Canadian Drilling – Rig Counts Head Lower at the Midpoint of Spring Break Up

As of April 5, Baker Hughes reported a net decline of four for the Canadian gas directed rig count to 71 (blue line in left hand chart below) and four lower than a year ago. For the oil directed rig count, it fell to 65, a net loss of 10 for the week (red line in right hand chart), but 13 higher than a year ago. The latest weekly downturn for oil and gas rigs is part of the annual spring “break up” period, a seasonal slowdown in activity associated with the end of the winter drilling season when ground conditions begin to thaw and which slows or prevents the movement of large heavy equipment such as drilling rigs in certain regions. Traditionally, this period affects oil rig counts to a much greater degree than gas rig counts and typically sees a bottoming out around the end of April, although this can vary depending on ground conditions in each region.