FOR a man who has seen £100m of his net worth eroded in a matter of weeks, Ayman Asfari is remarkably sanguine.

The chief executive of Petrofac, the FTSE 100 oilfield-services company, said he was “not too bothered” by the share-price fall, or his likely reduced standing in the Sunday Times Rich List. Asfari owns 18% of £2 billion Petrofac.

“Explaining the volatility to some of our shareholders can be difficult,” he said. “But I am a long-term investor. I am not selling my shares tomorrow.”

Like every other company in the oil sector, Petrofac has had rough treatment of late as the oil price has dropped back from its July peak of $147 a barrel. Since June, Petrofac’s share price has fallen 20%. At one point, it had lost nearly 50% of its value before recovering.

To investors it seems to matter little that next week the company will reveal what are expected to be its best-ever results. Deutsche Bank is forecasting net income of $113m (£61m), nearly 50% up on the same six-month period last year.

“The demand for the services sector is as robust as ever,” Asfari said. “The downgrading of the sector is overdone. We have more opportunities today than we ever had before.”

Petrofac is not alone. Virtually every UK oil-services company has taken a hammering. Indeed, the percentage fall of the UK index of these companies has matched the oil price fall exactly.

The run-up in share prices before the correction did not follow the same pattern. “When oil hit $147 a barrel, the market didn’t believe it. It didn’t take it into account when pricing these companies,” said Brendan Wilders, an analyst at Oriel Securities.

Indeed, some companies, like Salamander Energy, have been hit hard and are now trading at or below the net asset values of their producing assets. The upshot is that many companies look ripe for takeover. “This is an industry prone to M&A \ and people will start to see some real value exposed again,” said Wilders.

It has already begun. Russia-focused explorer Imperial Energy, for example, is at the centre of a bidding war between the state-owned oil companies of China, India and South Korea. John Wood Group, another oil-services firm, was last week the subject of takeover rumours that sent its share price up.

This week virtually every constituent of the FTSE 100 and FTSE 250 exploration, production and service sectors will report earnings. There will be record performances. As one banker said: “Given what most of these companies are worth now, next week is going to be like a beauty pageant.”

Even with the recent drop, the oil price has still not slipped below $110. More importantly, it is miles beyond the foundation on which companies base their business models and drilling programmes. “All our projects work at prices lower than where we are at the moment,” said James Menzies, chief executive of Salamander. “Some of our producing assets work at $20 a barrel.” The rest is cream.

Phil Corbett, an analyst at Royal Bank of Scotland, said valuations have slumped to a level appropriate for oil at $70 a barrel. “The sector is oversold. It’s due for a bounce,” he said.

Based on his assumptions about the oil price, which he admits are on the bullish side — an average price of $115 this year, $125 for the following three years, and then back down to $105 in 2012 — “there is 30% to 50% upside in these companies’ share valuations.”

Companies that have high-impact drilling campaigns — those that could lead to a big change in their production profiles and therefore increase the value of the company — are seen as the most likely to get a boost in the coming months. Tullow Oil, Dana Petroleum, Premier Oil, Salamander and Venture Production are among those tipped by analysts.

Even the most bearish analysts don’t expect the oil price to fall back below $100 a barrel.

Datamonitor, the intelligence group, predicts that “prices are unlikely to ease much in 2009-10, with further pressure expected by 2011-12, not least as Opec will struggle to match demand with actual supply”.

For oil-services groups such as Petrofac, Amec, Wood and Wellstream — all of which report this week — high prices are especially helpful because it means their clients can afford bigger projects. Analysts will keenly watch order backlogs, which remain at historically high levels, according to Goldman Sachs.

The result: record-breaking amounts of cash flowing into the sector at a time when, in some cases, companies are trading at historically low multiples.

Simon Lockett, chief executive of Premier Oil, said: “There is constant chatter across the industry about consolidation, but the simple fact is that not much has happened, and that has surprised me.

“The issue is the oil-price volatility. It causes management real problems when trying to value businesses. When there is a bit of stability and people get some breathing space, deals will start to get done.”

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