Well Cost Control & Forecasting (FIN11)
Description
Cost control and forecasting are fundamental to efficient well planning and execution. The ability to accurately estimate, track, and reconcile well costs is critical for drilling engineers, finance teams, and cost engineers to ensure projects remain within budget while maximising operational efficiency.
This course provides a comprehensive exploration of well cost control, covering everything from the initial cost estimation and AFE creation to real-time cost tracking, financial reporting, and post-drilling reconciliations. By integrating both technical and financial perspectives, participants will develop a well-rounded understanding of how to effectively manage well costs, mitigate financial risks, and optimise the value of well expenditures.
The course begins with a review of fundamental cost principles, including the well cost improvement cycle and how various technical and operational factors influence well expenses. Participants will learn how to break down costs into Time-Related Costs (TRC), Depth-Related Costs (DRC), and One-Off Costs (OOC) to develop a structured, standardised approach to cost estimation.
Another major aspect of the course is risk management in well cost control. Participants will learn how to recognise and mitigate potential cost overruns caused by operational challenges such as stuck pipe, lost circulation, non-productive time (NPT), and well control issues. Strategies for controlling actual well costs, managing financial commitments, and identifying cost overruns before they escalate will be discussed in detail.
By the end of the course, participants will have a clear understanding of the entire well cost control and forecasting process, from the initial budgeting phase to final reconciliation. They will be equipped with the skills needed to implement cost-effective drilling strategies, improve financial reporting accuracy, and add value to their organisation by enhancing cost control practices.
Course Level: Foundation
Duration: 3 days
Instructor: Kevin Gray
This course provides a comprehensive exploration of well cost control, covering everything from the initial cost estimation and AFE creation to real-time cost tracking, financial reporting, and post-drilling reconciliations. By integrating both technical and financial perspectives, participants will develop a well-rounded understanding of how to effectively manage well costs, mitigate financial risks, and optimise the value of well expenditures.
The course begins with a review of fundamental cost principles, including the well cost improvement cycle and how various technical and operational factors influence well expenses. Participants will learn how to break down costs into Time-Related Costs (TRC), Depth-Related Costs (DRC), and One-Off Costs (OOC) to develop a structured, standardised approach to cost estimation.
Another major aspect of the course is risk management in well cost control. Participants will learn how to recognise and mitigate potential cost overruns caused by operational challenges such as stuck pipe, lost circulation, non-productive time (NPT), and well control issues. Strategies for controlling actual well costs, managing financial commitments, and identifying cost overruns before they escalate will be discussed in detail.
By the end of the course, participants will have a clear understanding of the entire well cost control and forecasting process, from the initial budgeting phase to final reconciliation. They will be equipped with the skills needed to implement cost-effective drilling strategies, improve financial reporting accuracy, and add value to their organisation by enhancing cost control practices.
Course Level: Foundation
Duration: 3 days
Instructor: Kevin Gray
Designed for you, if you are...
- A well engineer or drilling engineer involved in well design and execution
- A finance professional or cost engineer seeking to understand the financial aspects of well operations
- A professional with limited or no experience in well cost control who needs to learn cost tracking techniques for both simple and complex wells
- Interested in understanding the financial impact of well construction and how effective cost control adds value to an oil & gas operator's organisation
How we build your confidence
- Instructor-led sessions using interactive exercises, case studies, and financial simulations
- A step-by-step approach, where each topic builds on previous knowledge
- Real-world examples from drilling projects to highlight cost management best practices
- Practical exercises, including AFE preparation and cost tracking models
- Q&A discussions to clarify financial reporting and cost control concepts
The benefits from attending
By the end of the course you will be able to:- Understand the principles of well cost control & forecasting
- Recognise the link between well design, drilling execution, and cost control
- Apply practical cost control techniques in real-world operations
- Develop financial control documents such as AFEs, cost trackers, and reconciliations
- Learn to calculate the Value of Work Done (VOWD) and apply it to financial reporting
- Identify cost overruns, track expenditures, and manage financial risk
- Effectively report and present well cost data, adding strategic value to an organisation
Topics
Fundamentals of Well Cost Estimation & Control- Understanding Time-Related, Depth-Related, and One-Off Costs (TRC, DRC, OOC)
- Key elements of building a well cost estimate
- Overview of AFE preparation and approval processes
Well Cost Tracking & Reporting
- Setting up daily, weekly, and monthly cost reporting
- Analysing cost variances and forecasting cost overruns
- Time depth vs. cost depth analysis – planned vs. actual expenditure
- Using graphs (cost per foot, planned vs. actual costs) to visualise financial performance
Role of Cost Control in Well Operations
- Integration of cost control with drilling operations and decision making
- How financial tracking affects real-time drilling adjustments
- The relationship between AFE tracking and financial reporting
Managing Cost Risks in Well Drilling
- Common cost overruns: stuck pipe, lost circulation, formation issues
- Impact of Non-Productive Time (NPT) on cost forecasts
- Risk assessment techniques for cost optimisation
Post Drilling Reconciliation & Auditing
- Final well cost reconciliation and variance analysis
- Materials usage reconciliation and stock audits
Financial Accounting & Reporting in Well Cost Control
- Breakdown of costs for internal financial reporting and external partners
- Work in Progress (WIP) accounting during drilling operations
- How financial teams analyse well cost data and use it for budget forecasting
Strategic Cost Management in Well Design & Drilling
- How well cost control influences drilling decisions
- Cost saving techniques in well design, rig selection, and operations
- The role of procurement & contract management in cost reduction
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HOT Engineering GmbH Tel: +43 3842 43 0 53-0 Fax +43 3842 43 0 53-1 hot@hoteng.com
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