By OGJ editors
HOUSTON, Dec. 2 -- US drilling activity is expected to increase in 2004 because rig efficiency is improving, said James K. Wicklund, an analyst with Banc of America Securities LLC.
He made that forecast in a Nov. 26 research note, saying US drilling activity is expected to increase even if exploration and production companies do not materially increase their spending next year.
Based upon preliminary projections for the firm's E&P coverage universe, Banc of America E&P analysts believe that exploration and development spending will be roughly flat in 2004 compared with 2003, Wicklund noted.
"However, this does not concern us as 2003 E&D budgets for the same companies currently reflect a 14% increase in spending this year vs. only a 2% increase expected for 2003 at this time last year," Wicklund said.
"But even if spending from E&P companies were not to increase materially next year, domestic drilling activity should still increase as efficiency per rig improves," he said.
Meanwhile, the Baker Hughes Inc. Canadian rotary rig count shows a record year this year, Wicklund noted. "Year to date, the Canadian rig count is up 56.7%, or 157 rigs," he noted.
Separately, the Calgary-based Petro-Canada announced it has approved a capital and exploration expenditure program of $2.6 billion for 2004 compared with an estimated 2003 program of $2.5 billion, based upon figures available on Nov. 28.