US 10th Dist. Energy Firms Less Optimistic about Future Drilling
The future of drilling activity in the U.S. Tenth District doesn’t seem to have been met with some caution, as results from the Kansas City Fed fourth quarter energy survey indicates.
The survey, which questions energy firms in western Missouri, Nebraska, Kansas, Oklahoma, Wyoming, Colorado and northern New Mexico, found that the drilling and business activity index fell from 45 to -13 in 4Q 2018 – the first quarterly decline in almost three years.
Year-over-year indexes declined but remained positive. The drilling and business activity index decreased from 57 to 17 year-over-year. This is the lowest level in two years.
Future expectations saw the drilling and business activity index drop from 57 to -19, the first negative posting since early 2016. Future total revenues, CAPEX and total profits indexes had considerable decreases.
And while most of the employment-rated indexes declined as well, they remained above 0, which is an indication of expansion, albeit a slower pace.
The survey also asked firms about their plans for capital spending in 2019. Forty percent of respondents said they expect to spend less in 2019 than in 2018.
Earlier this week, Oklahoma City-based Chesapeake Energy said it would be reducing its CAPEX in 2019, cutting its rig count by 20 percent.
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