- Price Per Flowing Barrel
A metric used to determine the value of a oil and gas company. Price per flowing barrel is calculated as:
(Market Cap + Debt - Cash) / Production Barrels Per Day
For example, an oil company with a market capitalization of $20 billion, debt of $500 million and $100 million in cash that produces 600,000 BPD will have a price per flowing barrel of $34,000.
Price per flowing barrel does not take into account the potential production from undeveloped fields. To get a better picture of an oil companies financial health, investors should also determine the cost of developing new fields.
As a comparative metric, price per flowing barrel is typically more useful when comparing similar types of oil from similar types of fields.
Investment dictionary. Academic. 2012.
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