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 FAQS
  1. What factors are the primary drivers of share prices in the oil and gas sector?

    The primary drivers of share prices in the oil and gas sector are energy prices and economic growth. Stock prices in the ... Read Full Answer >>
  2. What impact does the growth in horizontal drilling have in the oil and gas sector?

    It is tough to separate the growth in horizontal drilling from the growth in hydraulic fracturing, or fracking; the two techniques ... Read Full Answer >>
  3. What are the main substitutes for oil and gas energy?

    The main substitutes for oil and gas energy include nuclear power, solar power, ethanol and wind power. Fossil fuels dwarf ... Read Full Answer >>
  4. How much of the United States' energy comes from oil and gas?

    As of 2014, the oil and gas sector accounted for approximately 50% of total U.S. energy needs, with approximately another ... Read Full Answer >>
  5. What extent do interest rate changes have on the profitability of the oil and gas ...

    Interest rates, particularly real interest rates, can be a very important determining factor on the real costs of oil and ... Read Full Answer >>
  6. What debt to equity ratio is common for a oil and gas company?

    Oil and gas operations are very capital-intensive, yet most oil and gas companies carry relatively small amounts of debt, ... Read Full Answer >>
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. Chart Advisor

    3 Ways To Trade The Bounce In Coal

    News from the Supreme Court has caused active traders to turn their attention to the coal markets. We'll take a look at how to trade the bounce.
  7. Savings

    Do Oil Prices Affect The Auto Industry?

    Based on an understanding of complementary and substitute goods, the American auto industry is exhibiting expected effects from the recent plunge in the price of oil.
  8. Options & Futures

    Will Oil Ever Go Back Up To $100?

    Experts have yet to reach a consensus on whether oil will return to $100, but recent events could give us some clues to its future price changes.
  9. Investing

    4 Future Jobs In The Sci-Fi Future

    As long as the human race has problems, we'll continue developing new things and ideas to solve those problems.
  10. Chart Advisor

    Expect These Gold-Related Assets To Move Lower

    The spot gold price is trading within a long-term descending triangle. Traders may use this pattern to suggest gold and related assets are heading lower.

You May Also Like

Hot Definitions
  1. Social Security

    A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits ...
  2. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  3. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  4. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
  5. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
  6. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!