Sector Snap: Oil Services Slip On Bleak Outlook

NEW YORK (AP) — After rallying for a week, shares of oil services companies tumbled in Thursday afternoon trading on uncertainty over commodity prices and a dismal industry outlook.

Market and commodity price uncertainty continue to weigh especially on the oil services sector, deterring operators from adding additional programs until 2010, said Jefferies & Co. analyst Judson Bailey.

Bailey said the deep-water rig market faces pressure amid a competitive pricing market that is driving down day rates.

Bailey was leary of drilling contractors such as Ensco International Inc. and Rowan Companies Inc., which look like attractively priced investments but will likely continue in a downward spiral as a segment of the oil platform market that "has far to go before hitting bottom." Instead, he recommended investing in Noble Corp. based on its balance sheet, backlog and fairly priced stock.

Shares of Ensco slid $1.69, or 5.1 percent, to $31.44. Rowan shares fell 57 cents, or 3 percent, to $17.72. Noble shares dropped $1.73, or 5.6 percent, to $28.92.

Elsewhere in the industry Schlumberger Ltd., the world's largest oilfield services company, tumbled $2.51, or 4.5 percent, to $53.51. Halliburton Co. shares dropped 83 cents, or 3.6 percent, to $22.29.