No drilling permits were issued to drill new wells in the shallow water of the Gulf of Mexico in October 2016, as in September. This is the fourth straight month in which no drilling permits were issued for shallow water.
The number of deepwater permits in the Gulf of Mexico dropped in October 2016, after rising for two months. In October 2016, four drilling permits were issued, down from six in September. In the last ten months of 2016, drilling permits have shown an uptick in five months.
A drilling permit gives oil companies approval to begin the process of drilling for wells. It’s important to track drilling permits, as the number of permits gives us an idea how future active rig counts and utilization rates could change.
A higher number of drilling permits suggests an improving outlook for offshore drilling (IYE) companies such as Ensco (ESV), Ocean Rig (ORIG), Seadrill (SDRL), Seadrill Partners (SDLP), Noble (NE), Transocean (RIG), Atwood Oceanics (ATW), Diamond Offshore Drilling (DO), Rowan Companies (RDC), and Pacific Drilling (PACD).
In 2015, the highest number of new well permits for offshore drilling in any given month was two. Before the oil price plunge began in 2014, the highest new well permit count in any given month was nine.
For deepwater wells, the highest number of new well permits in any given month was 11 in 2015 and 12 in 2014. The current numbers are almost one-third of that.
Like new and pending applications, returned and pending applications give us an idea of the probability of seeing permits approved in the coming months. However, returned applications may not be granted if companies fail to comply with safety regulations and standards.
In October 2016, 16 drilling applications were returned for further information or clarification, as in September. In October, ten applications were pending, compared with eight in September.
Interested in ATW? Receive notifications on the latest research and sign up for a Market Realist account in one simple step: