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Which US Shales Are Expected to See Crude Oil Production Drop?

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Key US shale crude oil production

The EIA (U.S. Energy Information Administration) expects crude oil production to slow down at most of the key US shales. According to its Drilling Productivity Report released on February 8, 2016, the EIA expects crude oil production to fall at five key shales by March 2016. However, it forecasts a rise at two other shales.

Overall, crude oil production at the seven key shales is expected to fall 3.3% by March 2016 compared to January 2016 levels. The aggregate crude oil production at the key shales already fell 2.1% in January 2016 compared to December 2015.

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Bakken Shale and Eagle Ford Shale may lose, Permian Basin may hold steady

The Bakken is one of the major crude oil resource shales. It’s expected to see crude oil production fall between January 2016 and March 2016. The EIA estimates that it will produce 1.1 MMbpd (million barrels per day) of crude oil in March 2016. It produced 1.1 MMbpd in January 2016. Production is expected to fall 3.8% by March 2016.

The Eagle Ford Shale, the second highest crude oil–producing shale, is expected to see production fall 7.2% in the next two months. This is the largest production fall among key shales. The Permian Basin is the largest and has been one of the most prolific crude oil–producing shales in the United States. It’s expected to increase production by a marginal 0.3% by March 2016.

What’s the impact on oilfield services companies?

Changes in production and rig count in key US shales will affect the performance of oilfield services companies such as Schlumberger (SLB), Halliburton (HAL) and Dril-Quip (DRQ) as well as rig operators such as Helmerich & Payne (HP). Helmerich & Payne makes up 0.03% of the SPDR S&P 500 ETF (SPY).

See the next part of this series for the EIA’s projections for natural gas production in the key resource shales.

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