By Braden Reddall
Oct 25 (Reuters) - National Oilwell Varco Inc, the largest U.S. oilfield equipment maker, posted higher-than-expected profits and saw good demand for deepwater equipment, but its shares fell 3 percent on worries about the stalled U.S. land drilling market.
Revenue from NOV’s biggest business, supplying technology to rigs, rose 29 percent in the third quarter while revenue from the backlog in the business rose 36 percent to $1.91 billion.
Demand for its other products and services continued to grow in international markets, but softened in North America.
Chief Financial Officer Clay Williams characterized it as North America playing defense, while the rest of the world played offense. He said the company was building out facilities in Brazil, while selling more well stimulation equipment into the Middle East, China and Russia.
“Offense is fun. Defense, not so much,” he told analysts on a conference call.
Simmons & Co analyst Bill Herbert said margin sustainability would remain in focus since North America represents half the company’s revenue.
The number of rigs drilling for natural gas in the United States fell to a 13-year low in the quarter due to weak gas prices stemming from a flood of supply.
NOV, known for being highly acquisitive, said in August it would buy Robbins & Myers Inc for $2.54 billion to expand its product line of well tools, pumps and valves.
Third-quarter net profit rose to $612 million, or $1.43 per share, from $532 million, or $1.25 per share, a year earlier. Revenue rose 42 percent to $5.3 billion. Excluding transaction charges, profit was $1.52 per share, while analysts had expected $1.51, on revenue of $5.36 billion, according to Thomson Reuters I/B/E/S.
Capital One Southcoast described the results as on the “softer side of in line,” with taxes giving them a big lift.
National Oilwell shares fell nearly 3 percent, or $2.21, to $74.56 in morning trading on the New York Stock Exchange. The stock had risen 13 percent so far this year, compared with a 2 percent rise for the Philadelphia Stock Exchange oil service index.