What does the IHS report say about oil rig costs?

Based on expectations of continuing oversupply of global oil in 2016, the IHS report foresees a continued downward trajectory in costs as drilling activity declines. For example, the IHS report expects rig rates to fall by 5% to 10% in 2016 with increases of 5% in 2017 and 2018.

What are Rig rates & rentals?

Rig rates and rentals – These services were created specifically for unconventional oil and natural gas development. Thus, we expect to see reductions of 25 - 30% in 2015 from 2014 levels, with an additional 5 – 10% reduction in 2016, after which we would begin to see increases of 5% during 2017 and 2018.

What are rig day rates & diesel costs?

Rig day rates and diesel costs are related to larger market conditions and overall drilling activity rather than well design. Rig related costs can range from $0.9 MM to $1.3 MM making up 12% to 19% of a well’s total cost.

How much does a rig cost?

Rig related costs can range from $0.9 MM to $1.3 MM making up 12% to 19% of a well’s total cost. Casing costs are driven by the casing markets, often related to steel prices, the dimensions of the well, and by the formations or pressures that affect the number of casing strings.

How much does drilling cost?

Lateral lengths are fairly constant, averaging 6000 feet. Overall, drilling costs range from $2.1 MM to $2.5 MM. Like the Bakken, proppant costs per pound are higher due to heavy reliance on artificial proppant. Completion costs range from $4.3 MM in the more oily areas to $5.1MM in gas prone areas.

What are the key cost drivers for offshore drilling?

Key cost drivers for offshore drilling include water depth, well depth, reservoir pressure and temperature, field size, and distance from shore.