Houston-based National Oilwell Varco Inc. (NOV), which provides oilfield technology for onshore and offshore customers, said customers spent less than expected during the first quarter, with orders for new equipment sparse.
Revenue during 1Q2019 increased 8% year/year, but it was down 19% sequentially at $1.94 billion. Quarterly losses totaled $77 million (minus 20 cents/share), versus a year-ago loss of $68 million (minus 18 cents).
“Two big challenges negatively impacted our quarter — oilfield service customers cut expenditures due to low year-end oil prices and sliding producer activity outlook, and offshore sales declined following the accelerated equipment deliveries we saw in the fourth quarter,” CEO Clay Williams said.
“Additionally, the volume of orders for new capital equipment fell sharply in late 2018 and remained sparse through the first two months of the year. Nevertheless, customer confidence improved month-by-month through the first quarter as commodity prices strengthened.
“Strong order acceleration in March enabled NOV to post a sequential increase in bookings, improving our outlook for the second quarter and remainder of 2019.”
NOV is expecting “modestly improving activity in international and offshore markets, along with growing market penetration for NOV’s proprietary technologies and services,” but “capital austerity in the North American land market leaves our near-term outlook uncertain.
“Consequently, we are renewing our focus on controlling what we can, namely our cost structure, as we streamline our operations to improve our organization’s profitability, regardless of the market environment.”
The Wellbore Technologies segment generated revenue of $807 million in 1Q2019, off 14% from a year ago and down 9% sequentially.
“The sharp pullback in commodity prices in late 2018 amplified the typical seasonal first quarter slowdown in demand for equipment in international markets and resulted in lower levels of drilling activity and pricing pressure in North America, which contributed to the sequential decline in revenues,” management said.
Commodity prices, activity levels and the segment’s financial results improved through the first three months, while bookings for drill pipe “accelerated rapidly” toward the end of the quarter, resulting in the third straight sequential improvement in orders. Operating profit was $19 million, or 2.4% of sales.
In the Completion & Production Solutions (C&P) business, revenue fell 13% from a year ago and was down 26% sequentially to $581 million. The sequential decrease was blamed on equipment deliveries that were pulled forward before the end of 2019, along with limited order intake in late 2018 and the first two months of 2019, as well as customer-deferred deliveries.
“Orders improved in March and totaled $470 million for the quarter, equal to the bookings in the fourth quarter and representing a book-to-bill of 149% when compared to the $316 million of orders shipped from backlog,” management said. Backlog for capital equipment orders for the C&P business stood at $1.04 billion at the end of March.
Rig Technologies generated revenue of $603 million in 1Q2019, up 25% year/year but down 25% sequentially because of lower contributions from offshore projects, fewer deliveries of capital equipment and a seasonal decline in service and repair work. Operating profit was $31 million, or 5.1% of sales.
New orders booked during the quarter totaled $271 million, representing a book-to-bill of 110% when compared to the $246 million of orders shipped from backlog. At the end of March, backlog for capital equipment orders for Rig Technologies was $3.1 billion.
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