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LONDON, Sept 16 (Reuters) - Moody's lowered its outlook forthe integrated oil and gas sector to negative on Wednesday,saying the sharp drop in oil prices would weigh on revenue into2016.
With oil having shed more than half of its value since June2014, companies such as Royal Dutch Shell, Exxon Mobil and Total have lowered spending by up to 20percent, cutting thousands of jobs and reducing costs.
Further reductions will be needed next year, which will hurtcompanies' long-term production growth, Moody's said in areport. (Graphic: http://link.reuters.com/zyj65w)
The sector's free cashflow, or revenue minus spending anddividends, was negative in 2014 as a result of high costs and isexpected to plummet to a negative $80 billion in 2015 and onlyslightly improve in 2016 to $55 billion, the ratings agencysaid.
Moody's has lowered its oil price outlook several timessince 2014. It currently expects benchmark Brent crude oil toaverage $55 per barrel in 2015 and $57 a barrel in 2016. Brentwas trading at around $48 a barrel on Wednesday.
Moody's expects companies to sell $40-$60 billion of assetsin 2015-2016 to improve cashflow after divesting $70 billion in2013 and 2014.
Moody's in its report did not change its outlooks forindividual oil and gas majors. It currently sees the outlook asstable for Exxon, Total, Chevron, Statoil, Eni MI> and OMV while the outlook for Shell andRepsol is negative. BP stands alone with apositive outlook. (Reporting by Ron Bousso; editing by Jason Neely and SusanFenton)