Canadian Drilling – Oil Rig Count Held Back by Alberta Wildfires

For the week of June 6, Baker Hughes reported that the Western Canadian gas-directed rig count rose two to reach 45 (blue line and text in left hand chart below) and nine less than one year ago. The oil-directed rig count was unchanged at 67 (red line and text in right hand chart), 19 less than a year ago, and the first time in the five-year range in more than two years. The slow pace of rig activity is likely being held back by a combination of persistently low gas prices in Western Canada and the impacts of wildfires in the oil sands region of Alberta, a region which normally experiences a strong rig count recovery at this time of year. The rate of increase for the remainder of the spring and summer will be partly weather/wildfire dependent and reliant on an improvement in crude oil and natural gas prices and the degree of caution exercised by some producers over capital spending.