An OFS Thread:1/n The Canadian drilling sector is breaking out of its 5 year range. The industry is running more than 213 rigs. Q1 22 saw a similar number of rigs running. Looking forward the 5 year high in Q1 is 350 rigs. Will Q1 23 be more than 300 Rigs? Likely.
2/n How are we so confident? Let's drop by Prairie Sky. They lease land to hopeful operators. in Q1 and Q2 it reported ~100 new leases. Those are record leasing rates. It takes 9 months to work up locations, so suggests to a burgeoning well count in 2023.
3/n Between now and the end of June, Active rigs have increased significantly. You can see the main contractors have some 375 rigs registered. We could see very high utilization rates if trends persist.
Fly in the ointment: not all of these rigs can be crewed
4/n PD has signaled a long term activity increase below with this interesting bullet: suggesting that customers are committing to contracts on rigs that require some TLC to move again
5/n The implications for margins are profound. Q2 saw extraordinary day rates for the quarter, as high as 29,800 per day reported by WRG, up 34% YoY.
6/n Western Canada Select is trading at outstanding levels. AECO gas is a problem owing to some temporary made in Canada problems, Henry Hub is at a 5 year high.
For planning purposes, operators will be engaging OFS companies on these assumptions starting Sept.
7/7 Summary: OFS appears to be enjoying enhanced visibility for the first time in many years, as increasingly well capitalized and aggressive operators compete for scarce equipment. #EFT #COM @SuperSpiked
Share this Scrolly Tale with your friends.
A Scrolly Tale is a new way to read Twitter threads with a more visually immersive experience.
Discover more beautiful Scrolly Tales like this.