Yahoo Finance Why Bakken Crude Oil Production Fell 10% Year-over-Year in April
Estimates for Key Shales: Will Crude Oil Production Fall in June?
Bakken crude oil production
On May 16, 2016, the EIA (U.S. Energy Information Administration) released its Drilling Productivity Report. It estimated that the Bakken Shale produced 1.1 MMbpd (million barrels per day) of crude oil in April 2016. That’s 2.1% less than the March 2016 production level and 10.3% less than the April 2015 production level.
The Bakken Shale’s crude oil production fell for nine months in a row.
Shale oil production at the Bakken rose from 160,000 bpd (barrels per day) in April 2008 to ~1.1 MMbpd in April 2016. This represented a 575% rise in eight years.
However, as crude oil prices remain volatile, oil producers will have less incentive to increase production. Crude oil production may even fall. We’re seeing this with production at the Bakken Shale.
Rigs and monthly additions from the average rig
The number of rigs working at the Bakken Shale fell from 32 in March 2016 to 27 in April 2016. A year ago, there were 86 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 799 bpd in April 2016, a 42% rise compared to April 2015. Since March 2008, the additional production per rig has risen 4.0x.
What does this mean for oilfield services companies?
Oilfield services and equipment companies lose revenue if drilling activity falls. The lower Bakken rig count and lower production are negative for companies such as Schlumberger (SLB), Baker Hughes (BHI), Weatherford International (WFT), and Halliburton (HAL). BHI accounts for 1.2% of the ProShares Ultra Oil & Gas ETF (DIG).
In the next part of this series, we’ll look at crude oil and natural gas production at the Niobrara Shale.
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