I measured the impact of the global economic slowdown in the market value for Companies in the oil and gas industry. Price of oil has fallen nearly 60% since October and still suffering from weak demand (WTI price is the barometer of the world economy). The disruption in world finance markets and the drop in share value affected the market capitalization for Oil & Gas Companies. I compared the current, highest and lowest values (in billions USD) since Jan/08 to Jan/09, and I divided the analysis into 1) Oil & Gas Companies (Exxon, Shell, Chevron, BP, Total and ConocoPhillips), and 2) Oilfield Services Companies (Schlumberger, Halliburton, Varco, BakerHughes, Weatherford, Cameron). Oil companies shown lower drops from 1-year peaks (from 50 to 26%) than oil service companies (from 60% to 77%).
Companies in the oilfield services were the most affected, since service companies suffered from both high inventories and the cancellations of current and new projects. It is expected that energy prices will recover and the oilfield service industry will likely be one of the biggest beneficiaries. At the end of the recession, the Oil & Gas companies need to be well prepared for the next cycle by controlling cash flows, improving efficiency, and managing new operational and regulatory risks.