What is upstream and downstream in oil industry?
The terms upstream and downstream oil and gas production refer to an oil or gas company’s location in the supply chain. Upstream oil and gas production is conducted by companies who identify, extract, or produce raw materials. Downstream oil and gas production companies are closer to the end user or consumer.
What is the sequence of upstream oil and gas value chain?
The oil and gas value chain starts with discovering fields and ends with providing products to end consumers. The different stages are exploration, production, storage and shipping, refining and marketing.
What is value chain in oil and gas industry?
The Oil and Gas value chain represents the sequence of activities that occur from the supply sources to trading mechanisms, by which oil, oil products, and gas, are sold in the wholesale markets.
What is upstream in oil and gas industry?
Upstream refers to points in production that originate early on in the processes. Also called exploration and production (E&P), upstream is farthest from the end-user consumer in the oil & gas supply chain. Upstream activities include exploration, drilling, and extraction.
How do you value oil companies?
Oil and gas analysts often use price compared to cash flow per share or P/CF as a multiple. Cash flow is simply harder to manipulate than book value and P/E ratio. The calculation is simple. Take the price per share of the company that is trading and divide it by the cash flow per share.
What is upstream value chain?
The upstream part of your value chain includes all of the materials, people and environmental factors that contribute to your product and service. Businesses commonly focus on three areas to improve the sustainability of their upstream value chain: sustainable procurement, traceability and product design.
What is downstream value chain?
Your downstream value chain is generally classified as what happens once a product or service has left your door. There are risks and opportunities at any stage of a product’s or service’s life cycle. For issues that arise downstream, the solutions often need to be enacted upstream.
What is the oil and gas industry called?
The petroleum industry, also known as the oil industry or the oil patch, includes the global processes of exploration, extraction, refining, transporting (often by oil tankers and pipelines), and marketing of petroleum products. The largest volume products of the industry are fuel oil and gasoline (petrol).
How do you value an upstream company?
Reserve Reports and Reserve Valuation: The value of an E&P company may be estimated by calculating the fair value of its reserves and then aggregating this with the value of other net assets on its balance sheet, assuming those net assets have been assigned market value.
How do you value oil reserves?
The oldest and truest rule of thumb in the oil industry is that oil reserves in the ground are worth one-third the current market value. This method, in my opinion, is one that is after the fact. By that I mean that after Fair Market Value is determined then the price per barrel of in ground reserves can be calculated.
What is upstream and downstream in oil and gas industry?
Related Terms. Upstream is a term for the exploration and production stages in the oil and gas industry. It is the first stage in oil or gas production, followed by the midstream and downstream segments. Downstream operations are functions regarding oil and gas that happen after the production phase, through to the point of sale.
What are the upstream and downstream value chain activities?
Downstream value chain activities consist of production, marketing, distribution (outbound logistics) and after sales service. In oil and gas industry, upstream activities include exploration, drilling and producing oil and gas; downstream activities include refining, processing, marketing and distribution.
What are the components of the oil and gas industry value chain?
The oil and gas industry is divided into three components or sectors: the upstream, midstream, and downstream. Note that these three sectors also correspond to the three major categories of activities of the oil and gas industry value chain. Furthermore, these three represent the chronology of critical oil and gas activities. 1.
What is the downstream sector?
The downstream sector includes all activities revolving around the refining of crude oil and the processing and purification of natural gas, as well as the selling and distribution of final oil and gas products such as jet fuel, gasoline, diesel, kerosene, and liquefied natural gas, among others.