HSBC predicts more woe for troubled oilfield services companies

Market Report

The drop in price of crude oil reflects a loss of confidence in the market after the latest meeting of Opec, where ministers from oil-producing states failed to cut back supply (Corbis)

Troubled oilfield services companies hoping that rich suitors will sweep them off their feet are likely to be left high and dry, HSBC said as it predicted more woe for the sector before any takeover activity comes to fruition.

“The most willing buyers may be private equity but there could be a better entry point as distressed opportunities are likely to rise,” said HSBC analyst Phil Lindsay, who slashed his ratings on a wave of companies. He reckons investors should wait for the shares to fall further before buying them on the cheap.

A late oil price surge helped companies in the sector, though they still missed out on the strong rises enjoyed by most oil groups. Amec Foster Wheeler, which was downgraded to “hold”, fell 0.2p to 381p. Weir, which is now rated “underperform”, advanced 11p to 854.5p and Petrofac ended 31.5p better off at 750.5p.

The FTSE 100 finished 34.46 points higher at 5,911.46, clawing back early losses as the price of Brent crude recovered to above $31 a barrel and a stock market rally kicked in.

Miner Anglo American led the rebound, up 26.75p at 253.35p after a strong start to 2016 for its De Beers diamond business.

Investors ignored an upgrade to “buy” on Vodafone and the mobile operator rose just 0.15p to 218.65p. The investment bank Jefferies said Vodafone should strike a deal with US suitor Liberty Global to “secure its long-term prospects”, and this might be more likely now the value of both groups has shrunk.

Soft pre-Christmas sales left Carpetright 50p worse off at 400p, while shares in Conviviality edged up 3p to 207p as the Bargain Booze owner ushered in David Robinson, the former Argos chief operating officer, as managing director of its retail business.

Pinewood, the film and TV studios under pressure from Richard Bernstein’s activist fund Crystal Amber, was up 2p at 426p as it laid out plans to tap into the thriving TV drama production industry.

Among the tiddlers, David Lenigas’s AfriAg, which the Australian entrepreneur once dubbed “Lonrho Mark 2”, fell by 0.03p to 0.12p after it unveiled plans to cancel its Aim shares.