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Key US Shales to Witness Lower Crude Oil Production by November

Alex Chamberlin - Author

Oct. 16 2015, Updated 9:07 a.m. ET

Key US shales crude oil production

The EIA (U.S. Energy Information Administration) expects crude oil production to slow down at most of the key US shales by November. According to its Drilling Productivity Report released on October 13, 2015, the EIA expects crude oil production to fall at five key shales in October. However, it forecasts a rise at two other shales.

Overall, aggregate crude oil production at the seven key shales is expected to drop 3.2% in November compared to September levels. It’s expected to fall 1.5% in October.

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Bakken and Eagle Ford may lose, Permian may gain

The Bakken is one of the major crude oil resource shales. It’s expected to see crude oil production fall between September and November. The EIA estimates that it will produce 1.15 MMbpd (million barrels per day) of crude oil in November. It produced 1.2 MMbpd in September. The expected fall is 3.7% by November.

Niobrara Shale crude oil production, one of the smaller crude oil producing regions, is expected to fall 9.3% in the next two months. This is the highest percentage fall among these key shales. According to the EIA, the Eagle Ford Shale is expected to witness an 8.8% fall in crude oil production over the next two months.

The Permian Basin is the most prolific crude oil producing shales in the United States. It’s expected to increase production by 2.1% by November.

How it will affect producers

Companies such as EOG Resources (EOG), Concho Resources (CXO), and Matador Resources (MTDR) may drive higher production in the Permian Basin. This would be positive for these companies. Reduced Bakken oil production could be led by producers such as Continental Resources (CLR). This would be negative for these companies.

Changes in production and rig count in key US shales will affect the performance of OFS (oilfield service) companies as well. These companies include National Oilwell Varco (NOV) and Dril-Quip (DRQ), and rig operators such as Helmerich & Payne (HP). National Oilwell Varco is 4.4% of the VanEck Vectors Oil Services ETF (OIH).


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