Oil giants must “curb spending” to cap debts

Debts for oil companies could soar because of the the recent drop in oil prices, suggests new analysis. Oil giants will need to curb spending by 37% to keep their debt […]

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By Taryn Nixon

Debts for oil companies could soar because of the the recent drop in oil prices, suggests new analysis.

Oil giants will need to curb spending by 37% to keep their debt levels steady if Brent crude oil remains at $60 (£38) per barrel, according to the research by Wood Mackenzie.

This is on top of an extra $9bn (£5.7bn) in cuts that have already been made by companies in the last few weeks.

The collapsing oil process is squeezing the market for mergers and acquisitions, states the report, as would be buyers are not prepared to invest and companies are not getting the offers they want.

According to the research, the market will not recover until oil prices stabilise.

Luke Parker, Principal Analyst for Wood Mackenzie’s research said: “Weak oil prices through 2015 will ratchet up the pressure on the most financially stretched in the sector. Expect to see falling deal valuations and the emergence of a true buyers’ market.”