Moody's Downgrades Majors | Russell T. Rudy Energy LLC
“Rigzone” reports that bond rating agency, Moody’s Investor Service, views the major international oil and gas companies negatively. Citing continued low oil prices through 2016, and its impact on revenues, the company lowered its outlook for almost all the sector. Moody’s noted that since the oil price collapse, companies such as Shell, ExxonMobil, and Total have cut spending by 20% and laid off thousands of workers. Assuming continued low prices next year, the agency sees further reductions as inevitable, and ultimately compromised long-term growth.
Free cash flow (revenue less spending and dividends) was negative for the sector in 2014 and expected to deteriorate further to as much as a negative $80 billion this year. Only marginal improvement to negative $55 billion is projected for 2016. The majors sold $70 billion in assets in 2013 and 2014, and will sell another $40-60 billion in 2015 and 2016, further compromising growth prospects.
Moody’s views Exxon, Total, Chevron, Statoil, ENI and OMV as stable and Shell and Repsol negatively. Only BP is seen in a positive light. Unfortunately, the article does not elaborate as to why the agency sees BP differently.
To read the article in its entirety, please go to http://www.rigzone.com/news/article.asp?hpf=1&a_id=140644&utm_source=DailyNewsletter&utm .
