Mubasher: An expected slowdown in the pace of earnings growth has moved the 2018 outlook on the global integrated oil and gas industry to stable from positive, Moody's Investors Service said in a report published Monday.

The slowdown follows a strong earnings recovery in 2017 and signals a return to stable, organic growth, the report noted.

"Our outlook has turned stable to reflect the increased likelihood of earnings growth slowing down for the global oil and gas players in 2018, after the sharp recovery in 2017. We also expect fundamental conditions to stabilize further as companies have cut their production costs and capital investment amid low oil prices," said Elena Nadtotchi, the vice president and senior credit officer at Moody's.

Moody's expects earnings before interest, tax, depreciation, and amortization (EBITDA) growth for the global oil and gas sector to slow to around mid-single digits in 2018 from 28% for the 12-months to 30 June 2017.

“Strong growth in production volumes, accelerated cost cuts and modest oil price recovery drove the latter, supporting a strong recovery in credit metrics in 2017. Most gains from cost-cutting have now been realized,” the report noted.

“The sector's return to positive free cash flow generation in 2017 will boost the capacity of European majors to reinstate full cash dividends over the next 12-18 months. While higher shareholders returns would put a brake on further improvement in credit metric in 2018, the companies can maintain their recovered credit profiles,” the report concluded.