U.S. oil and gas drilling permits climbed 23% year/year in October and were up 39% from September, a strong sign that activity is likely to improve early next year, Evercore ISI said Thursday.

All major states and the Department of Interior’s Bureau of Ocean Energy Management require drilling permits to be filed and approved before an exploration and production company may drill a well or bypass/sidetrack an existing well. Land permits usually are submitted to individual state regulators, while offshore/Alaska permits are reviewed and approved by the Bureau of Safety and Environmental Enforcement.

According to the compiled data, a total of 4,820 U.S. permits were issued last month, a sharp uptick both month/month and year/year, said analyst James West and his team.

“This suggests drilling activity should improve in early 2019,” West said. “We continue to believe the high spec rig count will remain fully utilized for the foreseeable future.”

In fact, during the first two weeks of November, Evercore reported that a total of 2,849 onshore permits and four new Gulf of Mexico (GOM) plans were issued.

“On a two-week basis, onshore permits increased 14%, climbing from the two-week total of 2,498 in October,” West said. “The year-to-date onshore weekly average is up at 1,037 permits, versus 2017’s weekly average of 821 permits.”

The data has continued to indicate a steady increase in rig permits, which through October increased 3% on a compound annual growth rate over 2015-2018. The latest numbers, however, are below the year-to-date peak of 5,586 in March.

A “significant” uptick in permitting during October versus September was reported in Wyoming (106%), Colorado (48%) and in Texas (15%), while Nevada permitting fell 100%, New York was off by 75% and Nebraska permitting from September declined by 71%.

“Year-to-date the U.S. permits count is 1% below the count during the 2009 cyclical downturn,” West noted. “The U.S. horizontal rig count is currently at 935, which is the highest peak in 2018, surpassing the 934 from June 8…”

GOM permitting also gained steam during October, with 20 permits issued, which was double the September count and up from 12 in October 2017. Eight permits were issued for new wells, including three deepwater, two midwater and three shallow water wells. No permits were issued for ultra-deepwater, according to the data. Six permits were issued for sidetracks and six were issued for bypasses.

“Meanwhile, the number of new exploration plans filed in the GOM in October totaled two (from one in September), and operators filed plans for 16 new wells, up from plans to drill three wells in September,” West said.