Offshore and marine stocks tumbled 7.2% as oil price jitters escalate

Brent crude fell 9% over the last month.

Offshore and marine stocks took a beating as oil prices continued to slide in September, with stock prices tumbling 7.2% on average in the past month.

According to Maybank Kim Eng, declining oil prices stoked fears of cutbacks in offshore oil & gas spending and sparked a spike in share-price correlations with oil prices.

“With near-term uncertainties in oil prices, we recommend bottom-up stock-picking. We see opportunities for accumulating companies with growth on the above themes, on a recovery and with undemanding valuations,” stated Maybank Kim Eng.

Here’s more from the report:

In our view, the following could play out in the next six months:
· Oil companies should continue to exercise capital discipline and channel their spending towards achieving production.
· Players exposed to opex — development & production spending — and shallow waters to be more insulated.
· Oil companies prefer younger and modern assets for their efficiency and safety. Operators with the right fleets to gain.
· NOCs to continue spending, motivated by energy security over economic profits.