With the United States Oil Fund (NYSEArca: USO) and the United States Brent Oil Fund (NYSEArca: BNO) down more than 4% and 5% over the past month, it is not surprising equity-based energy exchange traded funds have lost some of luster accrued earlier in the year.

Already under pressure, some energy sector ETFs were dealt a blow last week when shares of British oil giant BP (NYSE: BP) sank after U.S. District Judge Carl Barbier ruled the company acted with gross negligence in the 2010 Gulf of Mexico oil spill.

Barbier’s decision on BP’s role in the Deepwater Horizon rig explosion and spill, the largest oil spill in U.S. history, “means BP faces as much as $18 billion in civil penalties under the U.S. Clean Water Act for pollution in the Gulf of Mexico, far more than if the judge had found the company simply negligent,” reports Daniel Gilbert for the Wall Street Journal. [BP Weighs on Some Energy ETFs]

Although BP is not a member of the Energy Select Sector SPDR’s (NYSEArca: XLE) lineup, the largest energy ETF is dealing with a pullback in energy equities and faltering crude prices. XLE is off 5% this quarter and has lost $1.3 billion in assets.

That does not mean opportunity with energy ETFs has been erased and in the wake of Barbier’s ruling against BP, oil services ETFs could be the place to look for investors searching for energy sector exposure.

Based on the ruling, BP now stands well apart from either Transocean (NYSE: RIG) or Halliburton (NYSE: HAL). Judge Barbier assigned 67% of the blame for the disaster to BP, deemed its conduct reckless, and ruled that it was guilty of gross negligence in this incident. Conversely, Transocean and Halliburton were assigned 30% and 3% of the blame, respectively, with both parties found guilty of just negligence. In addition, BP’s contractual agreement with Transocean – under which BP was compelled to insulate Transocean from compensatory damages associated with any below-ground seepage of oil into the environment – was held firm,” said S&P Capital IQ in a new research note.

Halliburton, the second-largest provider of oilfield services, has settled most of its legal exposure related to the 2010 Gulf of Mexico oil spill. Halliburton and chief rival Schlumberger (NYSE: SLB) combine for almost 32.3% of the iShares Dow Jones U.S. Oil Equipment Index ETF’s (NYSEArca: IEZ) weight. S&P Capital IQ has a marketweight rating on that ETF. [Oil Services ETFs Love North American Fracking]

With just 3% of the assigned blame, having settled most of its litigation overhang, and with North American oil fundamentals firmly in its corner, we think HAL shares are going to close the gap against chief oil services rival Schlumberger (SLB 106 Buy). Today, HAL trades at about a 20%-25% discount to SLB on various valuation metrics, which is roughly in line with long-term historical levels. Given HAL’s stronger position in North America, especially onshore, and given our positive view of this space, we think HAL benefits more than peers. In addition, we project HAL with relatively stronger return on invested capital in 2015. Year to date, HAL is up 32%, while SLB is up just 18%, but we think there is more room to run,” said S&P Capital IQ.

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