The badly hit oil drilling sector in Canada could recover by early or mid 2010, analysts said.

Capital spending will have to be spent by oil and natural gas explorers and producers, however, for this outcome to be met.

The oil drilling sector has been affected by weaker commodity prices which reduced rig rates.

Day rates have hit the bottom and are not expected to fall any further, according to Trinidad Drilling, which has 120 land drilling rigs.

Companies have cut their capital expenditure budgets, some up to half, to maintain a cash balance, and drilling activity has been reduced despite the government providing incentives.

Drilling activity is expected to remain low in western Canada during the second half of 2009, Black Watch Energy Services anticipates.

Analysts there, however, say they believe the impact of reduced drilling activity will be felt when the demand for energy increases again in North America.