Does the EIA Expect Natural Gas Production to Drop in April?

The EIA (U.S. Energy Information Administration) released its Drilling Productivity Report on March 7, 2016. The EIA expects less natural gas production at six key US shales by April 2016 compared to February 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 February 2016 compared to January 2016. By April 2016, aggregate natural gas production at the seven key shales is expected to fall 1.5% compared to production in February 2016. The EIA estimates that natural gas production will fall by 0.6% in March 2016 compared to February 2016.

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 1.4% in April 2016. The Utica Shale accounted for ~8% of 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 ~1% from February 2016 to April 2016. The Eagle Ford Shale is the second-largest natural gas–producing shale among the seven key shales. It could see a 5% production fall by April 2016, the most significant fall in natural gas production among these shales.

Reduced natural gas production will negatively affect the revenues and incomes of oilfield equipment and services companies such as Baker Hughes (BHI), Weatherford International (WFT), Halliburton (HAL), and Precision Drilling (PDS). Baker Hughes accounts for 2.1% of the Energy Select Sector SPDR ETF (XLE).