Dallas Fed Energy Survey: Outlooks brighten as business activity edges higher

News Releases

January 02, 2025

DALLAS-Oil and gas activity increased slightly in fourth quarter 2024, according to oil and gas executives responding to the Federal Reserve Bank of Dallas Energy Survey.

The business activity index-the survey's broadest measure of conditions facing Eleventh District energy firms-came in at 6, suggesting a small increase in activity since the last survey.

"The oil and gas sector is entering 2025 on a relatively quiet note, with business activity growing slightly compared to last quarter," said Michael Plante, Dallas Fed principal research economist. [download audio clip]

Key takeaways:

• Outlooks improved this quarter with the company outlook index jumping 19 points to reach 7.1.
• The oil production index was 1.1 this quarter, suggesting oil production was relatively flat compared to the third quarter.
• Conditions among oilfield service firms weakened but the pace of deterioration slowed, according to most indexes. The business activity index rose from -18.1 last quarter to 2.2. The equipment utilization index improved from -20.9 to -4.4. The operating margin index was -17.8 vs. last survey's read of -32.6.
• Both employment and employee hours remained close to last quarter's level. The employment index was 2.2 while the employee hours index was zero.

Firms report on capital spending plans for 2025

"About half of large E&P companies responded that they expect their capital spending to decrease in 2025. This is going to weigh on overall capital spending for the industry given the relative size and importance of these companies for spending and production," Plante said. [download audio clip]

Additional takeaways from the special questions :

• Among all firms, 43 percent of executives expect capital spending in 2025 to increase slightly compared to 2024 while 14 percent expect a significant increase. Another 19 percent expect capital spending to remain close to 2024 levels, while 12 percent reported they expect a slight decrease and 11 percent a significant decrease.
• Two-thirds of firms reported that they do not anticipate increasing their investment in 2025 relative to what they anticipated three months ago.
• Firms are, on average, using a West Texas Intermediate crude oil price of $68 for capital planning in 2025. This is down slightly from last year's average of $71.
• Most executives expect permitting times for drilling wells on federal lands to improve over the next four years. Thirty-five percent of executives expect a slight decrease in permitting times while 33 percent expect a significant increase. Twenty-six percent expect little change while only 6 percent anticipate permitting times to increase.
• Large E&P firms are more likely to report they have plans to reduce emissions, reduce flaring, and/or recycle/reuse water compared to small E&P companies.
• Only 5 percent of E&P companies noted they have plans to invest in renewables.

The survey samples oil and gas companies headquartered in the Eleventh Federal Reserve District, which includes Texas, southern New Mexico and northern Louisiana. Many have national and global operations.

Data were collected December 11-19, 2024, and 134 energy firms responded. Of the respondents, 87 were exploration and production firms, and 47 were oilfield services firms.

For more information, visit dallasfed.org.

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Media contact:
James Hoard
Federal Reserve Bank of Dallas
Phone: 214-922-5307
Email: [email protected]

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