Big cap shipbuilders hardest hit by oil price plunge

Small caps are surprisingly resilient.

Small and mid-cap oil service companies are in the best position to ride out the current volatility in oil prices. According to CIMB, these firms are better placed as they are covered by 1-2 years of contract backlog.

“The activities of Ezion, Swissco and Pacific Radiance are skewed towards shallow-water production and maintenance activities; these are more likely to continue in a low oil price environment,” noted CIMB.

Here’s more from CIMB:
Even as deepwater capex is cut, oil companies will seek ways to boost production from existing shallow water fields. 

The services companies are also increasingly catering to national oil companies (NOCs), which are less sensitive to oil profits than the international oil companies (IOCs). NOCs such as Saudi Aramco, Pemex, Petronas and Pertamina, which have to balance oil profits with the national agenda on energy security, industry development and employment will continue their oil-related activities even at lower oil price. 

Last, the demand-supply for offshore support vessels (OSVs) is seemingly not as bad as drilling units given the moderation of supply (as measured by orderbook-to-fleet and OSV-to-rig).