Canadian Drilling – Gas Rigs Hold Near Five-Year High, Oil Rigs Headed for a Holiday Break

For the week ending December 13, Baker Hughes reported that the Western Canadian gas-directed rig count was unchanged for a third consecutive week at 70 (blue line in left hand chart below), three more than one year ago and continuing to hold at its highest level since mid-April and near a five-year high. The oil-directed rig count dipped four to 118 (red line in right hand chart), just one greater than a year ago and nearing a six-month low. Higher but stable Western Canadian natural gas prices may be spurring some additional drilling as some producers wrap up capital spending programs before the end of the year, while others may be ramping up drilling activity to increase gas supplies into LNG Canada. The pullback in the oil rig count is another precursor to the drop off in activity that takes place toward the end of each year ahead of the traditional holiday break and which manifests itself in a short-lived sharp drop in oil-directed drilling activity.