Because of strong drilling in North America's onshore basins, oilfield equipment manufacturer National Oilwell Varco Inc. (NOV) said Tuesday its rig equipment backlog at the end of September was worth an estimated $4.87 billion -- more than at the end of the second quarter.
New equipment orders in 3Q2010 alone totaled $1.18 billion, "reflecting a broad mix of the company's products including new offshore and land rigs, workover rigs, cranes and well stimulation equipment, from domestic and international customers," said CEO Peter Miller.
"High oil and gas activity across North America and continued outstanding execution of equipment orders enabled the company to achieve solid earnings and cash flow again this quarter," he said. Bookings into NOV's "capital equipment backlog exceeded shipments during the third quarter, driving backlog a little higher sequentially and signaling renewed interest in drilling equipment construction and refurbishment, and improving credit markets. We are pursuing new orders aggressively, and remain well positioned to execute strategic internal growth and acquisition opportunities."
Excluding one-time charges, the Houston-based company reported net income of $406 million (97 cents/share) in 3Q2010, compared with $396 million (95 cents) in the year-ago period. Revenues in the latest period exceeded $3 billion, which was 2% higher sequentially and 2% lower than in 3Q2009.
Quarterly revenues for the Rig Technology segment were $1.65 billion, essentially flat from 2Q2010 and a decrease of 18% from 3Q2009. Operating profit was $480 million, or about 29% of sales. Revenue from orders completed in the backlog of orders decreased 8% sequentially and was down 28% year/year (y/y), "but nonbacklog revenue increased 17% sequentially and 23% y/y, reflecting higher demand for aftermarket parts, services and capital spares," the company stated.
NOV credited "rising levels of rig activity in U.S. shale plays and seasonal recovery in Canada" leading to "higher demand for products and services" within its Petroleum Services and Supplies segment. Revenue rose 5% sequentially and was up 23% from 3Q2009. The Distribution Services segment also generated a 16% sequential increase and a 39% increase y/y in revenue, which "benefited from sequential seasonal sales improvements in Canada, as well as strong sequential gains in U.S. operations on higher rig counts."