What does MMcfe stand for? More importantly, what does it mean?

I've been looking at financial reports of some shale companies, and am trying to figure out how the reserves add up. I know that when we extract resources, we get a bunch of different hydrocarbons, as well as water, salt and so on. I understand BOE means barrel of oil equivalent, and MMcfe refers to the gas, but is this measured in dollars? Or potential energy?


  • Hi Brian, you touch on a few interesting topics here, and it takes an expert (not me) to really put values on different estimates of reserves. First though, here's a run through of the meaning of MMcfe and a few similar terms:

    1. Mcfe Thousands of cubic feet of gas equivalent
    2. MMcfe Millions of cubic feet of gas equivalent
    3. Bcfe Billions of cubic feet of gas equivalent
    4. Tcfe Trillions of cubic feet of gas equivalent

    Barrel of oil equivalent (BOE) of gas gets calculated by using the conversion rate of one barrel of oil (1 bbl) to six thousand cubic feet (6 Mcf) of natural gas.

    Mcfe, MMcfe, Bcfe and Tcfe figures used to calculate estimated or proven reserves are often misleading, especially without looking at the whole picture. For example, one oilfield might have a nearby gas pipeline and capture all of the gas from a well. Another oilfield might flare it all because it's not economically viable to process it. Two companies might have the same number of BOE reserves on their balance sheets but one will be in a far better position than the other.

    In relation to your question about dollars or Btu's, a conversion ratio of 1 bbl to 6 Mcf is based on the energy equivalent and definitely not on the financial value. Even comparing BOE's is temperamental because one barrel can mean crude oil, condensate or natural gas liquids. These also have different financial values.

    Lastly, reserves are all estimated by Geologists and test holes, no-one knows exactly how much hydrocarbon might actually be recoverable from each well or field.

    Disclaimer: I've learned these concepts by reading articles and comments from much smarter people than I... You won't see me anywhere near a financial report!

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