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REGINA — Saskatchewan should see 1,660 oil and gas wells drilled this year, less than half the wells forecast last fall, but 155 more than forecast in April, the Petroleum Services Association of Canada (PSAC) said in its latest forecast update released Thursday.

While Saskatchewan and B.C. should do slightly better than PSAC’s April forecast, Alberta and Manitoba are expected to underperform, with significantly few wells drilled than forecast three months ago.

On Thursday, PSAC released its third-quarter update to its 2015 Canadian drilling forecast, which projected a total of 5,320 wells to be drilled in Canada this year. That total remains unchanged from PSAC’s second-quarter update, which drastically reduced its October 2014 forecast of 10,100 wells by 4,780 wells — a 47 per cent decrease.

“PSAC drilling activity forecast to the end of year remains flat,” said Mark Salkeld, PSAC’s president and CEO. “By now, most of the shock from the steep drop in oil prices we experienced at the beginning of 2015 has been absorbed. The adjustment down last quarter was dramatic; and now oversupply and low cash flows means there’s no better news for drilling activity from now to the end of year, except perhaps that it’s holding.”

PSAC based its third-quarter update to the 2015 forecast on average natural gas prices of $2.50 per thousand cubic feet (AECO), crude oil prices of US$53 per barrel (WTI), and the Canadian dollar averaging 77 cents US.

Provincially, PSAC projects 2,839 wells to be drilled in Alberta, down 50 per cent from the 5,740 wells in PSAC’s October 2014 forecast. Manitoba is forecasted to drill 251 wells, down by 179 wells from the October forecast, while British Columbia’s count has increased slightly to 559 from 555 forecast initially.

“Small changes with rig counts up in one area, and down in another, means the numbers have balanced out across the map and the overall forecast picture remains unchanged,’’ Salkeld said. “Better performance in Saskatchewan, where top-performing producers were in a position to take advantage of lower overall service and completion costs, was balanced by a drop in Alberta where a lot of uncertainty has added to the chill from the oil price shock,” adds Salkeld.

While not mentioned specifically in the report, Crescent Point, Saskatchewan’s largest oil producer, announced in March it planned to spend $1 billion of its $1.45-billion 2015 capital budget in the province. Crescent Point budgeted $400 million to drill 184 wells in the Viewfield-Bakken area in the southeast, $300 million to drill 110 wells in the Shaunavon area in the southwest and $190 million drilling 45 wells at Flat Lake, also in the southeast.

More than half of Crescent Point’s 2015 production and one-third of its 2016 production are hedged at $88 and $83 per barrel respectively.

In the first quarter, the company reported that funds from operations were reduced by 25 per cent, despite a 49 per cent drop in average oil price, partially offset by a 18 per cent increase in average production.

bjohnstone@leaderpost.com