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Was Marcellus Shale Natural Gas Production Steady in June?

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Jul. 20 2016, Published 12:00 p.m. ET

Marcellus Shale natural gas production

In its Drilling Productivity Report on July 18, 2016, the EIA (U.S. Energy Information Administration) estimated that the Marcellus Shale’s natural gas production totaled ~18 Bcf (billion cubic feet) per day in June 2016. That’s a marginal ~0.1% lower than May 2016 production but 11% higher than production in June 2015.

Month-over-month, June 2016 represented the fourth consecutive natural gas production decline.

Over a longer period, natural gas production growth at the Marcellus Shale has been outstanding. Natural gas production rose from 1.4 Bcf per day in June 2008 to ~18 Bcf per day in June 2016.

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Rigs and monthly additions from the average rig

The number of active rigs in the Marcellus Shale declined by two to 24 in June 2016 compared to May. In June 2015, there were 66 drilling rigs in the region.

The EIA calculates that the average Marcellus Shale rig added production of ~11.1 million cubic feet of natural gas per day in June 2016. That’s a 35% rise compared to June 2015. In the past eight years, the gain amounts to ~17x.

What does this mean for oilfield services companies?

The lower Marcellus Shale rig count in the past year has hurt oilfield services and equipment providers such as Weatherford International (WFT), National Oilwell Varco (NOV), Superior Energy Services (SPN), and FMC Technologies (FTI).

However, higher production and drilling productivity have benefited oilfield services and equipment companies. NOV makes up 1.4% of the WisdomTree Dividend ex-Financials ETF (DTN), which tracks an index of high-dividend-yielding US companies outside the financial sector.

In the next part of this series, we’ll look at drilling efficiency at the Eagle Ford Shale.

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