(Reuters) - Canada’s Precision Drilling Corp (PD.TO) said drilling activity in North America in the second quarter was the lowest in decades, but added that oil producers were resetting capital budgets due to the recent rally in crude prices.
Due to the weak activity, Precision Drilling also posted a bigger loss for the period, but managed to beat analysts’ estimates because of improved drilling efficiencies.
North American oil producers have started putting rigs back to work, encouraged by a 70 percent jump in U.S. crude oil prices since they hit near-record lows in February.
“Our customers appear to be looking beyond the oil price lows of earlier this year, resetting spending to current commodity price levels, and beginning the early stages of planning for improved longer term fundamentals,” Precision Drilling Chief Executive Kevin Neveu said.
Encana Corp (ECA.TO) on Thursday said it would raise its 2016 capital expenditure program by $200 million.
The decrease in the North American rig count has resulted in the trend of high-grading toward Tier 1 rigs, said Neveu, referring to a practice that helps oil producers improve productivity without raising spending significantly.
Precision Drilling’s U.S. rig count is now up 27 percent, to 28 active rigs, from trough levels, Neveu said. The company currently has 27 active rigs in Canada.
The industry-wide rig count in the United States climbed by 7 to 447 in the week ended July 15, but was far short of a peak of 1,931 in September 2014.
Precision Drilling said its contract backlog rose by one rig in 2016 and that it added four rigs on average under contract for 2017.
The company’s revenue more than halved to about C$164 million in the second quarter ended June 30.
Its loss increased to C$57.7 million ($44.3 million), or 20 Canadian cents per share, from C$29.8 million, or 10 Canadian cents per share.
Analysts were expecting a loss of 24 Canadian cents per share, according to Thomson Reuters I/B/E/S.
Reporting by Amrutha Gayathri in Bengaluru; Editing by Savio D'Souza