Canadian Drilling – Rig Counts Remain Stuck in Neutral

For the week of June 27, Baker Hughes reported that the Western Canadian gas-directed rig count was unchanged at 46 (blue line and text in left hand chart below) and 13 less than one year ago. The oil-directed rig count increased one to 93 (red line and text in right hand chart), 20 less than a year ago, and remains within the five-year range. The slow pace of gas rig activity is likely being held back by persistently low — and occasionally negative — gas prices in Western Canada (see our Analyst Insight of June 18), while the midyear stall in the advancement of the oil rig count may be a function of cooler and wetter weather in parts of Alberta. Further increases in the rig count 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.