"We are also expecting oil companies in the U.S., particularly (those) that are not well hedged and in expensive basins, to have negative cash flows as well if (the) oil price does not recover fast," Desphande said.
Back in the U.K., the Conservative government is willing to exacerbate its own revenue losses to easing the tax burden on the oil and gas sector.
In the government's budget speech Wednesday, Chancellor George Osborne's announced a 35 percentage point cut to the petroleum revenue tax to zero, and reduced the supplementary charge to 10 percent. The move is expected to lower receipts by around 0.2 billion per year, starting from the period running 2016 to 2017.
It's a long-term view that the government hopes will boost sector returns.
"There are only a few profitable firms in the sector," the OBR report explained.
"Lower tax rates will boost the post-tax returns on oil and gas production, but we have assumed only a modest behavioral response. As noted earlier, the low oil and gas price environment will make it difficult for projects to clear investment hurdles," the report added.
"This is likely to be the case even with lower tax rates."