DALLAS FED ENERGY SURVEY: OIL AND GAS ACTIVITY RISES AMID ELEVATED UNCERTAINTY

The following information was released by the Federal Reserve Bank of Dallas:

Oil and gas activity increased in first quarter 2026, according to industry executives responding to the Federal Reserve Bank of Dallas Energy Survey.

The business activity index, the surveys broadest measure of conditions facing Eleventh District energy firms, turned positiveindicating an expansion in activity. The index jumped 27 points to reach 21 this quarter.

Activity rose for the first time in almost a year, accompanied by a broad-based improvement in the operating environment for oil and gas support service firms. The ongoing conflict in the Middle East, however, has generated substantial uncertainty for firms about the near-term outlook. said Michael Plante, an assistant vice president at the Dallas Fed.

Key takeaways:

Oil and natural gas production was relatively unchanged this quarter. The oil production index was exactly 0 while the natural gas production index was 2.3.

The employment index came in at 0.8, suggesting little to no growth in overall employment, while the aggregate employee hours index was 12.8 this quarter, an increase of 22.1 compared to last quarter. The aggregate wages and benefits index increased from 6.2 to 23.5.

The outlook index jumped 47.4 points to reach 32.2 this quarter, pointing to an improving outlook among firms. Uncertainty about the outlook remains elevated, with the uncertainty index climbing from 43.4 last quarter to 53.7 this quarter.

Costs increased at a slightly faster pace when compared with the prior quarter. The input cost index for oilfield services firms increased from 24.4 to 34.9. The finding and development costs index increased from 5.7 to 22.3. Meanwhile, the lease operating expenses index was relatively unchanged at 30.

Oilfield services firms reported modest improvement in nearly all indicators, a shift from the prior quarter. The equipment utilization index for oilfield services firms moved positive, rising from -12.2 to 30.2. The operating margin index remained negative but increased from -31.7 to -7. Meanwhile, the prices received for services index jumped from -30 to 9.3.

Survey gauges to what extent drilling plans have changed since the start of the year, reassesses break-even prices

We asked executives how the number of wells their firm expects to drill in 2026 has changed since the start of the year, in light of recent oil price increases. Almost 70 percent of executives at large EandP firms, who make up the bulk of U.S. crude oil production, reported no change to their plans. Among smaller firms, however, almost 60 percent have revised up the number of wells they expect to drill this year. This suggests some interest among some firms to increase activity in response to the recent increases weve seen in WTI oil prices, Plante said.

Additional takeaways from the special questions:

Across all respondents, 50 percent report they have not changed their expectations for how many wells they plan to drill in 2026, 26 percent reported a slight increase, 21 percent a significant increase and 3 percent a significant decrease. Among large EandP firms, almost 70 percent reported they have not changed their expectations, while 23 percent reported a slight increase and 8 percent a significant increase. Among small EandP firms, close to 60 percent report an increase, with another 38 percent indicating no change and a small fraction reporting a decrease.

Executives were asked what West Texas Intermediate oil price their firm needs to cover operating expenses for existing wells. The average price across the entire sample was about $43 per barrel, up from $41 last year. The averages across different regions ranged from $34 to $47 per barrel.

Executives were also asked what West Texas Intermediate oil price their firm needs to profitably drill a new well. The average price across the entire sample was $66 per-barrel, up $1 from last year. Large EandP firms require a $59-per-barrel price, on average, while small EandP firms require a $68 per-barrel price, on average.

There remain about 30 publicly listed independent exploration and production (EandP) firms in the U.S. with a market capitalization of over $1 billion each. When asked how many such firms might remain by the end of the decade, the most selected response was 1924, chosen by 47 percent of respondents, followed by 1318 (26 percent) and ≥25 (17 percent). A smaller percentage selected 712 and 06.

Fifty-five percent of executives expect slightly more Venezuelan oil production over the next 24 months when compared to their expectations three months ago. Twenty-nine percent of executives have not changed their expectations, while 12 percent expect significantly more production. A small number of executives expect either slightly less or significantly less production from Venezuela.

Firms generally expect recovery rates to slightly increase over the next 10 years. For both crude oil and natural gas, the most selected response was yes, slightly.

When asked which basins or regions they expect U.S. oil production to increase from December 2025 to December 2026, an overwhelming majority (82 percent), selected the Permian Basin. The next most selected response was Eagle Ford and Utica (Ohio), each chosen by 29 percent of respondents. Respondents could choose more than one answer for this question.

The survey samples oil and gas companies headquartered in the Eleventh Federal Reserve District, which includes Texas, southern New Mexico and northern Louisiana. Many have national and global operations.

Data were collected March 1119, 2026, and 135 energy firms responded. Of the respondents, 92 were exploration and production firms, and 43 were oilfield services firms.