Low en­ergy

Lower oil pric­ing is lead­ing some oil and gas com­pa­nies to trim their bud­gets for the com­ing year.

The Oklahoman - - FRONT PAGE - BY JACK MONEY Busi­ness Writer [email protected]­la­homan.com

“We are hun­ker­ing down and weath­er­ing the storm.” This anony­mous quote from the most re­cent quar­terly en­ergy sur­vey con­ducted by the Fed­eral Re­serve Bank of Kansas City seems to sum up the at­ti­tudes of top ex­ec­u­tives of at least some oil and gas com­pa­nies op­er­at­ing in Ok­la­homa, Kansas, Colorado, Ne­braska, Wyoming and parts of Mis­souri and New Mex­ico. The sur­vey, re­leased Fri­day, shows en­ergy com­pa­nies pulled back their ac­tiv­i­ties in the fi­nal quar­ter of the year. It also shows at least some com­pa­nies have trimmed their cap­i­tal ex­pen­di­ture plans for 2019, but still presents a mixed picture. Some ex­ec­u­tives who took part in the sur­veys said they will con­tinue to ex­e­cute set drilling plans for the com­ing year to hold acreage while hedg­ing sig­nif­i­cant amounts of pro­duc­tion to pro­tect them­selves from a volatile mar­ket. Oth­ers said those ebbs and flows in pric­ing, par­tic­u­larly when it comes to oil, are a “deal killer” for their plans. One said, “uncer­tainty is driv­ing our plans for the next year,” while an­other added, “con­tin­ued low prices will dampen new hires and fu­ture spend­ing.” The bank uses the sur­vey re­sults to cre­ate in­dexes that mea­sure en­ergy in­dus­try ac­tiv­i­ties, in­clud­ing drilling, cap­i­tal spend­ing, em­ploy­ment levels and costs. Data from the fourth-quar­ter sur­vey showed that: • The sur­vey’s drilling and busi­ness ac­tiv­ity in­dexes fell for the first time in nearly

three years.

• In­dexes for to­tal rev­enues, prof­its and ac­cess to credit also de­creased con­sid­er­ably.

• In­dexes for most em­ployee-re­lated items also weakened, but showed the in­dus­try was still ex­pand­ing in the quar­ter, just more slowly.

As for what ex­ec­u­tives ex­pected in 2019, the sur­vey showed that some pre­dicted their firms would spend less and earn less profit.

It also showed they ex­pected for oil and nat­u­ral gas prices to con­tinue mod­er­at­ing.

“The re­cent drop in oil prices led to some pull­back” dur­ing the fourth quar­ter, said Chad Wilk­er­son, the Ok­la­homa City branch ex­ec­u­tive and

A num­ber of firms also re­duced their 2019 cap­i­tal spend­ing plans. Firms re­port need­ing $63 a bar­rel on av­er­age for oil in order to ‘sub­stan­tially’ in­crease drilling.” Chad Wilk­er­son, Ok­la­homa City branch ex­ec­u­tive

econ­o­mist at the Fed­eral Re­serve Bank of Kansas City.

“A num­ber of firms also re­duced their 2019 cap­i­tal spend­ing plans,” he said, adding, “Firms re­port need­ing $63 a bar­rel on av­er­age for oil in order to ‘sub­stan­tially’ in­crease drilling.

“But they an­tic­i­pate oil rising to only the mid- to high-$50s this year.”

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