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Eagle Ford among Key Rig Losers in Week Ended September 11

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Crude oil shale rig movements

For the week ended September 11, among the key shales, the Permian, the Williston, DJ-Niobrara, Eagle Ford, and Haynesville shales each lost one crude oil rig last week. Five more crude oil rigs were idled in the rest of the US basins last week.

The Williston Basin lost 123, or 63%, of its crude oil rigs in the past year. The Williston Basin includes the Bakken Shale, one of the most prolific crude oil shale plays in the US. The Eagle Ford Shale in South Texas lost 120 rigs, or 61%, over the same period.

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The lower Bakken and the Eagle Ford rig counts can lower crude oil production. This fall could be driven by upstream crude oil producers operating in these key US shales, including Denbury Resources (DNR) and Pioneer Natural Resources (PXD). Falling production in these regions could also lower the revenues for midstream MLPs like Targa Resources (NGLS) and Plains All American Pipeline (PAA), which operate here. PXD comprises 0.1% of the SPDR S&P 500 ETF (SPY).

Natural gas shale rigs

Among the major resource shales, the Permian and Eagle Ford Shales lost two natural gas rigs each in the week ended September 11. The rest of the shales combined lost two more natural gas rigs last week.

In the 12 months ending September 11, 2015, the Haynesville Shale and the Marcellus Shale natural gas rig counts decreased the most. During this period, the number of natural gas rigs in the Haynesville Shale and the Marcellus Shale fell by 35% and 38%, respectively. The falling Marcellus rig count would mean natural gas producers like EOG Resources (EOG) and EQT (EQT) are slowing down operations in these shales. Decreased production could affect these producers negatively. EQT accounts for 0.86% of the Energy Select Sector SPDR ETF (XLE).

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In the past year, the Eagle Ford Shale added seven natural gas rigs, the most of any shale play in the US. Higher Eagle Ford production could positively affect midstream MLPs like Enterprise Products Partners (EPD), Energy Transfer Partners (ETP), and Williams Partners (WPZ), which operate in this region.

Key US shales

According to the EIA (U.S. Energy Information Administration), the seven key shales—Bakken, Eagle Ford, Haynesville, Marcellus, DJ-Niobrara, Permian, and Utica—accounted for 95% of US oil production growth and 100% of natural gas production growth from 2011 to 2013.

Next, we’ll discuss the Permian Basin rigs and their importance in the US oil and gas industry.

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