Analyst remains cautious despite increase in Gulf of Mexico drilling permits
Evercore ISI’s most recent update on US onshore and offshore drilling permits reveals growth in the Gulf of Mexico.
NEW YORK– Evercore ISI’s most recent update on US onshore and offshore drilling permits reveals growth in the Gulf of Mexico.
The analyst firm’s Oilfield Services, Equipment & Drilling group collects data from individual US states’ drilling boards and governmental agencies on permits filed, regarding this number as an indicator for near-term drilling activity.
The August total of nine new permits grew 50% from six in July, and was down 57% from permitting in August 2015. New well permits grew 33% from three to four.
There was also an incremental add in deepwater permits, from three in July to four in August.
Side track permits totaled three, as compared to two in July.
The analyst noted that ultra-deepwater permitting “showed life for the first time in months,” with one bypass awarded for remedial work in the GoM. The sharpest decline year-over-year has been the shallow-water permitting, down 69% from this time last year. Just three total new permits were issued for shallow-water wells, permitting for which is down 95% from 2014.
“We believe that offshore drilling will continue to show depressed activity as long as shallow-water permits remain at historically low levels. Offshore planning suggests more offshore negativity moving forward, as a mere three Chevron plans were submitted in August (on par with the three issued in July).
“Overall, we remain cautious in allocating optimism to the offshore space, as crude prices haven’t quite yet increased to levels needed to support appreciable offshore activity growth,” Evercore said.
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