Dallas Fed Survey: US Oil and Gas Producers ‘Stretched to the Max’

U.S. oil and gas executives told the Dallas Fed their highest uncertainties are no longer below ground but above, with politics, inflation, supply times, material shortages, labor and capital hampering activity.

Dallas Fed Survey: US Oil and Gas Producers ‘Stretched to the Max’

In the Permian Basin, the country’s most active play, the “supply chain seems stretched to the max,” an oilfield services executive said. E&Ps executives added that it would take months or even a year to drill and complete an additional well above and beyond their plans. (Source: Hart Energy)

U.S. E&Ps and oilfield service companies are mired in shortages of equipment and labor.

Executives said they would need months to drill a single new, unplanned well and many believe the health of the economy is deteriorating, according to the June 23 Dallas Fed Energy Survey.

Doubt continues to plague the space.

“The highest uncertainties are no longer below ground (ultimate recoveries, initial production rates, gas–oil ratios, operating expenses), as we’ve gotten very good at forecasting, estimating, and predicting those,” an E&P executive told the Dallas Fed.

Rather, the highest uncertainties are above ground: politics, windfall profits tax, surtaxes, leasing bans, product prices, inflation, supply times, material availabilities, contractor availabilities and capital availability.

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Darren Barbee

Darren Barbee is senior editor for Oil and Gas Investor magazine.