Dallas Fed Energy Survey

First Quarter | March 26, 2025

Oil and gas activity edges higher; uncertainty rising, costs increase

What’s New This Quarter

Special questions this quarter include an annual update on break-even prices by basin. Questions also focus on regulatory compliance costs, employee head count, mergers and acquisitions in the upstream sector and the impact of steel import tariffs.

Activity in the oil and gas sector increased slightly in first quarter of 2025, according to oil and gas executives responding to the Dallas Fed Energy Survey. The business activity index, the survey’s broadest measure of the conditions energy firms face in the Eleventh District, remained in positive territory but declined slightly from 6.0 in the fourth quarter 2024 to 3.8 in the first quarter.

The company outlook index decreased 12 points to -4.9, suggesting slight pessimism among firms. Meanwhile, the outlook uncertainty index jumped 21 points to 43.1.

Oil and gas production increased slightly in the first quarter, according to executives at exploration and production firms. The oil production index moved up from 1.1 in the fourth quarter to 5.6 in the first quarter. Meanwhile, the natural gas production index turned positive, rising from -3.5 to 4.8.

Costs increased at a faster pace relative to the prior quarter. Among oilfield services firms, the input cost index advanced, from 23.9 to 30.9. Among E&P firms, the finding and development costs index increased, from 11.5 to 17.1. Meanwhile, the lease operating expenses index rose from 25.6 to 38.7.

The equipment utilization index for oilfield services firms was relatively unchanged at -4.8. The operating margin index decreased from -17.8 to -21.5, indicating margins narrowed at a slightly faster rate. Meanwhile, the prices received for services index swung into positive territory, increasing from -13.0 to 7.1.

The aggregate employment index edged down from 2.2 in the fourth quarter to zero in the first quarter. This suggests employment was unchanged in the quarter. The aggregate employee hours index was relatively unchanged at 0.7. Meanwhile, the aggregate wages and benefits index was also relatively unchanged at 21.6.

On average, respondents expect a West Texas Intermediate (WTI) oil price of $68 per barrel at year-end 2025; responses ranged from $50 to $100 per barrel. When asked about longer-term expectations, respondents on average said they expect a WTI oil price of $74 per barrel two years from now and $82 per barrel five years from now. Survey participants foresee a Henry Hub natural gas price of $3.78 per million British thermal units (MMBtu) at year-end 2025. When asked about longer-term expectations, respondents on average said they anticipate a Henry Hub gas price of $4.30 per MMBtu two years from now and $4.83 per MMBtu five years from now. For reference, WTI spot prices averaged $67.60 per barrel during the survey collection period, and Henry Hub spot prices averaged $4.10 per MMBtu.

Next release: July 2, 2025

Data were collected March 12–20, and 130 energy firms responded. Of the respondents, 88 were exploration and production firms and 42 were oilfield services firms.

The Dallas Fed conducts the Dallas Fed Energy Survey quarterly to obtain a timely assessment of energy activity among oil and gas firms located or headquartered in the Eleventh District. Firms are asked whether business activity, employment, capital expenditures and other indicators increased, decreased or remained unchanged compared with the prior quarter and with the same quarter a year ago. Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the previous quarter. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the previous quarter.