Which US Shale Is Expected to See Natural Gas Production Rise?



Key US shale natural gas production

The EIA (U.S. Energy Information Administration) released its Drilling Productivity Report on February 8, 2016. The EIA expects less natural gas production at five key US shales by March 2016 compared to January 2016. It expects production to rise at one key shale during the same period.

Aggregate natural gas production at the key shales already fell in January 2016 compared to December 2015. By March 2016, aggregate natural gas production at the seven key shales is expected to fall 1.7% compared to production in January 2016. The EIA estimates that natural gas production will fall by 0.6% in February 2016 compared to January 2016.

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Utica Shale to surge, Eagle Ford Shale to drop sharply

Among the key shales, only the Utica Shale is expected to see a rise in natural gas production in the next two months. Its production is expected to grow by 2.3% in March 2016. The Utica Shale accounted for ~7% of the US shale aggregate natural gas production in December 2015.

At the Marcellus Shale, the biggest natural gas–producing shale in the United States, production is expected to fall by 2.1% from January 2016 to March 2016. The Eagle Ford Shale is the second-largest natural gas–producing shale among the seven key shales. It could see production fall 4.3%, the most significant fall in natural gas production among these shales.

How this will affect oilfield services companies

Reduced natural gas production will negatively affect revenues and income for oilfield equipment and services companies like Baker Hughes (BHI), Weatherford International (WFT), Halliburton (HAL), and Precision Drilling Corporation (PDS). Baker Hughes accounts for 0.23% of the iShares S&P 500 Value ETF (IVE).


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