Prolonged oil industry slump leads to third cut in Canadian drilling forecast

The Petroleum Services Association of Canada is cutting its 2020 Canadian drilling forecast for a third time as the industry remains mired in a slump expected to extend well into the second half of the year.

The association says it now expects just 2,800 wells will be drilled in Canada this year, down from a nearly 50-year low of 3,100 in its revised forecast in April.

The new forecast for 2020 is 43 per cent lower than the 4,900 wells drilled in 2019.

PSAC interim CEO Elizabeth Aquin says a slow economic recovery, low commodity prices and high debt levels in the industry are preventing a quick recovery from the lows of earlier this year amid an economic downturn caused by the COVID-19 pandemic.

She says a North American crude oil supply surplus means producers have little incentive to explore for and develop new wells.

Last week, Calgary-based Precision Drilling Corp. reported more layoffs and parked drilling rigs as revenue, led by lower activity in its Canadian and U.S. operations, fell by 47 per cent in the second quarter compared to the same period of last year.