Provinces of Alberta and B.C. cashing in on drilling rights; surpasses 2016 as commodities strengthen

Already, in a few months of 2017, oil and gas producers spent four times what they did in all of 2016 on drilling rights in British Columbia. In Alberta, the producers spent the same in four months of 2017, as in all of 2016.

 

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Clearly, confidence is up, given the cost of drilling rights. Equally clear is the cause. Commodity prices are stronger this year.

Specifically, in Alberta 2017, to date, oil an d gas producers spent $138 million for drilling rights, and $63 million in British Columbia.

 

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Mergers of oilfield service firms

Against this backdrop of strengthening commodities, oilfield service firms have been consolidating and merging. Their vital service. The mergers of smaller companies with large is partially motivated by the high capital costs and the lingering impact of the low crude prices of last year. Lenders have been hesitant to fund oilfield companies. Cost-savings are also behind some of the mergers and acquisitions.

 

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The market, currently, is still over supplied, so despite confidence shown in the drilling rights numbers, the equity companies and lenders are holding back somewhat on oilfield service firms.

 

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