Lease Operating Expenses (LOE) incurred by the top 50 Oil and Gas companies in the US Top 50 hit 5 billion US dollars in 2012. This was a 15% YoY increased compared to 2011. (Source: E&Y 2013)
Lease Operating Expenses (LOE) are different from leasehold costs. The latter includes expenses in connection with leasing the property from a landowner including lease bonus, delay rentals, travel expenses, legal fees, G&G expense and seismic work to name a few. Lease Operating Expenses on the other hand includes the allocations for operating and maintaining productive leases that include the cost of labor for operating and maintaining the equipment on lease, repairs and supplies, utilities, automobile and truck expenses, taxes, insurance and overhead expenses such as bookkeeping, billing costs, and correspondence.
To keep the LOE in check, one should be able to analyze the LOE trends for different locations. This will help identify locations that need extra attention. There could be cases where combining two leases may help reduce the LOE drastically.
Visual BI’s LOE KPI Dashboards for Oil and Gas Executives helps managers and executives drive informed decision-making.