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Story by the Canadian Broadcasting Company

Moody’s expects the current weakness in energy prices to stick around until 2018 at least, the ratings agency said in a report looking at the finances of several dozen energy companies Thursday.

In the report, Moody’s examined the financial health of 90 North American oil and gas companies, attempting to gauge how well equipped they are to ride out oil prices that cratered late last year and are showing no signs of rebounding.

The price for a barrel of the North American oil benchmark known as West Texas Intermediate was at $42.52 US early Thursday, down about 80 cents on the day. A year ago, WTI closed at $97.59.

In the early days of the slowdown that began in the late summer of 2014, the strategy for many oil producers was to ride out the storm: cut costs, put new drilling on hold and keep your head above water until prices come back to near where they were.

However, the reality of the race to stay ahead of oil’s swoon is that it’s proving to be more of a marathon than a sprint.

That’s reflected in Moody’s report Thursday, which tested various energy firms to see how long they might be able to ride out the storm that drastically lower energy prices represent. That means crunching the numbers based on assumptions that would have looked overly bleak not too long ago, but are starting to look more realistic.

“We expect prices for oil, natural gas and natural gas liquids — and particularly oil — to remain below recent historical highs through 2018,” the ratings firm said.

Wide disparity in costs

Moody’s now expects oil prices will average $50 a barrel for 2015 as a whole, before rising to $60 through 2016. That’s a far cry from the forward projections that many oil companies were counting on when they undertook billion-dollar expansion projects.

Among the companies Moody’s examined, the firm calculated the average cost per barrel across all of them was $44 per barrel. But not all oil companies are created equally: There’s a wide disparity of costs between companies. The lowest cost (and therefore best able to ride out the storm) was found to be at EQT Corporation, where a barrel of oil costs about $13 to produce.

That’s a far cry from those on the opposite end of the spectrum, including Penn Virginia Corporation, whose costs are a whopping $135 per barrel of oil according to Moody’s math.

Oilsands have more costly production

Those figures aren’t a direct expression of how much it costs to extract any oil from the ground in their properties. Rather, in Penn Virginia’s case, Moody’s says the company has higher costs largely because of expensive acquisitions the company made between 2012 and 2014. From Moody’s perspective, the cost of those acquisitions has to be paid through the company’s oil-producing assets.

A lot of the differing cost structures are tied to geography. Energy companies in the Marcellus shale basin in Pennsylvania and Ohio have among the lowest production costs, but producers there face higher transportation costs due to pipeline bottlenecks. Companies in the Canadian oilsands have generally higher production costs to extract the oil, but have other advantages over more traditional producers.

Among Canadian names, Calgary-based Seven Generations Energy Ltd., which operates in Alberta’s Montney region, has one of the lowest per-barrel costs at $20. Calgary’s Canbriam Energy is also among the leaders with a per-barrel cost just under $16.

On the higher end, Alberta companies such as Lightstream Resources Ltd. and Northern Blizzard Resources Inc. have per-barrel costs of about $102 and $130, respectively.

“Companies’ ability to withstand a prolonged period of low commodity prices depends to a large extent on their cost structures,” Moody’s said, adding that it expects extensive cost cutting measures across the industry through the end of this year