Capital discipline by Lower 48 operators and market volatility appeared to temper oil and gas permitting during April, particularly in Colorado and the Permian Basin, according to a review by Evercore ISI.

Permitting during the fourth month of the year indicated a “more opaque” forecast in the near term following a “sharp contraction” month/month (m/m) across the Lower 48, mostly driven by declines in the Denver-Julesburg (DJ) Basin/Niobrara formation and the Permian Basin.

DJ permitting plummeted from March by 1,181 permits, while the Permian saw a decline of 277 permits m/m. Drilling permits also contracted in the Eagle Ford Shale to 124, off 73 m/m, and in the Bakken Shale to 128, down 26 from March.

“Gassy formations demonstrated some resiliency as monthly declines decelerated,” with the Marcellus Shale posting 149 permits, off by 54 from March, while the Haynesville Shale’s permitting declined to 141, or 85 lower m/m.

By Evercore’s tally, which compiles its monthly reports using state and federal data, said a total of 4,905 permits were issued in April, down 1,784 m/m but nearly 7% higher year/year. Permitting has been flat year-to-date, analysts noted.

“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),” analysts said. “We believe a few reasons come to mind here as the sharp declines and inclines in well permits in the first have been the result of a number of factors.”

First, there was the impact from the rapid deterioration during December in oil prices, which led to a 35% m/m decrease in February permitting. Permits rebounded by 57% in March, the highest m/m jump on record, as West Texas Intermediate prices firmed and there was a more resilient 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 exploration and production companies has begun to seep into drilling plans.

If year-to-date activity is an indicator, said analysts, “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 puts further pressure on supply/demand dynamics.”

U.S. offshore activity also was weak in April, with only four new permits issued, down by nine m/m. The decline was blamed on lower permitting activity in midwater, “which posted no activity in April following 10 permits 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.”