Dallas Fed Survey Shows Oil and Gas Activity Decline

Activity in the oil and gas sector declined slightly in the third 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 recently on a Dallas Fed Energy Survey page on its website, adding that the business activity index – which it described as the survey’s broadest measure of the conditions energy firms face in the Eleventh District – remained negative, “but edged up from -8.1 in the second quarter to -6.5 in the third quarter”.

“The company outlook index fell from -6.4 in the second quarter to -17.6, suggesting pessimism among firms. Meanwhile, the outlook uncertainty index remained elevated but edged down from 47.1 to 44.6,” the Dallas Fed noted on its site.

“Oil and gas production declined slightly in the third quarter, according to executives at exploration and production firms. The oil production index remained negative and was relatively unchanged at -8.6 in the third quarter. Similarly, the natural gas production index was relatively unchanged at -3.2,” it continued.

The Dallas Fed went on to state on its site that firms reported rising costs, with all series above their averages.

“Among oilfield services firms, input costs rose but at a slightly slower pace than the previous quarter as the input cost index declined slightly from 40.0 to 34.8,” it highlighted.

“Among E&P [exploration and production] firms, the finding and development costs index increased from 11.4 to 22.0. Also, the lease operating expenses index increased from 28.1 to 36.9,” it added.

Oilfield services firms reported modest deterioration in nearly all indicators, the Dallas Fed noted on its site.

“The equipment utilization index for oilfield services firms fell slightly from -4.6 to -13.0. The operating margin index was relatively unchanged at -31.8, indicating margins compressed at a similar rate,” it added.

“Meanwhile, the prices received for services index declined slightly from -17.7 to -26.1,” it continued.

The Dallas Fed also pointed out on its site that, “overall, demand for employees was relatively unchanged and hours worked was also little changed”.

“The aggregate employment index advanced from -6.6 in the second quarter to -1.5 in the third. Additionally, the aggregate employee hours index was relatively unchanged at -3.7,” it added.

“Meanwhile, the aggregate wages and benefits index was relatively unchanged at 11.5,” the Dallas Fed went on to note.

‘Variety of Issues’

In a ‘comments’ section of the Dallas Fed Energy Survey page, which the Dallas Fed has previously outlined shows comments from respondents’ completed surveys that have been edited for publication, one exploration and production firm said, “there are a variety of issues affecting our business”. 

“First, excess in the global oil market is restraining oil prices near term. Second, there is continued uncertainty from OPEC+ unwinding production cuts. Third, trade and tariff changes and the resulting geopolitical tensions,” that firm added.

Another exploration and production firm said in the comments section, “day to day changes to energy policy is no way for us to win as a country”.

“Investors (rightly) avoid investing in energy (of all types, now) because of the volatility of underlying business results as well as the ‘stroke of pen’ risk that the federal government wields as it relates to long duration energy developments,” it added.

Another exploration and production company warned that “the oil industry is once again going to lose valuable employees”, while another said, “who wants to make a business decision in this unstable environment”.

“The uncertainty from the administration’s policies has put a damper on all investment in the oilpatch,” one more exploration and production company warned, adding that “those who can are running for the exits”.

One more exploration and production company said “the U.S. shale business is broken” and another pointed out that “commodity pricing seems impossible to predict with daily market swings over five percent up or down being normal for both natural gas and crude oil”. 

Also in the comments section, one oil and gas support services firm said, “tariffs continue to increase the cost of production”.

Another oil and gas support services firm said, “a vibrant oilfield services sector is critical if and when the U.S. needs to ramp up production – right now we are bleeding”.

Rigzone has contacted industry body the American Petroleum Institute (API), the U.S. Department of Energy (DOE), and the White House for comment on the latest Dallas Fed Energy Survey. At the time of writing, none of the above have responded to Rigzone.

The Dallas Fed site highlighted that data for the third quarter Dallas Fed Energy survey was collected from September 10 to September 18 and pointed out that 139 energy firms responded. Of the respondents, 93 were exploration and production firms and 46 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,” the Dallas Fed 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 said.

“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,” the Dallas Fed went on to state.

To contact the author, email andreas.exarheas@rigzone.com