E&Ps shaved development and production costs substantially after the commodity price downturn in 2014, but those gains may now be hobbled.

Recent reports from Moody’s examined how credit conditions are changing for the North American E&P sector in a time of more modest and range-bound commodity prices. The analysts determined capital efficiency, leverage and the effects of shareholder-friendly activity all pose risks after a brighter environment in 2018.

Moody’s review of 40 independent oil and gas companies indicated that “range-bound commodity prices today, cost inflation and geological issues will all limit further gains in capital efficiency during 2019-20.” Companies included in the reports consisted of several large E&Ps such as ConocoPhillips Co., Occidental Petroleum Corp. and EOG Resources Inc.

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