The oil and gas industry is one of the largest sectors in the world in terms of dollar value, generating an estimated $3.3 trillion in revenue annually. Oil is crucial to the global economic framework, especially for its largest producers: the United States, Saudi Arabia, Russia, Canada and China
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The oil & gas industry is broken down into three segments: upstream, midstream, and downstream. Upstream, or exploration and production (E&P) companies, find reservoirs and drill oil and gas wells. Midstream companies are responsible for transportation from the wells to refineries and downstream companies are responsible for refining and the sale of the finished products. Drilling companies contract their services to E&P companies to extract oil and gas. Well-servicing companies conduct related construction and maintenance activities on well sites.
Investors looking to enter the oil and gas industry can quickly be overwhelmed by the complex jargon and unique metrics used throughout the sector. This introduction is designed to help anyone understand the fundamentals of companies involved in the oil and gas sector by explaining key concepts and the standards of measurement.