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06 January 2025

Daily Newsletter

06 January 2025

US oil executives expect improvements in drilling permitting times

A majority of executives foresee improvements in permitting times for drilling on federal lands.

Tiash saha January 03 2025

The Federal Reserve Bank of Dallas has released its Energy Survey, indicating a slight uptick in oil and gas activity for the fourth quarter (Q4) of 2024 among Eleventh Federal Reserve District energy firms.

The business activity index - the survey's broadest measure of conditions - registered six, pointing to a modest increase in activity since the previous survey.

Regarding regulatory expectations, a majority of executives foresee improvements in permitting times for drilling on federal lands up to 2028.

35% expect a slight decrease in permitting times, 33% expect a substantial decrease, 26% predict little change and only 6% anticipate an increase in permitting times.

Larger exploration and production (E&P) firms are more inclined to implement measures to reduce emissions and flaring, and to recycle or reuse water, compared to their smaller counterparts. Only 5% of E&P companies have plans to invest in renewable energy sources.

The survey encompasses oil and gas companies based in the Eleventh Federal Reserve District, which includes Texas, southern New Mexico, and northern Louisiana, many of which have national and global operations.

Outlooks among energy firms have improved, with the company outlook index rising 19 points to 7.1. However, oil production remained relatively unchanged from the third quarter, as reflected by the oil production index at 1.1.

Oilfield service firms saw conditions weaken, but the pace of deterioration has slowed. The business activity index for these firms rose from -18.1 to 2.2, and the equipment utilisation index improved from -20.9 to -4.4. The operating margin index also saw an uptick, showing -17.8 compared to -32.6 in the last survey.

Employment levels and employee hours within the sector have stayed consistent with the previous quarter's figures, with the employment index at 2.2 and the employee hours index at zero.

For 2025, 43% of executives predict a slight increase in capital expenditure over 2024, while 14% foresee a significant rise. 19% expect spending to remain similar to 2024, with 12% anticipating a slight decrease and 11% expecting a significant drop.

Two-thirds of the firms have stated that their investment in 2025 will not exceed their projections from three previous months. For capital planning purposes, firms are using an average West Texas Intermediate crude oil price of $68 for 2025, a slight decrease from the previous year's average of $71.

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