Activity in the oil and gas sector in the southern United States expanded strongly in first quarter 2021, the latest report from the Federal Reserve Bank of Dallas said on Wednesday.
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 Federal Reserve District which consists of Texas, northern Louisiana and southern New Mexico.
According to the 2021 first quarter Dallas Fed Energy Survey, the business activity index -- the survey's broadest measure of conditions facing Eleventh District energy firms -- soared from 18.5 in the fourth quarter to 53.6 in first quarter 2021, reaching its highest reading in the survey's five-year history. Exploration and production (E&P) and oilfield services firms both experienced a strong expansion in activity.
According to E&P executives, oil and gas production increased in this quarter. The oil production index rose from 1.0 in the fourth quarter to 16.3 in the first quarter. Likewise, the natural gas production index turned positive and increased 18 points to 15.9.
The survey showed that the index for capital expenditures increased from 12.5 to 31.0, indicating an acceleration in capital spending among E&P firms. Additionally, the index for the expected level of capital expenditures next year came in at 49.5, signaling firms have increased their capital spending plans for 2022.
The survey found that six-month outlooks improved notably in the first quarter with the index rising to the highest reading in the survey's five-year history. Additionally, firms noted less uncertainty around their outlook this quarter than last.
According to the Dallas Fed, data of the latest survey were collected on March 10-18 from 155 energy firms. Of the respondents, 104 were E&P firms and 51 were oilfield services firms.
The Eleventh District is home to four major U.S. oil and natural gas producing areas. A significant number of U.S. E&P and oil and gas support services companies are located or headquartered in the Eleventh District, making the Dallas Fed Energy Survey a useful indicator of sentiment in the national oil and gas sector.
Editor: Leon
