Schlumberger and Halliburton, the world’s largest providers of oilfield services, combine for 33.5% of OIH’s weight. OIH, the largest oil services ETF, has tumbled almost 20% over the past 90 days due to falling oil prices and other factors.
Those other factors include speculation that several of OIH’s smaller holdings could be crimped for cash to the point that dividend cuts could be in the offing. Earlier this month, it was reported that credit default swaps (CDS), the instrument used by bond traders to protect against issuer default, have recently surged for offshore drillers such as Diamond Offshore (NYSE: DO), Ensco (NYSE: ESV) and Noble (NYSE: NE). [Dividend Talk Hurts Oil Services ETFs]
Additionally, there has been no shortage of chatter about the future of Transocean’s (NYSE: RIG). Diamond Offshore, Ensco, Noble and Transocean combine for 14.6% of OIH’s weight. The ETF had a P/E ratio of just under 13.5 at the end of the third quarter compared to about 17 for the S&P 500.
Market Vectors Oil Service ETF
