By Georgina McCartney

Declining Oil and Gas Activity in Key U.S. States

HOUSTON (Reuters) – Recent findings from a survey conducted by the Federal Reserve Bank of Dallas revealed a slight decline in oil and gas activity among key producing states, including Texas, Louisiana, and New Mexico, during the third quarter. Executives in these regions are increasingly expressing a pessimistic outlook for the industry.

Impact of Uncertain Oil Prices and Policy Frustrations

The decrease in production and activity levels coincides with rising uncertainties surrounding global oil prices and growing frustrations directed at the policies of U.S. President Donald Trump. Many executives have pointed to various aspects of Trump’s administration, including tariffs and the intention to reduce oil prices, as detrimental to the industry’s health.

In the survey results, over one-third of executives in the exploration and production sector noted significant delays in investment decisions, attributing this hesitance to the increased unpredictability of oil prices and production costs. Oilfield services executives also shared a bleak perspective on the future.

“A thriving oilfield services sector is essential for the U.S. to quickly respond with increased production when needed. Right now, however, we are facing significant challenges,” shared one oilfield executive in the anonymous comments section of the survey.

Price Pressures and Economic Sustainability

Producers generally require oil prices to be around $65 per barrel to sustain profitability. Data from LSEG indicates that U.S. crude futures fluctuated between a high of $70 and a low near $62 a barrel through the third quarter.

“The ambiguity stemming from the administration’s policies is hampering all investments in the oil sector. Those capable of leaving are doing so,” countered another exploration and production executive.

Geopolitical Factors and Market Dynamics

While tensions in regions like the Middle East and Europe may bolster prices, actions from OPEC+ to increase output ahead of schedule and Trump’s tariff policies have negatively influenced market values.

Exploring International Opportunities

As domestic resources become increasingly tapped, a significant number of companies are turning their gaze towards international ventures. The survey indicated that over 75% of executives believe shale oil drilling could become commercially viable in regions outside the U.S., Canada, and Argentina within the next decade.

A notable example includes a joint venture between the Turkish national oil company TPAO and U.S. oil producer Continental Resources aimed at developing shale fields in Turkey’s Diyarbakir Basin. Additionally, Houston-based EOG Resources has entered markets in Bahrain and the United Arab Emirates earlier this year.

“We may be starting to see the decline of the shale boom,” remarked one executive, adding, “The U.S. isn’t running out of oil; it’s simply running out of oil that can be profitably extracted at $60 per barrel.”

Capital Expenditure Trends

Approximately 43% of exploration and production companies anticipate decreased capital expenditures in the third quarter compared to the same period last year. Likewise, oilfield service firms project a 42% decline in capital investments over the same timeframe.