Ensign Energy Services Outlook for 2024

Ensign Energy Services anticipates a positive outlook for 2024, with increased activity in both its Canadian and international operations. However, challenges persist in its California business in the near term.

Positive Oil Prices Driving Activity

The company predicts that positive oil prices will support steady oilfield services activity throughout the year. This activity is crucial for maintaining or increasing production, especially amidst well productivity declines and low drilled but uncompleted well inventory in certain U.S. regions.

Optimism in Canadian Operations

Ensign Energy Services remains optimistic about Canadian drilling activity, citing the completion of the Trans Mountain oil pipeline expansion project and the upcoming completion of the Coastal GasLink pipeline in 2024. Additionally, the company expects support from various liquefied natural gas projects like LNG Canada, indicating a positive outlook over the medium-to-long term.

Anticipated Increase in Canadian Activity

Canadian operations, accounting for a quarter of total revenue in 2023, are expected to see growth in the first quarter of 2024 due to favorable market conditions during the winter drilling months. Ensign notes that additional pipeline capacity and overall market conditions will further bolster activity throughout the year.

U.S. Activity Overview

While U.S. operations represented 58% of revenue last year, they experienced a modest decline in the fourth quarter of 2023, mainly due to mergers and acquisitions among customers and reduced activity in California. Ensign's California operations continue to face challenges, with drilling permit issues impacting programs in the short term. Despite this, the company expects stability in other areas of its U.S. operations during the initial quarter of 2024.

In conclusion, Ensign Energy Services looks forward to a promising year ahead, with strategic initiatives in place to navigate challenges and capitalize on growth opportunities.

Ensign Reports Steady International Performance

Ensign reported that its international operations remained steady in the final quarter of 2023 and are predicted to improve in the first quarter of 2024. The company currently has three active rigs in Oman, two in Bahrain, and two in Kuwait within its Middle East segment. Financially and operationally, all seven active rigs are expected to maintain stability in the upcoming quarter.

Despite recent volatility in global crude oil and natural gas commodity prices, as well as uncertain economic and geopolitical conditions, Ensign highlighted that oilfield services remained constructive. The company noted that global inflation, economic uncertainty, and geopolitical tensions have influenced commodity prices. Nevertheless, the outlook for global crude oil demand is projected to rise year-over-year. OPEC-plus nations are moderating supply according to market conditions.

Operational Highlights

  • Canadian drilling: 12,373 operating days in 2023 (a 9% decrease from 2022)
  • Canadian well servicing: 46,523 operating hours in 2023 (down 2%)
  • U.S. drilling: 15,759 operating days in 2023 (a 12% decrease)
  • U.S. well servicing: 121,147 operating hours in 2023 (a 2% decrease)
  • International drilling: 4,946 operating days in 2023 (a 24% increase)

Ensign's performance outlook remains positive as the company navigates evolving market dynamics.

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