Oil and natural gas production rose in Texas, Louisiana and New Mexico in the third quarter, according to the Federal Reserve Bank of Dallas energy survey, the region's most closely watched barometer of upstream activity across the Eleventh District.

The Dallas Fed's quarterly survey covers the nation's most productive oil and gas basin — the Permian, which spans West Texas and southeastern New Mexico — as well as operators active across Texas shale plays and in northern Louisiana. Production indexes for both oil and natural gas moved higher in the reporting period, indicating that output expanded across the district rather than in isolated pockets.

For readers tracking national supply, the survey's coverage matters. The three states named in the report account for the largest share of US crude output, with the Permian alone delivering the bulk of American onshore production. New Mexico's slice of the Delaware Basin has driven much of the basin's growth in recent years, while Texas operators anchor the Midland Basin, the Eagle Ford and the Haynesville gas play straddling the Texas-Louisiana border. Any broad-based production increase recorded across these three states carries weight for US supply balances.

The Dallas Fed compiles the survey from responses of oil and gas firms in the Eleventh Federal Reserve District, which covers Texas, southern New Mexico and northern Louisiana. Respondents span exploration and production companies, oilfield services firms and support businesses, and the bank publishes the results each quarter as part of its broader tracking of regional economic conditions.

What the increase signals

A production gain reported across all three states suggests operators sustained or expanded completions through the quarter despite the cost pressures and capital discipline that have characterized the shale sector since the last commodity downcycle. Firms have generally prioritized shareholder returns over aggressive growth, which has kept US output gains measured even as prices have recovered from 2020 lows.

Natural gas production gains, if they hold, will matter for Gulf Coast operators. Louisiana and East Texas gas feeds the growing corridor of LNG export terminals along the Gulf of Mexico, where feedgas demand has climbed as new liquefaction capacity has come online. Any incremental Haynesville and associated gas volumes from the Permian feed directly into that export chain.

Oil-side gains, meanwhile, land in a market still shaped by OPEC+ supply management. Rising US production has been a persistent counterweight to the producer group's output cuts, and Permian growth specifically is the swing factor most analysts watch when forecasting global balances. The survey's respondents typically provide forward-looking commentary alongside the production data, and their outlook for drilling and completion activity in coming quarters will determine whether the third-quarter gain marks a trend or a plateau.

Watch items

Two questions now frame the outlook. First, whether the production increase translates into a higher US rig count in subsequent Baker Hughes data — the Dallas Fed survey's activity readings and the North American rig count have historically moved together, though productivity gains have allowed operators to hold output flat with fewer rigs.

Second, service costs. The survey routinely captures firms' assessments of input prices from oilfield service providers, and cost inflation has been the sector's recurring constraint. If operators report rising costs alongside rising output, margin compression will temper enthusiasm about the expansion.

The Dallas Fed will publish its next quarterly survey in roughly three months. Traders and planners will look there — and in the monthly EIA production reports for Texas, New Mexico and Louisiana — to confirm whether the third-quarter increase marks a durable upleg in Lower 48 supply or a one-quarter bump in an otherwise flat trajectory.