How Far Could US Shale Oil Production Drop?



Key US shale crude oil production

Overall, crude oil production at the seven key shales is expected to fall 4.2% between July and September 2016. The aggregate crude oil production at the key shales fell by 2.6% between June and July 2016.

Article continues below advertisement

September estimates

The Bakken is one of the major crude oil resource shales. The EIA estimates that it will produce ~0.94 MMbpd (million barrels per day) of crude oil in September 2016. It produced ~1.0 MMbpd in July 2016. Therefore, production is expected to fall 5.7% by September 2016.

The Eagle Ford Shale, the second highest crude oil–producing shale, is expected to see production fall by ~10% in the next two months. This is the steepest production decline 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. Its production is expected to hold relatively steady, decreasing by 0.2% by September 2016.

What’s the impact on oilfield service companies?

A fall in crude oil production and rig count in key US shales could negatively affect the performance of oilfield service companies such as McDermott International (MDR), CARBO Ceramics (CRR), and Precision Drilling (PDS), as well as rig operators such as Patterson-UTI Energy (PTEN). Patterson-UTI Energy makes up 0.19% of the SPDR S&P MidCap 400 ETF (MDY). See the next part of this series for the EIA’s projections for natural gas production in the key resource shales.


More From Market Realist