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Will the US Rig Count Affect National Oilwell Varco in 1Q17?

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US rig count

From December 30, 2016, to the week ended April 13, 2017, the US rig count rose ~29% to close at 847. A higher US rig count could increase National Oilwell Varco’s (NOV) 1Q17 revenue and earnings.

Crude oil’s price has fallen ~1% since December 30, 2016. Despite the steadiness in crude oil’s price, the US rig count has continued to surge. Read more about crude oil’s price drivers in A key investor’s guide to the crude oil market.

The US rig count has risen ~93% in the past year as of April 13, 2017. The US rig count reached a multiyear high in September 2014. Since then, it’s fallen 57% as of April 13, 2017. From December 2016 to March 2017, the international rig count rose ~2%.

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NOV’s US revenue

In 2016, National Oilwell Varco’s (NOV) US revenue share remained unchanged at 25% compared to 2015. During the same period, NOV’s aggregate revenue fell 51%. In comparison, Oil States International’s (OIS) 2016 revenue fell 37% compared to 2015, while CARBO Ceramics’ (CRR) revenue fell 63%.

NOV makes up just 0.06% of the iShares Russell 3000 ETF (IWV). The energy sector makes up 6.1% of IWV. IWV tracks the Russell 3000 Index (RUA-INDEX), which is composed of 3,000 large US companies. The RUA-INDEX has risen 13% in the past year.

Next, we’ll discuss what implied volatility means for NOV’s stock price.

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