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Oilfield servicing companies lost half of their values to COVID-19


World renowned oilfield servicing (OFS) companies that have huge presence in Nigeria are some of the worse hit by Covid 19 pandemic as their capital base have been seriously eroded.
Some of the companies, such as Schlumberger, Halliburton, Saipem, Transocean, Baker Hughes dominate the oil servicing industry in Nigeria.
The implication of this is that their investment portfolios in Nigeria are going to be severely affected. This situation might lead to cuts in the number of their employees in the country and this may increase the already high unemployment figure in the country.
Oil field servicing companies are very strategic in oil production and exploration as they engage in series of activities that culminated in the production of crude oil. They are the ones contracted by oil companies to carry out seismic data activities drilling of oil wells and even construction of oil and gas pipelines among others
A Rystad Energy analysis reveals that stocks in OFS companies have collectively lost half their value since the beginning of 2020.
Analysing a representative group of 116 listed OFS companies, accounting for around 71percent of the traded equities in the sector in 2019, Rystad Energy found that the firms have lost approximately 49percentof their market capitalization since the beginning of this year.
The best performers among service companies were in the Engineering, Procurement, Construction and Installation (EPCI) sector, which only saw market capitalization drop by 27percentcompared to the value erosion of between 39percent and 54 per cent for most other service segments. The most affected stocks were in offshore drilling, a segment that has nosedived by about 80percent since the beginning of this year.
“In a nutshell, our analysis indicates that companies with exposure to EPCI, facility leasing, maintenance and inspection services, SURF or subsea equipment have been less punished by investors, who have prioritized limiting their exposure to well services, drillers, acquisition contract seismic and the North American market,“says Rystad Energy senior energy service analyst Binny Bagga.
SOURCE;BUSINESS DAY
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