ExxonMobil, Chevron Facing Cash Flow Problems From Oil Glut

Moody’s Investors Service has placed the US energy corporation Chevron on review for downgrade, and changed the outlook for the oil and gas corporation ExxonMobil to negative.

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WASHINGTON (Sputnik) — Moody’s Investors Service has placed the US energy corporation Chevron on review for downgrade, and changed the outlook for the oil and gas corporation ExxonMobil to negative, the rating agency’s Senior Vice President Pete Speer said in a press release.

"Despite sizable reductions in its 2016 capital budget, we expect that Chevron will have substantial negative free cash flow in 2016 and 2017 because of low oil prices," Speer stated on Thursday.

In a separate release, Speer pointed out that ExxonMobil is expected to experience cash flow difficulties too.

"While the company is cutting its capital spending and operating costs in response to lower commodity prices, this diminished level of capital reinvestment could adversely affect ExxonMobil's reserve replacement and production profile in the latter part of this decade," he explained.

Global oil prices plunged from $115 to less than $30 per barrel between June 2014 and January 2016, hitting their lowest levels since 2003, mostly because of prolonged global oversupply and sluggish demand.

Moody's argued that low oil and natural gas prices will persist for several years.

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