Houston-based National Oilwell Varco Inc. (NOV) is warning that first quarter revenue will be below expectations at $1.8 billion because of issues related to “reduced progress” on new offshore rig construction and customer-delayed deliveries of drilling, well servicing and stimulation equipment.

Revenue also is slipping into later quarters because of lower sequential shipments of subsea production equipment during the first three months of the year, management said Monday.

“Following an unusually protracted 2018 budgeting cycle, we’ve seen certain customers defer deliveries for existing capital equipment orders into the second quarter and delay making new order commitments until late into the first quarter,” said CEO Clay Williams. “Unfortunately, all three segments will report sequentially lower revenues…”

On a consolidated basis, the company, which provides onshore and offshore drilling support services worldwide, expects to report an operating loss of about $1 million.

“Nevertheless, industry fundamentals continue to improve, and we remain optimistic regarding the second quarter and the remainder of the year,” Williams said. “With oil prices continuing to trend upward, and the U.S. rig count topping 1,000, we expect demand for NOV’s critical products and services to resume growth as the year progresses.”

NOV is scheduled to issue its results late on April 26, followed by a conference call on April 27.

During the fourth quarter conference call held in February, Williams said the energy industry was nearing an inflection point, setting the stage for a better 2018.
Industry surveys were pointing to a “modest” increase this year in upstream capital expenditures following a sharp decline in spending. “This all sets the stage for a brighter outlook for 2018,” the CEO said.

However, CFO Jose Bayardo said in February that while NOV had made progress in the final quarter, working capital levels “remained frustratingly high through this downturn as a lack of cash and liquidity among our customers has made it challenging to turn inventory and accounts receivable into cash.”