Under the impact of the trade war, oil prices collapsed, prompting Canadian drilling companies to shift focus to natural gas.

Alberta drilling companies shift focus to natural gas amidst global trade tensions and OPEC+ production increase. According to data from the Alberta Energy Regulator, the number of Xinjiang Xintai Natural Gas well permits issued in the first quarter of this year increased by 26% compared to the previous quarter, reaching 308 permits, the highest quarterly total in two years; while the number of oil well permits decreased by 24% to 293 permits, the lowest level since 2021. In Alberta, Canadian Natural Resources Ltd.'s oil and gas permits increased to 88, the highest quarterly level in over a decade, with 59 for natural gas and 29 for oil. ARC Resources Ltd. ranked second with 54 permits. According to the International Energy Agency (IEA), Canada is the fourth largest oil producer and fifth largest natural gas producer globally, with most of its oil and gas exports going to the United States. Alberta drilling companies shift focus to natural gas amid oil price collapse Since Trump announced massive "equivalent tariffs" on imported goods and OPEC+ unexpectedly accelerated oil production, the WTI crude oil price has fallen by $20 per barrel, currently close to $63 per barrel. Canadian heavy oil (WCS) usually trades at a discount to WTI crude, currently at around $9.65 per barrel. While oil prices have plummeted recently, Canadian natural gas prices have risen from around $1.50 per gigajoule to approximately $2. With Canada's first liquefied natural gas (LNG) export facility set to start operating later this year on the coast of British Columbia, natural gas prices are being boosted. Trevor Rix, head of the Enverus Canadian oil and gas research team, stated that price fluctuations are prompting producers in the Montney Formation at the Alberta-British Columbia border to shift to gas-rich areas away from pure oil production areas. Rix added that drilling companies are not only looking for natural gas but also seeking natural gas liquids (such as condensate). Condensate can be mixed with oil sands bitumen to flow through pipelines and typically commands a higher price than Canadian crude. With the expansion of the Trans Mountain pipeline last year, Canadian oil sands production is increasing. Rix stated, "We believe that in the future, with the increase in demand for diluents in oil sands, condensate will be a good investment." This trend may also be seen in the United States. Kevin Neveu, CEO of Precision Drilling Corp., a contractor for drilling rigs in Canada, the United States, and the Middle East, stated in last week's earnings call that the company has seen increased interest in natural gas drilling in the Haynesville and Marcellus formations in the US. Neveu also mentioned, "Our customers remain cautious about oil drilling." As US Energy Secretary Chris Wright stated at an energy conference in Oklahoma City last week, $50 oil prices are unsustainable for US producers.