The theoretical paper presents development and verification of dimensionless groups describing a novel "smart" well completion with downhole water loop (DWL) that stimulates wells affected by water coning. A well producing from an oil reservoir with bottomwater coning is completed at the top of oil for oil inflow and lifting, below the oil/water contact (OWC) for water drainage and deeper in the same aquifer for water injection. The two lower completions are hydraulically isolated from the top completion and work as a "water loop" by draining the water to control OWC deformation (water cone) and injecting the drained water into the same aquifer. To date, computer simulations and field trials have shown that the wells with bottomwater drainage would produce more oil, and sooner, by removing water invasion to the oil-producing completion. However, addition of the water injection component makes the well's completion more complex and controlled by a multitude of well system parameters and reservoir and fluid properties. Therefore, dimensionless analysis is needed to simplify the system's description using only few dimensionless groups. The study employs the inspectional analysis (IA) method to confirm known and define new dimensionless groups specific for DWL wells. Then, the resulting cluster of dimensionless groups has been reduced by verifying the groups for redundancy and interdependence. Further reduction of the number of groups-from 14 to seven-has been accomplished by testing sensitivity of the recovery factor to the groups. Of the final seven, four dimensionless groups uniquely describe the DWL system.