What Is the Upstream Capital Costs Index (UCCI)?

The Upstream Capital Costs Index (UCCI) is a proprietary metric index that tracks the composite capital cost of materials, facilities, equipment, and personnel for oil and natural gas producing projects. Cambridge Energy Research Associates (CERA), formerly owned by IHS Markit, merged with S&P Global in February 2022, which owns and manages the index.

Understanding the Upstream Capital Costs Index (UCCI)

S&P Global's Upstream Capital Costs Index (UCCI) offers a concise benchmarking tool for analysts, traders, and others interested in the oil and gas industry. Use of the index is helpful in tracking and forecasting the performance of the underlying oil and gas properties. 

The UCCI is only one of a family of indexes published by S&P Global, a global data, analytics, technology, and advisory firm. The company’s indexes include: 

• Upstream Operating Costs Index (UOCI), which tracks the changing costs for oil and gas field operations
• Downstream Capital Costs Index (DCCI), which tracks capital expenses for the construction of petroleum projects
• North American Cost Index (NACI), which investigates the cost of producing oil and natural gas in North America
• Upstream Innovation Index (UII), which tracks the cost of efficiency and design changes on a portfolio of projects

Components of the UCCI

The 28 projects included in the UCCI represent a diversified portfolio of liquified natural gas (LNG), pipeline, onshore, and offshore projects in a range of geographic locations. The index looks at the changes to operating and capital costs over specific time frames.

Generally, oil and gas production separates into the upstream, midstream, and downstream stages. The upstream segment of operations involves exploration and production (E&P) of oil and natural gas. Many large integrated oil companies combine upstream activities with midstream and downstream operations.

The composite cost of capital is a company's cost to finance its business and projects. The determination of this amount is known as the weighted average cost of capital (WACC). The calculation involves multiplying the cost of each of the individual capital components by its proportional weight and then summing the results. A high composite cost of capital indicates that a company has high borrowing costs.

History of the UCCI

Cambridge Energy Research Associates (CERA), established in 1983 in Cambridge, Massachusetts, focuses on energy research and consulting for the energy industry. The company has the distinction of being a leading authority on energy markets and related trends and statistics.

CERA serves as an advisory source for government departments and private companies. IHS Energy, a prominent source of information related to the oil and gas industry, acquired CERA in 2004. In 2009, the joint organization adopted the new blended name of IHS CERA, Inc. IHS CERA merged with S&P Global in February 2022.

The Bottom Line

The Upstream Capital Costs Index (UCCI) measures the capital costs for businesses that extract oil and natural gas. It is part of a larger family of indexes published by S&P Global to evaluate the costs for companies in those industries.