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.
The business activity index, 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.
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.
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. Among E&P 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.
Oilfield services firms reported modest deterioration in nearly all indicators. 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. Meanwhile, the prices received for services index declined slightly from -17.7 to -26.1.
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. Meanwhile, the aggregate wages and benefits index was relatively unchanged at 11.5.
On average, respondents expect a West Texas Intermediate (WTI) oil price of $63 per barrel at year-end 2025; responses ranged from $50 to $80 per barrel. When asked about longer-term expectations, respondents on average said they expect a WTI oil price of $69 per barrel two years from now and $77 per barrel five years from now. Survey participants foresee a Henry Hub natural gas price of $3.30 per million British thermal units (MMBtu) at year-end 2025. When asked about longer-term expectations, respondents on average said they anticipate a Henry Hub gas price of $3.94 per MMBtu two years from now and $4.50 per MMBtu five years from now. For reference, WTI spot prices averaged $63.80 per barrel during the survey collection period, and Henry Hub spot prices averaged $2.99 per MMBtu.
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. The business activity index, 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.
Special questions this quarter focus on the viability of shale oil drilling internationally, the impact of regulatory changes on well break-evens and production, theft in the oil field, uncertainty and investment decisions, changes in hedging activity, artificial intelligence and the lifespan of equipment, and oilfield equipment sourcing from China.