October Eagle Ford Natural Gas Production Fell 2% in a Month

The EIA (US Energy Information Administration) released its Drilling Productivity Report on November 9, 2015. The EIA estimates that natural gas production at the Eagle Ford Shale was 6.83 Bcf (billion cubic feet) per day in October. That’s ~2% below September’s production level but 2.5% higher than production a year previously. The production fall in October represents the fifth monthly decline in a row.

According to the EIA, the Eagle Ford Shale’s natural gas production rose by 315% over the past eight years. In October 2015, the region produced 6.83 Bcf per day compared to 1.64 Bcf per day in October 2007.

The EIA estimates that the Eagle Ford Shale’s crude oil production amounted to ~1.42 MMbpd (million barrels per day) in October. This is 4% lower than September’s production total. Compared to a year ago, crude oil production was 7% lower in this region.

Shale oil production at the Eagle Ford Shale rose from ~52,500 bpd (barrels per day) in October 2007 to ~1.42 MMbpd in October 2015. That’s a huge 26-fold rise in eight years.

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 Company (MTDR), and Pioneer Natural Resources (PXD). Pioneer Natural Resources forms 3.5% 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).

The number of rigs working at the Eagle Ford fell from 99 in September to 90 in October 2015. One year previously, there were 268 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 36% of all Eagle Ford rigs in October 2011. As of November 9, 2015, they accounted for 15%.

The EIA calculates that the average Eagle Ford shale rig added production of 2.2 MMcf (million cubic feet) in October 2015—a 103% rise since October 2007. Since October 2014, the region’s production addition per rig rose by 29%. Higher production per rig benefits natural gas producers.

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