingAudit rights under JOA and preparation for JV auditFinal well cost review and materials usage reports
Accounting for well expenditure - financial accounting
Breakdown of costs – internal reporting to partnersWork in progress – accounting while drillingSuccessful efforts v full costs accountingAccounting depends on when you are in project lifecycleKeeping well costs in pending – statutory auditors
Advantages of close cooperation with accounting staff while drilling
Areas where accountants add valueFive areas of improvement
Course terms and conditions

Monday, 25. November 2019, Aberdeen, Well Cost Control and Forecasting: Aberdeen

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