Commodities
Canadian Oilfield Services Stocks Slip as WCSB Drilling Activity Climbs, RBC Says
Canadian oilfield services stocks fell 5% over the past week even as drilling activity in the Western Canadian Sedimentary Basin climbed further above historical levels, RBC Capital Markets analysts said in a note on Tuesday.The WCSB rig count rose by six week over week to 227, up 40 rigs from a year earlier and 35 above the five-year average. The Q3 average of 220 rigs is well ahead of RBC's forecast of 201.Private operators accounted for most of the increase, adding five rigs during the week, while large exploration and production companies producing over 75,000 barrels of oil equivalent per day added two.Montney activity increased by four rigs to 39, led by ARC Resources (ARC) and Ovintiv (OVV) with six rigs each, followed by Tourmaline Oil with five. Precision Drilling (PDS) remained the largest contractor in the play with 21 rigs, or 54% of the total.Heavy oil drilling also rose by four rigs to 68, led by Canadian Natural Resources (CNQ) with 13 rigs and Cenovus Energy (CVE) with 10. Duvernay activity edged up one rig to 18, while oil sands drilling slipped by two rigs to six.Despite stronger drilling activity, Canadian oilfield services stocks under RBC coverage declined 5% during the week.CES Energy Solutions posted the smallest loss, down 1.2%, followed by Calfrac Well Services, down 2.7%, and Pulse Seismic, down 3.7%.Trican Well Service, Precision Drilling (PDS) and Enerflex (EFXT) were the weakest performers, falling 6.5%, 7.4% and 9.8%, respectively.RBC's Canadian oilfield services coverage group has gained 28.7% year to date, compared with a 41.3% gain for the S&P/TSX Capped Energy Index.The bank forecast Canadian exploration and production companies under its coverage will generate pre-dividend free cash flow of $7.2 billion Canadian dollars ($5.12 billion) in 2026 and $7.8 billion in 2027, while reinvesting 64% and 62% of cash flow, respectively.
$ARC$CNQ$CVE$EFTX$OVV$PDS