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Haynesville Shale Natural Gas Production Was Up Again in November

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Haynesville Shale natural gas production

The EIA (U.S. Energy Information Administration) estimates that the Haynesville Shale produced 6.3 Bcf (billion cubic feet) per day of natural gas in November 2015. This is according to the EIA’s Drilling Productivity Report released on December 7, 2015.

The Haynesville Shale’s natural gas production in November was 0.4% higher than its production in October. This marked the second rise in Haynesville’s natural gas production after production fell for four months. However, on a YoY (year-over-year) basis, it was 1.2% lower.

The Haynesville Shale is located in Louisiana, southwestern Arkansas, and eastern Texas.

According to the EIA, natural gas production at the Haynesville Shale rose 60% in the past eight years. In November 2015, the region produced ~6.3 Bcf per day of natural gas compared to ~3.9 Bcf per day in November 2007.

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Haynesville rigs and monthly additions from one average rig

The number of active rigs at the Haynesville Shale was 33 in November 2015, up from 29 in October. A year ago, there were 49 drilling rigs in the region. It’s important to note that most of the Haynesville rigs are horizontal in trajectory.

From November 2007 to November 2015, additional natural gas production per rig at the Haynesville Shale rose from ~1.1 MMcf (million cubic feet) per day to ~5.5 MMcf per day, or by 3.8x. In the 12 months leading up to November 2015, the natural gas production addition per rig rose 23%.

What this means for OFS companies

Strong Haynesville Shale drilling and production activities help oilfield service (or OFS) and equipment service providers earn strong revenues. This activity also helps to maintain steady margins for OFS companies.

Higher energy production will benefit OFS companies such as Core Laboratories (CLB), RPC (RES), Weatherford International (WFT), and Dresser-Rand Group (DRC). WFT forms 4.4% of the VanEck Vectors Oil Services ETF (OIH).

Have production adjustments started in US shales?

Crude oil and natural gas production at key US shales rose in the past few years. However, aggregate crude oil production in these shales fell in the past eight months. Aggregate natural gas production followed suit in the past four months. The EIA’s projections suggest that production could fall more or stagnate at many of these shales within the next two months.

In the next two parts of this series, we’ll review the EIA’s crude oil and natural gas production forecasts for the major US shales.

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