U.S. oil and gas drilling permits slid in September, down 21% sequentially and 27% from a year ago, which suggests that a decline in the domestic rig count is possible, according to Evercore ISI.

The Evercore team led by James West compiles a monthly permit report using data from all major producing states and the Bureau of Ocean Energy Management. Permits have to be filed and approved before work on new wells or bypass/sidetrack existing wells is begun.

According to Evercore, a total of 3,469 permits were issued during September, and the decrease in the number of permits from August and a year ago “suggests a year-end pullback in the U.S. rig count is plausible,” even though high specification rigs likely will remain active.

“The data compares to the recent permit count high of 7,746 in August 2014 and the monthly onshore permit count peak of 8,441 in June 2008,” Evercore’s team said.

Weakening permit numbers from August were reported in Colorado, off 43%, Texas, which was down 26%, and in Kansas, down 34%. The losses were offset in part by sequential gains in Wyoming (21%), Utah (24%) and Montana (78%).

“Year-to-date the U.S. permits count is 5% below the count during the 2009 cyclical downturn,” analysts noted. “The U.S. horizontal rig count is currently at 919, down by 15 from the 2018 peak.”

Nine permits were issued in September for the U.S. Gulf of Mexico (GOM), down from 18 in August and from 15 in September 2017. Five permits were issued for new wells, two deepwater and three shallow water. Three permits were issued for sidetracks, while one was issued for a bypass.

Year-to-date through September, permits for new wells, sidetracks, and bypasses in the offshore increased from the first nine months of 2017. Ultra-deepwater permits doubled at eight, while deepwater/midwater permits also climbed. Shallow water permitting was down from the nine-month period of 2017.

“Meanwhile, the number of new exploration plans filed in the Gulf last month decreased to one (from eight in August) and operators filed plans to drill three new wells, down from plans to drill 46 wells in August,” analysts said. Two development plans were filed to drill during September, versus four in August.

For the first week of October, Evercore reported that a total of 1,139 U.S. onshore permits and one offshore plan were issued, increasing from September’s first week at 742. Year-to-date, the onshore weekly average was down at 867 permits from 2017’s weekly average of 912 permits.

In the GOM, activity was virtually flat in early October as only one plan was filed in the first week. The plan, filed by Chevron Corp., is a 10-well exploration project at 4,812 feet, which is expected to begin in May.