Drilling and Completion costs are very similar across all onshore plays. This report will be focused on the Permian Basin where the average drilled well costs between $6.6 MM to $8.1 MM (2014 data) and $5.0MM to $9.3MM (currently). Oil wells are developing longer laterals as technology and oil extraction improves so total cost numbers are fairly abstract without a lateral length. The most common metric to compare well costs is well cost/1,000 ft. lateral. With this metric, a 10,000' lateral well can be compared to a 7,500' lateral more accurately. It must be noted that the cost/1,000 ft. metric doesn't account for the fixed vertical depth of the well regardless of lateral. The 2014 Permian cost/1,000 ft. was between $1.1MM and $1.4MM. Current data from six Permian producers show the cost/1,000 ft. around $970k.
Well costs have declined as companies lean out operations to adjust to a lower price oil environment. One way Permian producers have decreased costs has been utilizing one surface pad with one set of facilities for multiple wells of different depths and directions. The surface facilities of the wells are expensed amongst the various well expenditures so aggregate well costs will naturally decrease as this trend increases. Permian producers such as Resolute Energy (REN) and Centennial Resource Development (CDEV) have discovered more efficient oil extracting techniques by increasing their proppant and frack stages per 1,000' of lateral, but increases the cost of completing the well.
More expensive wells are likely to have laterals greater than 7,500' with increased costs for frack stages and proppant. Once again, allocating costs per 1,000ft. can provide more color on well costs in similar zones with differing lateral lengths.
The graph below shows how universal the drilling and completion cost structure is by showing historical total drilling and completion costs
