UPDATE 1-National Oilwell adj profit boosted by rig technology business

Fri Jan 31, 2014 8:23am EST

* Fourth-quarter profit $1.56/shr vs est. $1.39

* Revenue rises 9 pct to $6.17 bln

Jan 31 (Reuters) - National Oilwell Varco Inc, the largest U.S. oilfield equipment provider, reported a better-than-expected adjusted quarterly profit, boosted by strength in its business that helps prepare oil and gas wells for production.

Revenue in the company's rig technology business, its biggest division, rose 14 percent and accounted for half of total revenue in the fourth quarter ended Dec. 31.

National Oilwell Varco also said its backlog of equipment orders stood at a record $16.24 billion at the end of the year, up 7 percent from the end of the third quarter.

The company makes components for both land and offshore drilling rigs, including derricks and drilling machinery.

The rig technology business designs, manufactures, sells and services complete systems for the drilling, servicing and completion of oil and gas wells.

However, a slowdown in gas drilling activity in North America weighed on the unit's margins, which slipped to 21.1 in the fourth quarter from 21.3 percent in the third quarter and 22.4 percent a year earlier.

"As we enter 2014, we recognize that there remain headwinds facing us in the North American land market," Chief Executive Pete Miller said on Friday.

Gas drilling in North America has been hit by weak gas prices as production from shale deposits soars.

National Oilwell Varco said in September it would spin off its distribution business, which provides maintenance and repair services to energy companies. Revenue in the company's combined distribution and transmission unit slipped 1 percent in the fourth quarter to $1.25 billion.

The transmission business sells equipment for water pipeline and wind towers.

Overall net income slipped 1.5 percent to $658 million, or $1.53 per share in the fourth quarter.

Excluding pre-tax transaction charges of $16 million, the company earned $670 million, or $1.56 per share.

Revenue rose 9 percent to $6.17 billion.

Analysts on average had expected earnings of $1.39 per share, on revenue of $5.86 billion, according to Thomson Reuters I/B/E/S.

Shares of the Houston-based company rose 2.2 percent to $$75.30 before the start of trading on the New York Stock Exchange. The stock has barely moved over the past year.