HOUSTON – The oil patch gave up some new hints Monday about what drilling activity may look like as oil prices plummet.
November’s batch of new Texas drilling permits fell 50 percent compared to the prior month, in a sign that oil companies are holding back from boring into their sweetest spots while crude prices linger below $70 a barrel. It’s the first time in the past year that the number of new Texas drilling permits has declined: It rose as much as 24 percent in September, according to Austin-based oil field analytics firm Drillinginfo.
For now, it is not necessarily a signal that shale oil producers have found their “breakeven” point, but it shows oil companies don’t want to drill up good spots in what could be a temporary low-price environment, said Drillinginfo CEO Allen Gilmer in an email.
“Given the faster decline of unconventional wells, more of your economics are dependent on your year-forward production,” Gilmer said. “Essentially, people are drilling locations that hold acreage.”
Drillinginfo data shows there were 1,473 new Texas permits in November, down from 2,947 in October. Gilmer said the rest of the United States is seeing the trend, as well.