Canadian Drilling – Rig Counts Creep Higher to Start July

For the week of July 4, Baker Hughes reported that the Western Canadian gas-directed rig count rose three to 49 (blue line and text in left hand chart below), 11 less than one year ago and the lowest for this time of year since 2021. The oil-directed rig count increased eight to 101 (red line and text in right hand chart), 11 less than a year ago and the lowest for this time of year since 2021. The slow pace of gas rig activity is likely being held back by persistently low gas prices in Western Canada, while the modest increase in the oil rig count may be a function of recent warmer and drier weather in parts of Alberta allowing for the greater movement of rigs and affiliated heavy equipment. Further increases in rig counts will be partly weather dependent and reliant on a sustained improvement in crude oil and natural gas prices and the degree of caution exercised by some producers over capital spending.