The delay in deepwater drilling for oil and gas in the Gulf of Mexico may be about to end, as the government has notified the companies impacted that they may be able to resume drilling without submitting revised drilling plans that would be subject to heightened environmental regulatory review.

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In May 2010, the Department of the Interior imposed a number of actions in response to the BP (NYSE:BP) oil spill in the Gulf of Mexico, including a six month moratorium on deepwater drilling. This moratorium impacted 13 companies that had projects underway in that region. Although the moratorium ended in October 2010, no previously approved exploration or development drilling has resumed.

2011 Actions
The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) sent out notice that operators, in most cases, that had operations interrupted by the moratorium will not have to submit revised exploration or development plans for review under the National Environmental Policy Act (NEPA). The operators must comply with new rules drafted by the agency in 2010.

The Players
The public companies impacted by the latest rule from the BOEMRE include ATP Oil & Gas Corp. (Nasdaq:ATPG), BHP Billiton (NYSE:BHP), Chevron (NYSE:CVX), Cobalt International Energy (NYSE:CIE), ENI (NYSE:E), Hess Corp. (NYSE:HES), Marathon Oil Company (NYSE:MRO), Murphy Oil (NYSE:MUR), Noble Energy (NYSE:NBL) and Statoil (NYSE:STO), among others.

Three Worth Noting
ATP Oil & Gas was one of the hardest hit by the moratorium and subsequent delays in drilling. The MC 941 #4 and 942 #2, two wells at the company's Telemark Hub, were planned for the second half of 2010, and had to be rescheduled for 2011. The company also had to delay the MC 711 #9 and #10 wells located at the Gomez Hub. A fifth sidetrack well at the Canyon Express area was also put off by the moratorium.

Despite the delays, the company is still committed to the deepwater Gulf of Mexico, and now has added an additional ten wells to its drilling inventory over the next two years.

Cobalt Exploration has more than 200 blocks under lease in the Gulf of Mexico and has an extensive drilling program planned here over the next few years. The company was about to spud the North Platte well into the Lower Tertiary formation when the moratorium was imposed. Cobalt Exploration has re-filed for a permit for this well along with a second prospect in the deepwater.

Marathon Oil was drilling the Innsbruck prospect in the Gulf of Mexico and had to suspend drilling when the moratorium was announced. The company has identified 21 prospects on its leases and plans between 5 and 7 exploratory wells in 2011.

The Bottom Line
The government's latest pronouncement on the approval process for deepwater drilling in the Gulf of Mexico may lead to the restarting of oil and gas exploration and development in that basin in 2011. (For additional stock analysis, see 6 Stocks That Will Profit From Gulf Infrastructure Upgrades.)

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Tickers in this Article: BP, CIE, ATPG, APC, CVX, STO, HES, MUR, MRO, E, BHP

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