Oil and gas drilling still lags behind the financial recovery recorded by production companies for the first six months of this year, according to a prominent Calgary field contractor that runs rig fleets in Canada, the United States and overseas.
“Operating and financial results continue to show residual impacts resulting from the events of 2020,” said management for Ensign Energy Services Inc. “While activity has improved from 2020 lows in the second quarter of 2021, industry operating conditions are still recovering from the impacts of the Covid-19 pandemic.”
Ensign cut the number of marketed rigs available for work by 15% to 227 in the first six months of this year, from 266 in the first half of 2020, when the fleets were busy until the global pandemic hit in March.
The firm’s marketed rig numbers shrank to 92 from 101 in Canada, to 93 from 122 in the United States and to 42 from 43 in overseas oil and gas fields.
The number of days worked by active Ensign rigs dropped by 22% to 10,087 in first-half 2021, from 12,976 in the same period of 2020.
Days worked by the Calgary contractor’s drilling equipment dropped to 2,904 from 3,479 in Canada, to 5,480 in the United States from 7,355, and to 1,703 from 2,142 overseas.
Ensign management said recovery from the pandemic and other negative fossil fuel industry conditions would remain cautious and gradual.
“We expect vaccine progress and oil demand recovery, coupled with a sustained commodity price environment, will continue to drive oilfield services activity improvements year-over-year,” management said.
“However, we continue to expect a multi-year recovery cycle for our industry to achieve pre-Covid-19 pandemic activity levels and operating conditions.”
Production firms are not plowing much of their improved 2021 earnings into reviving depressed drilling, said the Calgary-based international contractor. Until 2022, the field contractor predicts activity would largely be confined to replacing depleted legacy wells.
“Particularly in our United States operating region, increases to activity have been incremental, as oil and natural gas producers have moderated capital spending, remain committed to cash generation, maintain current production levels and continue to prioritize shareholder returns.”
Despite improvements recorded in quarterly financial results of producers to date this year, the immediate outlook is still murky for all segments of the industry, according to Ensign.
“Short-term uncertainty remains regarding the macroeconomic conditions, including commodity price fluctuations, setbacks in Covid-19 vaccine deployment or vaccine efficacy, the pace of oil demand recovery,” as well as production and supply decisions by the Organization of the Petroleum Exporting Countries and its allies, aka OPEC-plus, “that may impact the short-term demand for oil field services.”
Ensign Energy Services Inc. posted 2021 first-half losses of C$95.8 million ($76.6 million), or C59 cents/share ($0.47). This compared with 2020 first-half losses of C$46.3 million ($37 million), or C28 cents/share ($0.22).
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August 11, 2021 at 03:26AM
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Ensign Cuts Marketed Rigs by 15% as Oil, Natural Gas Drilling Still Lagging - Natural Gas Intelligence
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