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2013 Annual Report 22
rich zones in Alberta to service activity in the oil sands. These issues ultimately resulted in a 3% reduction in
Canadian rig activity in 2013 compared to 2012.
Outside of North America, customer spending is most heavily influenced by Brent oil prices. Due to the long-
term planning cycles associated with many international projects, customers do not tend to react to short-term
movements in oil prices. On average, Brent oil prices were flat in 2013 compared to 2012. During 2013, upward
pricing pressure, resulting from geopolitical tensions in the Middle East, was offset by weak European demand
caused by Europe's economic downturn, uncertainty regarding future economic growth in China and increasing
global oil supplies. Despite overall flat oil prices, our customers’ activity and spending levels increased moderately
in 2013 compared to 2012. As a result, the international rig count grew by 5% in 2013 compared to 2012, with the
largest gains seen in Africa, the Middle East and Continental Europe.
Oil and Natural Gas Prices
Oil and natural gas prices are summarized in the table below as averages of the daily closing prices during
each of the periods indicated.
2013 2012 2011
Brent oil prices ($/Bbl) (1) $ 108.81 $ 111.96 $ 111.05
WTI oil prices ($/Bbl) (2) 97.98 94.12 95.08
Natural gas prices ($/mmBtu) (3) 3.73 2.76 3.99
(1) Bloomberg Dated Brent (“Brent”) Oil Spot Price per Barrel
(2) Bloomberg West Texas Intermediate (“WTI”) Cushing Crude Oil Spot Price per Barrel
(3) Bloomberg Henry Hub Natural Gas Spot Price per million British Thermal Unit
Brent oil prices averaged $108.81/Bbl in 2013. Brent oil prices fluctuated throughout the year, with the highest
prices being seen in the first quarter as geopolitical disputes in the Middle East and Africa reduced output and
threatened future production. Overall, prices ranged from a high of $119.34/Bbl in February 2013 to a low of
$96.79/Bbl in April 2013. The low price in April was the result of unfavorable economic data from the U.S., Europe
and China that led to negative demand forecasts and fears of a global economic downturn. These fears eased
during the early summer months, and prices stabilized for the remainder of the year near the 2013 average price of
$108.81/Bbl. The International Energy Agency (“IEA”) estimated in its January 2014 Oil Market Report that
worldwide demand increased 1.2 million barrels per day to 91.2 million barrels per day in 2013 when compared to
2012.
WTI oil prices averaged $97.98/Bbl in 2013. Similar to Brent oil prices, WTI oil prices fluctuated throughout the
year, with the highest prices being recorded in the third quarter. Overall, WTI oil prices ranged from a low of
$86.68/Bbl in April 2013 to a high of $110.53/Bbl in September 2013. High prices during the third quarter were a
result of WTI crude increasingly displacing Brent-quality crude imports into North America through increased U.S.
oil production and improved crude-by-rail and pipeline infrastructure. The Brent-WTI spread, or the difference
between the spot prices of Brent and WTI crude oils, narrowed to within $0.66/Bbl during the third quarter, which
represented the lowest spread in three years. The spread widened significantly during the fourth quarter, however,
as WTI prices were pressured downward by increased supplies of light grade oil in the U.S., while Brent prices were
supported upward by temporary reductions in Libyan production due to increased political tensions. The Brent-WTI
spread closed the year in 2013 with a differential of $12.40/Bbl.
In North America, natural gas prices, as measured by the Henry Hub Natural Gas Spot Price, averaged $3.73/
mmBtu in 2013. Natural gas prices increased 35% during 2013 from 2012 average levels. Natural gas prices
improved throughout the year due to lower storage levels and reduced natural gas-directed rig counts. Overall,
natural gas prices ranged from a low of $3.08/mmBtu in January 2013 to a high of $4.52/mmBtu in December 2013.
According to the U.S. Department of Energy (“DOE”), working natural gas in storage at the end of 2013 was 2,974
billion cubic feet ("Bcf"), which was 16% or 562 Bcf below the corresponding week in 2012.