Oil exploration and production (E&P) firms in the footprint of the Federal Reserve Bank of Dallas are generally pulling in the reins—and souring sentiment among oilfield services firms—but also growing more upbeat about their plans several quarters out.
The latest Dallas Fed Energy Survey, which polled about 150 executives in Texas as well as parts of New Mexico and Louisiana, also showed that companies focused on natural gas production are cutting back aggressively in the face of low prices and the Biden administration’s move to pause approvals of LNG export plants (OGJ Online, Jan. 26, 2024). And the report’s reading on wages and benefits was the strongest since the middle of last year, suggesting that previous signs of labor pressures easing were more hope than fact.
The survey’s headline business activity indicator ticked down slightly from December and remains barely in positive territory. The leaders responding to the Fed said they have trimmed their workforces but added to the hours worked of those still on their payroll. The data show a growing gap between E&P firms and their services providers: The former have grown more upbeat about employment and hours worked since December while a quarter of the latter group cut staff this quarter (up from just one in 10 late last year) and said their overall activity levels and operating margins continue to worsen.
