CANADA: WORST PERIOD
CAODC announces its 2016 Drilling Forecast
- Projected 2016 wells drilled: 4,728—a decrease of 58% from 2014 (11,226)
- Projected operating days: 56,260—a decrease of 57% from 2014 (131,021)
- Rig fleet expected to contract by 62 (758 drilling rigs to 696 drilling rigs)
- 57% decrease in employment from 2014 levels (-28,485 jobs)
The Canadian Association of Oilwell Drilling Contractors (CAODC) has released a forecast for 2016 reflecting the dramatic downturn deeply impacting the oil and gas services industry. Low commodity prices, market access challenges, and cumulative regulatory and taxation changes have combined to create an investment climate that is resulting in uncertainty in Canadian markets. Activity in the Western Canadian Sedimentary Basin (WCSB) has been particularly affected, with escalating costs in an already expensive basin leaving operators exploring options outside of Canada.
Current activity levels suggest a significant de-listing of assets by member companies moving into Q1 2016. Active rig counts are down significantly in Q4 2015, with utilization rates cut in half. CAODC predicts this trend to continue throughout all four quarters in 2016, with utilization levels averaging around 22% for the year. CAODC projects the number of wells drilled in 2016 at 4,728.
CAODC President, Mark Scholz, emphasizes the depth of the current downturn: “Today, the oil and gas services industry is facing one of the most difficult economic times in a generation. The active rig count for the western Canadian rig fleet is at the same level as experienced in 1983, one of the worst periods in our history.” Scholz also notes the important role provincial and federalgovernments play in these difficult times: “In order to achieve a healthy oil and gas industry, government must ensure its fiscal policies are competitive, predictable and consider the cumulative costs of doing business.”
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U.S. Rig Count is down 1 rig from last week to 930, with oil rigs down 4 to 747, gas rigs up 3 to 183, and miscellaneous rigs unchanged. Canada Rig Count is up 19 rigs from last week to 238, with oil rigs up 22 to 134 and gas rigs down 3 to 104.