Utica to Defy Odds and Increase Natural Gas Production by August

Natural gas production by August

The EIA (U.S. Energy Information Administration) released its Drilling Productivity Report on July 13, 2015. The EIA expects less natural gas production at six key shales by August compared to June. It expects production to increase only at the Utica Shale.

Aggregate natural gas production in the key shales has already waned in June over May. Aggregate natural gas production by August at the seven key shales is expected to drop 1.0% compared to production in June.

The EIA is also projecting that crude oil production by the seven key shales will drop 3.1% over the same time frame. Read the previous part to know more on crude oil production.

Utica to Defy Odds and Increase Natural Gas Production by August

Utica to gain, Bakken to lose

The Utica Shale is expected to increase gas production 2.2% in the next two months. At the Marcellus shale, the biggest natural gas–producing shale in the United States, August production is expected to drop marginally from the June level.

The Eagle Ford Shale, the second-largest natural gas producer of the seven unconventional shales, may see production fall 3.2%, the most significant decrease in natural gas production among the shales.

The Bakken shale is expected to witness a 3.0% drop in the next two months. The Bakken, however, has a much smaller gas production base than the Marcellus or Eagle Ford shales.

How this will affect producers

Companies like EQT Corporation (EQT) may keep production steady, which will keep Marcellus shale production nearly unchanged in the next two months. Reduced Eagle Ford Shale production could be led by producers such as Encana (ECA). This would be negative for Eagle Ford producers.

Reduced Niobrara natural gas production could be led in this region by producers such as Bonanza Creek Energy (BCEI). On the other hand, companies like Chesapeake Energy (CHK) may drive greater Utica production, which will be beneficial for them.

EQT accounts for 0.82% of the Energy Select Sector SPDR Fund (XLE).