Canadian Services Group Sees Drilling Bump in 2021
The Petroleum Services Association of Canada (PSAC), which represents oilfield service (OFS) companies, revised upwards its 2021 drilling forecast on January 28.
It is now projecting 3,350 wells will be drilled in Canada this year on a rig release basis, up from its initial forecast in October 2020 of 2,600 wells.
The updated forecast is based largely on a stronger commodity price outlook for 2021, with West Texas Intermediate (WTI) crude now forecast to average US$50/b and western Canadian natural gas at Aeco to average C$2.60/’000 ft3. In its initial forecast for 2021, PSAC projected WTI at $42/b and Aeco at C$2.50/’000 ft3.
“The strengthened commodity price outlook today versus what was expected back in October is welcome news for our members who provide the service, supply and manufacturing for energy development,” said Elizabeth Aquin, PSAC’s interim CEO. “As expected global economic recovery gradually restores demand, it is helping to improve cash flows and balance sheets for our members’ oil and gas customers.”
Recent capital budget updates by operators, Aquin said, suggest capital spending will increase by about C$3.36bn (US$2.6bn) this year, to C$27.3bn, and while that is still lower than 2019 spending of C$35.2bn and well shy of the C$81bn spent in 2014, any improvement at all is seen as positive for the OFS sector that PSAC represents.
“The downturn and pandemic have taken a heavy toll on the sector,” Aquin said. “This boost to investment in new activity is welcome news that the exploration and production (E&P) companies still see potential and opportunity in Canada.”