HOUSTON (Reuters) - National Oilwell Varco (NOV.N) said on Tuesday oilfield equipment orders rose to their highest in over two years last quarter as rising crude prices spurred U.S. drilling activity, helping to narrow the company’s loss for the period.
Oilfield suppliers are continuing to recover slowly from a brutal three-year downturn as U.S. crude CLc1 prices climb above $60 a barrel, stirring demand for their oilfield equipment and services.
The Houston-based company reported its loss fell to $14 million in the quarter, from $714 million a year earlier, on a 16 percent bump in revenue to $1.97 billion. Orders for completions and productions hit $501 million in the fourth quarter, compared with $370 million a year earlier. Within its rig division, new orders were $169 million versus $115 million a year ago.
“It feels to us that the market is nearing an inflection point,” Chief Executive Clay Williams said on a conference call on Tuesday. National Oilwell Varco plans its first “meaningful” bonus compensation in three years, executives said on the call, a move expected to lower its free cash flow in the current quarter.
Rig technologies revenues rose to $614 million, up 20 percent from the prior quarter, and $1 million higher than the year-ago period.
The company’s shares gained more than two percent following the results but gave up gains to trade near flat at $33.86 by mid afternoon.
Promises of capital discipline among oil producers and less bank financing for new projects may temper future production increases, resulting in “higher oil prices down the road,” Williams said.
The company remained cautious on the near-term prospects for an offshore equipment and services recovery, noting that producers remain focused on onshore activities, which require lower crude prices to turn a profit.
Rival General Electric’s Baker Hughes (BHGE.N) last week said the subsea market remained challenging for its oilfield equipment business, and that it expected muted activity in the offshore sector in the short term.
National Oilwell Varco reported a 4 cents per share loss, in line with analysts expectations. Revenue topped analysts’ sales forecasts of $1.95 billion, according to Thomson Reuters I/B/E/S.
Reporting by Liz Hampton; Editing by Andrew Hay