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Large Rig Count Movers in Oil and Gas: Eagle Ford and Utica

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Crude oil shale rig movements

Among the key shale movements in the week ended November 6, the Eagle Ford shale lost three crude oil rigs. Meanwhile, the Permian Basin added four crude oil rigs, and the DJ-Niobrara Shale added one crude oil rig in the week ended November 6. Eight more crude oil rigs were idled in the rest of the US basins during the week ended November 6.

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A closer look

As of November 6, the Williston Basin has lost 128, or 67%, of its crude oil rigs over the past year. The Williston Basin includes the Bakken Shale, one of the most prolific crude oil shale plays in the United States. The Eagle Ford Shale in South Texas lost 136 rigs, or 69%, over the same period.

The Lower Bakken and Eagle Ford rig counts could lower crude oil production. Crude oil producers operating in these key US shales, including Matador Resources (MTDR) and Pioneer Natural Resources (PXD), could drive this fall.

Falling production in these regions could also lower the revenues of midstream MLPs that operate there, including Targa Resources (NGLS) and Plains All American Pipeline (PAA).

Natural gas shale rigs

Among the large rig count movers, the Utica Shale saw two natural gas rig decreases during the week ended November 6. One natural gas rig each was idled in the Permian Basin and DJ-Niobrara Shales during the same week. Six natural gas rig came online in the rest of the shales combined during the same one-week period.

In the 12 months ending November 6, 2015, the DJ-Niobrara Shale and the Marcellus Shale natural gas rig counts fell more than any other. During this period, the number of natural gas rigs in the Marcellus Shale fell by 48%. The Marcellus Shale produces 36% of the aggregate key shale natural gas production.

The falling Marcellus Shale rig count would mean natural gas producers like EOG Resources (EOG) and EQT Corporation (EQT) are slowing their operations in this area. Falling production could affect these producers negatively. EQT accounts for 0.7% of the Vanguard Energy ETF (VDE).

In the past year, Eagle Ford shale saw only two natural gas rig reductions. Steady Eagle Ford production is good for midstream MLPs like Enterprise Products Partners (EPD), Energy Transfer Partners (ETP), and Williams Partners (WPZ), which all operate in the region.

Key US shales

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

In the next part of this series, we’ll discuss the Permian Basin’s rigs and their importance in the US oil and gas industry.

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