Cost estimation and control is a crucial activity for well engineering and construction. Inaddition to the technical preparation before drilling an oil well, well construction cost is one ofthe essential activities leading to AFE (authorization for expenditure). Recently theprobabilistic method for cost estimate became necessary for understanding the risk anduncertainty of a certain cost range instead of a single (deterministic) value. This work describesthe main types of drilling contracts

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... been used in Basra oilfields and discusses theprinciples of well construction cost estimate according to those contracts. In addition, itsummarize the relevant cost breakdown for drilling operations. The research also illuminatesthe probabilistic method for effective well cost estimating along with deterministic method. thestudy subdivided the process of well construction into segments for cost tracking, emphasizedthe main aspects influence the well cost and leading to a methodology that can be applied bythe operator for onshore well in the south of Iraqi fields. The methodology used in this workincludes, first, analyzing data from offset wells to facilitate the possible cost out comes, andsecond, subdivide the well construction activities into fixed costs, time dependent and depthdependent costs. A probabilistic model (Monte Carlo simulation) for cost estimating isconstructed using @ Risk software. The results released for risked drilling operation, whichincludes the NPT. While revising the historical cost performances in Zubair field, it has foundthat the best practices and lesson learned of the previous activities has significantly contributedin time and cost reduction of well operation. The findings of this work contributes to improvethe decision-making by managers for best investment, enhance the planning for next activitiesand confident choice of well budget. It also helps to investigate the critical factors and actions that can be applied on operational and contractual parameters to achieve cost reduction. A casestudy from Zubair field will be presented in order to illuminate the mentioned points.