Analyzing National Oilwell Varco’s Net Debt after 2Q17
National Oilwell Varco’s net debt
National Oilwell Varco’s (NOV) net debt (total debt minus cash and marketable securities) rose 4% between 2Q16 and 2Q17. Its net debt stood at $1.7 billion in 2Q17. The company’s total debt fell ~2% between 2Q16 and 2Q17, and its cash and marketable securities fell 8%. In effect, its net debt rose year-over-year and quarter-over-quarter.
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National Oilwell Varco’s indebtedness
NOV’s trailing-12-month adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) deteriorated between 2Q16 and 2Q17, resulting in its debt-to-EBITDA ratio (or indebtedness) rising. However, compared with 1Q17, NOV’s indebtedness was lower in 2Q17 as a result of higher adjusted EBITDA. National Oilwell Varco makes up 3.6% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). XES has underperformed NOV in the past year, falling 19%.
Peers’ net debt
Weatherford International’s (WFT) net debt was ~$7.1 billion in 2Q17, Nabors Industries’ (NBR) was $3.5 billion, and Halliburton’s (HAL) was ~$9.0 billion. For more on Halliburton, read Will the International Slowdown Hurt Halliburton in 2017?.
Credit facility restructuring
On June 27, 2017, NOV entered into a new $3.0 billion revolving credit facility, which expires in 2022. This new credit facility replaced its previous $4.5 billion revolving credit facility. To learn more about the industry, read The Oilfield Equipment and Services Industry: A Primer.