San Juan Rig Activity Booms as Gas Prices Rise, M&A Heats Up
Drilling activity in the San Juan Basin has surged to its highest level since 2015, fueled by a rise in natural gas prices. Analysts say deeper Mancos Shale wells with higher IPs could lift San Juan gas output by 500 MMcf/d by 2030, reshaping the legacy basin’s future.
Private San Juan operators are currently running six rigs across the basin, the most since 2015, according to East Daley Analytics. Four rigs are drilling in the San Juan’s gas window to the north, while two rigs are targeting the basin’s “Gallup” oil play to the south.
The renewed activity has East Daley analysts rethinking their outlooks for the San Juan. Under the firm’s current forecast, San Juan residue gas production would drop from 1.7 Bcf/d today to 1.3 Bcf/d by year-end 2030.
But those estimates assume only two active rigs and modest IP rates of 1.66 MMcf/d from classic drilling targets like the Dakota and Mesaverde formations.
Drilling activity is picking up, and operators are increasingly landing in the deeper, richer Mancos Shale. Increased Mancos development will likely push average IPs across the basin up to 2.3 MMcf/d and 2.5 MMcf/d, according to East Daley.
“When paired with a sustained three to five rigs, residue gas production in the basin could jump [500 MMcf/d] to1 Bcf/d by 2030 from our current forecast,” Ian Heming, natural gas research analyst for East Daley, wrote on July 15.
Some San Juan operators are reporting higher average Mancos IP rates of around 12 MMcf/d, Heming told Hart Energy—with one exceptional Mancos well reaching approximately 25 MMcf/d.
For Houston-based private equity firm North Hudson Resource Partners, the San Juan’s advantages have been evident for years. North Hudson acquired San Juan operator LOGOS Resources II in 2022 for $402 million.
Farmington, New Mexico-based LOGOS was the second-largest San Juan gas producer last year, trailing only Hilcorp Energy.
“With abundant resource, access to multiple attractive markets and the opportunity to partner with a premier operator, the decision was clear,” North Hudson Managing Partner told Hart Energy.
The LOGOS team, led by CEO Jay Paul McWilliams, has completed 25 San Juan wells to date, with plans for an additional 15 wells online this year. The company is operating two rigs in the basin, per East Daley figures.
M&A activity
Dealmaking activity is returning to the San Juan as operators search for scale and natural gas exposure.
Earlier this month, Mach Natural Resources announced a $787 million acquisition of IKAV San Juan, a subsidiary of German investment firm IKAV. The deal includes 570,000 net acres and 60,000 boe/d (6% liquids, 94% natural gas).
IKAV affiliate SIMCOE LLC operates the San Juan asset—acreage previously held by supermajor BP Plc. Gas production averaged 596 MMcf/d in the first quarter, Mach said.
SIMCOE is the third-largest San Juan gas producer, behind LOGOS and Hilcorp.
Mach’s San Juan acquisition marks an expansion outside of the company’s Midcontinent roots. Mach CEO Tom Ward, who previously co-founded Chesapeake Energy and SandRidge Energy, has extensive experience operating in the Anadarko Basin.
The Mach-IKAV deal is expected to close in the third quarter.
Meanwhile, two of the San Juan’s smaller private producers, DJR Energy and Enduring Resources, have quietly merged.
Enduring and DJR merged their San Juan oil and gas assets on Dec. 21, 2023, according to Bureau of Land Management filings. Together, the companies run two of the active rigs in the basin.
San Juan Basin rig activity by operator since December 2023, according to East Daley Analytics. (Source: East Daley)
DJR and Enduring are the leading producers in the Mancos oil play in the southern San Juan.
In 2024, DJR Operating’s gross production was 5.19 MMbbl of oil, or an average 14,000 bbl/d, and 16.69 Bcf of gas (45.6 MMcf/d), according to New Mexico state data.
Enduring produced around 4 MMbbl of oil, at an average of 10,760 bbl/d, and 17.7 Bcf of gas (48.38 MMcf/d).
Combined, the company’s gross production would be around 25,000 bbl/d of crude and 94 MMcf/d of gas—or approximately 40,595 boe/d.
“The Mancos Shale is an upcoming giant natural gas field where we hold a 58,500 contiguous-acre position that is held by production,” said TXO Chairman Bob Simpson, who retired as the company’s CEO in March. He previously co-founded XTO Energy, which sold to Exxon Mobil for $41 billion of stock and debt assumption in 2010.
Despite the San Juan’s renewed drilling and future potential, takeaway constrains remain a key challenge. Growing production could reshape pipeline dynamics as new gas volumes try to work through a limited number of pipelines, Heming said.
Southern egress from the San Juan is constrained by Transwestern and El Paso Natural Gas (EPNG), which also carry Permian gas.
To the north, the TransColorado and Northwest Pipeline (NWPL) systems typically flow south but can reverse direction, potentially undercutting Western Rockies production from the Uinta, Piceance and Green River basins.
A major uptick in San Juan production would require flow shifts, Heming said.
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