‘Clear direction for planning’ lifts capex outlook in Dallas Fed survey
Nearly 60% of oil and gas executives surveyed by the Federal Reserve Bank of Dallas plan to increase their capital spending this year compared with 2024. But those upbeat plans are concentrated among small exploration and development firms; half of large companies say they will trim capex in 2025.
Leaders of 85 E&P firms and 47 service providers responded in mid-December to the Dallas Fed Energy Survey. Their collective capex outlook—57% of firms plan to spend more this year than in 2024 while 23% plan to cut outlays—is significantly more bullish than in mid-September, when 36% of executives told Fed researchers they planned to spend more in the year ahead. (OGJ Online, Sept. 25, 2024)
Comments from respondents show that a big reason for the brighter outlook is the expectation that the incoming Trump administration will be friendlier toward the energy sector, especially from a regulatory perspective. That was also reflected by the survey’s uncertainty gauge falling significantly from September.
“Much of 2024 felt like a waiting game as M&A activity kept clients in a holding pattern. First-quarter 2025 has more people talking about putting rigs in the ground,” one support services firm executive said. “We think the election results will be good for activity even if it’s just because operators and service companies have a clear direction for planning.”
It’s worth pointing out the discrepancy between the largest E&P firms (defined by the Dallas Fed as producing 10,000 b/d or more) and their smaller peers. Among large-company executives responding, 36% said they plan to ramp up capex slightly this year (none said they will add “significantly” to spending) while 50% said they will decrease spending. Among small-company leaders, by contrast, 63% say they will spend more while only 15% plan to trim capex.
The Dallas Fed Energy Survey’s headline reading of business activity in the bank’s territory, which includes parts of New Mexico and Louisiana, improved nearly 12 points from the third quarter to a slightly positive 6.0. Similarly, its outlook indicator improved nearly 20 points to 7.1, a move that puts it back to where it spent the first half of 2024.
Moderating price expectations
Many elements of the quarterly survey—including for production and employment—held relatively steady from their fall readings. Expectations for the prices of a barrel of West Texas Intermediate crude (which was about $71 during the survey period) have grown a bit more cautious, though. Six out of 10 respondents expect that WTI’s price will be between $65 and $75/bbl at year’s end.
Three months ago, roughly 30% of executives thought WTI would top $75 by the end of 2024. Respondents’ latest forecasts have moved them closer to those of analysts at Morningstar DBRS: Late last month, those researchers said they think WTI will end 2025 priced at $65/bbl.
Geert De Lombaerde | Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.
