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.

RELATED TERMS
  1. Exploratory Well

    A deep hole, in the earth, that a petroleum or natural gas company ...
  2. Wildcat Drilling

    The process of drilling for oil or natural gas in an unproven ...
  3. Directional Drilling

    A drilling technique in which a well is bored at multiple angles. ...
  4. Drilling Mud

    Fluid used in the drilling of boreholes. Drilling mud, also referred ...
  5. Vertical Well

    A well that is not turned horizontally at depth, and which allows ...
  6. Exploration & Production - E&P

    An E&P company is known to be in a specific sector within the ...
Related Articles
  1. Investing

    Unearth Profits In Oil Exploration And Production

    Drill down into financial statements to tap into the right companies and let returns flow.
  2. Investing

    Oil And Gas Industry Primer

    Before jumping into this hot sector, learn how these companies make their money.
  3. Investing

    Oil: A Big Investment With Big Tax Breaks

    Oil and gas investments can provide unmatched deduction potential for accredited investors.
  4. Investing

    A Primer On Offshore Drilling

    Learn the important ratios and terms that you'll need to know to get involved in this trading sector.
  5. Investing

    Tech Startups Eye the Oil Industry

    Although the oil and gas industries have plummeted, high tech companies and investors see promise.
  6. Investing

    The Cost of Shale Oil Versus Conventional Oil

    Fracking technology has brought new costs to the oil extraction process, and that has an impact on the profitability of the deposits being drilled.
  7. Investing

    Investing In Oil And Gas UITs

    Unit investment trusts provide direct exposure to the energy sector, fueling better returns.
  8. Financial Advisor

    Who Are Seadrill’s Main Competitors?

    Learn about some of the issues facing Seadrill and its competitors in the offshore oil drilling industry due to low commodity prices.
  9. Investing

    5 Reasons Why Private Equity Investors Like Oil and Gas Companies

    Oil and gas companies may look like a risky industry on the outside, but private equity investors have found reasons to regularly invest in these firms.
  10. Investing

    Exxon Mobil Stock: Analyzing 5 Key Suppliers (XOM, PKD)

    Take a quick look at several key companies supplying products and services in support of Exxon Mobil's global oil and gas operations.
RELATED FAQS
  1. What are risks associated with investing in the oil & gas drilling sector?

    Learn what unique risks are present for investment in the energy industry specifically affecting companies working in oil ... Read Answer >>
  2. How long does it take an oil and gas producer to go from drilling to production?

    Discover the process required to bring an oil well into production and learn how long it typically takes an oil producer ... Read Answer >>
  3. The term “wildcatting” in DPPs is typically used to refer to which of the following ...

    The correct answer is A).“Wildcatting” is exploratory drilling where oil and gas have never been recovered before. This is ... Read Answer >>
  4. Is the oil & gas drilling sector a good choice for value investing?

    See why the oil and gas drilling sector can present some problems for value investors, although undervaluation can still ... Read Answer >>
  5. What is the average growth rate of the oil & gas drilling sector?

    Learn about the growth rate in the critically important market sector of oil and gas exploration and production, and see ... Read Answer >>
  6. What developed countries have the greatest exposure to oil & gas drilling?

    Find out which countries have the largest proven reserves of oil and gas, and learn how the energy landscape has changed ... Read Answer >>
Hot Definitions
  1. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  2. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  3. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  4. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  5. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  6. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
Trading Center