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. J.D. Rockefeller: From Oil Baron To ...
    Economics

    J.D. Rockefeller: From Oil Baron To ...

  2. Canada's Commodity Currency: Oil And ...
    Forex Strategies

    Canada's Commodity Currency: Oil And ...

  3. Understanding Oil Industry Terminology
    Budgeting

    Understanding Oil Industry Terminology

  4. Commodity Funds 101
    Mutual Funds & ETFs

    Commodity Funds 101

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center