DEFINITION of 'Development Well'
A well drilled in a proven producing area for the production of oil or gas. A development well is drilled to a depth that is likely to be productive, so as to maximize the chances of success. A development well stands in contrast to an exploratory well, which is one that is drilled to find oil or gas in an unproved area. As a result, dry or unsuccessful development wells are rarer than dry exploratory wells.
It is also known as an "exploitation well."
BREAKING DOWN 'Development Well'
Energy companies expend significant resources in pinpointing the best locations for drilling wells, since a dry or unproductive well can be a substantial expense. The accounting treatment for development wells differs from exploratory wells. The costs of dry development wells are usually capitalized, whereas the costs associated with dry exploratory wells are expensed.