Canadian Drilling – Seasonal High for Oil Rig Count, Gas Limps Higher

For the week ending June 28, Baker-Hughes reported that the Western Canadian gas-directed drilling rig count rose two to 59 (blue line in left hand chart below) and one more than a year ago. For the oil-directed drilling rig count, it rose seven to 113 (red line in right hand chart) and five more than a year ago. The gas rig count has posted small increases for three consecutive weeks, suggesting a modest seasonal increase is underway, but further large advances are unlikely as producers remain reluctant to aggressively increase drilling due to low benchmark gas prices. The new seasonal high for the oil rig count appears to underscore producers desire to capitalize on sustained strength in crude prices and additional egress capacity provided by the Trans Mountain Pipeline expansion.