GulfSlope Energy Inc (GSPE)

[smith199]

Dallas Fed Energy Survey, First Quarter | March 23, 2022

Oil and Gas Expansion Accelerates as Outlooks Improve Significantly

Data were collected March 9–17, and 141 energy firms responded. Of the respondents, 91 were exploration and production firms and 50 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.)

Price Forecasts:https://dallasfed.frswebservices.org/research/surveys/des/2022/2201.aspx#tab-forecastcharts

Business Indicators: https://dallasfed.frswebservices.org/research/surveys/des/2022/2201.aspx#tab-results

Charts on Questions: https://dallasfed.frswebservices.org/research/surveys/des/2022/2201.aspx#tab-questions

What’s New This Quarter

Special questions this quarter include an annual update on breakeven prices by basin, expected firm growth in crude oil production, anticipated changes in employee head counts for 2022, the oil price needed to return publicly traded producers to growth mode, and the primary reason publicly traded producers are restraining production growth despite high oil prices.

Activity in the oil and gas sector accelerated in first quarter 2022, according to oil and gas executives responding to the Dallas Fed Energy Survey. The business activity index—the survey’s broadest measure of conditions facing Eleventh District energy firms—jumped from 42.6 in the fourth quarter to 56.0, reaching its highest reading in the survey’s six-year history.

Oil production increased at a faster pace, according to executives at exploration and production (E&P) firms. The oil production index rose sharply from 19.1 in the fourth quarter to 45.0 in the first quarter. Similarly, the natural gas production index advanced 14 points to 40.0.

Costs increased for a fifth straight quarter. Among oilfield services firms, the index for input costs increased from 69.8 to 77.1—a record high. Only one of the 50 responding oilfield services firms reported lower input costs this quarter. Among E&P firms, the index for finding and development costs advanced from 44.9 in the fourth quarter to 56.0 in the first. Additionally, the index for lease operating expenses also increased, from 42.0 to 58.9. Both indexes reached highs for the survey’s six-year history.

Oilfield services firms reported improvement across all indicators. The equipment utilization index remained elevated but edged down from 51.1 in the fourth quarter to 50.0 in the first. The operating margin index advanced from 11.6 to 21.3. The index of prices received for services jumped from 30.3 to 53.2, a record high.

All labor market indexes in the first quarter reached record highs, pointing to strong growth in employment, hours and wages. The aggregate employment index posted a fifth consecutive positive reading and increased from 11.9 to 28.0. The aggregate employee hours index jumped from 18.0 to 36.0. The aggregate wages and benefits index also rose, from 36.6 to 54.0.

Six-month outlooks improved significantly, with the index climbing from 53.2 last quarter to 76.3, a record high. The outlook uncertainty index also jumped from -1.5 to 31.9, suggesting uncertainty became much more pronounced this quarter.

On average, respondents expect a West Texas Intermediate (WTI) oil price of $93 per barrel by year-end 2022; responses ranged from $50 to $200 per barrel. Survey participants expect Henry Hub natural gas prices of $4.57 per million British thermal units (MMBtu) at year-end. For reference, WTI spot prices averaged $103.07 per barrel during the survey collection period, and Henry Hub spot prices averaged $4.65 per MMBtu.


Next release: June 22, 2022