Lower North Sea crude oil prices pose the biggest threat to oil and gas industry earnings and financial solidity since the global banking crash of 2008 - triggering the prospect for large-scale takeovers and mergers as the industry consolidates, if not actually shrinking.

With benchmark Brent crude now 50% below the 2014 average of $99-barrel, evidence of how this is affecting performance and strategy will appear in the Q4 results and further pared-back 2015 investment plans of major oil exploration companies.

The latest report by the upstream research unit at Edinburgh-based Wood Mackenzie warns that operators' financial performance in Q1 will deteriorate, as the impact of a full quarter of low price realisations flows through to earnings and that the industry will 'plunge' into full-on cost-cutting after merely 'dipping its toes in' in 2014.

A spokesman said: "We estimate companies need to cut costs by $170 billion – or 37% - to maintain net debt at 2014 levels at a Brent oil price of $60-barrel.

"Cuts will be spread across: investment in new projects; exploration budgets; operating costs; and shareholder distributions. Exploration budgets will fall sharply, although lower costs will be an offsetting factor.

"Last year, companies were making strategic choices related to messaging around value versus volume as they tried to increase their appeal to investors.

"This year, capital discipline will be less about choice and more about survival for some players. Large-scale corporate consolidation is more likely than at any point since the late-1990s. The effects could last well beyond 2015.

"The fall in revenue for the oil and gas sector will be exacerbated by higher net debt across much of the sector. The cost of new capital for smaller companies will rise sharply in 2015. Asset write-downs will lead to higher leverage ratios and increased financial stretch for some companies."

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