Dallas Fed energy survey shows little change in oil and gas production during Q4

According to a Federal Reserve Bank of Dallas survey, oil and?gas production in Texas, Louisiana, and New Mexico?edged down in the fourth quarter as executives expressed concerns about low oil prices, which are rendering some wells uneconomical, and the ongoing geopolitical uncertainties.

The oil and gas industry's production was essentially unchanged over the quarter, while costs rose at a lower rate than in the previous quarter. Oilfield service firms reported a modest decline in a number of indicators, including equipment usage and operating margin.

Michael Plante, Assistant Vice President of the Dallas Fed, said that while oil prices were not low enough in this quarter to cause a significant cutback in activities, they weren't high enough either to support any growth.

The responses for capital expenditures planned next year varied. "Remain close to?levels of 2025" was the response most selected by large E&P companies. Smaller companies had a tendency to increase spending.

Over?half of respondents anticipate that employment levels in their company will remain unchanged over the next 12 months.

The survey collected data from December 3 through December 11, 2009. Ninety-one of the respondents were oilfield service firms, and forty were exploration and production companies.

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Plante stated that the smaller companies were less confident about the impact of the new technology. The survey found that companies expect the West Texas Intermediate oil to be $62 per barrel, and Henry Hub natural gas to be $4.19 for every million British thermal units by year's end 2026.

According to the Dallas Fed, WTI averaged $59 per barrel during the period of the survey. Henry Hub averaged $4.84 per MMBTu.

Oil markets are likely to be oversupplied by 2026 if the Administration'succeeds' in ending the Ukraine conflict, and Russian sanctions have been lifted. If Russian sanctions are maintained, "along with reduced volumes of oil from Iran and Venezuela", markets could approach a balance, said an oilfield executive in the anonymous comments section.

A number of executives have said that they expect the U.S. government to keep oil prices down through November's midterm elections. (Reporting and editing by Liz Hampton, Andrea Ricci, and Nathan Crooks)

(source: Reuters)