First Quarter | March 25, 2026
Oil and gas activity rises amid elevated uncertainty
What’s New This Quarter
Special questions this quarter include an annual update on break-even prices by basin. Questions also focus on 2026 drilling plans, expectations for further consolidation among exploration and production (E&P) firms, oil and natural gas recovery rates, production growth outlooks for U.S. basins and regions, and Venezuela oil production expectations.
Activity in the oil and gas sector increased in first quarter 2026, 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, turned positive (indicating expansion), increasing from -6.2 in the fourth quarter of 2025 to 21.0 in the first quarter of 2026.
The company outlook index also turned positive, advancing from -15.2 in the fourth quarter to 32.2 in the first quarter, suggesting improving outlooks among firms. Meanwhile, the outlook uncertainty index remained elevated and increased from 43.4 to 53.7.
Oil and gas production was little changed in the first quarter, according to executives at exploration and production firms. The oil production index increased slightly from -3.4 to 0. Similarly, the natural gas production index edged higher from 0 to 2.3.
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. Among exploration and production firms, the finding and development costs index jumped from 5.7 to 22.3. Meanwhile, the lease operating expenses index was relatively unchanged at 30.0.
Oilfield services firms reported modest improvement in nearly all indicators, a shift from the prior quarter. The equipment utilization index for oilfield services firms turned positive, jumping from -12.2 to 30.2. The operating margin index remained negative but increased from -31.7 to -7.0, indicating margins compressed at a slower rate. Meanwhile, the prices received for services index rose sharply from -30.0 to 9.3.
Overall, demand for employees was unchanged, although those on the job tended to work more hours than in the previous quarter. The aggregate employment index increased from -10.8 in the fourth quarter to 0.8 in the first. Additionally, the aggregate employee hours index jumped from -9.3 to 12.8. Meanwhile, the aggregate wages and benefits index increased from 6.2 to 23.5.
On average, respondents expect a West Texas Intermediate (WTI) oil price of $74 per barrel at year-end 2026; responses ranged from $50 to $135 per barrel. When asked about longer-term expectations, respondents on average said they expect a WTI oil price of $73 per barrel two years from now and $79 per barrel five years from now. Survey participants foresee a Henry Hub natural gas price of $3.60 per million British thermal units (MMBtu) at year-end 2026. When asked about longer-term expectations, respondents on average said they anticipate a Henry Hub gas price of $4.03 per MMBtu two years from now and $4.42 per MMBtu five years from now. For reference, WTI spot prices averaged $94.65 per barrel during the survey collection period, and Henry Hub spot prices averaged $3.16 per MMBtu.
Next release: June 24, 2026
Data were collected March 11–19, and 135 energy firms responded. Of the respondents, 92 were exploration and production firms and 43 were oilfield services firms.
The Dallas Fed conducts the Dallas Fed Energy Survey quarterly to obtain a timely assessment of energy activity among oil and gas firms located or headquartered in the Eleventh District. The Eleventh District encompasses Texas, northern Louisiana and southern New Mexico. Firms are asked whether business activity, employment, capital expenditures and other indicators increased, decreased or remained unchanged compared with the prior quarter and with the same quarter a year ago. Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the previous quarter. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the previous quarter.