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Was Marcellus Shale’s Natural Gas Production Steady in August?

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Sep. 14 2016, Updated 4:04 p.m. ET

Marcellus Shale natural gas production

In its Drilling Productivity Report on September 12, 2016, the EIA (US Energy Information Administration) estimated that the Marcellus Shale’s natural gas production totaled ~17.8 Bcf (billion cubic feet) per day in August 2016. That’s a marginal ~0.2% decline from the production level in July 2016 but ~6% higher than production in August 2015. Month-over-month, August 2016 represented the sixth consecutive decline in natural gas production.

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 August 2008 to ~17.8 Bcf per day in August 2016.

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Rigs and monthly additions from the average rig

The number of active rigs in the Marcellus Shale remained unchanged at 24 in August 2016 as compared to July. In August 2015, there were 55 drilling rigs in the region.

The EIA calculates that the average Marcellus Shale rig added production of ~11.4 million cubic feet of natural gas per day in August 2016, a rise of 19% as compared to August 2015. In the past eight years, the gain amounts to ~16x.

What does this mean for oilfield services companies?

Higher production and drilling productivity in Marcellus over the past years have benefited oilfield equipment and services providers like Weatherford International (WFT), National Oilwell Varco (NOV), Superior Energy Services (SPN), and FMC Technologies (FTI).

Notably, 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.

Now let’s look at drilling efficiency at the Eagle Ford Shale.

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