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National Oilwell Q3 beats on rig building surge
October 25, 2011 / 2:41 PM / 6 years ago

National Oilwell Q3 beats on rig building surge

(Reuters) - National Oilwell Varco Inc (NOV.N), the largest U.S. oilfield equipment maker, posted higher-than-forecast quarterly profits, helped by an industry-wide move to upgrade rig fleets for tougher energy reservoirs.

The company said on Tuesday its backlog expanded along with a surge in new offshore rig building, with more than 90 orders placed in the last year.

Its rig technology backlog grew 33 percent from the second quarter level, boosted by 28 offshore rig packages. A record of nearly $4 billion in orders in the quarter were anchored by a seven-drillship package from Brazil’s EAS worth $1.5 billion.

But analysts had targeted $4 billion in orders anyway, and NOV shares were flat in early trading, as the sector .OSX declined on worries about the U.S. drilling outlook.

Shares of oilfield services firm Weatherford International Ltd WFT.S (WFT.N), which posted profits that matched estimates, fell 4 percent as it added to a chorus of concern about the impact of North American drillers switching their focus to oil from natural gas in response to prices.

NOV Chief Executive Pete Miller expressed a more sanguine view of this trend, which will have an impact on the need for land-rig equipment.

“I know there is consternation over the price of natural gas. But when the rigs are pulled off the natural gas wells, they are really put on the wet shales,” Miller told analysts on a conference call. “So we continue to believe the shales are going to be very, very active.”

NOV’s third-quarter net profit rose to $532 million, or $1.25 per share, from $404 million, or 96 cents per share, a year earlier. Excluding one-time items, it earned $1.26 per share, topping analysts’ average forecast of $1.17, according to Thomson Reuters I/B/E/S.

Revenue rose 24 percent to $3.74 billion, above the $3.67 billion that analysts had forecast.

Analysts Tudor Pickering Holt noted that NOV’s backlog of $10.3 billion was at its highest level in 2-1/2 years.

For Weatherford, net profit rose to $190 million, or 25 cents per share, from $145 million, or 19 cents per share, a year before. Revenue grew by 33 percent to $3.37 billion.

Excluding items, the Switzerland-based company earned 26 cents per share, in line with analysts’ average estimate.

Chief Executive Bernard Duroc-Danner talked of the risks of potential correction in U.S. well stimulation in 2012 due to the “disruptive” switch to oil from gas drilling.

Weatherford expects fourth-quarter earnings of 30 cents to 34 cents, leaving out certain items, and forecast “gradually higher” North American margins and further strengthening in profitability elsewhere in the quarter and year ahead, assuming no macroeconomic shocks.

“Should the turn of events prove to be one of economies essentially muddling through, we feel our positive outlook will be correct,” Duroc-Danner said on a conference call.

On Friday, industry leader Schlumberger (SLB.N) posted weaker-than-expected earnings, following good numbers from its nearest rival, Halliburton Co (HAL.N), that were overshadowed by worries about the U.S. drilling outlook.

But the entire sector had rallied on Monday, buoyed by a rise in oil prices.

Reporting by Matt Daily and Braden Reddall; editing by John Wallace and Derek Caney

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