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Flurry of well permits prompt forecasters to hike Canada’s drilling targets
Gary Park, PNA Canadian correspondent
Pulled by rapidly shrinking storage levels and pushed by a torrent of cash flow, Canada’s E&P companies are drilling up a storm across Canada.
Some of the highest rig counts on record and a flurry of new well permits have prompted forecasters to revise their expectations of a second-quarter downturn.
Dundee Securities Corp. has boosted its 2003 well completion target for Western Canada to 17,100 from 16,010; Friedman Billings Ramsey Group Inc. now predicts an average 330 rigs will be active through the year, up from its initial forecast of 300; and Peters & Co. Ltd. expects the second quarter will match levels experienced in the record year of 2001, setting a target for 2003 of 17,200 completions.
Currently about 605 of the 660 available rigs are at work.
Well completions for all of Canada tallied 14,563 last year, compared with the record year of 17,625 in 2001.
For February, regulators issued 2,141 well permits, up 65 percent from a year earlier and the second highest February count since the peak 2,254 in 1995.
The permit total for the first two months was 4,828, 51 percent ahead of 2002 and 98 wells ahead of the previous record in 2001.
The February approvals includes 1,794 wells for Alberta, 262 in Saskatchewan, 62 in British Columbia, five in Manitoba, 11 in Northern Canada and seven in Eastern Canada. EnCana leads new permits EnCana Corp. led the operators with 1,211 new permits, trailed by Husky Energy Inc. at 282, Canadian Natural Resources Ltd. 229, Burlington Resources Canada Energy Ltd. 173 and Penn West Petroleum Ltd. 120.
Wilf Gobert, an analyst with investment dealer Peters & Co. said the first quarter shapes up as a “barn burner” for Canadian companies with prices for the three months expected to average $30 per barrel for crude and $5.50 per million British thermal units for gas.
Peters has forecast oil prices will average $27 for the year, up $2 from its original forecast, while gas will average $4.25 per million Btu, up from $3.75.
With such riches, companies are likely to face pressure to move on several fronts — share buybacks, debt pay downs, higher dividends, expanded drilling programs or mergers and acquisitions.
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