EOG Resources (NYSE:EOG) and Devon Energy (NYSE:DVN) are sitting on thousands of federal onshore drilling permits, more than any other companies, according to a Bloomberg analysis, although neither plans to increase production by more than 5% even as U.S. oil futures exceed $120/bbl.
Bloomberg's review of federal drilling permits shows that half of unused onshore permits are for acreage in New Mexico's Lea and Eddy counties, part of the Permian Basin that is responsible for most of U.S. oil production, and EOG held the most permits there, followed by Devon and Occidental Petroleum (NYSE:OXY).
Bloomberg notes oil produced on the New Mexico side of the Permian tends to generate higher quantities of associated natural gas and water, which are more costly to dispose of in New Mexico than in Texas, where air and water regulations are more lenient.
President Biden criticized oil companies as he announced the U.S. ban on Russian oil imports in response to the invasion of Ukraine, saying U.S. producers "have 9,000 permits to drill now... they can be drilling right now."
Oil companies may feel it is safer to hold onto drilling permits now in case Biden, who campaigned on pledges to combat climate change and limit new oil and gas permitting on public lands and waters, clamps down on drilling later.
ConocoPhillips CEO Ryan Lance says it would take 8-12 months to see "the first drop of new oil" if the company decided immediately to start pumping, and Occidental CEO Vicki Hollub says supply chain constraints and personnel shortages are severely limiting U.S. drillers from raising production.