Service companies as well as E&P firms are enjoying the drilling boom in western Canada, according to a new Canadian Association of Drilling Contractors forecast, which expects 19,500 wells will be drilled this year, a new record. The type of drilling has changed, however. Conventional Canadian oil drilling activity has declined about 21% since 1997 as operators focus more on gas, heavy oils and oil sands, and offshore eastern Canada. Too, most of the majors and large independents at the recent Canadian Association of Petroleum Producers (CAPP) meeting mentioned that they plan to kick off new coalbed-methane pilot projects in the next few months, taking a page from their U.S. cousins who have so successfully plumbed this resource in the U.S. Rockies. That's why service companies are shifting their emphasis in product offerings, presenters told investors at the recent oil-services investment symposium held by the Petroleum Services Association of Canada (PSAC). "We've launched new initiatives such as selling more seamless pipe used in gas wells, selling a new line of compressors for low-performing gas wells, and selling a proprietary, progressive cavity pump for heavy oil production," noted John Gilbank, chairman and chief executive officer of C.E. Franklin Ltd., Canada's largest oil-supply store chain. The company, with 40 service centers and15 pipeyards across Canada, provides products for drilling, gas gathering and gas processing. Within the last two years, it implemented the industry's first online catalog (now listing some 42,000 products) and made seven acquisitions. Last year as the number of Canadian wells drilled surged 69%, the company's sales rose 52% and it returned to profitability. "But, we urge investors to look beyond the rig-count numbers and evaluate the different business models that are out there to see which one makes sense," says Gilbank. "Our biggest opportunity today is in tubulars-pipe, valves and fittings-which we see as a C$4.5-billion market."
Recommended Reading
Range Resources Holds Production Steady in 1Q 2024
2024-04-24 - NGLs are providing a boost for Range Resources as the company waits for natural gas demand to rebound.
Hess Midstream Increases Class A Distribution
2024-04-24 - Hess Midstream has increased its quarterly distribution per Class A share by approximately 45% since the first quarter of 2021.
Baker Hughes Awarded Saudi Pipeline Technology Contract
2024-04-23 - Baker Hughes will supply centrifugal compressors for Saudi Arabia’s new pipeline system, which aims to increase gas distribution across the kingdom and reduce carbon emissions
PrairieSky Adds $6.4MM in Mannville Royalty Interests, Reduces Debt
2024-04-23 - PrairieSky Royalty said the acquisition was funded with excess earnings from the CA$83 million (US$60.75 million) generated from operations.
Equitrans Midstream Announces Quarterly Dividends
2024-04-23 - Equitrans' dividends will be paid on May 15 to all applicable ETRN shareholders of record at the close of business on May 7.