Bit Run Economics

Components of Cost / Foot• Cost / foot of a bit run considers:

– Cost of the drilling operation ($ / hour)• Should include everything in the spread cost

– Cost of the bit ($)– Rotating time (hours)

• Should include all on-bottom hours, no wiper trips– Round trip time (hours)

• Time required to get a new bit on bottom - should include circulating time, reaming, changing BHAs

• No BOP testing, logging, BHA inspection, etc.– Footage Drilled (feet)

• Intended to indicate current drilling performance trend & basis for decision-making.

Cost / Foot Calculation

CPF = Cost per foot ($ / foot)B = Cost of the bit ($)R = Cost of the drilling operation ($ / hour)T = Rotating time (hours)t = Round trip time (hours)F = Footage drilled (feet)

Ft)R(TBCPF ++

=

Using Cost / Foot Calculations - Critical ROP• Intended to indicate current drilling performance

trend & basis for decision-making.

CPFRROPc =

ROPc = Critical ROP (fph)CPF = Cost per foot ($ / foot)R = Cost of the drilling operation ($ / hour)

Using Cost / Foot Calculations - Critical ROP• Calculate CPF at regular intervals during the bit run.• For each CPF value, calculate a Critical ROP (ROPc).• If ROP drops below ROPc, trip to replace the bit.• Stretch drilling time beyond ROPc if:

– TD or casing point is close– A faster drilling formation is anticipated

• However, don’t push too far!

CPFRROPc =ROPc = Critical ROP (fph)

CPF = Cost per foot ($ / foot)R = Cost of the drilling operation ($ / hour)

• Intended to show required footage (based on assumed ROP and hours performance) to achieve target cost/foot.

CPFt)R(TBF ++

=

Using Cost / Foot CalculationsBreakeven Footage

F = Footage required to break even (feet)B = Cost of the bit ($)R = Cost of the drilling operation ($ / hour)T = Rotating time based on assumed ROP (hours)t = Round trip time (hours)CPF = Target cost per foot ($ / foot)

Using Cost / Foot CalculationsBreakeven Footage

• Determine replacement bit cost.• Assume rotating time based on expected ROP of

replacement bit.• If actual footage drilled with replacement bit

exceeds F, replacement bit is more cost-effective.• Calculate new F if ROP varies from initial

assumption.

CPFt)R(TBF ++

=F = Footage required to break even (feet)B = Cost of the replacement bit ($)R = Cost of the drilling operation ($ / hour)T = Rotating time based on assumed ROP (hours)t = Round trip time (hours)CPF = Target cost per foot ($ / foot)

• Intended to show required rotary hours (based on expected ROP performance) to achieve target cost/foot.

e

e

ROP*CPFR-1

ROP*CPFt)*(RB

T

+

=

Using Cost / Foot CalculationsBreakeven Time

T = Rotating time to break even (hours)B = Cost of the replacement bit ($)R = Cost of the drilling operation ($ / hour)t = Round trip time (hours)CPF = Target cost per foot ($ / foot)ROPe = Expected ROP of replacement bit (ft / hr)

Using Cost / Foot CalculationsBreakeven Time

• Determine replacement bit cost and target CPF.• Assume expected ROP of replacement bit.• Recalculate if actual ROP varies from expectation.

e

e

ROP*CPFR-1

ROP*CPFt)*(RB

T

+

=

T = Rotating time to break even (hours)B = Cost of the replacement bit ($)R = Cost of the drilling operation ($ / hour)t = Round trip time (hours)CPF = Target cost per foot ($ / foot)ROPe = Expected ROP of replacement bit (ft / hr)

• Intended to show required ROP (based on expected bit life) to achieve target cost/foot.

CPF

RT

t)*(RB

ROPbe

++

=

Using Cost / Foot CalculationsBreakeven ROP

ROPbe = Target ROP for replacement bit (ft / hr) B = Cost of the replacement bit ($)R = Cost of the drilling operation ($ / hour)t = Round trip time (hours)T = Expected replacement bit life (hours)CPF = Target cost per foot ($ / foot)

Using Cost / Foot CalculationsBreakeven ROP

• Determine replacement bit cost and target CPF.• Assume expected life of replacement bit.

ROPbe = Target ROP for replacement bit (ft / hr) B = Cost of the replacement bit ($)R = Cost of the drilling operation ($ / hour)t = Round trip time (hours)T = Expected replacement bit life (hours)CPF = Target cost per foot ($ / foot)

CPF

RT

t)*(RB

ROPbe

++

=

Notes: __________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

Notes: __________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________