LEARN
What are Capital Expenditures (CapEx) and Operating Expenditures (OpEx)?
Definition
Capital Expenditures (CapEx) generally relate to spending used to acquire, develop, construct, or make significant improvements to oil and gas assets. In upstream operations, CapEx may include drilling and completing wells, developing properties, installing production equipment, or making major improvements to existing assets. Operating Expenditures (OpEx) generally relate to costs associated with operating and maintaining producing properties, such as field operations, labor, chemicals, utilities, maintenance, and repairs. Whether a cost is classified as CapEx or OpEx depends on the nature of the activity and the accounting policies applied by the organization.
Practical questions
- How much spending relates to ongoing operations versus capital activity?
- Which projects are driving capital spending?
- Which wells have the highest operating costs?
- Is an unusual cost related to routine operations or a larger project?
- Which wells are receiving the most capital?