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How the Rig Count Can Affect National Oilwell Varco in 2017

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Rig count

On March 31, 2017, the US rig count increased 25% over the previous year. The US rig count reached its multiyear high in September 2014. Since then, it has dropped 55% through May 5, 2017.

From March 31, 2017, until the week ended May 5, 2017, the US rig count gained 6% to close at 877. A higher rig count can increase NOV’s revenues and earnings in 2017. In April 2017, the international rig count increased 1.3% over March 2017.

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National Oilwell Varco’s US revenues

In 2016, National Oilwell Varco’s (NOV) revenue share from the US was 25%. This remained unchanged over 2015. In comparison, Weatherford International’s (WFT) North America revenue share in 1Q17 was ~35%, while Halliburton’s (HAL) 1Q17 North America revenue share was 52%. 

Baker Hughes’s (BHI) North America revenue share was 36% in 1Q17. NOV generated the majority of its revenues (75%) from its international operations in 2016. NOV comprises only 0.05% of the iShares Russell 3000 ETF (IWV). The energy sector makes up 5.8% of IWV. 

You can read a comparative analysis of the top oilfield services companies in Market Realist’s Which Oilfield Service Giant Stands Tallest after 1Q17?

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

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