What happened

Shares of oil-field services stocks Oceaneering International (NYSE:OII)Apergy (NYSE:APY), and TechnipFMC (NYSE:FTI) all jumped more than 30% in April, according to data provided by S&P Global Market Intelligence.

Technip, which provides general services for oil producers, saw its share price rise 32.2% in April. Onshore drilling specialist Apergy's shares soared 60.2%, while the stock of subsea services provider Oceaneering International skyrocketed 74.8% for the month. But even those impressive gains weren't enough to rescue the companies' long-term performances. For the year, shares of all three were down more than 60%, while they've all lost between 72% and 75% of their value over the last five years.

An offshore oil rig in silhouette.

Image source: Getty Images.

So what

Oil-field services stocks have had it rough since the oil price downturn in 2014 knocked prices from more than $100 a barrel down to around $30. Most companies' stocks never recovered, despite their equipment and operational expertise being a vital part of the oil and gas industry. Since then, when oil prices tumble, oil-field services stocks are among the first to be hit. 

Oceaneering International, Apergy, and Technip, though, saw stronger gains in April than some of their peers. That's a bit surprising because Technip reported a $3.3 billion Q1 operating loss on April 22, and effectively suspended its dividend through 2021. Neither Apergy nor Oceaneering International had dividends to suspend, but Apergy posted a $659.5 million net loss for Q1 2020 on April 27. Oceaneering International hasn't yet reported its Q1 2020 results. 

All three companies have slashed their 2020 capital spending budgets, with Technip announcing a 30% reduction, Oceaneering International predicting about a 35% to 40% cut, and Apergy announcing about a 25% reduction from 2019 levels, stating capital expenditures for 2020 would be for "maintenance only."

Investors may have shrugged off the big Q1 losses because they knew they were coming at that point. They also probably expected Technip to either cut or suspend its dividend, so that move was likely priced into the stock as well. As for why Oceaneering International and Apergy performed so much better than Technip and other oil-field services stocks during the month, they fell farther in March, so they simply had more room to make up in April:

OII Chart

OII data by YCharts.

Now what

Regardless of how well or how poorly a particular stock performed in April, the oil-field services industry is looking pretty shaky right now. With oil and gas production companies cutting their spending left and right to preserve their dwindling cash reserves, spending is likely to be anemic not only this quarter, but for the foreseeable future as well.

Meanwhile, even when coronavirus travel restrictions are eased, demand isn't going to suddenly spring back. Fuel consumption is likely to increase gradually, and the global market also has to work its way through a bunch of excess oil that producers have continued to pump over the last two months. That means production companies are likely to keep a lid on spending, certainly on currently unprofitable North American oil production, Apergy's bread and butter, but even on the offshore projects in which Oceaneering International specializes. 

Now simply isn't a good time to be investing in the oil industry in general, let alone companies in one of its hardest-hit sectors. Investors should probably leave these stocks alone.