Offshore staff
NEW YORK– Evercore ISI’s US Drilling Permit Monthly report of April 2016 found a total of 13 new offshore permits, which it found to be “on par with the March and February figures.” However, the total is down 28% from April 2015.
Theanalyst firm’s Oilfield Services, Equipment & Drilling group monitors all US permit data for land and offshore drilling activity for the monthly report, as it believes the information to be “a leading indicator for near-term drilling activity.”
New bypass permits halved from eight to four, an indication of better execution in new well drilling and development, it found. Similarly, new well permits grew 50%, from four in March to six in April.
Although ultra-deepwater permits have remained constant, this number did not necessarily reflect the full picture the sector faces, Evercore warned in the report.
“New ultra-deepwater and midwater permits increased month-to-month, but have fallen 50% year/year. Ultra-deepwater permits have remained relatively consistent due to their infrequency, although ultra-deepwater plans have all but evaporated heading into 2Q 2016,” it said.
Other data indicators provide more mixed results, with at least one other result showing some cause for concern.
However, the sharpest decline year-over-year since 2014 has been in shallow-water permitting, the group found, down 89% from this time last year, with three total new permits were issued for shallow water wells, down 93% from 2014.
“Offshore drilling will continue to show anemic movement as long as shallow-water permits remain at historically low levels,” Evercore noted.
The analyst noted that total permit numbers (from both onshore and offshore) eclipsed the 2,000 mark for the first time in 2016: 2,106 total US permits in April mark the third sequential monthly increase, as seasonal activity gains momentum heading into the summer.
Last year saw a permit low of 3,102 in December, so May 2016 would have to show 34% growth just to reach the 2015 monthly bottom, Evercore noted. May permit numbers are on pace to match April totals, with 510 permits issued through May 9.
“On a more positive note, well plans increased from seven in March to eight in April,” Evercore continued. “Eight new exploration plans were probably the result of seasonal drilling increases.
“Hopefully, better permitting and a marginal increase in exploration plans offshore will buoy rig activity in theGulf of Mexico, particularly heading into what we predict will be an offshore capex bottom in 2H 2016,” Evercore said.
05/10/2016
