Permits to drill in the U.S. onshore hit their second highest level for 2018 in December at 5,647, behind only November, Evercore ISI said Tuesday.
Analysts estimated the domestic permit count for 2018 stood at 55,818, up 26% year/year.
Permitting in the final month decelerated 11% month/month (m/m), but permits filed in December increased 14% year/year.
The December tally was 27% lower than in August 2014, when oil prices were higher, and was down by one-third from June 2008’s 8,441 as unconventional activity was taking off.
All major oil and gas states, as well as Interior’s Bureau of Ocean Energy Management (BOEM), require drilling permits to be filed and approved before exploration and production companies may drill a well or bypass/sidetrack an existing well.
Evercore tracks permit data as it is “a leading indicator for near-term drilling activity. Even before drilling or re-entry begins, companies incur significant lease costs, legal fees, and surface geological surveys.”
Permitting in the Lower 48 was weighed in December in part by a 64% m/m slump in Colorado, where permits filed fell to 437 from 1,228. Texas, home to the Eagle Ford Shale, most of the Permian Basin and a chunk of the Haynesville Shale, also saw permitting down, off 20% from November to 859 from 1,080.
“The trend was pushed downwards even more with the deceleration in California (minus 80% m/m) and Kansas (minus 48% m/m),” analysts said.
Still, Wyoming, where producers are plying the Williston Basin, saw its permit count steadily increase in the last six months of 2018, an estimated 33% compound annual growth rate from July-December, according to Evercore. Illinois also showed a “healthy increase” m/m to 53 in December from 22, up 141%.
For the Gulf of Mexico (GOM), 16 permits were issued, one higher than in November, analysts noted.
New well offshore permits fell by one-third from November to six, “grinded by a deepwater and midwater permit decrease from three to two and from four to two, respectively.”
Sidetrack drilling permits climbed by five in December, up 67% from November, lifted by more deepwater permits, which increased by two, totaling four. Total bypass permits increased to five, also up 67% m/m, while midwater permits increased to three from one.
“Offshore permits totaled 200 for the year ended 2018,” analysts said. “Permit growth was driven by an increase on new wells to 83 (up 28%y/y), sidetrack drilling permits stood at 71 (up 25% y/y) and bypass experienced an increase to 46 (up 35% y/y).
No development plans were filed for the GOM in December. In addition, the first week of January, during which the federal government was shut down, found no drilling plans filed, according to BOEM.