The Kansas City Federal Reserve Bank announced a second quarter Energy Survey showed improved drilling in the region that includes Oklahoma. Results were some of the highest in 8 years.
“District drilling and business activity grew faster in Q2, with additional growth expected in the next six months,” said Chad Wilkerson. Oklahoma City Branch executive and economist in the 10th District that covers the states of Colorado, Kansas, Nebraska, Oklahoma, and Wyoming; 43 counties in western Missouri; and 14 counties in northern New Mexico.
The survey also showed expectations for future activity continued to remain strong.
“Commodity prices have increased considerably, and firms reported more drilling and business activity and higher revenues. However, supply-chain issues, labor shortages, higher wages and benefits, and cost inflation continued to impact production growth and profitability,” said Wilkerson.
The drilling and business activity index accelerated from 29 to 57, the highest on record since December 2016. The quarterly indexes for revenues, number of employees, and wages and benefits, reached their highest levels since the survey began in 2014. The index for profits remained elevated, and supplier delivery time also increased. On the other hand, the pace of growth for employee hours and access to credit indexes eased.
Firms were asked what oil and natural gas prices were needed on average for drilling to be profitable across the fields in which they are active. The average oil price needed was $65 per barrel, while the average natural gas price needed was $4.64 per million Btu.
Firms were also asked what prices were needed for a substantial increase in drilling to occur across the fields in which they are active. The average oil price needed was $90 per barrel, with a range of $4 to $140. The average natural gas price needed was $6.34 per million Btu, with responses ranging from $3.50 to $12.
Overall, firms reported the highest prices needed to be profitable and increase drilling in survey history (since 2014).
