A total of 3,600 permits to drill onshore in the United States were issued during July, down 28% from June but 8% higher than a year ago, as weaker numbers in Colorado, Texas and Wyoming were offset by gains in Ohio and North Dakota, according to Evercore ISI.

Analysts led by James West issue a monthly report about domestic onshore and offshore permits filed, which they believe is a leading indicator for near-term drilling activity. The permit data, while stronger than a year ago, pales in comparison to the most recent permit count high of 7,746 in August 2014. The monthly onshore permit count peaked in June 2008 at 8,441, Evercore noted.
Permit numbers were weaker in July versus June in Wyoming (down 39%), Colorado (down 45%) and Texas (down 23%), but the declines were partially offset by a strong gain in Ohio, which saw a 120% month/month surge, and in North Dakota, with permits up 14%.

Evercore reviews permits from all the major producing states and for the offshore, from the Department of Interior’s Bureau of Ocean Energy Management. Permits have to be filed and approved before new wells are drilled or existing wells are bypassed/sidetracked. Most onshore permits are issued several months before drilling begins, while offshore permits are often secured even further in advance.

Year-to-date, Evercore estimated the U.S. onshore permit count is 1% below the count during the 2009 cyclical downturn.

Of note, said Evercore, is that a total of 1,744 U.S. onshore permits were issued in the first two weeks of July, with an average of 866 weekly permits, down from June’s 1,005 average. Year-to-date the onshore weekly average had risen to 1,027 permits versus a comparable period of 2017, when they averaged 779.

In the U.S. Gulf of Mexico, 17 permits were issued in July, versus 14 a year ago and 16 in June.

“Seven permits were issued for new wells, including two ultra-deepwater, one deepwater, two midwater, and two shallow water,” analysts noted. “Seven permits were issued for sidetracks while three were issued for bypasses.”

Since the start of this year, permits for offshore sidetracks and bypasses have declined from the same period a year ago, while new well permits “have held up relatively well thus far” and are flat year/year.

Ultra-deepwater year-to-date permits compared to the same period a year ago came in flat, while deepwater permitting has risen 32% and midwater is up 8%. Shallow water permitting had fallen 39% year-to-date.

“Meanwhile, the number of new exploration plans filed in the Gulf last month fell to one (from three in June), and operators filed plans to drill only four wells, down from plans to drill 28 wells in June,” analysts noted. “No development plans were filed to drill during July,” after four were filed in June.