Precision drilling predicts stronger North American natural gas, oil activity in 24

Precision Drilling Corp. Calgary-based, whose oil field expertise is concentrated in North America, expects a “sustained period of increased natural gas production” ahead of a wave of LNG export facilities, both in Canada and the US. Lower 48.

CEO Kevin Neveu discussed the third quarter results and forecast for next year during the conference call.

“Natural gas has shown short-term price weakness,” he noted. However, additional LNG export projects are scheduled to launch in North America in 2025, including LNG Canada project led by Shell plc in British Columbia.

(Want to imagine the prices of Henry Hub, Houston Ship Channel and Chicago Citygate? Check out NGI’s daily natural gas price overview now.)

After last year’s surge in commodity prices, a glut of oil-related natural gas has helped push Henry Hub prices below $4.00/MMBtu since January. Since then, gas prices are estimated to have averaged around $2.50 through mid-October Historical NGI price data. However, NGI outlook expects Henry Hub fixed prices to reach $3,573 by January and $4,479 by January 2025.

The market signals “a sustained period of increased natural gas production in both the U.S. and Canada,” Neveu said. “You know, macro can have an effect everywhere all the time, but assuming the macro doesn’t have some kind of… massive shift like a pandemic or another war,” the coming year looks strong.

Exploration and production (E&P) customers will start a “new fiscal year” in a few months, “and certainly, we’ve already had indications from customers that more rigs will be operating,” he said. The market is “playing against a pair of…big acquisitions” and acknowledges the deals announced separately in October ExxonMobil and Chevron Corp.

“Everyone knows that three plus two equals four, not five,” the CEO said. “So with these transactions, there will be a slight reduction in the number of devices.”

Is The Rig Count Trending Higher?

However, other E&Ps need to build their inventory of drilled but not completed assets and “get back to making sure that they sustain production. . . The rig count looks set to increase next year . . .”
The nephew pointed to the almost finished Trans Mountain Pipeline Expansion, an oil pipeline that will triple capacity to 890,000 b/d. TC Energy Corp Coastal GasLink Pipeline Ltd. is also nearing completion, which would shift natural gas supplies from the Montney Shale to LNG Canada.

“We’re looking at the Canadian market as it is today with the Trans Mountain pipeline and the Coastal GasLink project and then probably the subsequent approval of Phase 2 for LNG Canada,” Neveu said. “So if we’re running 30 rigs today, it could be three or four years down the road until the mid-30s… I don’t think we’re building new rigs. I think we have opportunities to upgrade existing rigs…I don’t think we would need a ton of capital to see our rig count in Canada increase by much if the LNG projects continue as they are looking and the heavy oil will continue to grow. stay strong.

Precision also predicts more deals driven by the takeover of a cross-town competitor CWC Energy Services Corp., which should be ready within weeks. In addition, international trade is growing.

“Internationally, there are currently seven facilities running and we expect to activate our eighth facility in the next few weeks,” Neveu said. “With our additional facility activations this year, we expect our international earnings to grow approximately 50% in 2024 compared to 2023 and should remain at this higher level for the next several years as our recent contract awards are for five years. “

The company, which reports in Canadian dollars (C$1.00/72 cents), said net income fell to $20 million ($1.45/share) year-over-year from $31 million ($2.26). Revenues increased to $447 million from $429 million on higher drilling day rates, partially offset by lower drilling and service activities.

U.S. rig days fell nearly 28% year-over-year to 3,815, with Canada down about 3% to 5,284. However, revenue per day of use told the opposite story, with U.S. revenue up 26% to $35,135 and in Canada by nearly 20% to C$32,224.

Post Precision drilling predicts stronger North American natural gas, oil activity in 24 appeared first on Natural gas intelligence

Leave a Comment