(The Center Square) – Energy activity in the 10th Federal Reserve District, which includes Colorado and Wyoming, slowed during the fourth quarter, according to a survey by Federal Reserve Bank of Kansas City.

The survey, which gauges energy firms’ activity and outlook, also found that “expectations for future activity remained positive.” 

“The pace of growth for District drilling and business activity slowed in Q4 as commodity prices eased and input prices remained elevated,” said Chad Wilkerson, the bank’s senior vice president. “Firms reported a drop in profits for the first time in over two years, but still remained moderately optimistic about 2023.”

Nearly 40 percent of survey respondents told the bank that the “biggest drag” on oil and gas production was inflation and supply chain issues, while 28 percent responded their top concern was regulatory uncertainty. 

Energy firms said oil needs to be an average of $64 per barrel for drilling to be profitable in their fields, while $89 per barrel “for a substantial increase in drilling to occur,” according to the survey. Crude oil prices as of Friday are 79.94 per barrel as of Friday.

For natural gas, an average of $4.32 per million Btu is needed to be profitable, respondents said, and $6.13 per million Btu would be needed for a substantial increase in drilling. The price of natural gas is $3.46 per million Btu as of Friday.

Over 70 percent of firms also said they expect prices to go up over the next year.

The bank’s district covers Colorado, Kansas, Nebraska, Oklahoma, Wyoming, and parts of New Mexico and Missouri.