Oil & Gas Stocks: Year in Review

Tickers in this article: APC BHI CAM DO DRQ FET HAL NOV RIG SLB WFT
NEW YORK (TheStreet) -- I want to start this article off with a bit of a disclaimer. Although the title states "oil and gas," this is one sector where the lines often blur. There's no clear line between equipment and service companies like Halliburton and Weatherford International , and those that deal in exploration and production (E&P) like Anadarko Petroleum . And let's not forget the drilling specialists like Transocean and Diamond Offshore .

Suffice it to say, if you're not yet confused, good. But understand, while each of these oil and gas company types serve a slightly different market, one thing they do have in common is that each of these industries will end 2013 on a high note for the year. This is unlike, say, the coal industry.

While it's encouraging to see the increase in customer orders and backlogs, some of these names are still working to overcome weak oil prices and soft rig counts.

I have to wonder how much faith the Street is willing to place in oil and gas in 2014. For example, Cameron International recently suffered a 15% stock decline on a downgrade by analysts at UBS, even though Cameron posted a 32% year-over-year increase in orders.

Transocean posted a 5% year-over-year revenue increase in its most recent quarter. Yet its stock has stagnated anyway. Not only did the company beat estimates by $90 million, but Transocean's performance more than doubled that of National Oilwell Varco , a stock with which the Street seems to have fallen in love.

Essentially, 2013 became a year where the Street was divided on the metrics it chooses to care about it, at least in this sector.

Now I'm not suggesting that there aren't any poorly performing companies in this industry, especially from an operational perspective. But in the case of Cameron and Anadarko, investors made the mistake of believing that certain details like revenue and gross margins are the driving forces of the stocks. To cite these metrics in bearish arguments doesn't make sense.

What's really important to remember is that this entire sector is driven by higher volume of orders.