Investors, Executives and Fed All Bullish on 6 Month Outlook for Oil & Gas Industry
Since oil and gas production has slowed for the third consecutive quarter, it might sound like grasping at straws to be looking for positive signs. However, since the rate of decline has also slowed, that is being viewed as reason to be optimistic by both the Federal Reserve Bank of Dallas and global investment banking firm Capital Alliance Corporation.
Although, it should be noted that the optimism is conditional.
Capital Alliance Corp. predicts that the oil and gas industry will improve through the end of the year and into the next, with an increase in activity for mergers and acquisitions, if the price of oil reaches or surpasses $50. In the Dallas Fed Energy Survey released on September 28 by the Federal Reserve Bank of Dallas, it was revealed that the oil and gas executives it surveyed expected the fundamentals in the sector to improve.
According to the Fed’s survey, there was an increase in business activity within the oil and gas industry during the third quarter. The survey measures conditions in the 11th District, which includes all of Texas, as well as northern Louisiana and southern New Mexico.
Paul Puri, managing director and chief development officer at Capital Alliance Corporation, says that the Fed’s findings are pretty much in keeping with what they’ve been seeing, as well. “We’ve witnessed an uptick in merger-and-acquisition interest from the oil patch, which indicates strengthening fundamentals that are bringing companies back to the bargaining table.”
Participants in the Fed’s survey don’t seem to think it will be all that long before we see this improvement, either. Sixty-two percent of them believe that the price of oil will be higher in just six months from now. Of course, the biggest indicator will be when production finally starts increasing, rather than decreasing.