Energy and natural resources
Barrel of oil equivalent (boe)
A unit that converts gas into barrels of oil by energy content, so oil and gas can be added together.
Facts checked against sources onWhat does Barrel of oil equivalent (boe) mean?
A barrel of oil equivalent lets an oil and gas company add its oil and gas output into one number. By the usual convention, about 6,000 cubic feet of natural gas (roughly 170 cubic metres) contains about the same energy as one barrel of oil. Example: a company producing 60,000 barrels of oil and 240 million cubic feet of gas a day produces 60,000 + 40,000 = 100,000 boe a day. Costs are then quoted per boe. The conversion is by energy, not value: gas is often worth less per unit of energy than oil, so two companies with the same boe can earn very different revenue.
Where does it come up in case interview prep?
- Cost leadership or differentiation: what must be trueLesson in Why some businesses win: competitive advantage and the economics of strategy
- How oil and gas works: from the well to the fuel pumpLesson in Oil and gas
- Oil and gas players, trends 2024 to 2026, and how to crack the casesLesson in Oil and gas
Related terms
- Lifting costThe cost of producing oil or gas from wells that already exist, per barrel.
- NetbackWhat a producer keeps per barrel after transport, royalties and production costs.
- LNG (liquefied natural gas)Natural gas cooled into a liquid so it can be shipped across oceans.
- Full-cycle breakevenThe oil price a project needs to cover all its costs, including building it, and earn its required return.
- Fiscal breakeven oil priceThe oil price a government needs to balance its budget.
- Crack spread (refining margin)The gap between the price of crude oil and the prices of the fuels made from it.
- Decline rateHow fast production from existing oil and gas wells falls each year without new investment.
- National oil company (NOC)An oil and gas company owned or controlled by a government.
Learn it in context
See Barrel of oil equivalent (boe) at work in a lesson from Why some businesses win: competitive advantage and the economics of strategy, with checks as you go.
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