• 5 minutes 'No - Deal Brexit' vs 'Operation Fear' Globalist Pushback ... Impact to World Economies and Oil
  • 8 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 12 minutes Will Uncle Sam Step Up and Cut Production
  • 4 hours OPEC will consider all options. What options do they have ?
  • 4 hours Danish Royal Palace ‘Surprised’ By Trump Canceling Trip
  • 53 mins Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 7 hours What to tell my students
  • 5 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 4 hours A legitimate Request: France Wants Progress In Ukraine Before Russia Returns To G7
  • 11 hours Recession Jitters Are Rising. Is There Reason To Worry?
  • 5 hours China Threatens to Withhold Rare Earth Metals
  • 7 hours With Global Warming Greenland is Prime Real Estate
  • 20 hours TRUMP'S FORMER 'CHRISTIAN LIAISON' SAYS DEEPWATER HORIZON DISASTER WAS GOD'S PUNISHMENT FOR OBAMA ISRAEL DIVISION
  • 19 hours Maybe 8 to 10 "good" years left in oil industry * UAE model for Economic Deversification * Others spent oil billions on funding terrorism, wars, suppressing dissidents, building nukes * Too late now
  • 16 hours CLIMATE PANIC! ELEVENTY!!! "250,000 people die a year due to the climate crisis"
  • 21 hours Flaring is at Record Highs in Texas
The Number One Gold Stock Of 2019

The Number One Gold Stock Of 2019

Gold prices are soaring amid…

Rampant Corruption In The World’s Last Oil Frontier

Rampant Corruption In The World’s Last Oil Frontier

Endemic corruption in Kurdistan continues…

Moody’s Sees Oil & Gas Earnings Stabilizing Amid Higher Prices, Lower Costs

Refinery North America

Integrated oil and gas companies will see their earnings stabilize within the next 18 months, as higher crude prices and lower operating costs will raise profit margins in the upstream business, Moody’s Investors Service said in a new report on Monday.

“Over the last year, integrated oil and gas companies have accelerated reductions in their operating costs to adjust to earlier oil price declines. As a result, most companies’ upstream operations returned to positive net income generation in the second quarter of 2016, while also benefiting from an uptick in the price of crude,” Elena Nadtotchi, a Moody’s Vice President -- Senior Credit Officer and author of the report, says.

Moody’s - which has held ‘stable’ outlook on the oil and gas sector since August 2016 - may raise its outlook to 'positive' should the companies’ earnings before interest, tax, depreciation and amortization (EBITDA) increase by over 5 percent annually within the next 18 months. Conversely, if the core earnings of the integrated oil and gas companies drop by 5 percent or more, Moody’s would downgrade its outlook to ‘negative’, according to the report.

Low crude prices have plunged the sector’s EBITDA to the lowest levels in 10 years.

Related: Oil Leak Forces BP To Shut Platform In North Sea

The core earnings recovery, however, will be slowed down by this year’s depressed downstream business earnings, which reflect the oversupply of refined petroleum products in Europe and North America, Moody’s says.

The agency sees the sector generating around US$65 billion in negative free cash flow this year and next. Moody’s also reckons the companies will keep on financing deficits with selling assets, issuing new debt, and cash balances in the near term.

Earlier this year, Moody’s slammed the current model used by oil companies to remunerate executives as too dependent on growth and as such, outdated and not in line with the current prices. According to the rating agency, the focus should be moved from growth to value preservation, as is more appropriate for the current and mid-term future situation in the industry.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play