There was a temporary ban from the Democrats on new LNG project in the USA.
With Trump in power, these ban will be lifted.This will increase the demand for gas drilling in the Permian.
Politics aside, this is good news for the drillers.
I will once again refer you to the recent outlook from Precision Drilling(At the end of my post).
They stated that
DEMAND COULD EXCEED SUPPLY. Akita is already running 13 of their 17 rigs in Canada in October (76%) and 13 out of 15 in the USA(87%)
At the end of the quarter in Canada,AKITA was at 71% utilization compared to industry utilization of 57%.
In the USA at the end of the quarter,the 12 active rigs (80%) was twice the utilization rate
compared to the 40% of the industry as a whole.
Akita is firing from all cyclinders and it is not at all reflected in it's deep discouted stock price.
The outlook for AKITA in Canada for the remainder of the year and the first quarter of 2025 is optimistic, with increasing demand in oil sands drilling and deep natural gas drilling — two key areas of focus for the Company. This trend is expected to lead to a robust fourth quarter of the year in Canada and into the first quarter of 2025. The Company’s capital expenditures in Canada will be on routine capital items for the balance of the year with no upgrade capital anticipated until 2025.
In the US, despite ongoing reductions in the active rig count in the industry, the outlook for AKITA in the fourth quarter of the year is positive. The Company ended the third quarter with 12 active rigs in the US, which is expected to increase slightly in the fourth quarter and hold into the first quarter of 2025. Ongoing investments in Permian natural gas takeaway capacity are likely to boost future drilling activity, along with the continued decline in drilled but uncompleted wells. This should lead to increased long-term demand in the Permian basin, benefiting AKITA.
Here is once again Precision's outlook.It is worth reading.
OUTLOOK
The long-term outlook for global energy demand remains positive with rising demand for all types of energy including oil and natural gas driven by economic growth, increasing demand from third-world regions, and emerging energy sources of power demand. Oil prices are constructive, and producers remain disciplined with their production plans while geopolitical issues continue to threaten supply. In Canada, the recent commissioning of the Trans Mountain pipeline expansion and the startup of LNG Canada projected in 2025 are expected to provide significant tidewater access for Canadian crude oil and natural gas, supporting additional Canadian drilling activity. In the U.S., the next wave of LNG projects is expected to add approximately 11 bcf/d of export capacity from 2025 to 2028, supporting additional U.S. natural gas drilling activity. Coal retirements and a build-out of AI data centers could provide further support for natural gas drilling.
In Canada, we currently have 75 rigs operating and expect this activity level to continue until spring breakup, except for the traditional slowdown over Christmas. Our Canadian drilling activity continues to outpace 2023 due to increased heavy oil drilling activity and strong Montney activity driven by robust condensate demand and pricing. Since the startup of the Trans Mountain pipeline expansion in May, customer activity in heavy oil targeted areas has exceeded expectations, resulting in near full utilization of our Super Single fleet. Customers are benefiting from improved commodity pricing and a weak Canadian dollar. Our Super Triple fleet, the preferred rig for Montney drilling, is also nearly fully utilized and with the expected startup of LNG Canada in mid-2025, demand could exceed supply.
In recent years, the Canadian market has witnessed stronger second quarter drilling activity due to the higher percentage of wells drilled on pads in both the Montney and in heavy oil developments. Once a pad-equipped drilling rig is mobilized to site, it can walk from well to well and avoid spring break up road restrictions. We expect this higher activity trend to continue in the second quarter of 2025.
In the U.S., we currently have 35 rigs operating as drilling activity remains constrained by volatile commodity prices, customer consolidation and budget exhaustion. We view these headwinds as short-term in nature, which will continue to suppress activity for the remainder of the year and into 2025. However, looking further ahead, we expect that a new budget cycle, the next wave of Gulf Coast LNG export facilities, and new sources of domestic power demand should begin to stimulate drilling.