Higher drilling activity to drive Q2 margins for oilfield services cos- RBC

Precision Drilling(Calgary)

07/07/2022 10:56

** RBC Capital Markets says fundamentals within the energy
sector appear strong as oil markets remain in a tightening cycle
and notes an increase in North America and global oil rig counts
    ** In Q2, the U.S. rig count increased 13% sequentially,
while the drilled-uncompleted well count decreased by 3% through
May- RBC
    ** Says higher U.S. drilling and completions activity, as
evidenced by the 13% sequential improvement in industry rig
counts, will help in annual margin expansion in Q2
    ** Brokerage raises forecast for North American land rig
counts for 2022/23 to range of 879-980 from previous estimate of
849-945 
    ** Higher service pricing, as contract books for rigs and
frac crews re-price toward prevailing spot rates, to reflect in
the Q2 results-RBC 
     ** Says it expects increased Exploration and Production
(E&P) budgets in the second half of the year which could present
a catalyst for the sector
    ** Brokerage's top picks include Schlumberger  SLB.N 
Helmerich & Payne  HP.N , Precision Drilling  PD.TO  and Secure
Energy Services  SES.TO  
    

 (Reporting by Rithika Krishna in Bengaluru)
 ((Rithika.Krishna@thomsonreuters.com; Twitter: https://twitter.com/rithika_krishna;))