Oil and gas sector in for "more pain", says BofAML executive

The oil and gas industry is in for a “lot more pain” in 2016, according to Julian Mylchreest, Global Head of Energy at Bank of America Merrill Lynch.

Speaking at Fitch Ratings’ London Energy Seminar on Tuesday, Mylchreest said, “The industry is by no means out of the woods yet with oilfield services companies appearing to be the most stretched. I see more financial pain for oil and gas companies over the first two quarters of 2016, but expect improvement thereafter.”

Mylchreest opined it was one thing getting to $40 per barrel, but maintaining liquidity at lower oil prices was the challenge. “It’s being met by operating and capital expenditure cuts, with gaps bridged by asset sales.”

The BoAML energy executive also feared some of the capital expenditure cuts may not be reversed. However, he added that the cuts would help oil companies streamline for the better.

On the finance front, Mylchreest noted that the big four US banks would in all likelihood "lend less to the oil and gas industry than more over the next 12 months."