Dallas Fed: Oilfield Services Firms have Positive Outlook
Oilfield services companies, an especially battered group during the oil and gas industry downturn, are more optimistic about the next six months, according to findings from the Federal Reserve Bank of Dallas’ energy survey, released March 29.
The quarterly survey garnered responses from 153 E&P (exploration and production) and oilfield services firms in Texas, northern Louisiana and southern New Mexico. Nearly 70 percent of services firms had an improved six-month outlook compared to last quarter. The business activity index – used to measure conditions among the energy firms – for oilfield services firms was 48, compared to 40 in the previous quarter.
In a series of special questions, respondents said oil prices need to be anywhere from $46 to $55 in order to profitably drill a new well. The Midland Basin of the Permian came in at the low end of that spectrum at $46. Respondents also said oil prices need to be $24 to $38 to cover operating expenses for existing wells, with the Permian (Midland) coming in at $24.
For the first time in the survey’s history, respondents were able to predict future prices of WTI crude oil prices. On average, survey respondents expect oil prices to be $53.49. The closing WTI crude oil price March 29 was $49.51 per barrel.
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