Executive Summary: Rigs: The total rig count held steady for the week of January 26 at 531. Infrastructure: The Denver-Julesburg (DJ) Basin is undergoing a period of significant change as major players reposition assets. Storage: East Daley expects a 4.65 MMbbl injection into commercial and Strategic Petroleum Reserve (SPR) inventories for the week ending February 7.
Rigs:
The total rig count held steady for the week of January 26 at 531. There was no change in liquids-driven basins at 446 rigs.
Infrastructure:
The Denver-Julesburg (DJ) Basin is undergoing a period of significant change as major players reposition assets. Occidental Petroleum (OXY) and Civitas Resources (CIVI) are considering sales, while Prairie Operating Co. is expanding its footprint through a ~$603MM acquisition.
According to East Daley’s DJ Production Scenario Tool, Chevron (CVX), OXY and CIVI are the three largest producers, accounting for ~75% of the basin’s total production. The sale of these portfolios may mark a shift to the DJ returning to a landscape dominated by private producers versus the public-led consolidation seen elsewhere.
OXY is divesting a minerals package valued at between $900MM–$1B as part of its broader strategy to reduce debt following its $12B acquisition of CrownRock. The company holds 700,000 net acres in the DJ and has already made substantial asset sales, including the Barilla Draw and Western Midstream units.
Meanwhile, CIVI is exploring the sale of part or all its DJ assets, which could be valued at over $4B. The company produces ~120 Mb/d in the region but faces regulatory challenges in Colorado. It is estimated Civitas’ DJ production could fetch ~$3.6B based on Prairie Operating’s recent deal, suggesting that undeveloped acreage may not significantly impact the final price.
Prairie’s acquisition of Bayswater Exploration & Production assets adds ~24 Mb/d production and expands its DJ holdings to 54,000 net acres. The deal, priced at ~$23,500 per boe/d, provides a benchmark for assessing CIVI’s potential sale. While Prairie sees the move as a transformational step, its stock dropped 25% following the announcement, reflecting investor caution.
As consolidation accelerates, the future of the DJ Basin remains uncertain. While OXY and CIVI look to exit, Prairie’s expansion signals confidence in the region’s long-term potential. However, stringent regulations and valuation concerns could shape how these deals ultimately unfold.
Storage:
East Daley expects a 4.65 MMbbl injection into commercial and Strategic Petroleum Reserve (SPR) inventories for the week ending February 7. We expect total US stocks, including the SPR, will close at 824 MMbbl.
The US natural gas pipeline sample, a proxy for change in oil production, increased 3.82% W-o-W across all liquids-focused basins. Samples increased 9.6% in the Gulf of Mexico, 8.68% in the Eagle Ford, and 6.49% in the Permian. The Rockies and the Gulf of Mexico have a high correlation between gas volumes and crude oil volumes, whereas the Permian and Eagle Ford basins correlation is less than 45%.
We expect US crude production to be 13.6 MMb/d. According to US bill of lading data, US crude imports decreased by 815 Mb/d W-o-W to 6.1 MMb/d. More than 60% of the supply originated from Canadian pipelines and vessels into the US, with the remainder largely coming from vessels carrying crude from Mexico and Argentina.
As of January 24, there was ~790 Mb/d of refining capacity offline, including downtime for planned and unplanned maintenance. EDA expects gross crude input into refineries to increase by ~150 Mb/d W-o-W, coming in at 15.5 MMb/d.
Vessel traffic monitored by EDA along the Gulf Coast W-o-W decreased W-o-W. There were 23 vessels loaded for the week ending February 7 and 25 the prior week. EDA expects US exports to be 3.75 MMb/d.
The SPR awarded contracts for 6.0 MMbbl to be delivered To Choctaw February – May and 2.475 to be delivered to Bryan Mount Jan – March 2025. The SPR has 395.4 MMbbl in storage as of January 31, 2025.
Regulatory and Tariffs:
Presented by ARBO
Tariffs:
Gray Oak Pipeline, LLC The uncommitted rate from Wink, TX to Crane, TX was discounted from 97.54 cpb to 27.60 cpb. FERC No 2.23.0 IS25-204 (filed January 24, 2025) Effective March 31, 2025.
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 corey@goarbo.com or phone at 202-505-5296. https://www.goarbo.com/