Latest TPI report shows mixed results in oil and gas

The latest Texas Petroleum Index, a tool that serves as a finger on the pulse of the oil and gas industry in Texas, shows the recovery trend continued its upward momentum in January.

The report, compiled by petroleum economist Karr Ingham, indicates the index increased a second straight month, up from 150.6 in December to 153.3 in January. The December figure was up from November's 148 reading. Ingham said despite the good news, the January measure is still 16 percent below a year ago and 51 percent down from November 2014 (313.5), when the entire industry went into free fall.

The TPI looks at the price of oil and gas; rig count; drilling permits issued; value of oil and gas produced in Texas; well completions; volume of oil and gas produced; and upstream jobs.

"The components of the Texas Petro Index continue to register mixed results as the transition from contraction to expansion plays out," Ingham said. "Crude oil and natural gas prices, the rig count, the number of drilling permits issued, and the value of oil and gas produced in Texas all registered year-over-year increases in January, while oil- and gas-well completions, the volume of oil and gas produced and upstream oil and gas employment continued to decline compared to levels a year ago."

January crude oil production was down about 4.5 percent from January 2016, but the $49.25 per barrel price was up more than 63 percent year-over-year. The same trend was true for natural gas, where production was down about 10 percent, but price was up by about 30 percent January-to-January.

January's rig count showed a continued increase in activity with a roughly 10-percent increase to 336 rigs this January compared to 305 a year earlier. The number of drilling permits issued by the Texas Railroad Commission soared in January, up about 88 percent from 510 in January 2016 to 956 in January this year.

January Jobs declined about 10 percent, year-over-year, according to Texas Workforce Commission figures, but that number could change when the agency releases new figures later this month.

"The expansion is in its infancy and 2017 will very likely be a year of growth and recovery in the Texas upstream oil and gas economy," Ingham said. "But at some point, absent another surge in the price of crude oil, price levels and oilfield service costs will conspire to put a bit of a lid on activity growth. Thankfully, we're not there yet."