Moody's: Oil uptick and reduced costs will keep global energy sector stable into 2017

The US-based ratings agency, Moody’s Investor Service, published their latest report on the oil and gas sector this Monday, earnings in the integrated oil and gas sector will stabilize over the next 12-18 months, supported by higher oil prices and lower operating costs driving a steady improvement in the profitability of companies' dominant upstream exploration operations.

Key Quotes:

"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"

“Moody's expects the pace of upstream cost reduction to slow after the industry delivered a 26% cut in average production costs per barrel of oil equivalent (boe) in 2015”

“Volume growth in the sector will remain flat as companies continue to cut capex to pay dividends, and investment returns remain low at the current level of oil prices”