For the second time, the Petroleum Services Association of Canada (PSAC) has revised upward its forecasted number of wells drilled (rig released) across Canada in 2017, with the latest call out for 6,680 wells throughout the year.
“When the numbers started coming in with our analysis, we were pleasantly surprised,” Mark Salkeld, president and chief executive officer at PSAC, told reporters following Thursday’s forecast update.
“We had a bit of confidence coming out of 2016 with the activity in Q4, but because we had just come through 2.5 years of tough time, were cautiously optimistic. When we got the actuals back for Q1 2017, it was just like ‘holy cow.’”
Late last year, PSAC forecast a total of 4,175 wells to be drilled in Canada for this year. Higher prices led PSAC in January to bump up the numbers to 5,150 wells in 2017, up 23 per cent or 975 wells.
The new forecast suggests 60 percent more wells rig released this year than originally predicted, based on updated commodity price forecasts of C$3/mcf AECO natural gas, US$52.50/bbl WTI, and an exchange rate of 74 cents between the Canadian and U.S. dollars.
By comparison, PSAC’s previous price forecast for 2017 saw AECO at C$2.50/mcf, WTI at US$52/bbl, and the loonie averaging 76 cents against the greenback.
“It’s the nature of this sector and this industry—we can bounce back fast. It was a very pleasant surprise,” Salkeld told reporters. “There’s confidence that the trend will continue on the steady upward, and the bottlenecks will be people and equipment.”