Oil price collapse could lead to cost pressures, defaults

Dateline 2020-03-11, Malaysian Reserve:

THE lower crude oil price is likely to hit contract rates and cashflows leading to potentially higher non-performing loans and impairments, particularly for oil and gas (O&G) companies with weak balance sheets and provide supplementary services to big oil producers.

As crude oil prices fall into the US$30 (RM126) a barrel levels, AxiCorp Financial Services Pte Ltd chief market strategist Stephen Innes said the lower price is bound to diminish revenue streams and likely take a toll on the financial capabilities of support service provider companies to service their loan debt.

He said Malaysian O&G companies are price takers, so a lot of industry constituents could struggle if prices remain low.

“I’m not suggesting any company in particular. The same thing is happening in Calgary, Alberta, when oil prices get depressed, the industry as a whole struggles,” he told The Malaysian Reserve (TMR).

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: