According to results from the Dallas Fed’s 3Q Energy Survey, oil and gas activity declined in the third quarter of 2019 among energy firms in the US’ 11th District (Texas, northern Louisiana, and southern New Mexico).
Down from -0.6 in the second quarter, the business activity index for the 11th District fell to -7.4. The decline was driven by the oilfield services sector. From 6.6 in the second quarter, the sector saw its business activity index plunged to -21.8.
In the third quarter, overall activity and employment declined modestly. Conditions deteriorated in the oil and gas sector. A sharp drop is predicted in operating margins and equipment utilization. The survey results, in general, suggest a tough situation for the industry in the second half of 2019.
Investor pressure to generate free cash flow as well as limited access to credit and capital are considered as limiting factors. On average, WTI oil prices are expected to be $56.92 per barrel by year-end 2019.
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