Canadian Drilling – Oil Rig Count Jumps After Easing of Alberta Wildfire Threat

For the week of June 13, Baker Hughes reported that the Western Canadian gas-directed rig count reached 47, an increase of two (blue line and text in left hand chart below) and eight less than one year ago. The oil-directed rig count increased 23 to 90 (red line and text in right hand chart), 11 less than a year ago, and remains in the five-year range. The slow pace of gas rig activity is likely being held back by persistently low gas prices in Western Canada, while an easing of the wildfire threat in and around the oil sands region of Alberta was partly responsible for allowing the oil rig count to snapback from a seasonally soft point in the prior week. The rate of increase in the rig count 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.