Operational disruptions from freezing weather in February, as well as softer-than-expected customer orders are set to weigh on first quarter results, NOV Inc. said Tuesday.
The Houston-based oilfield technology giant said severe weather during February knocked out operations in Oklahoma and Texas, two of its biggest operating regions. In addition, there has been an underwhelming number of orders by exploration and production (E&P) companies.
“Unfortunately, the extreme winter weather across Texas and Oklahoma, the ongoing effects of Covid-19 lockdowns, and the continued spending austerity from our oilfield customers are combining to take a greater-than-expected toll on our first quarter results,” said CEO Clay Williams.
The wintry weather last month slammed all three of NOV’s business segments.
In addition to the weather-related disruptions, the Completion & Production Solutions and the Rig Technologies segments faced project delays and pandemic-related shutdowns in Southeast Asia.
In addition, an “acute global glass fiber supply shortage” encroached on the Fiberglass Systems operations.
“Within NOV’s Wellbore Technologies segment, recent improvements in North American drilling activity levels and incremental cost savings initiatives are expected to offset weather-related disruptions and allow for segment results that are in-line with prior guidance,” the company noted.
Consolidated first quarter revenue is forecast to be $1.20-1.26 billion.
“While the first quarter result is disappointing, we expect the prospects for our business to improve through the remainder of the year,” Williams said. “The combination of $60/bbl-plus oil, the continued recovery in the North American rig count, improvements in international activity, and the emergence of a number of our offshore drilling customers from bankruptcy is expected to lead to meaningfully better results in the second half of the year.”
Meanwhile, said the CEO, “we remain focused on reducing operating costs and investing in new products and technologies to position NOV for the upturn.”
During the fourth quarter conference call Williams noted that technology advances underway include a digital platform test with three E&Ps. By the end of March, it also is ramping development of a low-cost robotics rig that could be commercialized by year’s end. In addition, an electric hydraulic fracturing system, aka e-frack, is being tested by a pressure pumper to help E&Ps reduce costs and emissions.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 | ISSN © 2158-8023 |