National Oilwell says land business to bottom in Q3, recovery in 2017
July 28 (Reuters) – National Oilwell Varco Inc, the largest U.S. oilfield equipment provider, said demand rose for some of its products and services in North America in recent weeks, as drillers put rigs back to work.
Shares of the company, which also reported a smaller-than-expected quarterly loss, rose as much as 5.9 pct to $33.10 in morning trading on Thursday.
“Like others in our space, we believe we are seeing some isolated green shoots of activity,” Chief Executive Clay Williams said on a post-earnings call.
A 60 percent fall in global oil prices since mid-2014 has forced producers to scale back drilling and idle rigs, weighing on demand for equipment manufactured by companies such as NationalOilwell.
But some producers have begun to return rigs to work, encouraged by U.S. crude prices touching $50 in late May.
U.S. drillers have since added about 55 oil rigs.
The company was in discussions with customers in North America, Middle East and other markets about equipment upgrades and new field opportunities, Chief Financial Officer Jose Bayardo said on the call.
These talks centered around land activity, with offshore opportunities expected to remain limited for the foreseeable future, he said.
“We believe our land business will bottom in Q3 and begin to recover as we enter 2017.”
However, the company said it was “not ready to call bottom yet”.
The comment echoed that of Baker Hughes Inc, which said on Thursday it did not expect a “meaningful” recovery in North America this year.
National Oilwell, which has been aggressively cutting costs to offset the impact of low crude oilprices, said it slashed about 10 percent of its workforce during the quarter.
The company had about 44,000 employees at the end of the first quarter.
National Oilwell also said it is in the process of shutting down about 250 facilities since the downturn began in mid-2014.
Net loss attributable to National Oilwell was $217 million, or 58 cents per share, in the second quarter ended June 30, compared with a profit of $289 million, or 74 cents per share, a year earlier.
Excluding items, the company lost 30 cents per share, smaller than the average analyst estimate of 32 cents loss, according to Thomson Reuters I/B/E/S.
The Houston-based company’s revenue more than halved to $1.72 billion, missing the average estimate of $1.79 billion.
National Oilwell’s shares were up about 2 percent at $31.86 in late morning trading.
Up to Wednesday’s close, shares had fallen about 27.2 percent over the past 12 months. (Reporting by Arathy S Nair in Bengaluru; Editing by Maju Samuel and Sriraj Kalluvila)