uploads///Eagle Ford

Eagle Ford Oil and Gas Production Fell Again in September


Oct. 15 2015, Updated 3:14 p.m. ET

Eagle Ford natural gas production

The EIA (U.S. Energy Information Administration) released its Drilling Productivity Report on October 13, 2015. The EIA estimates that natural gas production at the Eagle Ford Shale was 7.0 Bcf (billion cubic feet) per day in September. That’s ~2% below August’s production level but 6% higher than production a year ago. Month-over-month, the September production fall was the fourth in a row.

According to the EIA, the Eagle Ford Shale’s natural gas production rose 323% in the past eight years. In September 2015, the region produced 7.0 Bcf per day compared to 1.7 Bcf per day in September 2007.

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Eagle Ford crude oil production

The EIA estimates that the Eagle Ford Shale’s crude oil production amounted to ~1.49 MMbpd (million barrels per day) in September. This is 3.7% lower than August’s production total. A year ago, crude oil production was the same in this region.

Shale oil production at the Eagle Ford Shale rose from ~54,000 bpd (barrels per day) in September 2007 to ~1.49 MMbpd in September 2015. That’s a huge 27-fold rise in eight years.

What it means for energy companies

Major oil and gas producers in the Eagle Ford Shale in South Texas could see lower revenue led by lower production. Eagle Ford producers include EOG Resources (EOG), BP (BP), Matador Resources (MTDR), and Pioneer Natural Resources (PXD). Pioneer Natural Resources forms 3.3% of the Energy Select Sector SPDR ETF (XLE). EOG Resources accounts for 0.3% of the SPDR S&P 500 ETF (SPY).

Lower Eagle Ford production can also negatively affect midstream MLPs operating in the region such as Enterprise Products Partners (EPD), Energy Transfer Partners (ETP), and Williams Partners (WPZ).

Rigs and monthly additions from one average rig

The number of rigs working at the Eagle Ford fell from 108 in August to 99 in September. A year ago, there were 257 drilling rigs in the region. That said, there’s been a shift away from natural gas–directed rigs to liquids-directed rigs in the Eagle Ford over the last few years. Natural gas rigs accounted for 40% of all Eagle Ford rigs in September 2011. Now they’re at 15%.

The EIA calculates that the average Eagle Ford shale rig added production of 2.2 MMcf (million cubic feet) in September 2015, a 98% rise since September 2007. In the 12 months to September 2015, the production addition per rig rose 30%. Higher production per rig benefits natural gas producers.

In the next part of this series, we’ll look at production at the Utica Shale.


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