What is Wildcat Drilling?

Drilling for oil or natural gas in untested or fully explored locations that either have no definite historical production records or have been entirely exhausted as a site for oil and gas extraction is known as wildcat drilling, a kind of high-risk exploratory drilling.

Because of this increased uncertainty, the drilling crews must have the necessary training, experience, and understanding of what different health metrics tell them about their formations. Whether or not the wells are dug in established producing zones, the energy corporations with the highest drilling success rates are the most prosperous.

Understanding Wildcat Drilling

The initial steps in producing energy are called exploration and production, and they include finding and removing gas and oil. An E&P firm locates and obtains the raw materials the energy industry needs.

Since drilling was often done in isolated locations throughout the first half of the 20th century, the name “wildcat drilling” most likely originated from this practice. Some of these sites may have been or seemed to be, overrun by wildcats or other untamed beasts in the American West due to their remoteness and distance from populated regions. International energy companies have combed many areas of the Earth’s surface, including the deep seas, looking for oil and gas, and only a small number of areas still need to have their energy potential thoroughly investigated.

Wildcat drillers can get claims for significantly less than they usually would since they search for claims that would otherwise be unattractive. However, this kind of exploratory drilling is costly to run without results since it often yields many more misses than positives.

Only a tiny percentage of big oil corporations’ drilling activity comprises wildcat drilling. Wildcat drilling may be a make-or-break decision for small energy enterprises. If such drilling finds significant energy resources, investors in these corporations stand to gain a lot. On the other hand, small-cap energy businesses may experience poor stock performance or even insolvency due to wildcat drilling that consistently produces dry holes.

Particular Points to Remember

Small producers searching for oil in areas that major oil firms have ultimately used constitute another facet of wildcat drilling. Large pockets of oil reservoirs may exist in these areas, too costly for more prominent companies to pursue owing to economies of scale but valuable for smaller, more nimble wildcat drillers. Approximately two-thirds of the oil in known oil fields is estimated to be left in the ground despite high oil prices, according to a 2008 Massachusetts Institute of Technology study. They claim this is because significant oil firms are not making widespread use of current technology, which has the potential to extract significantly more oil—up to 75% of the oil in specific oil fields. This gives more minor wildcat oil drillers access to a significant market niche.

Although wildcat drillers play a crucial role in enabling higher oil and gas production than would be achievable without their involvement, their influence on the price of oil is minimal.

Conclusion

• Wildcat drilling is an exploratory technique targeting high-risk or untested locations for exploring and producing oil and gas.
• An alternate course of action for a wildcat driller may be to revisit older or current wells that are no longer lucrative or valuable to more prominent oil firms.
• Smaller businesses are often involved in wildcatting, which may have significant stakeholder payoff potential and considerable risk.