• 3 minutes UAE says four vessels subjected to 'sabotage' near Fujairah port
  • 6 minutes Why is Strait of Hormuz the World's Most Important Oil Artery
  • 8 minutes OPEC is no longer an Apex Predator
  • 12 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 2 hours Australian Voters Reject 'Climate Change' Politicians
  • 6 hours Australia Election Summary: "This was the Climate Change Cult Election, and the Climate Change Cult Lost"
  • 10 hours Canada's Uncivil Oil War : 78% of Voters Cite *Energy* as the Top Issue
  • 1 hour Shale to be profitable in 2019!!!
  • 28 mins Global Warming Making The Rich Richer
  • 14 hours China Downplays Chances For Trade Talks While U.S. Plays ‘Little Tricks’
  • 14 hours California Threatens Ban on ICE Cars
  • 14 hours IMO2020 To scrub or not to scrub
  • 14 hours Did Saudi Arabia pull a "Jussie Smollett" and fake an attack on themselves to justify indiscriminate bombing on Yemen city population ?
  • 15 hours "We cannot be relying on fossil fuels to burn as an energy source at all in our country" - Canadian NDP Political Leader
  • 10 hours Some Good News on Climate Change Maybe
  • 6 hours Misunderstanding between USA and Iran the cause of current stand off, I call BS
  • 6 hours DUG Rockies: Plenty Of Promise, Despite The Politics
  • 3 hours Shell ‘to have commercial wind farms’ by early 2020s

The One Number Every Oil and Gas Investor Needs

I talked a little last week about the “recycle ratio”.

This is a tool every oil and gas investor needs to understand. Without exaggeration, if you used only this one number to analyze stocks (and used it correctly—more on that in a moment) you’ll beat the market. Simple as that.

The recycle ratio is a deceptively simple, but incredibly powerful tool for uncovering quality companies in the E&P space. It cuts through the reams of data we get today on corporate performance - elegantly combining reserves reporting and financial results into one, easy-to-understand number.

This figure shows just how much value your stock is creating when it comes to drilling and developing. It’s far superior to many of the other measures analysts use:

•    Dollars of market capitalization per flowing barrel – Doesn’t take into account that all flowing barrels are different. A barrel that flows for three years is worth a lot less than one that pumps for ten.

•    Finding, development and acquisition (FD&A) costs – Great for showing a company’s performance on the micro level (i.e., per barrel) but doesn’t give any indication of the scale at which this is being achieved.

•    Reserves growth – Growing reserves is great, but it’s critical to know how much it costs. Anyone can grow reserves if they spend enough money drilling…




Oilprice - The No. 1 Source for Oil & Energy News