Goldman Sachs estimates that some $930 billion in investments are no longer profitable with Brent crude at $70 per barrel. Brent for February delivery resides below $51 per barrel at this writing.
If there is a silver lining for oil services ETFs, it is twofold. First, valuations for some of the strongest names in the group are compelling. Second, those strong names, while familiar, are becoming easier to identify.
The average forward P/E ratio on Schlumberger (NYSE: SLB), Halliburton (NYSE: HAL) and National Oilwell Varco (NYSE: NOV) is 13.3, well below the 18.8 P/E on the S&P 500. On a broader basis, energy is one of the most deeply discounted sectors compared to the S&P 500 and OIH reflects as much with a P/E below 11 and a price-to-book ratio of just 1.37. [ETFs for a 2015 Energy Rebound]
Market Vectors Oil Service ETF
