The definition of operating Netback’
Operating netback is a measure of realized oil and gas revenue net of compensation, production and transportation costs. This is a non-GAAP measure used specifically in the oil and gas industry as a benchmark for comparison of performance between time periods, operations and competitors.
Penetration ‘operating Netback’
A measure of operating netback is calculated usually on the basis of the oil or gas selling metric, such as per barrel in the case of oil. This is the amount of money the company receives per barrel after royalties, production costs and transportation costs are deducted. This is a specific industry standard.
Example operating Netback
For example, suppose that the canadian operations of the oil companies to sell oil to average $50 per barrel if royalties, production and transportation equal to$ 5, $15 and $8 respectively. Operating netback for the canadian operations is more than 22 dollars per barrel. The calculated operating netback can be compared to past results of a specific operation or implementation of a competing company in the same region.