Oil majors may have slashed capital spending but NOCs in the Middle East and North Africa show no sign of cutting investment, buoying oilfield services that the stock market has beaten down.
LONDON, April 10 (Reuters) - Oil majors may have slashed capital spending but national oil companies (NOCs) in the Middle East and North Africa show no sign of cutting investment, buoying oilfield services that the stock market has beaten down.
Investors sold in the second half of 2014 as benchmark fuel prices sank, expecting a dire performance from a sector reliant on investment in oil and gas projects for its revenues.
Names such as Saipem and Subsea 7 notched up double-digit share price declines from June to December as oil majors put projects on hold or scaled back expenditure.
But while offshore drillers and seismic companies continue to suffer, oil services stocks with chunky exposures to Middle East spending, such as Petrofac, have bounced back.
Petrofac's order backlog was up 26 percent at the end of 2014, and its share price has risen by almost 27 percent since it reported full year earnings on Feb. 25. Recent wins include a contract for the first phase of Kuwait Oil Company's Lower Fars heavy oil development programme and two strategic contract agreements with Algeria's Sonatrach.
"There is a building differentiation in the backlog profiles of those companies exposed to onshore construction in the Middle East and those not," said Mick Pickup, managing director at Barclays Capital. "While some of this is gas related, it signals a continued robust construction market in the region."
In contrast, a JBC Energy analysis found that ExxonMobil , BP, Shell, Total, Chevron and ConocoPhillips had slashed capital expenditure by 12.7 percent for 2015, or almost $21 billion.
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