The Covid-19 pandemic will unsettle long-term energy consumption patterns and heighten oil and gas prices volatility, Moody’s Investors Service said in a report on Monday.
The recovery is expected to be uneven, amplifying disparities between “strong and weak” energy companies, Kallanish Energy learns.
“Well-capitalized E&P firms and oil majors will consolidate their U.S. shale assets, while the number of highly leveraged companies will shrink amid waning support from banks and investors,” said Steven Wood, a managing director with Moody’s Corporate Finance Group.
Large integrated oil and gas companies will look into adjusting their product mixes, reducing their carbon footprints, while “redoubling” efforts to reduce breakeven production costs.
National oil companies’ earnings are forecast to recover over the next two to three years. However the extent and speed of recovery will depend on how soon economic activity returns to normal and, on post-Covid policy actions taken by their government sponsors.
China, southeast Asia and the U.S. are key regions for a global oil and gas industry’s recovery, Moody’s said.
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