Canadian Drilling – Reaching the Bottom of Spring Break Up

For the week of May 2, Baker Hughes reported that the Western Canadian gas-directed rig count fell one rig to 46 (blue line and text in left hand chart below), 14 less than one year ago and remained within the five-year range. The oil-directed rig count dropped seven to 73 (red line and text in right hand chart), 15 more than a year ago and remained above the five-year range. The additional pullback in oil rigs continued to follow a seasonal pattern known as spring break up, when drilling and rig movement activity is reduced due to restrictions on the movement of heavy equipment in some regions because of the thawing of surface conditions. Given that weather conditions in Western Canada have been relatively dry and warm in recent weeks, this latest rig tally may represent the bottom of the seasonal downturn.