Surging oil and natural gas prices drove higher global demand for NOV Inc.’s oilfield services in the third quarter as orders eclipsed shipments, but “pandemic-related supply chain issues” pressured some projects, CEO Clay Williams said Wednesday.
Williams and his management team discussed the Houston-based operator’s third quarter performance and the outlook ahead during a conference call.
Covid-19 issues “challenged certain projects” during the quarter but “we nevertheless saw sequential improvement in many of our oilfield businesses, along with our strong order levels,” Williams said. “Rising economic activity and higher backlogs continue to underpin our improving outlook for 2022.”
NOV continues to invest in technologies to improve its oil and gas portfolio, and it is pouring more funding into renewable energy, Williams noted. The company’s technologies are being successfully transferred into several areas, particularly offshore wind projects.
“We were particularly pleased to again see offshore wind power-related projects drive more than half of our Rig Technology segment’s orders in the third quarter, and we made steady progress in other low-carbon solutions under development.
“As global economies emerge from pandemic lockdowns,” said the CEO, and as “supply chains normalize and energy demand grows, NOV is well positioned to generate much stronger financial returns from the coming multi-year up-ycle in both the conventional and renewable energy markets.”
NOV operates in three segments: Well Technologies, Completion & Production Solutions (CPS) and Rig Technologies.
In Wellbore Technologies, revenue climbed 40% from a year ago and was 10% higher sequentially at $507 million in the quarter.
The revenue increase “was driven by oil and gas drilling activity levels that improved in every major region of the world, market share gains in certain markets, and higher prices,” management noted. The segment’s operating profit was $32 million, or 6.3% of sales.
In the CPS segment, Covid-related issues pressured revenue, which at $478 million was down 20% year/year and off 4% from 2Q2021.
The pandemic caused “operational disruptions and supply chain issues.” That in turn negatively impacted converting revenue from backlog. Covid-related disruptions at a project in a Southeast Asia shipyard led to CPS suffering an operating loss of $26 million, or 5.4% of sales. The disruptions led to $12 million in one-time charges.
However, new orders booked for CPS during the quarter totaled $384 million, representing a book-to-bill of 144% when compared to the $266 million of orders shipped from backlog. At the end of September, the backlog for CPS capital equipment orders was $1.11 billion.
In the Rig Technologies segment, revenue fell 13% from a year ago and declined 20% sequentially.
Operating profit for Rig Technologies was $1 million, or less than 1% of sales. New orders booked during the quarter totaled $300 million, representing a book-to-bill of 190% when compared to $158 million of orders shipped from backlog. The backlog for capital equipment orders at the end of September was $2.78 billion.
Net losses in 3Q2021 totaled $69 million (minus 18 cents/share) , or 5.1% of sales. In 3Q2020, net losses were $55 million (minus 14 cents). Overall revenue in 3Q2021 slumped to $1.34 billion, off 3% year/year and down 5% sequentially.
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