Shares in oil and gas engineering services business Plexus (LSE: POS) have slumped by 39% today after it released a profit warning. This has been caused by a declining oil price that meant the company’s customers have slashed capital expenditure resulting in less demand for its services. As such, Plexus feels the reduced level of activity that has been recorded so far in the current financial year is set to continue and that it will be unable to make up for the shortfall by the time of its year-end in June.

Looking ahead, Plexus is shifting its strategy and will focus on cutting costs, reducing investment and also improving cash conversion to shore up its financial position. This seems to be a sound response to what are unprecedented trading conditions and despite such an environment, Plexus continues to be in discussions regarding a number of potentially significant projects worldwide. As such, its long-term outlook may still be relatively positive.

Clearly, Plexus is undergoing a very challenging period at the present time and with the potential for further falls in its valuation as the market adjusts to expectations in the short run, it appears to be a stock to watch rather than buy.

Think positive

Also reporting today is Ophir Energy (LSE: OPHR). Its shares have risen by 6% for two main reasons. Firstly, it has signed a Heads of Terms with Schlumberger for the latter to become an upstream partner in the former’s Fortuna FLNG project in Equatorial Guinea. This is positive news because it shows that the project is making progress despite challenging operating conditions, and it also helps to free up Ophir’s balance sheet and improve its financial flexibility.

Secondly, Ophir announced a relatively positive trading update that showed production in 2015 was higher than anticipated at 13,000 barrels of oil equivalent per day (boepd). And with Ophir having a net cash position of $360m and a low-cost production base that is cash generative materially below current commodity prices, its outlook appears to be rather positive. Certainly, Ophir is expected to remain lossmaking in 2016, but it could prove to be a sound, albeit risky, buy for the long term.

Worth the risk?

Meanwhile, Amec Foster Wheeler (LSE: AMFW) also continues to experience difficult trading conditions, with its second half update (released in November) stating that it has refreshed its strategy in response to an uncertain outlook. As such, the company has increased its cost-cutting targets, reduced future dividend payments by 50% and will focus on exiting low growth areas.

With Amec Foster Wheeler’s bottom line due to flatline this year, investor sentiment could remain weak following the 51% decline in the company’s share price during the last six months. However, with Amec Foster Wheeler trading on a price-to-earnings (P/E) ratio of just 6.5, it’s dirt cheap and for less risk-averse investors it seems to be a very strong buy for the long term.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.