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EIA Projections for December 2015: Key US Shale Crude Oil Production

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Key US shales crude oil production

The EIA (US Energy Information Administration) expects crude oil production to slow down at most of the key US shales by December. According to its Drilling Productivity Report released on November 9, 2015, the EIA expects crude oil production to fall at five key shales by December. However, it forecasts a rise at two other key shales.

Overall, aggregate crude oil production at the seven key shales is expected to drop by 4.1% by December compared to October levels. It’s expected to fall by 2.3% in November. Aggregate crude oil production at these key shales already fell in October compared to September.

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Bakken and Eagle Ford versus Permian

The Bakken Shale is one of the major crude oil resource shales. It’s expected to see crude oil production fall between October and December 2015. The EIA estimates that the Bakken Shale will produce 1.11 MMbpd (million barrels per day) of crude oil in December. It produced 1.16 MMbpd in October. The expected fall is 4.3% by December.

Niobrara Shale crude oil production, one of the smaller crude oil-producing regions, is expected to fall by 10.5% during November and December. This is the highest percentage fall among these key shales. According to the EIA, the Eagle Ford Shale is expected to witness a 10.3% fall in crude oil production over the same two months.

On the other hand, the Permian Basin, the most prolific crude oil-producing shales in the United States, is expected to increase production by 1.4% by December. The Utica Shale, a much smaller shale oil producing region, is expected to see a 3.2% crude oil production growth.

How it will affect producers

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

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 4.8% of the VanEck Vectors Oil Services ETF (OIH).

Continue to the next and final part of this series for more on the EIA’s projections for December.

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