Determining When A Well Is “Complete”

Although operationally it may be clear when the a drilled well is completed. From a legal perspective, the “completion” concept is more nuanced. The date of completion can have continuous development and retained acreage consequences, so accurately defining and determining completion in the lease is important. Texas courts have analyzed the following events as potential completion dates:• Production- Limited authority treats this as completion. Generally, completion has a broader meaning referring to finishing the required work on the well, regardless of whether it actually produces.• Preparation for Production- The Texas Supreme Court has held that completion occurs when a hole is “bored in the ground, and if oil or gas in paying quantities is encountered, the casing must be perforated or otherwise prepared for production.” Preparation likely includes acidizing, perfing, fracking, or similar procedures.• Reaching Total Depth on a Dry Hole- If no hydrocarbons are found, some Texas cases state that reaching total depth may be all that is required for the well to be completed. Texas case law is not clear if the well is a dry hole if it is actually capable of producing, just not economically.• Abandoning a Dry Hole- Several appeals courts have held that abandonment of a dry hole constitutes completion. Whether plugging, desertion, or desertion with intent to desert a dry hole is the operative event for abandonment is still an open question under Texas case law.Operators and others attempting to determine when the well is completed may refer to the following decision tree to aid their analysis.Conrad HesterThompson & Knight LLP