Canadian Drilling – Gas Rig Count Pushes Higher, Oil Above Five-Year Range

For the week ending July 12, Baker-Hughes reported that the Western Canadian gas-directed drilling rig count rose three to 63 (blue line in left hand chart below) and 10 less than a year ago. For the oil-directed drilling rig count, it rose 11 to 123 (red line in right hand chart), 10 more than a year ago and six above the top end of the five-year range. The gas rig count has posted a modest seasonal increase in recent weeks, but is behind the pace of last year as producers remain reluctant to aggressively increase drilling due to low benchmark gas prices and as several gas-levered producers have recently announced further deferrals of drilling and well completions until later this year. The very strong oil rig count continues to underscore producers desire to capitalize on sustained strength in crude oil prices and additional egress capacity provided by the Trans Mountain Pipeline expansion.