Recycle Ratio

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).

BREAKING DOWN '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. Sweet Crude

    A type of oil that meets certain content requirements, including ...
  4. Oil Sands

    Sand and rock material which contains crude bitumen (a heavy, ...
  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. Chart Advisor

    Sector Headwinds Buffeting First Solar (FSLR, TAN)

    First Solar has entered a new downtrend after failing to break out above two-year resistance.
  7. Fundamental Analysis

    Alcoa vs. BHP Billiton: Which Is Better for My Portfolio?

    Obtain an up-to-date overview of BHP Billiton and Alcoa, Inc., two key players for investors seeking exposure to the aluminum market to consider.
  8. Options & Futures

    The Debt Report: The Energy Sector

    Discover how the energy sector bit off more debt than it could chew, and learn why the energy bond contagion has market analysts worried about the economy.
  9. Chart Advisor

    Oil Services Fund Still Hasn't Entered a New Uptrend

    Market Vectors Oil Services ETF needs to rally above 33 to end the two-year downtrend.
  10. Stock Analysis

    Kinder Morgan's 6 Most Profitable Lines of Business (KMI)

    Read about Kinder Morgan's 2015 profitability and the relative importance of each segment. This illuminates changes by comparing 2014 results.
RELATED FAQS
  1. What is a good debt ratio, and what is a bad debt ratio?

    Learn about the factors that influence how investors and lenders evaluate the debt ratio for a company and why the answer ... Read Answer >>
  2. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Answer >>
  3. Can working capital be depreciated?

    Learn the difference between expensing and depreciation for current and long-term assets, and how working capital can be ... Read Answer >>
  4. Do working capital funds expire?

    Find out how and why a company's working capital can change over time, though the fund does not actually expire, and how ... Read Answer >>
  5. How much working capital does a small business need?

    Learn about the three primary factors that determine how much working capital is needed by a small business, including business ... Read Answer >>
  6. What does high working capital say about a company's financial prospects?

    Learn about net working capital and what a high figure indicates about a company's financial prospects, including the importance ... Read Answer >>
Hot Definitions
  1. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  2. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  3. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  4. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  5. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  6. Economies Of Scale

    Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale arise because ...
Trading Center