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Washington — The Federal Reserve Bank of Dallas released a quarterly energy survey Wednesday that painted a grim portrait of a US oil and natural gas sector struggling with the demand impact of the coronavirus pandemic and the price war between Russia and Saudi Arabia.

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"My outlook on the domestic oil and gas industry has never been bleaker," one executive at an exploration-and-production firm wrote to the survey.

"We are now expecting an almost total stop in business in the coming weeks and months," an executive at an oilfield services company told the Dallas Fed. "It is not a pretty picture."

"It is looking to be a bloodbath for most firms," another E&P executive said.

While one of the 161 US oil and gas executives surveyed called the impact of the coronavirus "overhyped" and another called the current state of the global energy market "times of opportunities," the survey reported historic declines in activity in the oil and gas sector.

In the Dallas Fed's 11th District, which includes Texas and much of New Mexico and Louisiana, a broad measure of business activity by oil and gas firms fell to minus 50.9 in Q1, the lowest point in the survey's four-year history, from minus 4.2 in Q4 2019. The Dallas Fed's oil production index declined 51 points to minus 26.4 in Q1 and its natural gas production index dropped to minus 21.2 in Q1 2020 from 15.6 in Q4 2019.

But the majority of survey participants expect oil prices to rebound. According to the survey, 63% of executives polled expect WTI crude oil prices to be above $40/b by the end of 2020, with 19% expecting prices to be $50/b or higher. Only 7% of those surveyed expect WTI prices to be below $30/b by year-end.

S&P Global Platts assessed cash WTI crude at $20.76/b Tuesday, up from $20.36/b Monday, but down 65% from January 20, when commodities markets first began reacting to the coronavirus outbreak.

Even if WTI prices were to remain below $40/b, 47% of the survey's respondents said their E&P and oilfield services companies would remain solvent for more than four years, although 34% said their firms would be insolvent in less than two years at those prices.

Part of this modest optimism in an otherwise pessimistic survey may be declines in breakeven costs, particularly in the Permian and Eagle Ford. According to the survey, E&P companies need WTI prices at an of $23/b to cover operating expenses of existing wells in the Eagle Ford, down from $28/b in the Q1 2019 survey. Operators in the Delaware and Midland portion of the Permian would both need WTI prices of $26/b to cover expenses, down from $35/b and $27/b, respectively, in the Q1 2019 survey.