Oil & Gas Exploration & Production
Also known as the "upstream" sector, these companies focus on finding hydrocarbon reservoirs, acquiring drilling rights, and extracting crude oil and natural gas from the ground.
Why it exists
E&P companies exist to discover, develop, and produce oil and natural gas from underground reservoirs.
Why it’s necessary
They supply the raw energy inputs that power transportation, industry, power generation, and petrochemicals.
Key components
Acreage & mineral rights
Geological modeling and seismic
Drilling & completions
Production operations and field management
How to evaluate businesses
Focus on reserve quality, decline rates, breakeven costs, free cash flow at different price decks, and capital discipline. Inventory depth and replacement ratios determine long-term survival. Hedging strategy and leverage are critical.
How the industry could be improved
Outcome-based capital allocation, AI-driven reservoir management, reduced routine flaring, better water recycling, and tighter reinvestment thresholds tied to free cash flow rather than pure production growth.