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How National Oilwell Varco Performed in 3Q17

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National Oilwell Varco’s revenue by segment

From 3Q16 to 3Q17, National Oilwell Varco’s (NOV) Wellbore Technologies segment witnessed 32% revenue growth. On the other hand, its Rig Systems segment revenue declined ~30%—which was the highest revenue slump among NOV’s operating segments.

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Net income for NOV versus peers

Compared to NOV’s $27 million net loss in 3Q17, Schlumberger (SLB) recorded a $556 million net loss in 3Q17. Halliburton (HAL) recorded ~$361 million in net income in 3Q17 while Flotek Industries (FTK) recorded a $3.4 million net loss in 3Q17. For a comparison on Schlumberger, Halliburton, and other key oilfield services companies, see Market Realist’s Comparing SLB, HAL, BHGE, and NOV before 4Q17.

NOV’s growth drivers: Positives

  • Nearly all of the Completion & Production Solutions segment’s business units secured orders near or more than 100% book-to-bill.
  • Revenue growth in the Wellbore Technologies segment outpaced rig count growth.
  • NOV booked additional orders of hydraulic fracturing equipment.
  • NOV saw rising demand in North America and the Middle East, benefiting NOV’s onshore business.
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NOV’s growth drivers: Negatives

  • Rig reactivations and upgrades decelerated as drilling contractor customers curtailed aftermarket spending.
  • NOV saw lower orders for spare parts.
  • Deferred deliveries and limited new equipment orders were due to capex cutbacks by upstream companies.

Change in reporting segments

On January 19, NOV combined its Rig Systems and Rig Aftermarket reporting segments into a single segment called Rig Technologies. According to the company, the changes were done to address “current and anticipated market environments, reduces administrative burden, and eliminates reported intercompany transactions between Rig Technologies’ capital equipment and aftermarket operations.”

How dependent is National Oilwell Varco’s business on the US rig count? We’ll discuss that question in the next part of this series.

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