Spud

AAA

DEFINITION of 'Spud'

In the oil and gas industry, the process of beginning to drill a well. Initially a larger drill bit is used to drill a surface hole, which is lined with casing and cement to protect groundwater. After the surface hole is completed, the main drill bit is inserted and the well is drilled to the total depth.


Can also be referred to as "spudding in".

INVESTOPEDIA EXPLAINS 'Spud'

Drilling for oil and gas is a highly complex task involving sophisticated techniques and machinery. It often costs hundreds of thousands of dollars to drill even a simple well. More difficult wells can cost millions of dollars. The most expensive wells are often found offshore, where high-end drilling platforms can cost over $500,000 per day in times of peak demand.

RELATED TERMS
  1. Cracking

    Used in the oil and gas industry to refer to a variety of methods ...
  2. Oil Field

    A tract of land used for extracting petroleum, or crude oil, ...
  3. Crude Oil

    A naturally occurring, unrefined petroleum product composed of ...
  4. Oil Reserves

    An estimate of the amount of crude oil located in a particular ...
  5. Working Interests

    Refers to a form of investment in oil and gas drilling operations ...
  6. Wildcat Drilling

    The process of drilling for oil or natural gas in an unproven ...
Related Articles
  1. Economics

    J.D. Rockefeller: From Oil Baron To Billionaire

    More than 70 years after his death, this man remains one of the great figures of Wall Street.
  2. Forex Strategies

    Canada's Commodity Currency: Oil And The Loonie

    When the price of oil goes up, don't worry about how much gas is going to cost - get even by making a play on the Canadian dollar.
  3. Budgeting

    Understanding Oil Industry Terminology

    The drillers are just one aspect of the oil & gas industry, and by knowing some details of their role, you'll be better suited to make investment decisions.
  4. Mutual Funds & ETFs

    Commodity Funds 101

    These funds make investing in gold, oil or grain an easier prospect.
  5. Economics

    Meet OPEC, Manager Of Oil Wealth

    This organization's decisions can influence oil prices, but there is a limit to its power.
  6. Mutual Funds & ETFs

    Want to Go Long Natural Gas? Eye the UGAZ ETN

    Is UGAZ the best way to play natural gas? Maybe not.
  7. Chart Advisor

    These Oil Service Stocks Are Ready For A Move Higher

    In the oil services sector, active traders have been trying hard to establish a floor and the double bottom pattern that is appearing on the chart suggests that a short-term reversal could be ...
  8. Economics

    Why The Russian Economy Rises and Falls With Oil

    The Russian economy depends on profitable oil production to pay for the cost of government, prop up the ruble, and provide most of it exports revenue.
  9. Economics

    How Oil Prices Impact the U.S. Economy

    Now that the United States has increased oil production through shale oil and fracking, low oil prices can harm the U.S. oil industry and its workers.
  10. Mutual Funds & ETFs

    Take Advantage of Cheap Oil, Invest in these ETFs

    With crude oil prices at record lows, investors should consider oil ETFs over oil company stocks as ETFs more closely mirror the price of oil

You May Also Like

Hot Definitions
  1. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  2. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  3. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  4. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  5. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
  6. Absorption Costing

    A managerial accounting cost method of expensing all costs associated with manufacturing a particular product. Absorption ...
Trading Center