Canadian oilfield services companies, which bore the burnt of the two-year downturn in crude oil prices, are reporting higher prices, buoyant business activity and robust bookings for the remainder of the year.

“Our bookings for Q2 are as high as they have ever been —we are fully booked on the fracturing (side),” Dale Dusterhoft, president and CEO of Trican Well Service Ltd. said during a panel discussion at the Canadian Association of Petroleum Producers Scotiabank Investment Symposium in Toronto Wednesday. “I am comfortable in saying we would be fully booked in Q3.”

Average rig count at the start of the second quarter stood at 135, compared with RBC Capital’s estimate of 80, and substantially higher than the 52 rigs active in the second quarter 2016. Rig count in the first quarter of 2017 was 70 per cent higher than the same period in 2016, according to industry estimates.

Trican, which is set to acquire Calgary-based Canyon Technical Services Inc. for $637 million by the end of the second quarter, expects “strong” activity in the second half based on current commodity prices of above US$50 per barrel.

Fernando Aguilar, president and chief executive officer of Calfrac Well Services Ltd., echoed the sentiment, noting that many producers were unable to secure drilling equipment due to hectic activity, which is driving up its business in the second quarter.

“Summer programs look stronger with further pricing gains and reactivations possible,” Aguilar said during a presentation to a business audience.

Labour remains the largest bottleneck to increasing activity levels, according to RBC Capital Market analyst Benjamin Owens.

“Demand far outweighs the pumpers’ ability to crew equipment,” the analyst said in a note to clients last month. “We think the coming 2Q industry pause should allow companies to make up ground on staffing requirements.”

The shortage of labour is a welcome development for an industry that laid off thousands of rig crew as oil prices fell below US$30 per barrel and oil producers slashed their capital expenditure plans. squeezing oilfield services to reduce their service fees over the past two years.

Trican, which has 40 per cent of its equipment parked for now, says it would need more labour to fire up the rigs again.

“Training and staffing has been difficult in our industry in the last six months, and if we don’t get all the (parked) equipment back it won’t be because of demand — it’s because we are unable to staff it going into 2018,” Dusterhoft said.

Mike Buker, president of Calgary-based PHX Energy Inc., also told the investor audience that the company is “very busy in Canada, busier than we had anticipated at the start of the New Year.”

Buoyed by the rising activity, PHX hiked salaries of the company’s field crew by 20 per cent at the start of the year, and has also raised its own service fees to oil producers.

“Getting prices up is not an easy conversation to have with customers,” said Buker. “But it feels that over the past few weeks it is becoming little bit easier, where the activity has started to make customers realize — ‘okay, it’s time for us to at least talk about covering the costs’.”

Financial Post

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