Eagle Ford Drilling Slows in 3Q17: Impacts on Buckeye Partners
Eagle Ford drilling activity
Drilling activity in the Eagle Ford region has slowed down in the third quarter of 2017 compared to a strong recovery during the first half of the year. That could be attributed to the weakness in crude oil and natural gas prices during the quarter. According to the recent rigs reports by Baker Hughes, the rig count in the region has fallen to 73 compared to 84 at the end of the second quarter. The fall is due to the decline in the crude oil rig count, while the natural gas rig count has remained stable over the period.
Interested in BPL? Don't miss the next report.
Receive e-mail alerts for new research on BPL
However, drilling activity in the third quarter through September 1, 2017, is still quite high compared to the same period last year. The average rig count during this period is 77 compared to 35 during the same period last year.
Drilling activity in the Eagle Ford region has been impacted by Hurricane Harvey. The situation is expected to improve in the coming weeks with the post-storm ramping up of production.
How this impacts Buckeye Partners
Buckeye Partners’ (BPL) Domestic Pipelines & Terminals has exposure to the Eagle Ford region. The recent decline in Eagle Ford activity would most likely not impact BPL’s Eagle Ford crude oil throughput volumes. However, a further decline in the rig count might impact its throughput volumes at its Domestic Pipelines & Terminals segment, resulting in lower earnings. NuStar Energy (NS), Kinder Morgan (KMI), and Plains All American Pipeline (PAA) are among the midstream companies that have high exposure to the Eagle Ford region.