Horizontal Well

What Is a Horizontal Well?

A horizontal well is an oil or gas well whose wellbore starts out vertical, like a conventional well, then bends until the lower section runs nearly parallel to the ground. That horizontal section stays inside a target rock layer, so a long stretch of the wellbore is in contact with hydrocarbon-bearing rock. Horizontal wells are most closely associated with shale oil and shale gas development, where the producing rock has low natural permeability.

How It Works

Drillers use directional drilling techniques to steer the drill bit. The vertical section is drilled first, followed by a gradual bend and then the horizontal section. Operators typically line the well with steel casing and cement it in place, then create openings in the casing along the horizontal section. Hydraulic fracturing is performed in stages along that length, cracking the surrounding rock so oil and gas can flow into the well. A longer exposed section can contact more of the reservoir than a vertical well drilled through the same layer.

Advantages and Drawbacks

• Greater reservoir contact per well
• Fewer surface sites needed to develop a given area
• Higher drilling and completion costs per well
• Greater technical complexity and operational risk

Why It Matters to Investors

For investors in oil and gas producers, horizontal drilling has changed how companies add production. Because each well can drain more rock, a single well may produce more than a vertical well, but it also costs more to drill and complete. Analysts often look at the breakeven price needed for a well to be profitable and track capital expenditure to see how much spending goes into drilling. Results vary by basin, rock quality, and commodity prices, so per-well figures are usually read alongside company-level reporting.