Shale Oil Production in Bakken, Eagle Ford Little Changed in December: Platts Bentek

DENVER, Jan. 27, 2016 /PRNewswire/ -- Oil production from key shale formations in North Dakota and Texas dropped slightly in December versus November, according to Platts Bentek, an analytics and forecasting unit of Platts, a leading global provider of energy, petrochemicals, metals and agriculture information.

Oil production from the Eagle Ford shale basin in Texas was relatively unchanged in December, increasing about 11,000 barrels per day (b/d), or less than 1%, versus the previous month, the latest analysis showed. This marks the first time since March 2015 that the Eagle Ford shale did not decline. Conversely, crude oil production in the North Dakota section of the Bakken* shale formation of the Williston Basin dipped by less than 1% month over month in December, or about 9,000 b/d, continuing the trend of marginal decline that began in the summer.

The average oil production from the South Texas, Eagle Ford basin in December was 1.5 million barrels per day. On a year-over-year basis, that is down about 7%, or about 110,000 barrels per day, from December 2014, according to Sami Yahya, Platts Bentek energy analyst. The average crude oil production from the North Dakota section of the Bakken in November was 1.2 million b/d, about 6% lower than year ago levels.

"The small increase in crude production in the Eagle Ford shale is attributed to a slight resurgence in drilling activity in the region," said Yahya. "In December, the number of active rigs in the Eagle Ford reached 80, an increase of five rigs over the previous month. The brief rebound of active rigs is likely due to producers balancing their drilling programs and budgets for the fourth quarter and meeting their goals for wells drilled for the year."

Recapping the year-on-year production drop in the Eagle Ford shale, Yahya emphasized the importance of efficiency gains realized in 2015. Back in January of 2015, the Eagle Ford shale utilized over 200 rigs, while now, in January of 2016, the number of active rigs shrunk to under 70 rigs, a drop of over 65%. And yet, production did not meet a similar fate. Producers back in January of 2015 could drill less than two wells per rig per month, compared to nearly three wells per month currently.

"It is survival of the fittest: the best and most efficient rigs and crews remain standing on the field," Yahya noted. "The number of active rigs in the Bakken shale formation of the Williston Basin went from nearly 150 rigs in early 2015 to around 50 rigs currently. At the same time, producers were able to increase their drilling rates from about 1.5 wells per rig per month to about 2.2 wells per rig per month."

However, Yahya explained that going forward, crude production would need more than just efficiency gains to grow.

"Last year, optimization and hedging programs helped production stay largely afloat. But unless the pricing of the oil barrel improve, producers are in for a difficult year ahead. Based on latest Platts Bentek forecast data, both the Eagle Ford and the Bakken shales are expected to continue declining throughout most of the year. Certainly, the availability of wells in backlog inventory where drilling cost is already sunk would be a helpful factor in partially sustaining production volumes in both shales."

"If prices remain sub-$40/barrel and producers are unable to further bring down completion costs, then they might defer completions until the pricing market makes a comeback," said Yahya.

Platts Bentek analysis shows that from November 2014 to November 2015, total U.S. crude oil production has increased by about 265,000 b/d. 

In terms of the U.S. physical spot markets, Luciano Battistini, Platts managing editor of Americas crude, said, "Prices fell by the largest amount of the year in December 2015, falling upwards of 10% month on month for both Bakken and Eagle Ford. Eagle Ford prices fell below $37/b in December, the lowest point in 2015. Bakken shale oil fell to $30.04/b close to the wellhead."

The Platts Eagle Ford Marker, a daily price assessment launched in October 2012 and reflecting the value of oil out of the Eagle Ford Shale formation in South Texas, has dropped 18% between January and December 2015, with an average price of $52.01/b for the year. That is down 35% from year-ago levels. The marker ranged between $36.76/b and $66.23/b in 2015. 

The price of oil out of the Bakken formation at Williston, North Dakota, dropped 16% between January and December, with an average price of $45.24/b, according to the Platts Bakken  assessment. But when compared to the same month a year ago, the Platts Bakken price is down 35%. The wellhead assessment has ranged between $30.04/b and $59.32/b in 2015.

The Platts Bakken, introduced April 22, 2014, is a daily assessment of price for oil closest to the wellhead prior to determination of transportation by rail or pipe. The assessment reflects a sulfur content of 0.2% or less and an American Petroleum Institute (API)** gravity of 42 or less, similar to the nature of North Dakota Light Sweet crude. The  Platts Eagle Ford Marker reflects the value of a median 47-API Eagle Ford crude barrel, based on the crude's product yields and Platts product price assessments, adjusted for U.S. Gulf Coast logistics.

Platts introduced the world's first independent daily price reference valuing crude oil produced from a shale formation in May 2010 when it began assessing Bakken Blend shale oil injected into pipelines at Clearbrook, Minnesota, and Guernsey, Wyoming.

For more information on Platts price assessments methodology visit these links: Details of Platts Bakken and Platts Eagle Ford Marker.  Platts Bentek shale oil production figures are derived from proprietary data models using publicly available data.  For more information on data models, reports or Platts Bentek methodology, please contact info@platts bentek.com.

Platts will publish monthly updates via press release on Bakken and Eagle Ford shale oil production and price data.

* The Bakken formation spans North and South Dakota, Montana, Saskatchewan, Manitoba and Alberta.
** API gravity is a measure of how heavy or light a grade of crude oil is compared to water.

For more information about Platts oil and gas price assessments and price assessment methodology, visit the website www.platts.com.

Media Contact:
Kathleen Tanzy, + 1 917 331 4607, [email protected]

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