Advertisement
During the first quarter of 2013, Essential's equipment expenditures of $6.8 million were primarily directed towards progress payments for the 2013 capital builds and maintenance capital expenditures. During the first quarter of 2013, Essential commissioned one mobile free standing, all-period double service rig purpose-built to work on SAGD wells.
Three months ended March 31,(Thousands of dollars) 2013 2012----------------------------------------------------------------------------Growth capital(1) $ 4,766 $ 6,088Maintenance capital(1) 2,048 4,102----------------------------------------------------------------------------Total equipment expenditures $ 6,824 $ 10,190----------------------------------------------------------------------------
Essential's 2013 capital spending budget of $45 million is comprised of $32 million of growth (1) capital and $13 million of maintenance (1) capital.
The following table shows the expected in-service dates of the major equipment being built over the remainder of 2013:
Expected In-Service Date Quantity 2013----------------------------------------------------------------------------Deep masted coil tubing rigs 4 Q3(2),Q4(2)Deep coil tubing rig converted from intermediate 1 Q2Nitrogen pumpers 2 Q2 (2)Double rod rig 1 Q4Double service rigs - mobile free standing, all-period 3 Q2(1), Q4(2)(two of these are purpose-built for SAGD wells)----------------------------------------------------------------------------
Compared to the capital budget announced in December 2012, Essential has cancelled one double service rig and will build one double rod rig.
During the first quarter, Essential removed two masted coil tubing rigs from service. These two rigs, the last rigs of their kind in Essential's fleet, were among the first masted coil tubing rigs built for use in the WCSB. These rigs have nominal net book value and/or sales proceeds, and Essential expects to dismantle this equipment. The remainder of the deep coil tubing fleet is relatively new and, as of March 31, 2013, the average age of the deep coil tubing fleet is 4 years from construction or most recent recertification date.
OUTLOOK
After spring break-up, Essential expects that oilfield service activity will be similar to 2012. Global economic concerns are still prevalent, impacting the stability of oil prices, and while there has been some recent improvement in the oil price differential, longer-term infrastructure solutions are still required. A colder winter has reduced natural gas storage levels and the NYMEX price for natural gas has recently risen above US $4/mmbtu. There is longer-term optimism with certain foreign investment focused on the Montney and Horn River natural gas basins to develop the reserves to provide gas to the proposed liquefied natural gas ("LNG") export facilities in British Columbia. Such development would increase the demand for oilfield services to complete these wells.
