Lease Operating Expense (LOE)
The recurring cost to keep a producing well running. LOE reduces working-interest net cash flow and is a key driver of a well's breakeven.
Lease operating expense, or LOE, is the day-to-day cost of keeping a producing well alive: pumping power, chemicals, saltwater disposal, equipment repairs, field labor, and routine maintenance. It is the recurring "lifting cost" an operator pays month after month, usually quoted in dollars per barrel of oil equivalent.
LOE falls on the working interest, not on a cost-free royalty interest — which is exactly why royalty owners prize their position. For a working interest owner, rising LOE eats directly into net cash flow, and on a marginal well climbing operating costs can push it underwater.
That makes LOE a central driver of a well's breakeven price. When commodity prices fall toward the level where revenue no longer covers LOE, operators shut wells in or plug them. A buyer evaluating any cost-bearing interest needs a realistic LOE figure before trusting a cash-flow projection.