Drilling activity near Lloydminster still slow despite big uptick from one year ago

The Lloydminster area of western Canada has been hit particularly hard by the downturn. Activity levels have fallen off a cliff since 2014.

For the first 2 months of 2017, 82 wells have been drilled within a 50 mile radius of the city of Lloydminster according to data from the BOE Report Well Activity Map. This is a major increase from last year’s abysmal 23 wells drilled, however a long way off from 2014 levels when 267 wells were spudded. Most major areas in western Canada have seen activity levels rebound to approximately 50-55% of the activity of 2014 highs.

Valuations in the region have also been low compared to other areas. Where Shaunavon and Viking deals are fetching $50,000-$60,000/BOE/D, assets in the Lloydminster region are valued between $15,000-$35,000/BOE/D range.

The greater decrease in activity levels and valuations is likely due to the oil quality in the area – which tend to be of a much higher gravity with high water cuts. However wells are much cheaper–especially compared to wells drilled into prolific shale plays.