The DJ/Niobrara Basin| March 2020

Field Overview

Located mainly in the Northeast of Colorado, the Denver-Julesburg Basin consists of five main oil-producing formations: Niobrara sections A-C, Codell, and Greenhorn. These five plays produce over 90% of Colorado’s oil/gas.

State Drilling Statistics

Active Drilling Rigs in Basin- 19
Total Rigs in Colorado- 21
Total Rigs in United States- 664
Total U.S. Rigs down 35.2% YTD

State Top Producers

Top Gas Producer- Anadarko (Oxy)
Top Oil Producer- Anadarko (Oxy)

Financial & Economic Updates

Crestone Peak looks to triple DJ Basin assets following acquisition

Crestone Peak Resources has agreed to pay ConocoPhillips nearly $400 million for its Colorado assets, nearly tripling its Denver-Julesburg acreage, as the company tacks on nearly 100,000 acres located in Adams and Arapahoe counties. Crestone Peak struck a deal to buy 97,000 acres of oil and gas lease rights in Adams and Arapahoe counties and in the city of Aurora, nearly tripling the company’s size in the southern DJ Basin, for approximately $380 million. The deal is expected to close by the end of the month. An annual earnings report for 2019 filed by ConocoPhillips revealed the deal’s value. Some “customary adjustments” are possible before the final figure is settled, the company noted. Unlike many operators in the DJ Basin, Crestone Peak has primarily targeted suburban areas north of Denver, such as Broomfield, Lafayette, Erie and Frederick rather than Weld County, a slightly more rural location, which dominates production in the basin.

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State Highlights

Colorado oil producers hit hard by Saudi, Russian production war and coronavirus uncertainty

The situation for the oil and gas market will likely remain volatile for at least the next couple of months as demand stays low because of coronavirus-fueled drops in activity and as oil prices slide, analysts said Monday. Oil prices plunged after Russia rejected Saudi Arabia’s plan for steeper cuts in production. Saudi Arabia proposed cutting production another 1.5 million barrels on top of existing cuts of 2.1 million barrels agreed to by the so-called Opec+ alliance to stabilize prices. Companies in Colorado felt the blows. Occidental Petroleum, the dominant producer on Colorado’s Front Range, saw its stock closed at $12.51 a share, a 52% drop from Friday’s close of $26.86. Noble Energy, another major Colorado producer, saw its stock drop 29.8% Monday and Denver-based PDC Energy’s stock fell 48.2%.

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American Petroleum Institute analysis says Sanders’ fracking bans would devastate Colorado economy

U.S. Sen. Bernie Sanders has called for an immediate ban on fracking and the end of drilling on federal lands as a way to combat global climate change, a message that resonated in Colorado, where he won Tuesday’s Democratic presidential primary. But the American Petroleum Institute argues that Sanders’ policies, if implemented, would deal a crushing blow to the Colorado economy, eliminating 353,218 jobs directly and indirectly. Sommers said 95% of wells drilled in the U.S. rely on hydraulic fracturing, which injects water, sand and chemical lubricants under high pressure to fracture rock and release more petroleum. Fracking combined with horizontal drilling have greatly boosted U.S. production, including in the D-J Basin northeast of Denver.

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Top Gas Producers

Top Oil Producers

Refining

Colorado Production

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The information contained in this newsletter is provided by RARE
PETRO Engineering, PLLC via the following sources unless otherwise
noted:

www.eia.gov
www.drillinginfo.com
www.bhge.com
RARE Petro Analytics