Recycle Ratio

AAA

DEFINITION of 'Recycle Ratio'

An important measure of the profitability of an energy company. The higher the recycle ratio, the greater the profitability of the company.


The recycle ratio equals the profit per barrel divided by the total cost of discovering and extracting that barrel (more commonly known as the netback divided by the finding and development costs).

INVESTOPEDIA EXPLAINS 'Recycle Ratio'

The recycle ratio can often be found in the quarterly report of a company, and it can be used in advertising if the ratio is good enough. However, this ratio can be computed somewhat differently by different firms, depending on their accounting practices. Therefore it may not always provide an exact measure of profitability.

RELATED TERMS
  1. Oil Field

    A tract of land used for extracting petroleum, or crude oil, ...
  2. Oil Reserves

    An estimate of the amount of crude oil located in a particular ...
  3. Oil Sands

    Sand and rock material which contains crude bitumen (a heavy, ...
  4. Sweet Crude

    A type of oil that meets certain content requirements, including ...
  5. Netback

    A summary of all the costs associated with bringing one unit ...
  6. Sour Crude

    The name given to barrels of crude oil that do not meet certain ...
Related Articles
  1. Investing Basics

    Oil: A Big Investment With Big Tax Breaks

    Oil and gas investments can provide unmatched deduction potential for accredited investors.
  2. Active Trading

    Oil And Gas Industry Primer

    Before jumping into this hot sector, learn how these companies make their money.
  3. Mutual Funds & ETFs

    Investing In Oil And Gas UITs

    Unit investment trusts provide direct exposure to the energy sector, fueling better returns.
  4. Fundamental Analysis

    Accounting For Differences In Oil And Gas Accounting

    How a company accounts for its expenses affects how its net income and cash flow numbers are reported.
  5. Options & Futures

    An Introduction To Canadian Income Trusts

    Yields in excess of 10% aren't rare, but these unique investments need to be chosen very carefully.
  6. Fundamental Analysis

    What is the difference between operating cash flow and net income?

    Learn how net income is an income statement for a certain period of time, while cash flow shows inflows and outflows based on conversion of sales into cash.
  7. Economics

    How has fracking helped the U.S. to decrease dependence on foreign oil?

    Learn about the drilling technique referred to as fracking, and discover how this technology has significantly reduced U.S. dependence on foreign oil.
  8. Fundamental Analysis

    How do I calculate dividend payout ratio from a balance sheet?

    Understand what the dividend payout ratio indicates and learn how it can be calculated using the figures from a company's balance sheet statement.
  9. Credit & Loans

    When is it necessary to get a letter of credit?

    Capitalize on assets and negate risks by using a letter of credit. Letters of credit are often requested for buying, selling or trading.
  10. Fundamental Analysis

    Can entities other than banks issue letters of credit?

    Obtaining a letter of credit from a non-bank is legally acceptable according to the ICC, but companies tend to prefer to receive them from banks.

You May Also Like

Hot Definitions
  1. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  2. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  3. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  4. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  5. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  6. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
Trading Center