Activity in the oil and gas sector contracted slightly in the second quarter of 2025, according to oil and gas executives responding to the Dallas Fed Energy Survey.
That’s what the Federal Reserve Bank of Dallas stated last week on a Dallas Fed Energy Survey page on its website, adding that the business activity index turned negative, “declining from 3.8 in the first quarter 2025 to -8.1 in the second”. The Dallas Fed highlighted on its site that this index is the survey’s broadest measure of the conditions energy firms face in the Eleventh District.
“The company outlook index was little changed at -6.4, suggesting slight pessimism among firms,” the Dallas Fed noted on its site.
“Meanwhile, the outlook uncertainty index increased four points to 47.1, indicating elevated uncertainty,” it added.
The Dallas Fed went on to state on its site that “oil and gas production decreased slightly in the second quarter, according to executives at exploration and production firms”.
“The oil production index fell from 5.6 in the first quarter to -8.9 in the second quarter. Meanwhile, the natural gas production index also turned negative, declining from 4.8 to -4.5,” it said.
Among oilfield services firms, the input cost index increased from 30.9 to 40.0, the Dallas Fed highlighted on its site, noting that this suggests input costs for oilfield services firms rose at a slightly faster pace than in the prior quarter.
“Among E&P firms, the finding and development costs index decreased slightly from 17.1 to 11.4,” the Dallas Fed said on its site.
“Also, the lease operating expenses index declined from 38.7 to 28.1. This suggests costs for E&P firms rose at a slower pace relative to the prior quarter,” it added.
“Oilfield services firms reported modest deterioration in nearly all indicators. The equipment utilization index for oilfield services firms was relatively unchanged at -4.6,” it continued.
“The operating margin index decreased from -21.5 to -33.4, indicating margins compressed at a faster rate. Meanwhile, the prices received for services index turned negative, falling from 7.1 to -17.7,” it went on to note.
The Dallas Fed also stated on its site that, overall, demand for employees fell slightly and added that those on the job tended to work fewer hours.
“The aggregate employment index declined from zero in the first quarter to -6.6 in the second,” the Dallas Fed said on its site.
“Additionally, the aggregate employee hours index decreased from 0.7 to -5.1. Meanwhile, the aggregate wages and benefits index remained positive but declined from 21.6 to 10.3,” it added.
The Dallas Fed site highlighted that data for the second quarter Dallas Fed Energy survey was collected from June 18 to June 26 and pointed out that 136 energy firms responded. Of the respondents, 91 were exploration and production firms and 45 were oilfield services firms, the Dallas Fed revealed on its site.
“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,” the Dallas Fed stated on its site, noting that the Eleventh District encompasses Texas, northern Louisiana, and southern New Mexico.
“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,” it added.
“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,” it continued.
“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,” it went on to state.
“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,” it highlighted.
To contact the author, email andreas.exarheas@rigzone.com
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