Our theme highlights marked differences within the oil service industry
- Because of size and market dominance, fully integrated oil service companies such as Schlumberger
may suffer but are better positioned to weather oil price cycles - Specialists, such as offshore oil and gas contract drilling services, are sharply exposed to any downturn and might rebound strongly when higher oil prices restart an investment cycle – unsurprisingly, their volatility is extreme
- Transportation and storage services, such as Kinder-Morgan
of the US or Vopak from the Netherlands, are essentially correlated with oil prices but the reliance on indispensable infrastructures to bring the oil & natural gas to market lessen the impact of the oil cycle and provide a degree of protection to the investor - Infrastructure contractors are – in our opinion – the most interesting service segment when the outlook is uncertain because their order book benefits from the diversification between hydrocarbon industries, industrial infrastructure and government contracts. Though MasTec
has been outstanding, the industry as a whole has been able to rebalance their activities through the 2015/2017 cycle
