Moody's lowers outlook for oil and gas sector

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LONDON, Sept 16 (Reuters) - Moody's lowered its outlook for the integrated oil and gas sector to negative on Wednesday, saying the sharp drop in oil prices would weigh on revenue into 2016.

With oil having shed more than half of its value since June 2014, companies such as Royal Dutch Shell (Xetra: R6C1.DE - news) , Exxon Mobil (Swiss: XOM.SW - news) and Total (Swiss: FP.SW - news) have lowered spending by up to 20 percent, cutting thousands of jobs and reducing costs.

Further reductions will be needed next year, which will hurt companies' long-term production growth, Moody's said in a report. (Graphic: http://link.reuters.com/zyj65w)

The sector's free cashflow, or revenue minus spending and dividends, was negative in 2014 as a result of high costs and is expected to plummet to a negative $80 billion in 2015 and only slightly improve in 2016 to $55 billion, the ratings agency said.

Moody's has lowered its oil price outlook several times since 2014. It (Other OTC: ITGL - news) currently expects benchmark Brent crude oil to average $55 per barrel in 2015 and $57 a barrel in 2016. Brent was trading at around $48 a barrel on Wednesday.

Moody's expects companies to sell $40-$60 billion of assets in 2015-2016 to improve cashflow after divesting $70 billion in 2013 and 2014.

Moody's in its report did not change its outlooks for individual oil and gas majors. It currently sees the outlook as stable for Exxon, Total, Chevron (Swiss: CVX.SW - news) , Statoil (Xetra: 675213 - news) , Eni (Swiss: ENI.SW - news) MI> and OMV (Amsterdam: OM6.AS - news) while the outlook for Shell (LSE: RDSB.L - news) and Repsol (Amsterdam: RP6.AS - news) is negative. BP stands alone with a positive outlook. (Reporting by Ron Bousso; editing by Jason Neely and Susan Fenton)