Does NOV’s management see a recovery?
Where did NOV face challenges?
In the 3Q17 earnings conference call, NOV’s management discussed the challenges in the rig business. Jose Bayardo, NOV’s chief financial officer, said during the 3Q17 conference call, “The overarching macro commentary for our rig business is that the commodity price pullback that began late in the second quarter, which saw oil prices fall into the low to mid-40s, and ensuing activity declines, caused our drilling contractor customers to retrench and stop spending on all, but the most essential of items. The result for us was deferred deliveries and a sharper-than-anticipated falloff in orders for new equipment, re-activation services, and spare parts.” National Oilwell Varco makes up 0.05% of the iShares Russell 1000 ETF (IWB). IWB rose 18% versus a 17% fall in NOV’s stock price during the past year.
National Oilwell Varco’s outlook for 4Q17
- Recent improvements in spare part bookings are expected to boost the Rig Aftermarket segment.
- The company expects bookings to taper off in the Completion & Production segment, as 2017 budgets for most of NOV’s customers have been exhausted.
- NOV expects to realize a 3% to 5% rise in revenue growth with stronger incremental margins in the Wellbore Technologies segment.
Next, we will discuss National Oilwell Varco’s revenue and earnings.