Rising oil prices encouraged more spending by small and intermediate oil and gas companies in Western Canada during the first six months of 2018. These rising oil prices are expected to lead drilling budgets to grow even further this fall.
Producers say last weeks steady march by U.S. benchmark West Texas Intermediate oil prices to higher than US$70 per barrel, a level last seen in early July, will encourage some to open their wallets.
A lot of us spent a fair bit of our capex for the year in the first quarter, and before spring break in the second quarter, during that four-month period, said George Fink, CEO of Bonterra Energy Corp., in an interview.
With the second half now, its a situation where, if we can stay between US$68 and $70, I think there will be companies that will potentially increase their capital in the fourth quarter and spend a little more because the cash flow will be better than most of us anticipated.
Small and intermediate oil and gas companies reported spending an average of about 50 percent of their planned 2018 exploration and development budgets in the first six months of the year.
Drilling activity was strong in the three months ended June 30 thanks to warm weather that shortened spring break, the annual slowdown when the thawing landscape in Western Canada prevents companies from moving heavy equipment on provincial roads.