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Last spring, president and chief executive Scott Saxberg of Crescent Point Energy Corp., the Calgary-based company that is the largest driller in Saskatchewan, said he expects the royalty review will result in lower valuations for Alberta oil and gas assets and diversion of capital to other regions.

In an interview Tuesday, Kevin Neveu, president and CEO of Precision Drilling Corp., said the royalty review uncertainty is a factor in the current lower level of activity but oil prices are having a larger affect.

“The visibility has narrowed to very short term; in fact, we’re seeing decisions being made (by producers) on a day-to-day basis right now,” he said.

“They’re not analyzing their future cash flows based on the pricing today but they’ve just moved very short term in thinking until we get some sense of where the commodity price is heading.”

He said expectations of stronger activity suggested by higher oil prices in June have been washed away by the ensuing price weakness and he expects flat activity at best for the current quarter. He added wet weather last week led to some temporary downtime in the Alberta rig fleet which could have affected the rig count.

Mark Scholz, president of the CAODC, said Tuesday a one-week decline in utilization could be explained by rig movements and other factors and he hasn’t heard of any sudden changes in producer demands that would account for lower activity.

“It still is a very difficult time for a drilling contractor,” he added. “When we come into November and we start forecasting for 2016, it’s going to be very interesting to see where commodity prices are to see if 2016 is going to be worse than ’15.”

He pointed out the number of active rigs in Western Canada is at a 30-year low.

“We’re running about the same number of rigs today as we were in 1983 but we have more rigs. Things are incredibly difficult right now.”

Analyst Mark Westby of AltaCorp Capital said the decline in Alberta activity was widespread among major rig operators and could have been prompted either by temporary factors or by the recent sudden drop in oil prices.

dhealing@calgaryherald.com

Twitter.com/HealingSlowly