National Oilwell Varco said Tuesday its second-quarter net income fell a less-than-forecast 28% as its rig technology business held steady despite a downturn in the oil service business.
National Oilwell Varco earned $220 million, or 53 cents a share, compared to $421 million, or $1.05 a share, in the year-ago period. Revenue was virtually flat at about $1.9 billion.
On an adjusted basis, the Houston maker of drilling-equipment said it earned 90 cents a share compared to $1.04 in the year-earlier period, while analysts polled by FactSet Research were looking for earnings of 88 cents a share, on average.
Its backlog fell to $8.7 billion from $9.6 billion at the end of the first quarter. Shares of National Oilwell Varco added 1.8% in premarket trading to $59.84
"Our strong book of business and solid balance sheet positions us well to navigate the current challenging marketplace, which witnessed further steep rig count declines and fierce pricing pressure during the second quarter, particularly in North America," the company said.
"We are using this time to streamline our business and invest for future growth, while continuing to execute on our customer's requirements."
The volume of rig declines could play a negative role for NOV for a couple of quarters. I've discussed this a lot with regard to natural gas. Production is being shut off until supply can be balanced with demand. I may revisit this name if oil offers a more attractive entry point. My favorite names in the oil sector are National Oilwell Varco, Diamond Offshore, Noble, and Schlumberger. I also sometimes trade the 2x oil ETF (symbol DXO).