A new Kansas City Federal Reserve Bank survey found that energy activity in Oklahoma and other states that comprise the district took a sharp drop in the fourth quarter and circumstances are not likely to improve in the next six months.
The quarterly Energy Survey showed companies in the 10th District of the Federal Reserve want higher prices in order to make any profit. The Federal Reserve Bank of Kansas City is located in Kansas City Missouri, and the 10th District includes Oklahoma, Colorado, Kansas, Nebraska, Wyoming, and portions of western Missouri and northern New Mexico. It is second only to the Federal Reserve Bank of San Francisco in size of geographic area served.
“Our company is not making money at current oil prices. We do not see that current reserve development is warranted,” replied one company representative, while another declared, “We need help in prices.”
Firms reported that oil prices need to be $61 per barrel, on average, for drilling to be profitable, and $75 per barrel for a substantial increase in drilling to occur. Natural gas prices need to be $3.80 per million Btu, on average, for drilling to be profitable, and $4.89 per million Btu for drilling to increase substantially.
“Tenth District drilling and business activity decreased to its lowest level since 2020,” said Cortney Cowley, assistant vice president and Oklahoma City Branch executive with the Federal Reserve Bank in Kansas City.
“One reason for these declines was that West Texas Intermediate oil prices fell below district firms’ average profitable price of $61 per barrel in Q4 2025,” said Cowley. “Moving forward, the outlook for investment in 2026 is mixed, with similar shares of firms planning to increase investment, decrease investment, or leave it unchanged.”
Fourth quarter energy survey results showed that Tenth District energy activity fell sharply, with further contraction expected in the next six months.
The bank’s quarterly indicators showed quarter-over-quarter drilling and business activity was down and revenues and profits fell “further from their lowest levels in two years.”
Drilling activity also decreased from this time last year as revenues and profits fell farther.
Firms also anticipate more declines in drilling activity.
Survey respondents were asked their expectations for capital spending and employment levels for 2026 compared to 2025. Expectations for capital expenditures were mixed, with
9% expecting a significant increase, 29% a slight increase, 34% expecting levels similar to 2025, while 17% expect a slight decrease and 11% anticipate a significant decrease.
A majority of firms (60%) expect employment to remain close to 2025 levels, while 3% expect a significant increase, 9% expect a slight increase, 25% expect a slight decrease, and another 3% expect a significant decrease.