In March 2017, no drilling permits were issued to drill new wells in the shallow water of the Gulf of Mexico. Two permits were issued in February compared to two in the previous month.
Deepwater drilling permits
Deepwater permits fell in February but bounced back in March. Four deepwater drilling permits were issued in March, up from one in February.
A drilling permit gives oil companies approval to start the process of drilling for wells. It’s important to track drilling permits, as the number gives us an idea of how active rig counts and utilization rates could move in the future.
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).
A total of three shallow well drilling permits were issued in 1Q17. This figure is down from five permits issued in the same period last year. A total of 12 deepwater drilling permits were issued in 1Q17, down from 19 in 1Q16.
Returned and pending applications
Like new applications, returned and pending applications give us an idea about the probability of permit approvals in the coming months. However, returned applications might not be granted if companies don’t comply with safety regulations and standards.
In March 2017, 11 drilling applications were returned for more information or clarification. In the same month, 19 applications were pending.