UPDATE 1-National Oilwell profit up on offshore drilling demand

Thu Jul 26, 2012 10:13am EDT

* Adj Q2 earnings/share $1.46 vs $1.40 expected by Wall St

* Backlog grows 9 pct in Q2, driven by offshore

* Shares up 6.2 percent

July 26 (Reuters) - National Oilwell Varco Inc, the largest U.S. oilfield equipment maker, reported a 26 percent rise in quarterly profit on Thursday as demand for new offshore drilling equipment stays high, and its shares rose more than 6 percent.

The company's backlog for rig technology orders, of which 86 percent is for offshore rigs, rose 9 percent in the quarter to $11.3 billion -- up 46 percent from a year earlier.

"The strong orders during the quarter support our view that NOV's end markets remain very strong and that the company is in the midst of a powerful earnings cycle," said analyst James Crandell of Dahlman Rose and Co.

Rival Cameron International Corp also reported a higher-than-expected profit on Thursday and noted plenty of potential outside North America, particularly in deepwater.

NOV said a handful of offshore rig equipment packages for Brazil had not yet been awarded.

The possibility of those orders, growing interest in hot deepwater markets around Africa and recoveries in the Gulf of Mexico, North Sea and Southeast Asia should help offset softness in North American land this quarter, Chief Financial Officer Clay Williams said.

NOV equipped five offshore rigs last quarter -- for a total of 137 since 2005 -- and new orders included equipment packages for six new deepwater rigs, including one in Brazil, and five shallow-water jackups.

"The good news is every time we deliver a rig, we have to support that rig for the next 25 years," Chief Executive Officer Pete Miller said on a conference call.

Second-quarter net profit rose to $605 million, or $1.42 per share, from $481 million, or $1.13 per share, a year earlier.

Excluding charges, earnings were $1.46 per share, while analysts on average had expected $1.40, according to Thomson Reuters I/B/E/S.

Revenue increased 35 percent to $4.7 billion.

NOV shares were up 6.2 percent at $71.50 in morning trading. The stock has now risen 5 percent so far in 2012, compared with an effectively flat performance for the Philadelphia Stock Exchange oil service index.