Drilling Performance Contract: An Evolution in the Partnership Between Operator

Performance contracts are increasingly common in the drilling industry, especially in recent years. This incentivized contract structure, established as a partnership between operator and contractor, improves
both well performance and operational execution while incorporating the rig contractor as an additional stakeholder in the operational performance of the well. Many performance contract styles exist, with one
common goal: if targets are met, all parties involved benefit.
An increasingly common performance contract type is a tier-structure KPI (Key Performance Indicator) format. In this format, metrics in the form of KPIs are determined, and goal ranges are set in a tiered
system. Prior research and data collection, requiring effort from multiple departments, is needed to determine achievable and stretch metrics. After the goals are agreed upon, field personnel, experienced rig
leadership, and comprehensive technology support are determined, forming a foundation for success.