Why February Eagle Ford Natural Gas Production Fell 9.1% in a Year



Eagle Ford natural gas production

The EIA (U.S. Energy Information Administration) released its Drilling Productivity Report on March 7, 2016. The EIA estimates that natural gas production at the Eagle Ford Shale was ~6.7 Bcf (billion cubic feet) per day in February 2016. That’s ~2% lower than January 2016’s production level and 9.1% lower than production in February 2015.

On a month-over-month basis, last month’s production fall was the sixth in a row. However, according to the EIA, the Eagle Ford Shale’s natural gas production has risen 305% in the last eight years. In February 2008, the region produced 1.6 Bcf per day.

Article continues below advertisement

Eagle Ford crude oil production

Shale oil production at the Eagle Ford Shale rose from ~54,000 bpd (barrels per day) in January 2008 to ~1.3 MMbpd (million barrels per day) in February 2016. That’s a huge ~23-fold rise in eight years.

Rigs and monthly additions from the average rig

The number of rigs working at the Eagle Ford Shale fell from 74 in January 2016 to 59 in February 2016. In February 2015, there were 192 drilling rigs in the region.

The EIA calculates that the average Eagle Ford Shale rig added production of ~2.7 MMcf (million cubic feet) per day in February 2016, a 127% rise since February 2008. In the 12 months leading up to February 2016, production addition per rig rose 41%. Higher production per rig benefits natural gas producers.

What it means for energy companies

The falling Eagle Ford rig count and production can negatively affect oilfield services companies’ revenues and profits. These companies include C&J Energy Services (CJES), FMC Technologies (FTI), Patterson-UTI Energy (PTEN), and Helmerich & Payne (HP).

Oilfield services companies may continue to lose revenues and profits if drilling activity in the Eagle Ford Shale falls. FMC Technologies forms 0.47% of Vanguard Energy ETF (VDE). VDE invests 15.8% of its holdings in oil and gas equipment and services companies.


More From Market Realist