US oil and natural gas activity declined slightly in the third quarter because of heightened uncertainty, according to the latest survey from the Federal Reserve Bank of Dallas.
The business activity index — the survey's broadest measure of conditions — remained negative even as it ticked up to -6.5 from -8.1 in the second quarter. Meanwhile, the company outlook index fell to -17.6 from -6.4. The indexes are calculated by subtracting the percentage of companies reporting a decrease from the ones reporting an increase.
Executives quoted in the anonymous survey signaled growing skepticism over the White House's "drill, baby, drill" strategy that has seen President Donald Trump push for higher production even as he has repeatedly urged lower energy prices to tame inflation. Challenges from Trump's trade wars to Opec+ supply hikes have put a sector that was already showing signs of slower growth on the back foot just as a global oversupply looms.
"The US shale business is broken," wrote one respondent at an exploration and production firm. "What was once the world's most dynamic energy industry has been gutted by political hostility and economic ignorance."
Others complained about volatile price swings and said unpredictable policy was also acting as a constraint.
"Day-to-day changes to energy policy is no way for us to win as a country," wrote one executive. "The US isn't running out of oil, but she sure is running out of $60/bl oil," said another.
Other industry leaders laid into Trump's decision to impose tariffs on steel imports, which has pushed up oilfield costs while the sector was already grappling with oil prices hovering around breakeven levels for new wells.
"The administration is pushing for [$40/bl], and with tariffs on foreign tubular goods, [input] prices are up, and drilling is going to disappear," wrote another participant in the survey.
Most companies have delayed investment decisions given elevated uncertainty over oil prices and production costs. While 42pc of executives said they had slightly delayed investment decisions, 36pc said they had significantly postponed them. Executives from small firms were more likely to report no delay compared with those at large companies — or those that have output of 10,000 b/d or more.
"The uncertainty from the administration's policies has put a damper on all investment in the oilpatch," wrote one survey respondent. "Those who can are running for the exits."
While 57pc of executives at estimate regulatory changes this year have reduced breakeven costs on new wells by less than $1/bl, a further 25pc estimate reductions of $1-$1.99/bl.
Despite a growing number of industry layoffs, the latest of which was US independent ConocoPhillips' plan to cut up to 25pc of its workforce, the employment index was relatively unchanged in the energy survey.
US benchmark crude WTI was expected to end 2025 at $63/bl, according to the average of survey responses, which ranged from $50-$60/bl. Respondents forecast Henry Hub natural gas prices ending the year at $3.30/mmBtu on average. WTI spot prices averaged $63.80/bl during the survey period, and Henry Hub prices averaged $2.99/mmBtu.
The quarterly survey was carried out from 10-18 September and included responses from 139 energy companies in Texas, southern New Mexico and northern Louisiana.
