### Uncertainty Climbs in Oil and Gas Industry, but E&P Spending Plans Hold Steady
The second quarter of 2024 has brought about an uptick in uncertainty within the oil and gas industry, as reflected in the latest Dallas Fed Energy Survey. Despite this increasing uncertainty, exploration and production (E&P) firms show resilience in their spending plans, with many companies planning to continue investments over the next year.
#### Market Dynamics
The survey indicates that the business activity index in the Dallas Fed’s energy footprint has dropped to -5.9 from 12.5 in the previous quarter, moving below the near-zero reading from earlier in the year. This decline is accompanied by a negative shift in the outlook among E&P and service firm executives, who expressed significant concerns about the economic and political environment.
Uncertainty about the outlook has doubled since June, with 57% of respondents noting an increase in uncertainty and only 9% observing a decrease. This rising uncertainty is leading companies to delay investment decisions, particularly as they await the outcome of the upcoming U.S. presidential election.
#### Investment Plans and Market Predictions
Interestingly, despite the increased uncertainty, the number of E&P firms planning to increase their spending over the next 12 months has barely budged from late spring levels. About 36% of executives intend to boost their capex, matching the previous quarter’s numbers. Meanwhile, the percentage of respondents planning to cut spending rose to 24% from 19%.
When it comes to oil pricing, nearly 35% of respondents expect West Texas Intermediate (WTI) crude oil prices to remain in the low $70s through year-end 2024. Another roughly 30% anticipate prices climbing to between $75 and $80 by year-end.
#### Cost Pressures Easing Slightly
Notably, cost pressures have been easing for E&P companies. Whether stemming from labor, lease, or development costs, these financial burdens have shown signs of relief. However,