Next Release Date: December 2008
Brief Description of Financial Terms
For additional information, see the Glossary of the Form EIA-28 instructions.
Additions to Investment in Place: See Capital Expenditure. Capital Expenditure: Also referred to as Additions to Investment in Place. Funds (including cash) used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment. Additions to property, plant and equipment as well as year’s additions to investments and advances to unconsolidated affiliates are investment.
Cash Flow From Operations: The amount of cash a company generates from operations, defined as net income after taxes plus depreciation and other noncash expenses.
Development Expenditures: Costs of developmental wells, facilities and support equipment used to access and prepare oil and gas deposits for production.
Exploration Expenditures: Costs of locating oil and gas deposits, including the costs of retaining and carrying undeveloped property, geological and geophysical costs, and the costs of drilling and equipping exploratory wells.
Finding Costs: The per-barrel costs of adding oil or gas proved reserves.
Gross Refining Margin: The difference between the revenue from the sale of petroleum products (e.g., motor gasoline) and the cost of the raw materials (e.g., crude oil) used to produce the products.
Lifting (Production) Costs: See Production Costs.
Lines of Business: The FRS lines of business consist of petroleum, downstream natural gas (including NGL processing and natural gas pipelines), electric power, nonenergy, and other energy (including coal, nuclear, renewable fuels, and nonconventional fuels). The petroleum line of business is further segmented into production (including oil and natural gas exploration, development, and production), refining/marketing, crude and petroleum product pipelines (for domestic petroleum), and international marine transport (for foreign petroleum).
Net Income: A company's total earnings, or profit. Net income is calculated by taking revenues less the cost of doing business, depreciation, interest, taxes and other expenses. This number is an important measure of how profitable the company is over a period of time. See the dictionary on Investopedia.com for additional information. Investopedia.com can be found at http://www.investopedia.com (as of October 31, 2007).
Net Investment In Place: The sum of long-term assets of the company after adjusting for the age of the assets.
Net Refining Margin: The difference between the gross refining margin and the costs of producing and selling the petroleum products (e.g., refining energy costs and selling costs).
Production (Lifting) Costs: The per-barrel costs associated with the extraction of a mineral reserve from a producing property.
Production Expenditures: The costs of extracting oil and gas from oil and gas deposits.
Profitability: Both of these measures are used to get a balanced look at how a company or an industry is performing in terms of earnings relative to investments. They are also usually compared to other companies within the same industry, or when measuring an industry, to other similar industries. Two of the major measures of profitability are:
- Return on Equity (ROE): Net income divided by shareholders’ equity. ROE measures performance (i.e, net income) relative to the value of stockholders' equity (retained earnings plus other equity) in the company.
- Return on Investment (ROI): Net income divided by net investment in place. ROI measures performance relative to the value of investments by the company in property, plant and equipment (PP&E) (long-term capital assets) that are used to engage in its revenue producing operations. ROI can be used to measure the performance of an individual project or business segment within a company. In this report, net investment in place also includes investments and advances to unconsolidated affiliates.
Regions: The FRS regions consist of U.S. Onshore, U.S. Offshore, Canada, Europe, Former Soviet Union, Africa, Middle East, Other Eastern Hemisphere (primarily Asia Pacific), and Other Western Hemisphere (primarily South America).
Reserve Additions: The amount of oil and gas reserves added in a year.
Reserve Replacement Ratio: The amount of oil and gas reserves added in a year divided by the amount of oil and gas produced during that same year.
Reserves-to-Production Ratio: The number of years that oil and gas reserves would last at the current production rate.
Unusual Items: Accounting changes, asset dispositions and write-downs, tax adjustments, and related items that affect net income but are not part of normal operations.
PDF format, 1,536 KB