This study presents a comprehensive material balance equation (MBE) to estimate the reserve of shale gas reservoirs including free and adsorbed gas volume. The presented material balance equation takes into account the effect of stress change, matrix shrinkage, water volume production and influx, and critical desorption pressure. The material balance equation is converted into a linear relationship between the reservoir production and expansion parameters used during the derivation procedures that include rock-fluid properties and production history data. The proposed straight line reserve evaluation technique yields a slope of original free and absorbed gas in organic matrix, while the y-intercept yields the volume of original free gas in the in-organic matrix. A field case study of shale gas located in Australia is presented. Results show that the proposed MBE and the corresponding straight line reserve evaluation technique are rational and competent in estimating the free gas and adsorbed gas volumes accurately with error less than 6% compared to the numerical simulation model presented in this study using an in-house simulator based on finite element technique and FORTRAN language. Hence, the presented technique in this study can be used as a quick and easy to use tool to accurately estimate the free and adsorbed gas reserves and to improve the development of the production strategies of shale gas reservoirs.