Western Energy sends drilling rig to US south as Canadian activity dries up

CALGARY — Drilling companies continue to move rigs from Western Canada to the more active oilfields of the southern United States.

Calgary-based Western Energy Services Corp. says it moved a drilling rig from Canada to the US Permian Basin oil play in western Texas and southeastern New Mexico early this year and will likely move more rigs in the near future.

It says the addition took its US drilling fleet to eight rigs, including a drilling rig purchased and upgraded in the US near the end of 2018 and also deployed in the Permian Basin.

The Canadian Association of Oilwell Drilling Contractors says its members relocated 16 of their rigs to the US in 2018, up from just six in 2017. So far this year, four rigs have been moved south of the border.

Western, the fourth-largest drilling contractor in Canada with a fleet of 49 rigs, says its average rig utilization rate in Canada fell to 32% in the last three months of 2018 from 38% in the fourth quarter of 2017 as customers cancelled drilling programs due to market uncertainty.

It says operating days in the US rose by 29% and utilization improved to 71 per cent in the fourth quarter versus 63% in the year-earlier period.

“You have to follow the capital and go where the work is,” said Western CEO Alex MacAusland.

“I expect our peers will (move rigs south) as well. It’s just not sustainable with the current pricing environment.”