Executive Summary:
Rigs: The total US rig count decreased during the week of Feb. 7 from 527 to 525.
Infrastructure: The $58B merger between Devon Energy and Coterra Energy is the latest mega-deal in the oil patch.
Supply & Demand: The US natural gas pipeline sample, a proxy for change in oil production, increased 0.8% W-o-W across all liquids-focused basins.
Rigs:
The total US rig count decreased during the week of Feb. 7 from 527 to 525. Liquids-driven basins decreased by 2 rigs W-o-W from 397 to 395.
- Anadarko (-1): Validus Energy
- Bakken (-1): Petro-Hunt
- Eagle Ford: (+1): Strand Energy
- Permian:
- Midland (-2): Medders Oil, ExxonMobil
- Powder River (+1): WRC Energy
Infrastructure:
The $58B merger between Devon Energy (DVN) and Coterra Energy (CTRA) is the latest mega-deal in the oil patch. The producers are targeting $1B in annual synergies once the merger closes, leaving quite a few midstream names potentially exposed to reduced spending.
Devon and Coterra announced the all-stock transaction on Feb. 2. Under the deal, DVN will own ~54% of the combined company, which will retain the Devon name and ticker. Executives expect to close the deal by 2Q26.
The tie-up creates a top independent producer with operations in six major US basins. The companies will have a combined 750,000 acres in the Delaware Basin, as well as assets in the Marcellus, Anadarko, Eagle Ford, Powder River and Williston basins.
The Delaware will be the “crown jewel” for the merged portfolio, Devon President and CEO Clay Gaspar said during an investor call. The Permian operations account for more than half of the total production and cash flow for the combined company, he said.
Upstream consolidation has been a key driver behind falling US rigs counts, and the DVN-CTRA announcement looks to continue that trend. Devon said it aims to generate $1B in annual pre-tax synergies by YE27 from the combination, including around $350MM from reduced capital spending and supply chain benefits and $350MM in improved margins from streamlined field operations.
Clients can use the tools in East Daley Analytics’ Energy Data Studio to screen for midstream assets at risk from the DVN-CTRA combo. The two figures, available in the Producer to System Analysis dashboard, show historical rig activity by basin and G&P system for the two producers.
Devon and Coterra have been running a total of 32 rigs so far in 2026, down from a recent peak of 40 rigs in March 2025, according to data in Energy Data Studio. CTRA in early February was drilling with 13 rigs on seven G&P systems in the Delaware, Marcellus and Anadarko. DVN has deployed 19 rigs so far in 2026, spread across 12 G&P systems in the Delaware, Bakken, Anadarko, Eagle Ford and Powder River basins.
East Daley’s review finds little overlap between the two producers’ Delaware Basin operations. Coterra is served by five G&P systems in the Delaware, including assets owned by Energy Transfer (ET), Kinetik (KNTK), MPLX and Targa Resources (TRGP). Devon uses six G&P systems in the basin; Enterprise Products (EPD), ET, Phillips 66 (PSX), TRGP and Western Midstream (WES) are the owners. Devon also jointly owns a G&P system with Howard Energy Partners in the Delaware.
In terms of drilling concentrations, the MPLX – Delaware system is most exposed to rig swings. Coterra currently accounts for 6 of the 8 rigs (75%) East Daley allocates to the MPLX system. The ET – Delaware asset is also potentially exposed; Devon at the end of January ran 4 of the 12 rigs on the ET system (33%).
Management has provided few clues how it will proceed with spending cuts once the DVN-CTRA merger is finalized. Given the breadth of the producers’ operations, the focus on the Delaware could lead to cutbacks in more marginal basins, meaning the Bakken, Anadarko, Eagle Ford and Powder River programs could be in the crosshairs. Alternatively, the high-grading of operations in the Delaware Basin could result in less drilling on several G&P systems
Supply and Demand
The US natural gas pipeline sample, a proxy for change in oil production, increased 0.8% W-o-W across all liquids-focused basins. This increase follows a large decline in late January due to freeze-offs caused by Winter Storm Fern across the US.
This week, samples in the Barnett (+6.8%) and Arkoma (+2.4%) basins saw healthy gains while the Anadarko sample declined 3.0%. All other basins had slight increases, all below 2%. Production is increasing back to normal levels following the winter storm. The Rockies and the Gulf of America have a high correlation between gas volumes and crude oil volumes, whereas the Permian and Eagle Ford basins correlation is less than 45%.
As of Feb. 17, there is currently ~145 Mb/d of refining capacity offline for non-planned maintenance due to the winter storm shutting down refineries. The most affected operator is Valero with 145 Mb/d in outages seen at its Benicia refinery.
Vessel traffic monitored by EDA along the Gulf Coast decreased W-o-W. There were 21 vessels loaded for the week ending Feb. 14. The trend is reversing downward after five weeks of increases.
Presented by ARBO
Tariffs:
Gray Oak Pipeline, LLC: Certain available capacity discounts were increased.
Magellan Pipeline Company, L.P.: The tariffs were revised to add a new product and to update the product grade document to be consistent with ONEOK’s product grade documents.
The above information is provided by ARBO’s Oil Pipeline Tariff Monitor. For more information on regulatory proceedings or tariff rates, please contact please contact Corey Brill via email at [email protected] or phone at 202-505-5296. https://www.goarbo.com/