The Comprehensive Guide to

Passive Income Investing


Learn the secrets of how Paul Tracy generates over $XXX,XXX per month in passive income!

How to Become Financially Independent Through Passive Income Investing

What is Barrel of Oil Equivalent (BOE)?

A barrel of oil equivalent (or BOE) is a unit measure of unused energy resources. Expressed frequently in the financial statements of energy companies, BOEs are defined by the U.S. Internal Revenue Service as 1,700 kilowatt hours or as 5.8×106 British Thermal Units (BTUs).

How Does Barrel of Oil Equivalent (BOE) Work?

Energy companies need some way of expressing their inventories of potential energy resources. Since there may be many resources capable of differing energy outputs, there needs to be one standard, universally-recognized unit of measure that can be used to express the value of energy resources.

To illustrate, consider Company XYZ with the following energy resource inventories:

  • Coal – 5,000 kilowatt hours
  • Crude Oil – 5,000 kilowatt hours
  • Propane – 7,000 kilowatt hours

Regardless of the energy resource, when added up, the total amount of kilowatt hours comes to 17,000. To express this in BOEs, please note the calculations below:

17,000 kilowatt hours / 1,700 kilowatt hours per BOE = 10 BOEs total available energy resources

Why Does Barrel of Oil Equivalent (BOE) Matter?

Energy companies need to report their energy inventories in their annual reports and financial statements. Since energy is produced from potential energy resources, companies express the energy in terms of available resources. The total amount is expressed in a standard unit based on how much energy can be produced regardless of the resource. This makes it easier to compare financial statements from different companies. Since barrels of oil are a universally-recognized and common source of consumer and industrial energy, it is often used to express energy inventories.

Ask an Expert about Barrel of Oil Equivalent (BOE)

All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Barrel of Oil Equivalent (BOE).

Be the first to ask a question

If you have a question about Barrel of Oil Equivalent (BOE), then please ask Paul.

Ask a question
Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.