New Mexico, Texas oil firms see little production change in Q4,  Dallas Fed says

Operator sentiment in the oil and gas sector remains low despite relatively steady production, according to a Federal Reserve Bank of Dallas survey released Wednesday. 

The quarterly Dallas Fed Energy Survey pulls responses from executives at 131 firms across Texas, northern Louisiana and southern New Mexico. The Dallas Fed says it does not have the particular number of New Mexico operators that responded to the survey, which took place Dec. 3-11.

Jon Prior, a Dallas Fed spokesperson, said flatlined activity in the fourth quarter is “primarily due to lower (West Texas Intermediate) oil prices,” the main benchmark for North America. WTI, a crude oil, is refined into products like gasoline. 

Executives said they anticipate $62 per barrel for WTI at the end of 2026, and estimate long-term prices two years from now to be $69.

“... It is unclear if WTI will go up or down in the future,” Prior said. “The price of WTI oil is below the price needed to profitably drill a new well.”

New Mexico is the nation’s second-largest crude oil producer behind Texas and makes up a large portion of Permian Basin oil production – a key source of WTI. 

The survey’s business activity index, the broadest measurement of conditions energy firms face, remained negative at -6.2 — nearly unchanged from third-quarter results. 

The Dallas Fed’s index numbers — ranging from -100 to 100 — are calculated by subtracting the percentage of respondents who report decreases from those reporting increases.

The oil production index saw an increase from last quarter’s -8.6, but ultimately stayed negative at -3.4. According to the survey, the natural gas production index worked its way from -3.2 to 0 in the fourth quarter. 

Overall employee demand in the fourth quarter fell, and those working in the oil patch worked fewer hours, the Dallas Fed survey said.

Hannah García covers tech and energy for the Journal. You can reach her at hgarcia@abqjournal.com.