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Dallas Fed Energy Survey Shows Oil, Gas Sector Activity Increase in 4Q
Activity in the oil and gas sector increased slightly in fourth quarter 2024, according to oil and gas executives responding to the Dallas Fed Energy Survey.
That’s what the Federal Reserve Bank of Dallas stated late last week on a Dallas Fed Energy Survey page on its website.
“The business activity index, the survey’s broadest measure of the conditions energy firms face in the Eleventh District, increased from -5.9 in the third quarter to 6.0 in the fourth quarter,” the Dallas Fed noted on the site.
“The company outlook index turned positive in the fourth quarter, increasing 19 points from -12.1 to 7.1, suggesting mild optimism among firms. The outlook uncertainty index declined 26 points to 22.4,” it added.
The Dallas Fed highlighted that, according to executives at exploration and production (E&P) firms, “oil and gas production was mixed in the fourth quarter”.
“The oil production index remained positive but declined from 7.9 in the third quarter to 1.1 in the fourth quarter, suggesting oil production was relatively unchanged during the period,” it said on the site.
“Meanwhile, the natural gas production index remained in negative territory but lifted from -13.3 to -3.5, indicating gas production edged lower,” it added.
Costs rose at a similar pace when compared with the prior quarter, the Dallas Fed noted.
“Among oilfield services firms, the input cost index was relatively unchanged at 23.9. Among E&P firms, the finding and development costs index was relatively unchanged at 11.5. Meanwhile, the lease operating expenses index increased slightly, from 21.3 to 25.6,” the Dallas Fed stated on its site.
The Dallas Fed also noted that conditions among oilfield services firms weakened, “albeit at a slower rate”.
“The equipment utilization index for oilfield services firms remained in negative territory, improving from -20.9 in the third quarter to -4.4 in the fourth quarter, suggesting the pace of the decline slowed significantly,” it said.
“The operating margin index increased from -32.6 to -17.8, indicating margins declined at a slower rate. The prices received for services index declined from -2.3 to -13.0,” it added on the site.
The aggregate employment index was relatively unchanged at 2.2 in the fourth quarter, the Dallas Fed stated on its site.
“While this is the 16th consecutive positive reading, the low-single-digit result suggests little net hiring. The aggregate employee hours index moved up to zero. Additionally, the aggregate wages and benefits index ticked up from 18.6 to 21.7,” it added.
Back in September, the Dallas Fed stated on its site that activity in the oil and gas sector declined slightly in third quarter 2024, according to oil and gas executives responding to the Dallas Fed Energy Survey.
“The business activity index … decreased from 12.5 in the second quarter to -5.9 in the third quarter,” the Dallas Fed noted on its site at the time.
“The business activity index was zero for exploration and production (E&P) firms compared with -18.1 for services firms, suggesting activity was unchanged for E&P firms but declined for service firms,” it added.
In December 2023, the Dallas Fed stated on its site that 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 business activity index … remained positive but slipped from 10.9 in the third quarter to 3.6 in the fourth quarter,” the Dallas Fed highlighted on its site at the time.
“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 Dallas Fed states on its site 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.
“Firms are asked whether business activity, employment, capital expenditures and other indicators increased, decreased or remained unchanged compared with the prior quarter and with the same quarter a year ago,” it adds.
“Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase,” it continues.
“When the share of firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the previous quarter. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the previous quarter,” it goes on to state.
Data for the latest survey was collected from December 11 to 19, with 134 energy firms responding, the site highlighted. Data for the third quarter survey was collected from September 11 to 19 and 136 energy firms responded, according to the site.
The first quarter 2025 Dallas Fed Energy Survey is scheduled to be released on March 26.
The Federal Reserve Bank of Dallas is part of the Federal Reserve System, the central bank of the United States, the Dallas Fed site states.
“The Fed has a public mission: We serve the American people by promoting a strong financial system and a healthy economy for all,” the site adds.
To contact the author, email andreas.exarheas@rigzone.com
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