Track drilling costs in real-time against AFE budgets. Monitor actuals vs. estimates, forecast final well costs, and identify cost overruns before they become major problems.
AFE (Authority for Expenditure) budgets are critical for drilling economics. Operators approve wells based on estimated costs, and the difference between estimated and actual costs directly impacts well economics and project IRR. Yet most operators don't know whether they're on budget until the well is complete — when it's far too late to take corrective action.
The problem isn't a lack of cost data. Company men track costs in daily drilling reports. Invoices flow through accounting systems. The data exists. But it's scattered across multiple systems and formats, making real-time cost visibility nearly impossible. When management asks "are we on budget?", someone spends days compiling data from drilling reports, accounting systems, and vendor invoices just to answer the question.
Spreadsheet-based cost tracking creates a dangerous delay between when costs are incurred and when they're known. A well can be 20% over budget before anyone realizes there's a problem. By then, you're already in the hole with limited options to recover. Manual cost compilation is too slow for proactive management. And when costs are spread across daily drilling reports, accounting systems, and email threads, there's no single source of truth. Different teams see different numbers. Budget vs. actual comparisons are outdated as soon as they're compiled. And trending analysis that could predict final costs is impossible without systematically tracked historical data.
Modern drilling operations need real-time cost visibility. When a well is running over budget, you need to know immediately — not 30 days later when accounting closes the books. And you need analytics that help you understand why costs are different from estimates so you can improve future AFEs.
Modern drilling cost tracking should capture costs as they're incurred, compare them to AFE budgets in real-time, and provide analytics that help optimize drilling economics.
Costs captured daily as drilling progresses. No waiting for month-end accounting to know where you stand.
Compare actual costs to AFE estimates by cost category. See exactly where you're over or under budget.
Project final well costs based on current performance and remaining work. Know the probable final cost before TD.
Detailed cost tracking by category: rig dayrate, directional drilling, mud & chemicals, bits & BHA, cementing, and more.
Analyze cost trends across wells to improve future AFE estimates. Learn from historical data instead of repeating estimation errors.
Understand what's causing cost variances. Is it slower drilling? NPT? Scope changes? Higher than estimated service costs?
RigReports tracks drilling costs as part of daily drilling operations. Company men and drilling engineers enter costs daily — rig time, services, materials, and other expenses. All cost data flows into the Mi4 database where it's automatically compared to AFE budgets and made available for analysis.
1. Daily Cost Entry
Costs are recorded in RigReports as part of the daily drilling workflow. Each daily drilling report includes a cost section where all expenses are entered with cost codes, descriptions, and amounts. The system supports multiple cost entry methods including daily lump sum costs or detailed line-item tracking depending on your workflow preference.
2. AFE Budget Integration
Import AFE budgets into RigReports before drilling begins. The system automatically compares actual costs to AFE estimates as drilling progresses. Cost dashboards show budget vs. actual by category, total well cost to date, and projected final cost.
3. Cost Dashboards
Real-time dashboards show drilling cost status across all active wells. See total costs to date, budget variance (over/under), projected final costs, and cost per foot. Dashboards are customizable by well, rig, cost category, or date range.
4. Cost Forecasting
Based on current drilling performance and cost rates, RigReports forecasts final well costs. The forecast considers actual costs to date, estimated costs for remaining drilling (based on time to TD), and known upcoming expenses. This allows early identification of wells that will exceed AFE.
5. Cost Analysis & Reporting
Analyze cost data across drilling programs to understand trends and improve estimates. Compare actual costs to AFE estimates by cost category to identify where estimates are consistently off. Use historical cost data from similar wells to improve future AFE accuracy.
6. Cost Integration with Operations
Because RigReports integrates cost tracking with operational data (depth, ROP, NPT, etc.), you can analyze the relationship between operational performance and costs. For example, correlate slower drilling in certain formations with higher than estimated costs.
Use Case 1: Early Detection of Budget Overruns
A well is drilling slower than expected through a challenging formation. RigReports shows the well is 8% over AFE at 60% depth. Engineering reviews the cost data, sees the overrun is due to slower drilling and NPT in that formation, and updates the AFE forecast to reflect higher than estimated costs. Management is notified early instead of being surprised at TD.
Use Case 2: AFE Estimation Improvement
An operator's AFE estimates are consistently 12-15% low, creating budget surprises and impacting well economics calculations. Cost analysis in RigReports reveals the underestimates are concentrated in two areas: directional drilling costs and NPT. Engineering revises AFE estimation methodology for those categories, and subsequent wells have much more accurate AFEs.
Use Case 3: Service Cost Verification
Daily cost tracking in RigReports shows an unusual spike in mud costs. Drilling engineering reviews the data and discovers the vendor is charging rates that don't match the contracted pricing. The discrepancy is identified and corrected before month-end invoicing, saving $40,000.
Use Case 4: Drilling Program Cost Analysis
An operator completes a 20-well drilling program. RigReports provides comprehensive cost analysis showing average cost per well, cost trends over the program, variance from AFE by well, and identification of the most significant cost drivers. This analysis informs planning and AFE development for the next drilling program.
Real-time cost tracking transforms drilling cost management from reactive to proactive. Instead of discovering budget overruns at TD, you identify them early when there's still time to take action. Instead of guessing at final well costs, you forecast them based on actual performance. Instead of repeating the same AFE estimation errors across multiple wells, you learn from historical data and continuously improve estimate accuracy. And instead of spending days compiling cost reports, you see cost status instantly in live dashboards.
Drilling cost tracking in RigReports works as soon as you begin using the platform for daily drilling reports. Simply enter costs daily as part of the drilling workflow. For more sophisticated analysis, import AFE budgets before drilling begins so the system can compare actuals to estimates automatically.
For operators with historical drilling cost data, Mi4 can import that data to enable trend analysis and benchmarking. Many operators import historical AFE estimates and actual costs from 10+ wells to establish baseline cost models for their operations.
Integration with accounting systems is also available for operators who want to automatically sync cost data between RigReports (operational cost tracking) and their accounting system (invoice processing and payment).
Schedule a demo to see cost tracking in action, or learn more about RigReports.