Natural gas production is described in terms of cubic feet. almost like the convention for oil, the term Mmcf means 1 million cubic feet of gas. Bcf means 1 billion cubic feet and Tcf represents 1 trillion cubic feet.
For this reason, investors frequently consider an Mcf of gas as being roughly like one MBtu.
During this calculation, one BOE has the energy equivalent of 6,040 cubic feet. Gas or roughly one bbl to 6 Mcf.
E&P companies report their oil and gas reserves—the quantity of oil and gas they own that’s still within the ground—in an equivalent bbl and mcf terms. Reserves are often wont to value E&P companies and make predictions for his or her revenue and earnings. However, since the worth of reserves isn’t a GAAP figure, it’d not be reflected during a company’s financial statements.
Of course, new reserves are an important source of future revenue, so E&P companies spend tons of your time and money exploring for brand spanking new untapped reservoirs. If an E&P company stops exploring, it’ll have only a finite amount of reserves and a depleting quantity of oil and gas. Revenue will inevitably decline over time. In short, E&P companies can only maintain or grow revenue by acquiring or finding new reserves.
Drilling and repair Companies
E&P companies don’t usually own their own drilling equipment or employ a drill rig staff. Instead, they hire contract drilling companies to drill wells for them and therefore the contract drilling companies generally charge for his or her services supported the quantity of your time they work for an E&P company. Drillers don’t generate revenue that’s tied on to oil and gas production, as is that the case for E&P companies. Rig count and utilization rates are indicators of the quantity of activity happening within us at any given time.
