CAODC Releases 2013 Forecast

CALGARY, ALBERTA--(Marketwire - Nov 13, 2012) - The Canadian Association of Oilwell Drilling Contractors (CAODC) projects the industry will drill 10,409 wells in 2013.

The Association released its 2013 Forecast Tuesday at the CAODC Associate Member Breakfast.

A well count of 10,409 wells is approximately 6% below 2012 activity.

The Association arrived at the lower well count based on continued uncertainty around commodity prices. Additionally, the well count reflects an industry engaged in complex drilling programs that require more time to drill. For its 2013 Forecast, CAODC projects industry will average 11. 4 days to drill a well.

The CAODC registered fleet will begin 2013 with 830 rigs. CAODC members will have added 30 rigs to the fleet through 2012, but CAODC does not anticipate further expansion in 2013. " It''s more likely contractors will retire older equipment, " says CAODC President, Mark Scholz. The retirement of older equipment has been an ongoing trend over the last three years as the newer, more advanced equipment is better suited to explore unconventional plays.

The annual well count is a useful barometer to identify the strength of industry activity, but rig contractors charge for services based on operating days. For this reason, operating days are an important indicator of the health of the rig sector.

CAODC anticipates that 10,409 wells will generate an average of 118,401 operating days.

Drilling activity follows a distinct annual cycle. Rig utilization and operating days are highest in the first quarter. Second quarter activity drops due to spring break-up. The third quarter sees a nominal increase over Q2, and activity trends higher in the fourth quarter.

CAODC projects fleet utilization in the first quarter of 2013 to be 60% (or 498 rigs). Industry is anticipated to pack 44,367 operating days in this period.

Second quarter activity is always a challenge to forecast as spring break-up is a significant factor. For Q2 2013, CAODC projects an average utilization of 20% (166 rigs active) and 14,789 operating days. This projection mirrors second quarter activity seen in 2012.

For Q3 2013, the Association is forecasting 35% utilization (or 291 rigs) and 25,925 operating days.

Q4 2013 will be higher as industry ramps up for winter drilling. The CAODC Forecast pegs Q4 utilization at 45% (374 active rigs), similar to current activity levels. In terms of operating days, Q4 2013 should see 33,320 days.

2013 activity is projected to be slightly below 2012 activity levels, but industry will remain focused on attracting back the skilled workers lost during the 2009 downturn and on investing in new employees. CAODC members continue to cite skilled labour as a significant challenge. The drilling and service rig sector''s manpower challenges are compounded by the fact that the rigs are a recruiting ground for other oil and gas sectors.

2012 Revised

CAODC also released revisions to its fourth quarter projections for 2012. The revised numbers reflect operator budgets tightening due to uncertain commodity prices. Average rig utilization for Q4 is expected to be 45% (or 374 rigs). Operating days will be approximately 33,320.

CAODC expects that the total well count for 2012 will be 11,067.

The revisions put average rig utilization for the year at 44% (or 356 rigs) and operating days at 126,167. This level of activity is stronger than 2010 (when industry attained 41% utilization and 119,303 operating days) but not as strong as 2011 (52% utilization and 145,118 operating days).

CAODC is the unified voice of the Canadian drilling and service rig industry, promoting safer and more efficient operations through advocacy, communication and needed products and services.