Dallas Fed Energy Survey Outlines Oil and Gas Activity

Activity in the oil and gas sector was relatively unchanged in the first quarter of 2024, according to oil and gas executives responding to the Dallas Fed Energy Survey, the Dallas Fed stated in its latest survey.

“The business activity index, the survey’s broadest measure of conditions energy firms in the Eleventh District face, was 2.0 in the first quarter, suggesting little to no growth during the quarter,” the Dallas Fed noted in the survey.

“The index was essentially unchanged from last quarter,” it added.

Oil and gas production decreased in the first quarter, according to executives at exploration and production (E&P) firms, the Dallas Fed said in the survey.

“The oil production index moved down from 5.3 in the fourth quarter to -4.1 in the first quarter, suggesting a small decline in production,” it noted.

“Meanwhile, the natural gas production index turned negative, falling sharply from 17.9 to -17.0,” it added.

The Dallas Fed also noted in the survey that costs increased at a slightly faster pace for both oilfield services and E&P firms.

“Among oilfield services firms, the input cost index increased from 21.3 to 31.2. Among E&P firms, the finding and development costs index was relatively unchanged at 24.2,” it said.

“Meanwhile, the lease operating expenses index increased from 22.6 to 33.7,” it added.

The Dallas Fed said in the survey that oilfield services firms reported modest deterioration in nearly all indicators. 

“The equipment utilization index remained negative but increased from -8.4 in the fourth quarter to -4.2 in the first,” it said.

“The operating margin index moved down from -32.0 to -35.4, suggesting declining margins. The index of prices received for services was unchanged at -6.2,” it added.

The aggregate employment index was relatively unchanged at 3.4 in the first quarter, the Dallas Fed stated in the survey.

“While this is the 13th consecutive positive reading for the index, the low-single-digit reading suggests slow net hiring,” it warned.

“The aggregate employee hours index increased from 2.8 in the fourth quarter to 6.9 in the first quarter. Additionally, the aggregate wages and benefits index increased from 21.2 to 32.8,” it added.

The company outlook index rebounded in the first quarter, jumping 24 points to 12.0, the Dallas Fed pointed out in the survey.

“While the company outlook index increased, it is still below the series average,” it said.

“The overall outlook uncertainty index fell 22 points to 24.1, suggesting that while uncertainty continued to increase on net, fewer firms noted a rise in the recent quarter. The uncertainty index this quarter was slightly above the series average,” it added.

In its previous fourth quarter survey, the Dallas Fed said “activity in the oil and gas sector was essentially unchanged in fourth quarter 2023, according to oil and gas executives responding to the Dallas Fed Energy Survey”.

The Dallas Fed highlighted in that survey that the business activity index “remained positive but slipped from 10.9 in the third quarter to 3.6 in the fourth quarter”.

“The business activity index was 7.5 for E&P firms versus -4.2 for services firms, suggesting activity slightly grew for E&P firms, but declined slightly for service firms,” it added.

The aggregate employment index was relatively unchanged at 4.2 in the fourth quarter, the Dallas Fed said in that survey.

“The aggregate employee hours index remained positive but fell from 9.6 in the third quarter to 2.8 in the fourth quarter. Meanwhile, the aggregate wages and benefits index edged down from 24.5 to 21.2,” it added.

In its first quarter 2023 survey, the Dallas Fed stated that “growth in the oil and gas sector stalled out in first quarter 2023, according to oil and gas executives responding to the Dallas Fed Energy Survey”.

The Dallas Fed outlined in that survey that the business activity index was 2.1 in the first quarter, “down sharply from 30.3 in fourth quarter 2022”.

“The near-zero reading indicates activity was largely unchanged from the prior quarter, a break from the more than two-year stretch of rising activity,” it said.

Indexes related to employment and hours worked eased in the first quarter, the Dallas Fed stated in that survey.

“The aggregate employment index posted a ninth consecutive positive reading but dipped to 14.3 from 25.7,” it said.

“The aggregate employee hours index declined to 12.3 from 27.7 in the prior quarter. Meanwhile, the aggregate wages and benefits index edged higher, to 43.6 from 40.2,” it added.

Data for the latest survey was collected from March 13–21, with 147 energy firms participating, the Dallas Fed survey highlighted, noting that, of the respondents, 97 were exploration and production firms and 50 were oilfield services firms.

In the fourth quarter 2023 survey, data was collected from December 6–14 and 144 energy firms responded, that survey showed. Of the respondents, 96 were exploration and production firms and 48 were oilfield services firms, that survey highlighted. In the first quarter 2023 survey, data was collected from March 15–23 and 147 energy firms responded, that survey revealed. Of those respondents, 95 were exploration and production firms and 52 were oilfield services firms, the survey highlighted.

The Dallas Fed states that it conducts the Dallas Fed Energy Survey quarterly to obtain a timely assessment of energy activity among oil and gas firms located or headquartered in the Eleventh District.

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