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Why April’s Utica Shale Natural Gas Production Rose 53% in a Year

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Utica Shale natural gas production

According to the EIA (U.S. Energy Information Administration), the Utica Shale in eastern Ohio has become one of the fastest-growing natural gas–producing regions in the United States.

In its Drilling Productivity Report released on May 16, 2016, the EIA estimated that the Utica Shale’s natural gas production reached 3.7 Bcf (billion cubic feet) per day in April 2016. That’s 0.5% more than production in March 2016 and 53% more than production in April 2015. In the past eight years, natural gas production at the Utica Shale has risen more than ~21x.

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Rigs and monthly additions from the average rig

According to Baker Hughes (BHI), the Utica Shale currently has 11 active rigs, unchanged from March 2016. In comparison, 26 rigs were in operation in the shale in April 2015.

From April 2008 to April 2016, additional natural gas production per rig at the Utica Shale rose from ~0.21 MMcf (million cubic feet) per day to 7.0 MMcf per day, or by ~32x. In the 12 months ending April 2016, the natural gas production addition per rig rose 34%.

Utica Shale energy operators

Steady Utica Shale production can positively affect oilfield equipment and services providers such as RPC (RES), Superior Energy Services (SPN), and Precision Drilling (PDS) and contract drillers such as Patterson-UTI Energy (PTEN) and Helmerich & Payne (HP).

These companies could continue to improve revenues and profits from operating in the Utica Shale if drilling activity rises. RES accounts for 3.8% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES).

In the next part of this series, we’ll look at production at the Haynesville Shale.

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