Rigs: The total US rig count decreased to 579 rigs for the week of July 25.
Infrastructure: Shell and Phillips 66 are testing buyers’ interest in their combined 60.5% stake in Explorer Pipeline Co. at a valuation near $3.5B, Reuters reports. The majors would be trimming their stakes in a refined products pipeline that has hit a bump recently, even as Midwest fuel demand keeps growing.
Supply and Demand: The US natural gas pipeline sample, a proxy for change in oil production, decreased 0.1% W-o-W across all liquids-focused basins for the week ending Aug. 3.
Rigs:
The total US rig count declined by 5 rigs to 579 for the week of July 25. Liquids-driven basins decreased from 453 to 448 rigs.
- Anadarko (-1): Gulf Exploration
- DJ (-1): Prairie Operating Co.
- Uinta (-2): Finley Resources, FourPoint Energy
- Permian (-1)
- Midland (-1): Texland Petroleum
Infrastructure:
Shell (SHEL) and Phillips 66 (PSX) are testing buyers’ interest in their combined 60.5% stake in Explorer Pipeline Co. at a valuation near $3.5B, Reuters reports. The majors would be trimming non-operated stakes in a refined products pipeline that has hit a bump recently, even as Midwest fuel demand keeps growing.
MPLX holds ~25% and Energy Transfer (ET) ~15% of the remaining Explorer ownership. Both could contribute their stakes if demand supports a sale of the full company. The process is early and a transaction is not guaranteed, according to Reuters.
The 1,872-mile Explorer Pipeline moves refined products from the Gulf Coast to Midcontinent and Midwest markets, supplying Houston, Dallas, Tulsa, St. Louis and the greater Chicago area. The 28-inch southern mainline carries up to 660 Mb/d to Tulsa; the 24-inch northern segment is rated at 450 Mb/d to Hammond, IN. More than 60 shippers move over 72 product specifications on the system.
East Daley’s PSX Financial Model shows Explorer has been in decline, with both volumes and rates shrinking last year. Average throughput fell 9.5% from 638.4 Mb/d in 2024 to 578 Mb/d in 2025. The blended transportation rate softened from ~$2.38/bbl in 2024 to $2.21 in 2025. The blended rate further declined to $1.94 in 4Q25, about 18% below the 2024 average.
Explorer’s revenue tracked the same path, down 15.9% in 2025 to a $468MM average vs $557MM in 2024. At $3.5B, the headline valuation would run about 13.3x 2025 EBITDA of ~$264MM, before accounting for whether the 4Q25 rate is a temporary dip or the new run-rate.
Energy Information Administration (EIA) data shows Midwest gasoline, distillate and jet fuel demand all grew in 2025, which rules out weaker regional consumption as the explanation for the drop. That leaves system-specific causes: a shift in Gulf Coast refinery supply, a change in shipper routing, or a competing transportation option gaining share. Public disclosures do not identify the cause; an open question a buyer would have to assess is whether the fourth-quarter rate represents a floor or a trend.
East Daley’s refinery-level data identifies Motiva as Explorer’s largest supplier, shipping out of its 730 Mb/d Port Arthur refinery. Motiva is wholly owned by Saudi Aramco, so a sale of Shell’s Explorer stake has no bearing on Motiva’s shipping decisions, and Shell’s historical association with Motiva provides no governance protection over those volumes either way. The durability of Explorer’s largest supply relationship rests on a commercial arrangement, and is a risk that only shows up once refinery-level shipment data is connected directly to the pipeline itself.
The diluent expansion that entered service in July 2025 drives the growth case. It connects Gulf Coast supply to the Irwin/Cochin and Manhattan/Southern Lights terminals in Illinois, the same corridor that carries up to 180 Mb/d of condensate toward Edmonton on the Southern Lights system. The expansion could bring take-or-pay and incentive-rate revenue untied to refined products throughput. Explorer has not disclosed the expansion’s own capacity, volumes or utilization, so none of that upside is in the numbers yet.
Base case: Throughput and rate stabilize near the 2025 exit level, with the diluent expansion adding a modest, still-undisclosed layer of contracted revenue.
Upside: The 4Q25 rate proves to be a trough, the cause of the 2025 decline reverses, and diluent volumes ramp toward a meaningful share of the Edmonton corridor’s capacity.
Downside: Explorer’s 4Q25 rate is the new normal, the cause of the decline is structural, and Motiva’s shipping stays intact only for as long as it remains commercially convenient for Aramco.
Investor Takeaway: Explorer has many advantages, including scale and Gulf Coast-to-Midwest connectivity. The question is whether a buyer would pay 13.3x for a shrinking base, or 13.3x for a trough that a market-based tariff and a new diluent corridor are about to reverse. That is a question East Daley’s company-level financial models and refinery-level supply data can answer well before it shows up in a filing.
Supply and Demand:
The US natural gas pipeline sample, a proxy for change in oil production, decreased 0.1% W-o-W for the July 20 week across all liquids-focused basins.
The Eagle Ford (-4.1%) posted the largest decrease for the week, followed by the Rockies (-2.6%) and Williston (-1.4%) basins. Volumes increased in the Barnett (+7.7%), Gulf of America (+2.8%), Permian (+2.7%) and Anadarko (+1.3%). 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 Aug. 3, there are no refinery outages.
Vessel traffic monitored by East Daley along the Gulf Coast increased W-o-W. A total of 29 vessels were loaded for the week ending August 1, a significant increase from the previous week.