Legal Definitions - intangible drilling cost

Intangible drilling cost is an expense that is necessary for drilling and completing an oil or gas well. These costs have no salvage value and can be deducted in the year they are incurred instead of being capitalized and depreciated.

Examples of intangible drilling costs include:

• Labor costs for drilling and completion
• Fuel costs for drilling equipment
• Chemicals used in the drilling process
• Permitting and legal fees

These costs are considered intangible because they do not have a physical asset that can be sold or salvaged. Instead, they are necessary expenses for the drilling process and are deducted from the company's taxable income.