Boe (barrels of oil equivalent)

The basic unit used to measure oil and gas production is barrels of oil equivalent (boe). It is often necessary to use millions or billions of barrels of oil equivalent (mboe or bboe) when discussing oil reserves. Production volumes are measured in boed (barrels of oil equivalent a day) or mboed (millions of barrels of oil equivalent a day).

A boe is the amount of energy contained in a barrel of crude oil. Approximately 6,000 cubic feet of natural gas is considered equivalent to one barrel of oil, but the exact rate varies depending on the type of gas.

This measure is used to quantify the output of an oil company in way that:

• allows output of oil (measured in barrels) and gas (measured by its volume) to be added together to form one figure
• measures production volumes rather than values.

Investors do also have another single figure that measures output of both oil and gas: the value of production. As this is dependent on the volatile prices of both commodities it does not tell us much the actual level of production.