With the prospects for $60/bbl or higher oil prices looking dimmer, Midcontinent oil/gas companies are expecting further spending cuts and employee layoffs, according to a survey released Friday by the Federal Research Bank (FRB) of Kansas City, MO.

The 3Q2015 energy survey revealed a “decline in activity” by the energy firms in the bank’s district, which covers Denver, Oklahoma City and Omaha, and a clear indication that “financing for the sector is tightening,” according to FRB economist Chad Wilkerson.

“As in the spring, firms on average reported needing domestic oil prices to be around $60/bbl to be profitable,” Wilkerson said. “They now don’t expect that price until at least 2017, and so many are planning further capital spending cuts.”

The average expected WTI crude oil price is $48/bbl for the end of this year and $58/bbl for the end of 2016, according to the survey. “Most firms expected their capital spending and employment to be lower in 2016 than this year,” Wilkerson said.

The survey uncovered another “large decline” in district energy activity in 3Q2015, with the drilling/business activity index falling from -34 to -37, the FRB said, along with a total revenues index decline to -55 and an employment index decline from -37 to -39. “Compared to a year ago, activity was significantly lower,” Wilkerson said. “Revenues were also drastically lower than last year.”

With those results, the FRB said expectations in the industry in the third quarter “turned pessimistic,” and that the future drilling and business activity expectations index “plunged from a positive 16 to a negative 24.”

In regard to future profitable prices, firms responses put the average at $60/bbl with a range of $50-$80/bbl in the responses. That was down slightly from the $62/bbl average in the first quarter survey this year, and way down from the $79/bbl average profitability price in the third quarter last year.

The average expected price for all of 2015 was put at $48/bbl by survey respondents, down considerably from $70/bbl in the previous quarterly survey. “Overall, financing was less available from all sources, but private equity remained most accessible,” Wilkerson said.

“There is still a lot of equity sitting on the sidelines waiting for a strong signal that we have hit bottom and that deals are being priced accordingly,” said one of the selected comments from the responses. Another comment: “The price of oil is too low to continue drilling, and we don’t expect it to recover for 18-24 months.”

The quarterly survey attempts to monitor oil and natural gas-related companies located or headquartered in the FRB’s 10th District, which includes the western third of Missouri and all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming and the northern half of New Mexico.