As 2017 comes to a close, it rounds out a year that started very bleakly, and now, going into 2018, is showing promise.
Talking to people in the oilpatch in late 2016 and the first few months of 2017 was almost like going to a funeral. Next to no one had any sort of good news. Most oilfield services companies had laid off roughly half their staff compared to 2014. But drilling picked up in the first quarter, and we even got to 76 active drilling rigs before breakup took hold. Service rigs, their staffs plundered by the rising drilling rig count, were the first people to see a labour shortage.
Step forward now to the end of the year. This month and next month we are focusing on Estevan. There have been a number of new ventures that have popped in Estevan in recent months, many of which are highlighted in this edition. They include Innovative Artificial Lift Solutions, Gryphon Artificial Lift Solutions, Apollo Electric and Controls and Prairie Hot Shot.
Estevan-based Stampede Drilling Ltd. was purchased by MATRRIX Energy Technologies Inc. The announcement was made right after MATRRIX announced it had picked up the three rigs of defunct Vortex Drilling Ltd. from the receiver. The prices may have been depressed compared to the amount of money spent on building those six rigs between the two companies, but given the background of the people behind the deal, we can expect the new Stampede Drilling will be looking to grow.
In the middle of this year, both carbon dioxide miscible flood projects, the Midale Unit and the Weyburn Unit, went up for sale by their respective operators, Apache Canada and Cenovus Energy. Cardinal Energy Ltd. announced it closed their acquisition of the Midale Unit on June 30, and Whitecap Resources Inc. did the same for the Weyburn Unit on Nov. 13.
These two changeovers are significant news. The downturn had meant the previous operators substantially cut back on their capital expenditures in each unit. Both had stopped drilling for quite a while. We attended a safety awards lunch several years ago where Precision Drilling Rig 275 had been honored for decades 鈥� decades! 鈥� of safe work in the Weyburn Unit. That rig is now parked at Stoughton.
Those two companies didn鈥檛 buy these significant plays just to sit on their hands. We expect to see drilling resume in the new year with the Weyburn Unit, according to Whitecap president and CEO Grant Fagerheim. Drilling, of course, is the leading indicator for everything else.
As for Cardinal, their Nov. 7 press release noted, 鈥淥ur focus for 2018 will shift from a maintenance mode to one of more aggressively exploiting our properties while continuing to maintain the cost discipline developed through this downturn. We have managed to acquire several long life legacy assets at what we believe was the bottom of the commodity cycle. Our shareholders should see the rewards from these purchases in 2018 and beyond as it transforms Cardinal into a company that becomes sustainable without the need for further large scale acquisitions.鈥澛�
That sounds like they plan on doing something with the Midale Unit, breathing new life into it.
All of this is good news, something the sector has been sorely lacking for a long time.
This all has everything to do with the fact oil prices are now floating around the US$55 WTI mark, as opposed to US$42 or US$32 or US$26.
It reminds us again of our conversation with Del Mondor, president, CEO and owner of Weyburn-based Aldon Oils Ltd. Back on Feb. 17, 2016 he spoke prophetically, saying, 鈥淭o me, there鈥檚 opportunity in that, as well. To my other comment of this industry is full of innovators and entrepreneurs and people that stand up to challenges, whether it鈥檚 B.C., Alberta, Saskatchewan or Manitoba, we will get good at this. Whether that鈥檚 getting good at $35 or $75 or whatever, we will get good at this.鈥�
That week, oil was at US$29.64 WTI.
We are getting good at this. Asking several of the entrepreneurs who have started up new operations in recent months if they were crazy like a fox, or just crazy, they responded by seeing opportunity where there are challenges.
So they are crazy, like a fox, and getting good at this.
