Since February 27, US oil prices are up nearly 50%. ConocoPhillips, Chevron, and ExxonMobil stock are all up. OFS? Not so much.
ConocoPhillips stock is up 7% since the US and Israel launched combat operations in Iran.
Chevron is up 5%. ExxonMobil is up 2%.
It’s a different story for the largest oilfield service companies.
Halliburton is down 6%.
SLB is suffering worse, down 13%.
Baker Hughes has slid furthest, down 17%.
The reality?
SLB and Baker Hughes get a plurality of their oilfield service revenue from the Middle East and Asia.
For Halliburton, the Middle East and Asia follows only North America. Their relatively light exposure is why their stock price move was less severe.
As SLB disclosed this week, “…the company has begun to demobilize operations in a few countries in response to customer actions to safeguard personnel and facilities.”
All else equal, of course higher oil prices are better for oil producers and the service companies they rely on.
But in this case, all else is not close to equal.
These higher prices come with the largest reduction in global oilfield activity on record.
The resulting stock price moves communicate two important lessons.
First, to the extent that anyone can be called a “winner” in a war like this, the group of winners is smaller than almost anyone would like to imagine.
Second, even when the oilfield generally is supposed to catch a break, oilfield services can still end up getting kicked in the shorts.
