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Oil and gas sector outlook remains stable on higher earnings in 2020: Moody’s

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The prospects for global integrated oil and gas firms remain stable for the coming 12 to 18 months as production increases and higher refining margins are set to boost earnings, Moody’s Investors Service said on Thursday in its annual outlook on the sector.

The sector’s earnings are expected to increase five percent in 2020, driven by production increases and higher refining margins, Moody’s said.

"Production costs and capital spending are likely to tick up after bottoming out in 2018, but the sector will remain leaner and more capital efficient than it was before the 2015 oil price crash," said Sven Reinke, a Moody's Senior Vice President.

Increasing investments in the low-carbon energy sector are set to be spearheaded by Royal Dutch Shell Plc, Total S.A., BP plc, Repsol, and Equinor, Moody’s said.

“After two years in the black, free cash flow will fall to zero in 2019-20 driven by a combination of lower funds from operations (FFO), gradually rising capital investments and higher dividend payments,” the report added.