Report identifies Gulf of Mexico as ‘relative bright spot’ for deepwater drilling

Offshore staff

NEW YORKEvercore ISI’s US Drilling Permit Monthly report of February 2016 found a total of 18 new permits were issued in the US Gulf of Mexico last month, up from 15 in December but down from 36 a year ago.

Ten permits were issued for new wells, including two deepwater, six midwater, and two shallow-water. Five permits were issued for side tracks while three were issued for bypasses.

The analyst firm found that permits for side tracks and bypasses declined substantially year-on-year while new well permits have held up well thus far (up two year-over-year).

While the number of ultra-deepwater and midwater new well permits were relatively robust in 2015, deepwater new well permits fell 17% to 25 and shallow-water new well permits dropped 78% to 14 (from 65). Meanwhile, the number of new exploration plans filed in the GoM last month rose to eight (from two). Operators filed plans to drill a total of 27 wells, up from 10 in December.

No development plans were filed to drill during January and, Evercore said that the development of the Lower Tertiary appears to remain a long ways off, as the industry has filed few such plans over the past 12 months.

“With pricing having contracted sharply, we expect development activity to accelerate slightly in the coming months and years and believe the Gulf of Mexico will be the only relative bright spot for deepwater activity in 2016-2017,” Evercore said in the report.

In addition, one new offshore exploration plan was issued in the first week of February: Fieldwood Energy filed an exploration plan for one well in 59-ft (18-m) water depth estimated to start in April.


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