Still, there is no denying falling oil prices are problematic for oil services stocks and ETFs. Over the past three months, IEZ and OIH are down an average of more than 18%. USO is lower by 18.6% over the same period. Over that time, only 23 ETFs have lagged OIH. Highlighting the lingering weakness in the energy patch, 10 of those 23 ETFs are energy-related. [Maybe Some Help for Oil Services ETFs]
That says more M&A news needs to be coupled with rebounding oil prices to earnestly lift OIH and IEZ. The M&A scenario could come to pass as National Oilwell Varco (NYSE: NOV), the third-largest holding in both OIH and IEZ, is seen as a potential target.
Based on last Friday’s close, Halliburton is offering $80.69 per share for Baker Hughes, a roughly 34% premium to where the latter’s shares closed. A 34% premium for National Oilwell Varco would value the company at over $41 billion based on the company’s current market value of just under $30.9 billion.
Several of OIH’s smaller components, including Nabors Industries (NYSE: NBR), Rowan (NYSE: RDC), Dresser Rand (NYSE: DRC) and Weatherford International (NYSE: WFT) have been previously mentioned as takeover targets.
Market Vectors Oil Service ETF