Moody’s: Oil and gas companies will increase their earnings within 18 months

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Moody’s Investors Service published a new report on Monday saying that integrated oil and gas companies are expected to stabilize their earnings within the next 18 months. The experts see two main reasons that will contribute to a rise of revenues: they are growing crude prices and lowering operating costs.

“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 reminds that the sector’s EBITDA (earnings before interest, tax, depreciation and amortization) has fallen to the lowest levels in 10 years due to low crude oil prices. This year’s depressed downstream business earnings may also have a negative impact making the core earnings recovery slow down.