The Federal Reserve Bank of Kansas City’s third-quarter energy survey revealed moderately rising business activity and revenues for firms in the tenth district for the first time in 2 years.
The Kansas City Fed’s quarterly energy survey monitors oil- and gas-related firms located or headquartered in the tenth district, with results based on total firm activity. The district encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico.
The third quarter survey ran from Sept. 15-30 and included 39 responses.
According to the survey, the drilling and business activity index increased to 26 in the third quarter from 0 in the second quarter. The total revenues index jumped into positive territory from negative 31 to 5. The total profits, access to credit, and wages and benefits indexes picked up modestly but also remained negative.
Firms reported that oil and natural gas prices on average needed to be $53/bbl and $3.45/MMbtu, respectively, to be profitable in the areas in which they were active.
On average, firms projected West Texas Intermediate prices to be $49/bbl by yearend 2016 and $57/bbl by yearend 2017. The majority of firms expected oil inventories to balance in the second or third quarters of 2017.
Firms were asked how their capital spending plans for 2017 compared with both 2016 and 2014. Compared to their 2016 capital spending plans, most firms projected spending in 2017 to be flat to slightly higher, with a few expecting sizeable increases. By contrast, when compared with their 2014 spending, more than half of the firms reported that spending for 2017 would be down more than half.