Upstream businesses contain companies involved in the exploration and production of oil and gas. These are the firms that search the planet for reservoirs of the raw materials then drill to extract that material. These companies are often referred to as “E&P” for “exploration and production.”
High investment capital, extended duration. Because it takes time to locate and drill, also as being technologically intensive. Virtually all income and earnings report line items of E&P companies are directly associated with oil and gas production.
Midstream businesses are people. They’re those liable for moving the extracted raw materials. To refineries to process the oil and gas. And storing as well as the raw materials. Particularly on pipeline transmission, and low capital risk. Into the success of upstream firms.
Downstream businesses are the refineries. These are the businesses liable for removing impurities. And converting the oil and gas to products for the overall public, like gasoline, jet fuel, fuel oil, and asphalt.
Understanding boring Numbers
E&P companies measure boring in barrels. One barrel as well as usually abbreviated as bbl is adequate to 42 U.S. gallons. Companies often describe production in terms of bbl per day or bbl per quarter.
A common methodology within the oil patch is to use a prefix of “M” to point 1,000 and a prefix of “mm” to point 1 million. Therefore, 1,000 barrels are commonly denoted as Mbbl, and 1 million barrels are denoted as MMbbl. for instance, when an E&P company reports production as well as the hub of seven Mbbl per day, it means 7,000 barrels of oil per day.
Once a well is drilled, various activities are involved in generating. And maintaining its production over time. Servicing and may include logging, cementing, casing, perforating, fracturing, and maintenance. Oil drilling and oil servicing thus represent two different businesses. Activities within the oil and gas industry.