Federal Reserve Bank of Dallas Energy Survey June 2024

by | Jun 30, 2024 | Production, Gas Prices

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The survey calculates indices by subtracting the percentage of respondents reporting a decrease from those reporting an increase, providing a snapshot of sector conditions.

 

Dallas Fed Energy Survey: Q2 2024 Insights

Modest Rise in Oil and Gas Activity Amid Stable Production and Employment

The Dallas Fed Energy Survey for the second quarter of 2024 highlights a modest rise in oil and gas activity, despite little change in production and employment. Here’s what’s new and noteworthy this quarter:

Special Questions and Focus Areas:

  • Artificial Intelligence: The use and benefits in the energy sector.
  • Industry Consolidation: Impact on U.S. oil production.
  • Lithium Extraction: Potential from oil field brine.
  • Waha Hub Natural Gas Prices: Effects on Permian Basin activity.
  • Drilling Techniques: Expectations for horizontal lateral drilling in a horseshoe pattern.

Key Survey Highlights:

  1. Business Activity: The business activity index rose from 2.0 in Q1 to 12.5 in Q2, indicating improved conditions for energy firms in the Eleventh District.
  2. Oil and Gas Production:
    • Oil Production: The index increased from -4.1 to 1.1, indicating stable production levels.
    • Natural Gas Production: The index turned positive, rising from -17.0 to 2.3.
  3. Costs and Expenses:
    • Oilfield Services Firms: Input cost index rose from 31.2 to 42.2.
    • E&P Firms: Finding and development costs index decreased from 24.2 to 15.7, and lease operating expenses index dropped from 33.7 to 23.6.
  4. Equipment Utilization and Margins:
    • Equipment Utilization: The index turned positive, increasing from -4.2 to 10.9.
    • Operating Margin: Improved from -35.4 to -13.0, indicating slower margin declines.
    • Prices Received for Services: Index remained relatively unchanged at -4.4.
  5. Employment and Wages:
    • Aggregate Employment: Index was steady at 2.9, marking the 14th consecutive positive reading.
    • Employee Hours: Index remained largely unchanged at 8.1.
    • Wages and Benefits: Index decreased from 32.8 to 24.0.
  6. Company Outlook and Uncertainty:
    • Outlook Index: Steady at 10.0 overall, with E&P firms more optimistic (16.8) compared to services firms (-2.1).
    • Outlook Uncertainty: Unchanged at 24.1, indicating continued net increase in uncertainty.

Price Forecasts:

  • West Texas Intermediate (WTI) Oil:
    • Year-end 2024: Average $79 per barrel (Range: $62.5 – $100).
    • Two-Year Outlook: Average $83 per barrel.
    • Five-Year Outlook: Average $88 per barrel.
  • Henry Hub Natural Gas:
    • Year-end 2024: Average $3.01 per MMBtu.
    • Two-Year Outlook: Average $3.58 per MMBtu.
    • Five-Year Outlook: Average $4.28 per MMBtu.

For reference, during the survey period, WTI spot prices averaged $79.94 per barrel, and Henry Hub spot prices averaged $2.61 per MMBtu.

Survey Methodology: The Dallas Fed Energy Survey, conducted quarterly, gathers timely insights from oil and gas firms in the Eleventh District. The Q2 2024 survey collected data from June 12–20, with 138 firms responding (90 E&P firms and 48 oilfield services firms). The survey calculates indices by subtracting the percentage of respondents reporting a decrease from those reporting an increase, providing a snapshot of sector conditions.

Next Release: September 25, 2024

Stay tuned for further updates and insights into the energy sector’s evolving landscape.

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