March Surge in U.S. Shale Production Sparks Optimism for Energy Investors

by | Feb 17, 2024 | Production, Energy, Energy Information Administration, Texas Oil Boom, United States

March surge in U.S. shale production presents a compelling narrative for energy investors.

Shale Oil Production Soars to Four-Month High

The U.S. Energy Information Administration’s (EIA) latest report signals a robust increase in oil output from the nation’s top shale-producing regions, with March production expected to reach its highest point in four months. A substantial surge of nearly 20,000 barrels per day (bpd) is projected, setting the stage for promising opportunities in the energy sector.

Permian Basin Leads the Charge

The Permian Basin, the largest U.S. shale field spanning West Texas and New Mexico, is anticipated to drive this surge. Projections indicate a noteworthy increase of approximately 14,000 bpd, catapulting output to an impressive 6.1 million bpd. This achievement marks the second-highest monthly output on record, just shy of the peak reached in November.

Eagle Ford and Bakken Regions Experience Growth

The Eagle Ford in southeast Texas and the Bakken region are also poised for substantial growth. The EIA forecasts an uptick of nearly 4,700 bpd in the Eagle Ford, reaching 1.1 million bpd—its highest since September. Simultaneously, the Bakken region is expected to experience an increase of about 3,000 bpd, hitting 1.2 million bpd in March, marking the highest output since December.

While the spotlight is on oil production, the report also unveils insights into the natural gas landscape. Total natural gas output in major shale basins is expected to dip slightly to 100.4 billion cubic feet per day (bcfd) in March from 100.5 bcfd in February. Despite this marginal decrease, it’s crucial to note that November 2023 saw a monthly record high of 101.4 bcfd in these basins.

Appalachia’s Gas Output Dynamics

In Appalachia, the largest shale gas basin covering Pennsylvania, Ohio, and West Virginia, output is projected to dip to a two-month low of 36.4 bcfd in March. However, this dip follows a record high of 36.9 bcfd in December 2023. The EIA anticipates a noteworthy increase in new well production per rig, reaching a 26-month high of 28.0 per million cubic feet per day (mmcfd) in March—an encouraging trend for investors.

Investing Considerations: Opportunities and Challenges

What makes these developments particularly noteworthy for energy industry investors is the sustained growth in new well production per rig. If the EIA’s projections hold true, March would mark the 14th consecutive month of increase, with levels not seen since December 2020.

However, amidst this positive outlook, the report also highlights a potential concern. Producers drilled only 850 oil and gas wells in January, the lowest since February 2022, completing just 863, also a low since February 2022. Furthermore, total drilled-but-uncompleted (DUC) oil and gas wells slid by 13 to 4,386 in January—a record low for a third consecutive month, as per EIA data dating back to December 2013.

Conclusion: Navigating the Dynamic Energy Landscape

In conclusion, the March surge in U.S. shale production presents a compelling narrative for energy investors. While challenges persist, the sustained growth in key shale regions and the optimistic projections for natural gas output provide a fertile ground for strategic investment decisions. As the energy sector continues to evolve, staying informed about these trends is essential for investors seeking to navigate the dynamic landscape of the U.S. energy industry.

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