Industry executives Petroleum and gas from U.S expect increased production and drilling activity in 2022 as barrel prices rise, but say they face much higher costs, according to a survey released by the Federal Reserve (Fed) from Dallas.
About 49% of executives surveyed said they aim to expand production in 2022, while 15% said their main focus would be to maintain existing pumping levels and 13% plan to focus on reducing debt.
The six-month outlook remained higher, but the index fell to 53.2 from 58.9 the previous quarter.
Executives at publicly traded oil companies have said they largely plan to keep production flat or expand it at low single-digit percentage rates next year, in order to focus on improving returns for shareholders.
The WTI contract has gained 60% since the beginning of the year, as demand for oil and motor fuels is improving following the crisis caused by the coronavirus pandemic.
The input cost index among service companies hit a record in the survey, rising to 69.8 from 60.8 last quarter.
Oil service companies reported higher costs during the fourth quarter, and leasing operating expenses rose to 42 from 29.4 during the quarter, also the highest reading since the Dallas Fed began taking the poll five years ago.
“Strong supply chain disruption and associated inflation have the potential to delay and impact drilling and processing activity in 2022,” commented one executive. Others said that highly skilled workers have been difficult to find.
Respondents anticipate, on average, that oil prices will hit US $ 75 a barrel next December, and Henry Hub natural gas prices will hit US $ 4.06 per million British thermal units (MMBtu), both close to current prices.
.
Ricardo is a renowned author and journalist, known for his exceptional writing on top-news stories. He currently works as a writer at the 247 News Agency, where he is known for his ability to deliver breaking news and insightful analysis on the most pressing issues of the day.
