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607

Barrel of oil equivalent BOE

A barrel of oil equivalent (BOE) is a standard fuel used to compare fuels.

Barrel of oil equivalent BOE

Barrel of oil equivalent (BOE) - a measure used to aggregate oil and gas resources or production, with 1 BOE ≈ 6,000 cubic feet of natural gas.

Barrels of oil equivalent or BOE is a measure of energy; it's almost always used to discuss primary energy.

It compares any amount of energy to how much energy is contained in a single barrel of oil.
The volume of a barrel of oil is quite specific and equal to about 35 imperial gallons (42 US gallons, about 159 liters).

A barrel of oil is also significantly heavy.
Since average domestic crude oil weighs about 7.21 pounds per gallon, a barrel of oil weighs around 300 pounds or about 136 kilograms.
The amount of energy that this amount equates to is dependent on the energy density of oil, and ends up making 1 BOE equal to 5.7 MTUs or 1.7 MWh.
A barrel of oil is a lot of energy, so it is typically used when exploration and production companies are reporting the amount of reserves they may have.


By giving a BOE figure, analysts, investors and management can assess the total amount of energy the firm has access to, providing an equivalent unit for different amounts of primary energy for natural gas, coal or even uranium.

BOE is a measure of hydrocarbon volume (typically used for natural gas) in terms of the barrels of crude oil that would have the same energy content.
There is no single standard conversion factor for BOE.

Barrels of oil equivalent per day (BOE/D) is a term that is used often in conjunction with the production or distribution of crude oil and natural gas.
Many oil companies produce both of these commodities, but the unit of measure for each is different.
Oil is measured in barrels and natural gas is measured in cubic feet.
To help facilitate like-for-like comparisons, the industry standardized natural gas production into BOE.

When measuring a company's natural gas production output, management often wants to know how many equivalent barrels of oil they are producing.
This makes it easier to compare themselves to other industry participants. 

Barrels Of Oil Equivalent Per Day (BOE/D)
Large oil producers are evaluated and refer to their production by the number of cubic feet/ day of natural gas, and/or by the BOE/day.
This is an industry standard and a way that investors can compare the production and/or the reserves of two oil/gas companies.

​BOE/D is important to the financial community because it is used as a way to help determine the value of a company.
There are several different metrics equity and bond analysts use to evaluate the performance of an oil company:
  • a company's total production, which is calculated on a total equivalent barrel basis. This helps to determine the scale of the business. Companies that produce little oil and a lot of natural gas could be unfairly evaluated if equivalent barrels were not counted.
  • size of its reserves. Equivalent barrels play an important role here too because excluding natural gas reserves can unfairly impact the size of a company. When banks are determining the size of a loan to extend, it is important to consider the total size of the company's reserve base. Converting natural gas reserves to equivalent barrels is an easy to understand like-for-like metric that helps to determine the amount of debt a company has relative to its reserve base.