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What are Well Economics?
Definition
Well economics looks at the financial performance of an oil and gas well or group of wells by considering the relationship among production, revenue, operating costs, capital investment, and other economic factors. Reviewing well economics can help evaluate how an asset is performing financially, how that performance is changing over time, and how individual wells compare within a portfolio. The measures used can vary by company, ownership structure, and the decision being evaluated.
Practical questions
- Which wells are generating the strongest financial performance?
- Which wells are underperforming relative to the rest of the portfolio?
- How are revenue and operating costs affecting well economics?
- How has a well’s economic performance changed over time?
- Did a workover or capital investment improve the well’s economics?