The order books of oil and gas (OandG) companies are drying up,leading to lower utilisation rates, says OSK Research.

It also said, some of their contracts were renewed based on lower rates, in view of the excess supply in the industry.

'Nevertheless, we see some excitement in the second half of 2010, led by the listing of MMHE, which may prompt a re-rating of the share prices of OandG stocks,' OSK said in a research note today.

'Overall, the first half performance of OandG companies was mostly below expectations as we are now starting to see the negative impact of the crash in oil prices since mid-2008.

'It had resulted in a slowing global economy and in turn, a weaker OandG industry,' it added.

The research firm also maintained its overweight call on the OandG sector and its top pick, remained Kencana. -- Bernama