Dallas Fed surveys 11th District oil and gas firms

By Staff | April 11, 2017

From March 15-23, the Federal Reserve Bank of Dallas conducted an energy survey to obtain a timely assessment of energy activity among oil and gas firms in the Federal Reserve’s 11th District. This district covers all of Texas, southern New Mexico and northern Louisiana. The 153 respondents included 78 exploration and production (E&P) companies and 75 oilfield services firms.

Firms were 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.

According to survey respondents, business activity continued to rise in the first quarter. The business activity index—the survey’s broadest measure of conditions facing 11th District energy firms—remained robust at 41.8, similar to last quarter’s 40.1 reading. For a second consecutive quarter, nearly all survey measures—including input costs and selling prices—reflected expansion on a quarterly basis. Responses from oilfield services firms were particularly strong.

The respondents also answered a series of special questions included in the survey.

E&P Firms

In the top two areas in which your firm is active: What WTI oil price does your firm need to cover operating expenses for existing wells?

Individual responses varied, but average prices needed to cover operating expenses across regions fell in the fairly narrow range of $24–$38 per barrel. Most respondents are able to cover operating expenses for existing wells at current oil prices.

In the top two areas in which your firm is active: What WTI oil price does your firm need to profitably drill a new well?

Average breakeven prices to profitably drill a new well ranged from $46-$55 per barrel, depending on the region. For the entire sample, firms need $50 per barrel on average to profitably drill a new well, down from $54 per barrel when the same question was asked last year. Average breakeven prices in the Permian Basin were down to $48 per barrel this year from $51 per barrel last year.

Oilfield Services Firms

For the top two services or products your firm provides: Do you expect average selling prices to increase, not change or decrease in 2017 vs. 2016?

More than half of respondents who drill, complete or work on wells expect selling prices for those services to increase this year. Responses for other types of services were mixed, with many predicting no change in prices.

For the top two services or products your firm provides: If you expect average selling prices to change, by what percent do you expect they will change?

On average, executives expect selling prices for drilling and completions to increase between 8 and 9 percent this year. Well work and oilfield transportation prices are also generally expected to increase between 5 and 6 percent. Prices for other services are expected to remain relatively flat. Across all responses, oilfield service selling prices are expected to increase 4 percent this year.