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The UK oil and gas industry has shed 120,000 jobs since oil prices began falling in 2014, according to a new report.

Oil & Gas UK, an industry group, said in its annual report that the UK oil and gas industry is expected to support 120,000 fewer jobs in 2016 than it did in 2014.

Those job cuts come amid a wave of spending cuts and project deferrals that have impacted companies across the industry’s supply chain.

The report found that companies across the supply chain have seen average revenues fall almost 30 percent since 2014, with some sectors experiencing even greater declines.

Despite the layoffs and revenue decline, Oil & Gas UK said there have been fewer business failures than many analysts expected thanks to companies “differentiating their value offering and diversifying both into new geographies and new products and services.”

The report said that “some indications suggest” that prices may have finally hit bottom this year.

The group added that, if cost and efficiency are sustained and commodity prices hold, revenues may start growing again for extraction and supply firms next year.

The costs cuts helped generate a free cash-flow deficit of about $3.5 billion for companies working in the UK Continental Shelf (UKCS), an improvement from the $5.45 billion deficit seen in 2014 and 2015.

Total expenditure on the UKCS fell from $34.49 billion in 2014 to $28.14 billion in 2015.

The group expects expenditure levels will likely to continue to fall in 2016 to about $24.64 billion.

Capital investment plummeted last year to about $11.67 billion compared to a from a record $19.19 billion in 2014.

The cost of operating in the UKCS is expected to decline to around $9.73 billion this year, an 8 percent decline from 2015.

Production continued to trend upwards during the first half of 2016, climbing 5.7 percent compared to first half of 2015.

UKCS production climbed 10.4 percent in 2015 to 1.65 million boe per day.

The report found that only 13 exploration wells and 13 appraisal wells were spudded in the UKCS during 2015.

Oil & Gas UK found that about 150 million barrels of oil equivalent of potentially recoverable reserves were discovered through exploration drilling last year.

That amount is the largest in any year since 2011 but was still lower than the average level for the past decade, the report said.

Despite the rocky market conditions, Oil & Gas UK believes that the range of total estimated recoverable resource potential on the UKCS still stands at 10 to 20 billion barrels of oil equivalent.

The report also calls for increased investment in new developments to safeguard a steep production drop.

“As an industry we are producing at four times the rate we are discovering new reserves – this is unsustainable….Encouraging all forms of drilling, including development, over the next 12 to 18 months will be vital for the industry’s future,” the report said.