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Why November Eagle Ford Natural Gas Production Fell 19% in a Year



Eagle Ford natural gas production

The EIA (U.S. Energy Information Administration) released its Drilling Productivity Report on December 12, 2016. The EIA estimates that natural gas production at the Eagle Ford Shale was ~5.8 Bcf (billion cubic feet) per day in November 2016. That’s 2.9% lower than the October 2016 production level and ~19.0% lower than production in November 2015.

Eagle Ford’s natural gas production has fallen 11 times in the past 12 months. However, according to the EIA, natural gas production there has risen 242.0% in the last eight years.

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Eagle Ford’s crude oil production

Crude oil production at the Eagle Ford Shale rose from 58,395 bpd (barrels per day) in November 2008 to ~1.0 MMbpd (million barrels per day) in November 2016. It’s risen a huge 17.0x in eight years.

Rigs and monthly additions from the average rig

The number of rigs working at the Eagle Ford Shale rose to 39 in November 2016 compared to 35 in October 2016. In November 2015, there were 83 drilling rigs in the region.

The EIA calculates that the average Eagle Ford Shale rig added natural gas production of ~3.7 MMcf (million cubic feet) per day in November 2016, a 234.0% rise since November 2008. In the 12 months to November 2016, the production addition per rig rose 12.0%. Higher production per rig benefits natural gas producers.

What it means for energy companies

Lower Eagle Ford production in the past year negatively affected oilfield services companies’ revenues and profits. These companies include National Oilwell Varco (NOV), Fairmount Santrol Holdings (FMSA), Baker Hughes (BHI), Patterson-UTI Energy (PTEN), and Helmerich & Payne (HP). Oilfield services companies can stand to benefit if drilling productivity in the Eagle Ford Shale stays strong.

Helmerich & Payne forms 1.9% of the iShares Select Dividend (DVY). You can read about Baker Hughes’s latest deal in Market Realist’s Baker Hughes Makes Another Deal: An OFS Newco Explained.

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


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