The capital discipline instilled by many exploration and production (E&P) companies has put the squeeze on permitting in the Lower 48, with a “more opaque outlook” expected in the near term, according to Evercore ISI.

Analysts led by James West compiled April permitting data from state and federal officials to gauge activity levels in the onshore and offshore.

Overall, there was a month/month contraction across the Lower 48, driven by a decline almost across the board, led by sharp reductions in Denver-Julesburg/Niobrara formation activity.

The Colorado region reported 1,181 fewer permits in April than in March, while the Permian Basin reported 277 fewer permits month/month. Drilling permits also contracted in the Eagle Ford Shale to 124, down 73 from April, and in the Bakken Shale, which issued 128 permits, 26 fewer than in March.

Overall, 4,905 permits were issued in April, off 1,784 month/month but up 7% from a year ago and flat year-to-date, according to Evercore.

“Gassy formations demonstrated some resiliency as monthly declines decelerated,” with the Marcellus Shale posting levels of 149 permits, down 54 from April. The Haynesville Shale’s permits declined to 141, off 85 from slower activity in North Louisiana.

“Our calculations show that the variability in permitting applications for U.S. onshore wells so far this year has surpassed every year on record going back to 2008 (with 2013 as the second most volatile year),” West noted.

Analysts said “a few reasons come to mind here as the sharp declines and inclines in well permits in 1Q2019 have been the result of a number of factors,” initially from the oil price declines in December.

The price plunge led in a 35% month/month (m/m) decrease in February drilling permits. March permits rebounded 57%, however, the highest m/m increase on record as West Texas Intermediate oil prices firmed against a more stable economic backdrop.

“Then, April permitting levels experienced a 27% m/m decline (the second highest on record) as unusually adverse weather in February and a more capital-disciplined mentality amongst E&Ps has begun to seep into drilling plans,” West said.

“What we think is important to highlight here is that if year-to-date activity is any indicator, then it’s fair to expect further U.S. onshore permit volatility going forward, especially on the heels of the recent U.S.-China trade war saga and a number of destabilizing indicators in the Middle East and Venezuela put further pressure on supply/demand dynamics.”

U.S. offshore activity during April also was weak, according to Evercore, as new well permits declined to four, down by nine m/m. The falloff was blamed on fewer permits for midwater activity, which posted no permits in April after 10 were filed in March.

“However, on a year-to-date basis, new well permits of 11 so far in 2019 are up 57% versus 2018 due to a resurgence of activity in shallow water.”

Overall, said Evercore, total U.S. offshore permitting is down 11% year-to-date because of fewer sidetrack permits to drill in midwater and shallow water basins.