### Uncertainty Climbs in Oil and Gas Industry, but E&P Spending Plans Remain Resilient
The latest Dallas Fed Energy Survey has highlighted a significant rise in uncertainty within the oil and gas sector. This trend is attributed to both economic and political factors, including the forthcoming U.S. elections. Despite this heightened uncertainty, exploration and production (E&P) firms are remarkably unwavering in their plans for capital expenditures.
**Declining Business Activity Index**
The survey’s headline index of business activity, covering parts of Texas, New Mexico, and Louisiana, experienced a substantial drop from 12.5 in the second quarter to -5.9 in the third quarter. This decline indicates a negative outlook among E&P and service firm executives, who noted a significant increase in uncertainty since June. With 57% of respondents indicating that conditions have become more uncertain, only 9% reported otherwise, doubling the uncertainty index from the previous quarter and reaching its highest level since early 2023.
**Uncertainty and Investment Decisions**
The rising level of uncertainty has caused some companies to delay investment decisions, particularly when it comes to long-term commitments. Executives from E&P firms are reevaluating their plans, focusing on potential drilling strategies for a lower-commodity environment. One respondent noted, “Recent volatility has started to impact planning discussions for 2025.” Another executive stated, “The oil community prefers to await the allocation of capital until after the election”.
**Capital Spending and Employee Hours**
Despite the overall negative trend, E&P firms have shown resilience in their spending plans. Only a slight drop was observed in the outlook for capital expenditures (capex) over the next year, with about 36% of executives planning to increase spending, mirroring the second-quarter level. This stability is evident despite rising short-term uncertainty and slightly reduced employee hours.
**Oil Price Projections**
The anticipated price of West Texas Intermediate (WTI)