Why oil services firms are the best play on the oil price

Stronger balance sheets than producers

Is it too late to benefit from the oil price rally? The valuation of oil stocks - oil service companies in particular - remain attractive.

Larger integrated oil stocks have historically displayed poor capital discipline, and high oil prices tend to be met with higher taxation rates - but stewardship of capital is now improving, capex has been cut dramatically, and new prospects are being evaluated more carefully. Of course, capex must increase, and at the current oil price, possibly back towards levels last seen in 2012. Could we see the return of $100 oil this year? Investors should consider playing this opportunity through the oil services companies, but they need to be patient; increased capex takes time to reach m...