Canadian Drilling – Gas Rigs Hold Steady at Seven-Month High, Oil Rigs Slip to Five-Month Low

For the week ending December 6, Baker Hughes reported that the Western Canadian gas-directed rig count was unchanged at 70 (blue line in left hand chart below), four less than one year ago and holding at its highest level since mid-April. The oil-directed rig count tumbled 10 to 122 (red line in right hand chart), three more than a year ago and a five-month low. The recent upswing in Western Canadian natural gas prices may be spurring some additional drilling, as well as some producers ramping up drilling activity to increase gas supplies into LNG Canada. The pullback in the oil rig count may be a 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.