Thursday 28 Mar 2024
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KUALA LUMPUR (Aug 29): While inflation and taxes are set to drive up costs, the oil and gas industry may soon experience best returns for 15 years and record cash generation.

Citing the investment banking subsidiary of Canadian Bank of Montreal, BMO Capital Markets, energy portal Upstream on Aug 26 said stronger oil and gas prices will be the key driver of record cash flows in the industry.

According to an analysis by BMO Capital Markets of 120 oil and gas firms globally, last year these companies generated a record US$300 billion of free cash flow, compared to just US$17 billion in 2020.

BMO said cash flows are set to rise further as energy commodity prices rally.

It said the massive cash flows are expected to boost the role of the oil and gas sector in investing in the energy transition and decarbonisation.

The investment bank as quoted by the portal said despite rising costs of production and cost inflation in the supply chain, the oil and gas sector offers “compelling value for a select subset of producers with vastly improving returns profiles.”

“We continue to believe that global under-investment presents substantial upside to fundamental support levels through 2025,” BMO said.

 

 

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