At least a few Texas oil drillers seem to think the oil collapse has hit bottom.
Last month, Texas issued 656 permits to drill wells, a slight improvement over May. Perhaps more importantly, it represents another month with figures above their worst level in January.
June’s numbers are a far cry from the 2,200 permits issued in June 2014. Still, the trend line has now turned, at least temporarily.
That doesn’t mean more wells are producing oil. The Texas Railroad Commission, which regulates the oil and gas industry in the state, reported that the number of “completions” — wells drilled, finished and ready to pump oil — dipped again, from 1,030 in May to 900 in June.
Total well completions so far in 2016 are 6,429, a drop of about half against the same period last year.
And all that makes sense, said Allen Gilmer, chairman and CEO of Drillinginfo, an industry consultancy. There’s usually a few-month delay between acquiring permits to drill a well and actually drilling it. And there’s another delay between completing the well and reporting it to the state: Oil producers have 90 days to file with the Railroad Commission.
Still, Gilmer said, June’s numbers do give a hint at the future: “It is a positive indication that there may be some more drilling coming up,” he said.
Just don’t read too much into it, he warned. The uptick is too slight — just 50 permits, or less than 10 percent from May to June — to be substantive.
And remember that prices and rig counts dove last summer, too, before stabilizing, then diving again.
“We’ve seen some false bottoms,” Gilmer said.
Gilmer said he has yet to pick up signs of a sustained recovery.