More tough times ahead for drillers
Wet weather, low gas prices blamed
As seen in the Calgary Herald
Friday, July 27, 2007
" The clouds got darker for Canada's drilling services sector Thursday after a leading industry group slashed its 2007 drilling forecast nearly 25 per cent -- and the country's biggest driller reported a dramatic drop in second quarter earnings.
The Canadian Petroleum Services Association (PSAC) now expects 17,650 wells will be drilled in 2007 from last year's record count of 23,306.
Alberta is expected to experience a 27 per cent drop, while gas-dominated British Columbia is expected to fall 42 per cent.
Soucy also indicated that "many areas in the western Canadian sedimentary basin now need natural gas prices of $8 to $10 (per thousand cubic feet) to attract new drilling."
In New York, oil closed at $74.95 US a barrel while natural gas finished at $5.94.
After a prolonged spring break-up, Canadian service outfits are already feeling the pain of what industry insiders say is shaping up to be the worst drilling year in a decade.
Wet weather and high levels of uncertainty stemming from falling natural gas prices combined to produce some of the lowest activity levels in 10 years, Precision said.
Precision, which operates about a third of all rigs in Canada, has seen its bottom line deteriorate as the big natural gas producers -- EnCana Corp., Canadian Natural Resources Ltd. and Talisman Energy Inc. -- cut back spending in response to higher costs and lower commodity prices.
"As a result we do not see a material increase in rig count until the tail end of 2008," it said.
According to the Canadian Association of Oilwell Drilling Contractors, 42 per cent of 885 available units were working this week, down from 73 per cent at this time last year.