Canada’s rig count jumped by 25 this week to 146, pushing the North American total up again, according to the latest report from Baker Hughes Inc. (NYSE: BHI).
The report released Aug. 26 showed Canada had 84 oil rigs and 62 natural gas rigs operating, ending the week up 19 and six, respectively. Most of the rigs were operating in Canada’s Alberta and Saskatchewan provinces, the country’s two highest-producing oil regions.
Rotary rig count data revealed drillers added nine rigs in Alberta and 12 in Saskatchewan. Driving the gains were activity pickups in the Bakken/Viking areas, mostly in Medicine Hat, and favorable weather conditions. British Columbia had a single-digit gain this week.
The move-up still pales in comparison to the total number of Canadian rigs that were operating a year ago. Back then, there were 196 rigs running, compared to 146.
Drilling rigs have become more efficient, but operators have been scaling back operations and reducing spending since the oversupply-driven downturn caused commodity prices to fall.
The rig count is one of several indicators of future oil and gas production. Other indicators include drillers’ ability to get more out of each well and the completion of drilled but uncompleted wells, or DUCs.
Meanwhile, in the U.S., the eight-week streak of oil rig additions came to a halt this week. The U.S. oil count was unchanged at 406 this week, while the gas rig count fell by two to 81.
In all, the U.S. rig count was down by two to 489, compared to 877 a year ago.
Before this week, the U.S. oil rig count rose by 76 since the week ended July 1, the most in a row since April 2014, after crude prices hit the key $50-a-barrel mark that made a return to the well pad viable.
“Rigs are going to continue to climb,” said John Kilduff, partner at New York energy hedge fund Again Capital. “We are in a price environment where there are an increasing number of fields that are profitable, and you have a lot of companies that are on the edge and need to generate cash to service their debt. Even if the wells are marginally profitable, they are going to be put into service."
On Aug. 26, U.S. crude hovered near $47 a barrel, vs. its 2016 peak of $51.67 in June that spurred a return to the well pad after prices hit a 12-year low of $26.05 in February.
Crude futures have increased more than $8 a barrel, or about 20%, over the past three weeks on speculation that Saudi Arabia and other key members of OPEC will agree next month to a production freeze deal with non-OPEC members led by Russia.
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