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How the Rig Count Can Affect National Oilwell Varco in 2017

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National Oilwell Varco’s US and international revenues

In 2016, National Oilwell Varco’s (NOV) revenue share from the US was 25%, which remained unchanged over 2015. In comparison, Weatherford International’s (WFT) North America revenue share was ~37%, while Halliburton’s (HAL) 4Q16 North America revenue share was 45%. Baker Hughes’s (BHI) North America revenue share was 32% in 4Q16.

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Rig count

On December 30, 2016, the US rig count had declined 6% over the previous year. The US rig count reached its multiyear high in September 2014. Since then, it has dropped 61% through March 3, 2017.

From December 30, 2016, until the week ended March 3, 2017, the US rig count gained 15% to close at 756. A higher rig count can increase NOV’s revenues and earnings in 2017. In January 2017, the international rig count increased 0.4% over December 2016.

Next, we’ll discuss how upstream companies’ capex decisions can affect oilfield services companies like National Oilwell Varco.

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