Canadian Drilling – Turning the Corner on Spring Break Up

For the week of May 16, Baker Hughes reported that the Western Canadian gas-directed rig count rose one to 47 (blue line and text in left hand chart below), 10 less than one year ago and remained within the five-year range. The oil-directed rig count rose five to 72 (red line and text in right hand chart), 17 more than a year ago and above the five-year range. The upturn in rig counts appears to mark the end of a seasonal pattern known as spring break up, when rig movement is reduced due to restrictions on the transportation of heavy equipment in some regions because of the thawing of surface conditions at the end of winter. The rate of increase in the rig count for the spring and summer may be more tempered this cycle than last year due to lower crude oil and natural gas prices and greater capital spending caution being exercised by some producers.