A recent analysis by Moody’s Investors Service reported by Oil & Gas Journal said the outlook for the global energy industry is stable over the next 12-to-18 months “with earnings remaining elevated as the industry steps down from exceptionally high gains in 2022.” Moody’s expects E&P capital spending to rise by 15 percent and production to grow by 5 percent based on preliminary guidance from 43 of the largest North American E&P companies.
E&P companies are more resilient to lower prices today, according to Moody’s, after significantly reducing debt and improving capital efficiency during 2021-22. Oil producers can generate free cash flow if WTI averages at least $65 per barrel in 2023. “The deceleration is led by lower average oil and natural gas prices,” Moody’s said, but the “lower prices and heightened volatility do not point to a resolute weakness in fundamental conditions in the energy industry as prices should remain above our medium-term price ranges and companies have improved operating and financial resilience.”
