Daylight finally broke for the Texas oil and natural gas industry in December after a 24-month economic contraction, according to the Texas Petro Index (TPI), a barometer of upstream industry health in the Lone Star State.

December saw the first monthly increase in the TPI since it peaked at a record 313.5 in November 2014. The TPI improved to 150.6 in December, up from 148.0 in November but still down 21.1% from 190.9 in December 2015.

“This is the moment we’ve been waiting for,” said Karr Ingham, the economist who created the TPI and updates it monthly. “It is good news for the industry, for the Texas economy, and for many communities around the state that are strongly connected to the oil and gas exploration and production industry.

“It’s been a bloodbath, frankly, but better days are ahead in 2017 after two years of sharp contraction, job losses, and downward pressure on the statewide and regional economies of Texas.”

At 150.6, the December TPI amounted to only 48% of the peak TPI only two years and one month earlier. The extreme declines of indicators tracked by the TPI reflect the severity of the downturn.

Monthly average posted crude oil prices in Texas fell from $101.68/bbl in June 2014 to $27.08/bbl in February 2016, a decline of 73%. Daily posted prices for West Texas intermediate crude declined from $103.75/bbl in June 2015 to $22.75/bbl in February 2016, a decline of 78%.

The average monthly price of natural gas fell from more than $4.50/Mcf in June 2014 to $1.63/Mcf in March 2016, a decline of 64%.

The statewide rig count in Texas as reported by Baker Hughes Inc. hit 906 in the third week of November 2014 before falling to a weekly low of 173 in May 2016, a decline of more 80%.

The number of drilling permits granted each month, which exceeded 3,000 in September and October 2014, reached 510 in January 2016, an 83% decline. Sixty-eight percent fewer permits were granted in 2016 than in 2014.

Between December 2014 and October 2016, an estimated 103,800 jobs were lost in the upstream sector of the Texas oil and gas industry, which amounts to 34% of Texans on the payrolls of production, drilling, and well servicing companies.

Daily crude oil production in Texas declined by 12.7% from March 2015 to September 2016.

Natural gas production in Texas has declined about 10% since peaking in early 2015 and is probably still declining, Ingham said.

Nearly 70% fewer oil wells were completed in Texas in 2016 compared to 2014 and about 60% fewer natural gas wells, and both completion rates continued to decline through the end of 2016.

“By the end of 2016, every indicator that makes up the TPI had turned the corner, with the exception of natural gas production and the number of oil and gas wells completed,” Ingham said. “Still, even with the $6-8/bbl added to the price of crude oil by the OPEC [Organization of the Petroleum Exporting Countries] plan announced in late November to remove 1.2 million b/d from global crude oil markets, oil prices are still less than half what they were in advance of the downturn.

“So, while there is little sense the Texas oil and gas exploration and production economy in 2017 will recoup all that has been lost over the course of the contraction, the industry is moving into the new year with a sense of optimism and resurgence for the first time in three years.”

December crude oil production in Texas totaled about 98.5 million bbl, 5.1% less than in December 2015. With oil prices in December averaging $48.69/bbl, the value of Texas-produced crude oil amounted about $4.8 billion, 36.8% more than in December 2015.

Texas natural gas output was more than 649.7 Bcf in December, a year-over-year decline of about 9.5%. With natural gas prices in December averaging $3.46/Mcf, the value of Texas-produced gas increased about 63.8% to more than $2.24 billion.

The Baker Hughes count of active drilling rigs in Texas averaged 310 in December, 4.3% fewer units than in December 2015 when an average of 324 rigs were working. Drilling activity in Texas peaked in September 2008 at a monthly average of 946 rigs before falling to a trough of 329 in June 2009.

The number of original drilling permits issued in December was was 1,009, about 38.8% more than the 727 permits issued in December 2015.

An estimated average of 205,300 Texans remained on upstream oil and gas industry payrolls, based upon revised quarterly data from the Texas Workforce Commission, about 11.6% fewer than in December 2015 and about 32.9% fewer than the estimated high of 306,020 in December 2014. According to TPI estimates, the trough of upstream oil and gas employment in Texas before the expansion ending December 2014 was 184,640 in October 2009. During the previous growth cycle, industry employment peaked at 225,965 in October 2008.