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Which Shales Were the Key Rig Gainers in the September 18 Week?



Crude oil shale rig movements

For the week ending September 18, among the key shales, the Williston lost three crude oil rigs last week. Among the key rig gainers, the Permian Shale added two crude oil rigs, while the Utica Shale added one last week. Eight more crude oil rigs were idled in the rest of the US basins last week.

The Williston Basin lost 130, or 66%, 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 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 revenue for midstream MLPs like Targa Resources (NGLS) and Plains All American Pipeline (PAA) that operate there. Pioneer Natural Resources accounts for 0.10% of the SPDR S&P 500 ETF (SPY).

Natural gas shale rigs

Among the major resource shales, the Marcellus and Eagle Ford shales lost two natural gas rigs each in the week ending September 18. The Permian Shale added one natural gas rig last week. Five more natural gas rigs came online in the rest of the shales combined last week.

In the 12 months ending September 18, 2015, the Haynesville Shale and the Marcellus Shale’s natural gas rig counts fell the most. During this period, the number of natural gas rigs in the Haynesville Shale and the Marcellus Shale fell by 36% and 39%, respectively. The falling Marcellus rig count would mean that natural gas producers like EOG Resources (EOG) and EQT (EQT) are slowing down operations in these shales. Lower production could affect these producers negatively. EQT accounts for 0.87% of the Energy Select Sector SPDR ETF (XLE).

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In the past year, the Eagle Ford and the Cana Woodford shales added seven natural gas rigs each. This is the most compared to the other shale plays in the US. Higher Eagle Ford production could be positive for midstream MLPs like Enterprise Products Partners (EPD), Energy Transfer Partners (ETP), and Williams Partners (WPZ). They 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 the US oil production growth and 100% of the natural gas production growth from 2011 to 2013.

Next, we’ll discuss the Permian Basin rigs and why they’re important in the US oil and gas industry.


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