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Why October Bakken Crude Oil Production Fell 21% Year-over-Year

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Bakken crude oil production

Shale oil production in the Bakken rose from 217,300 bpd (barrels per day) in October 2008 to ~0.95 MMbpd in October 2016. This represents a 338% rise in eight years.

However, as crude oil prices remain volatile, oil producers will have less incentive to increase production. We’re seeing this with the Bakken production.

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Rigs and monthly additions from the average rig

The number of rigs working at the Bakken Shale increased to 31 in October 2016 compared to 28 a month ago. A year ago, there were 63 drilling rigs in the region. Most of these rigs are horizontal in trajectory or type.

The EIA calculates that the average Bakken rig added production of 905 bpd in October 2016, a 32% rise since October 2015. Since October 2008, the additional production per rig has risen 3.9x.

What’s this mean for oilfield services companies?

Oilfield service and equipment companies lose revenue if drilling activity falls. The lower Bakken rig count and production in the past year are negative for companies such as CARBO Ceramics (CRR), Baker Hughes (BHI), Weatherford International (WFT), and Helix Energy Solutions (HLX). BHI accounts for 0.27% of the iShares S&P 500 Value ETF (IVE).

Please read Market Realist’s GE to Partner with BHI? The Changing Oilfield Services Landscape to learn about BHI’s recent partnership proposal with GE (GE).

In the next part of this series, we’ll look at the crude oil and natural gas production at the Niobrara Shale.

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