Oil and gas activity rose in the first quarter of 2026, according to industry executives responding to the Federal Reserve Bank of Dallas’ Energy Survey released on Mar. 25.
The survey’s business activity index, which measures conditions facing Eleventh District energy firms, turned positive for the first time in nearly a year, rising by 27 points to reach a level of 21. This suggests expansion in the sector after several quarters of stagnation.
Michael Plante, assistant vice president at the Dallas Fed, said: “Activity rose for the first time in almost a year, accompanied by a broad-based improvement in the operating environment for oil and gas support service firms. The ongoing conflict in the Middle East, however, has generated substantial uncertainty for firms about the near-term outlook.”
Key findings from the survey show that oil and natural gas production remained relatively unchanged this quarter. The employment index was nearly flat at 0.8 while aggregate employee hours increased significantly compared to last quarter. Wages and benefits also saw an increase during this period.
The outlook among surveyed firms improved as indicated by an outlook index jump of over 47 points; however, uncertainty about future conditions remains high with its own index climbing further this quarter. Costs related to input materials and finding or developing new resources increased at a faster pace than previously reported.
Oilfield services companies reported modest improvements across most indicators compared with last quarter—equipment utilization turned positive while operating margins remained negative but less so than before. Prices received for services also showed gains.
Survey participants were asked how recent increases in oil prices have affected their drilling plans for 2026: nearly seventy percent of large exploration and production (E&P) firms reported no change while almost sixty percent of smaller E&P companies revised up their expected number of wells drilled this year. “This suggests some interest among some firms to increase activity in response to the recent increases we’ve seen in WTI oil prices,” Plante said.
Executives also provided estimates on break-even West Texas Intermediate (WTI) crude prices needed both to cover existing well costs—averaging $43 per barrel—and profitably drill new wells—averaging $66 per barrel across all respondents.
Looking ahead, most executives expect slightly more Venezuelan oil production over the next two years compared with previous expectations; they also anticipate recovery rates will slightly increase over ten years for both crude oil and natural gas extraction processes.
