Amid hard times, oil companies are starting to improve upon their inefficiencies and hopefully the upgrades may prove to be a boost to their shares, along with related exchange traded funds (ETFs).

Many oil companies are reducing budgets, closing wells and throwing out long-term contracts, report Christopher Palmeri and Stanely Reed for BusinessWeek. About 40% of rig drills for oil and natural gas in the United States have been shut down in order to reduce costs. One company is doing so well that it’s actually expanding.

It is calculated that onshore production could drop by 700,000 barrels per day, or 1% of worldwide supply, due to cutbacks already done.

Devon Energy (DVN), a large oil and gas producer, is set to slash its overall capital budget by almost 60% this year, a severe drop from $8.5 billion in 2008 to $3.5 billion.

As a sign of the times, new technologies are being implemented, such as unmanned production platforms that cost one-third of larger ones, onboard devices that are run by solar energy and some companies are providing ordinary upkeep work such as plugging leaks and tuning furnaces. Companies that adapt in the downturn with improved energy efficiency, new technologies and employing wind and solar power may be the ones elated in the long run.

• Oil Services HOLDRs (OIH): down 17.5% in the last month; down 0.6% in the last three months

• iShares Dow Jones US Oil & Gas Ex Index (IEO): down 23% in the last month; down 6.6% in the last three months; DVN is 7.8%

Tags: Energy, IEO, OIH, Oil, Oil & Gas Exploration, Sector ETFs, Socially Responsible ETFs, Solar, Wind