Dallas Fed: Oil, Gas Activity Flat in 2Q
After three years of growth, activity in the oil and gas sector was flat in the second quarter, according to energy executives surveyed in the Dallas Fed’s quarterly energy survey released Wednesday.
The survey, which analyzes responses from energy executives in the United States’ 11th District (Texas, northern Louisiana and southern New Mexico), revealed the second quarter’s business activity index fell to -0.6 in the second quarter, down from 10.8 in the first quarter. The second quarter decline was driven by E&P and oilfield services firms.
After 10 consecutive quarters in positive territory, the aggregate employment index dropped to -2.5, down from 6.0, which suggests a reversal for hiring in the quarter.
“Results from this quarter’s survey indicate a further slowdown in the oil and gas sector, with employment and business activity essentially unchanged from last quarter,” Michael Plante, Dallas Fed senior research economist, said in a statement sent to Rigzone. “Increasing pessimism and a surge of uncertainty suggest a potentially challenging near-term outlook, especially for oilfield service firms.”
Regarding capital spending, 36 percent of executives said their firm’s capital spending budget for 2019 was unchanged since the start of the year. Another 34 percent said they lowered their spending plan while 30 percent reported an increase.
“Many firms are under pressure to maintain capital discipline for various reasons…” said Plante. “By and large, companies are maintaining budget discipline, with most reporting either no change or slight adjustments up or down.”
Additionally, 26 percent of respondents have invested in water infrastructure. Overall, a higher percentage of E&P firms (46 percent) have taken initiatives related to water management compared with 28 percent of service firms.
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Senior Editor | Rigzone