What are operating netbacks?
Also known as production netback, operating netback refers to the oil and gas revenues realized per boe (barrel of oil equivalent) after the costs to bring one barrel of oil equivalent to the market are subtracted from the realized price.
Operating netback is derived by subtracting field operating expenses (or production expenses), production taxes, and transportation expenses from realized price including hedging benefit.
Encana’s operating netbacks
In 4Q16, Encana (ECA) reported operating netback of ~$12.24 per boe (barrel of oil equivalent), which is ~82% higher than in 4Q15.
Among the other S&P 500 (SPY) upstream companies, Marathon Oil (MRO), Pioneer Natural Resources (PXD), and Murphy Oil (MUR) have operating netbacks of $17.23 per boe, $29.76 per boe, and $23.76 per boe respectively.