Offshore Drilling Could Return To California If Lawmakers Approve Budget

A rise in well permitting in recent weeks seems to point to robust drilling activity in the second half of this year, according to Barclays.

The bank monitors permitting data in 30 states, which has been on an upward trajectory of late.

Onshore drilling permit activity showed a 4% increase month-over-month in June, adjusted to reflect a comparable number of permitting days in June and May. This is up from a 2.7% rise in May, which followed a 7.9% drop in April.

“The gradual increase in permit activity will lead to a continued rise in drilling activity, with an acceleration likely in 2H13,” said Barclays analysts.

Bureau of Ocean Energy Management permitting data suggests that offshore drilling is headed in a similar direction.

“BOEM permit announcements tend to lag contract awards for the offshore drillers typically by a couple of weeks,” but “offshore permit issuances are one of the final steps prior to commencement of drilling operations and help to indicate future offshore activity levels” , the bank said.

Barclays noted that the deepwater rig count has climbed above levels recorded prior to a six-month moratorium on new wells following the Deepwater Horizon rig explosion and subsequent oil spill in the US Gulf of Mexico in 2010.

“The continued strong permitting environment in the US Gulf of Mexico suggests a continued improvement in the deepwater rig count, especially in light of recent, very successful discovery announcements in the lower tertiary,” Barclays said. “We expect this to persist in the coming months.”