Analyst: Despite ‘upward momentum,’ permit numbers still weak for the US GoM

Offshore staff

NEW YORK– Evercore ISI’s Oilfield Services, Equipment & Drilling group has released February’s US Drilling Permit Monthly report.

During January, the Gulf of Mexico’s numbers showed a notable gain and continued its positive streak from previous months. However, not all data was positive, with some indicators pointing to more uncertainty in theoffshore drilling market.

January’s total of 15 new permits grew 36% from 11 in December, and was down just 17% from permitting in January 2016. Shallow-water permitting doubled to four permits in January, with one new well, two side tracks, and one bypass approved.

Seven new midwater permits were filed in January, up from three filed in the previous month.Deepwater permitting showed “a modicum of resilience,” the analyst firm noted, falling just one permit month-over-month to a total of four for the month.

Ultra-deepwater permitting fell back to zero after a new well was filed in December.

Overall, new well permits grew from six in December to eight in January, while side track permits grew 150% to five and bypass permits decreased 33% to two. With the exception of ultra-deepwater, the sharpest decline year-over-year has come from shallow-water permitting, down 75% in 2017 from full-year 2016. Evercore ISI continued to point to these figure as one of particular concern.

“We believe thatoffshore drilling (and jackup utilization) will continue to languish as long as shallow-water permits remain at historically low levels. Offshore planning from last month suggests more GoM weakness moving forward, with just one deepwater plan filed in the month of January.

“Overall, we remain cautious in allocating optimism to the offshore space, but permitting trends have certainly shown upward momentum over the two months,” the firm noted.

02/14/2017