Finding costs methodology - alternative approaches

Though the context may vary, the topic of the day in the oil and gas industry is ''finding costs per barrel.'' First, there have been numerous articles in both the popular media and the industry press that have argued it is cheaper for companies to buy reserves that find them with the drill bit. Financial analysts have emphasized the importance of comparing relative finding costs when evaluating different companies. The success of failure of a company's management has been judged on the basis of finding costs. In discussing oil and gas prices, economists commonly refer to the relationship between the market prices of oil and gas and their finding costs, and no discussion of the U.S. petroleum industry and the development of a national energy policy is complete without reference to finding costs. (Author)