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 the society of petroleum engineers provides conversion tables that help illustrate unit equivalencies and some of the factors that affect comparison and conversion 
understanding barrels of oil equivalent per day boe d large oil producers are evaluated and refer to their production by the number of cubic feet of natural gas and or by the barrels of oil equivalent they produce per 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 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 another important measure of a company is the 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 if this isn t evaluated correctly a company can be unfairly impacted with higher borrowing costs 