Article - http://marketrealist.com/2016/01/december-haynesville-shale-natural...

The EIA (U.S. Energy Information Administration) estimates that the Haynesville Shale produced 6.2 Bcf (billion cubic feet) per day of natural gas in December 2015. This is according to its Drilling Productivity Report released on January 11, 2016.

The Haynesville Shale’s natural gas production in December 2015 was 0.2% lower than production in November 2015. Month-over-month, Haynesville natural gas production fell on seven occasions in 2015. On a YoY (year-over-year) basis, December production was 0.4% lower. The Haynesville Shale is located in Louisiana, Southwestern Arkansas, and Eastern Texas.

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According to the EIA, natural gas production at the Haynesville Shale has risen 55% in the past eight years. In December 2015, the region produced ~6.2 Bcf per day of natural gas compared to ~4.0 Bcf per day in December 2007.

Haynesville rigs and production per rig

The number of active rigs at the Haynesville Shale was 33 in December 2015, unchanged from November 2015. A year ago, there were 50 drilling rigs in the region. It’s important to note that most of the Haynesville rigs are horizontal in trajectory.

From December 2007 to December 2015, additional natural gas production per rig at the Haynesville Shale rose from ~1.1 MMcf (million cubic feet) per day to ~5.3 MMcf per day. In the 12 months to December 2015, the natural gas production per rig rose 18%.

What this means for OFS companies

Strong Haynesville Shale drilling and production activity helps oilfield equipment and service (or OFS) providers earn strong revenues. It also helps maintain a steady margin for the OFS companies. Higher production will benefit OFS companies like Core Laboratories, RPC, Weatherford International, and Cameron International. WFT makes up 2.4% of the SPDR S&P Oil & Gas Equipment & Services ETF.

Have production adjustments started in US shales?

Crude oil and natural gas production at key US shales has risen in the past few years. However, aggregate crude oil production in these shales fell 5.4% in the past year until December 2015. Aggregate natural gas production fell 2.6% in the past year. The EIA’s projections suggest that production could fall more or stagnate at many of these shales within the next two months.

In the next two parts of this series, we’ll review the EIA’s crude oil and natural gas production forecasts for the major US shales.