what is a barrel of oil equivalent boe 
a barrel of oil equivalent boe is a term used to summarize the amount of energy that is equivalent to the amount of energy found in a barrel of crude oil by encompassing different types of energy resources into one figure analysts investors and management can assess the total amount of energy the firm can access this is also known as crude oil equivalent coe many oil companies produce both oil and gas among other petroleum products but the unit of measure for each is different oil is measured in barrels and natural gas is measured in billions of cubic feet bcfe to help facilitate like for like comparisons the industry standardized natural gas production into equivalent barrels of oil one barrel of oil is generally deemed to have the same amount of energy content as 6 000 cubic feet of natural gas so this quantity of natural gas is equivalent to one barrel of oil boe can be compared with natural gas equivalent which translates the energy in an amount of oil or other energy product into that of gas understanding a barrel of oil equivalent boe the boe is frequently used when exploration and production companies are reporting the total amount of reserves they have oil and natural gas are formed through the same geological processes therefore the two energy commodities are often found together many energy companies have a mixed reserve base and they need a way to communicate the total energy content of their reserves in a manner that is easily understood they can accomplish this by converting all of their reserves to boe an energy company s primary asset is the amount of energy it owns so an energy company bases its financial decisions and planning on its reserve base for investors a company s reserves are important in assessing the value of the company and determining whether or not the company is a good investment both investors and companies want to see a company s total energy resource increase over time representing reserves in boe facilitates the comparison of total energy assets over time and against other similar energy companies it would be more complicated to compare a company s energy assets over time and against other companies if natural gas and oil were presented separately calculating barrel of oil equivalentsconverting assets to boe is fairly simple in terms of volume oil is represented per barrel and natural gas is represented per thousand cubic feet mcf there are 42 gallons approximately 159 liters in one barrel of oil the energy contained in a barrel of oil is approximately 5 8 million british thermal units mbtus or 1 700 kilowatt hours kwh of energy this is an approximate measure because different grades of oil have slightly different energy equivalents one mcf of natural gas contains approximately one sixth of the energy of a barrel of oil therefore 6 000 cubic feet of natural gas 6 mcf have the energy equivalent of one barrel of oil for large quantities of energy boe can be represented at kilo barrels of oil equivalent kboe which is 1 000 boe the society of petroleum engineers provides conversion tables that help illustrate unit equivalencies and some of the factors that affect comparison and conversion barrel of oil equivalents and productionboe also comes up when communicating daily energy production and consumption this is expressed in barrels of oil equivalent per day boe d barrels of oil equivalent per day is a term that is used often in conjunction with the production or distribution of crude oil and natural gas 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 that equity and bond analysts use to evaluate the performance of an oil company first is 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 