Introduction
National Oilwell Varco (NOV) is a leading provider of equipment and components for the global oil and gas industry. With operations in over 60 countries, NOV manufactures a variety of oilfield products and provides related services to upstream oil and gas companies worldwide. The company has a history going back over 150 years and has grown mainly through mergers and acquisitions. This article provides an overview of National Oilwell Varco, its key facts, products and services, financial performance, and future outlook.
History
National Oilwell can trace its roots back to 1862 with the formation of Oil Well Supply Company in Ohio. The company focused on designing, manufacturing and distributing consumable drill site supplies and equipment used in oil and gas drilling. Over the next century, Oil Well Supply expanded and acquired several other regional oilfield equipment suppliers.
In 1995, National Oilwell acquired the oilfield equipment division of Armco Inc. which nearly doubled its size. In 2000, National Oilwell merged with Varco International Inc., a manufacturer of drill bits, pipe handling tools and rig instrumentation systems. The combined entity came to be known as National Oilwell Varco, one of the largest oilfield equipment makers globally.
NOV has continued to grow inorganically with several other acquisitions including:
- 2005: Acquired Kavernen measuring tools and well site reporting software firm
- 2007: Bought Grant Prideco, a provider of drill pipes and well casings
- 2008: Acquired ReedHycalog, a drill bits manufacturer
- 2010: Merged with Advanced Production and Loading PLC, a Norwegian manufacturer of deck equipment for offshore rigs
The company currently operates through four business segments – Rig Technologies, Wellbore Technologies, Completion & Production Solutions, and Downhole Technologies.
Products and Services
NOV provides a diversified range of products and services spanning the entire oil and gas value chain. Some of its major offerings are:
- Land and offshore drilling rigs, equipment and components – drawworks, mud pumps, top drives, traveling blocks, rotary tables
- Drill strings, tubular inspections, drill bits, downhole tools, solids control equipment
- Well intervention and stimulation equipment – coiled tubing, wireline, pumping trucks
- Well completion tools and components – liners, wellheads, artificial lift, valves
- Production equipment – rods, pumps, gas lift equipment, sand control screens
- Drilling instrumentation, software and machine diagnostics
NOV employs advanced technologies and robotics across several products. It also provides equipment refurbishment, repair, maintenance and parts replacement services. The company has invested significantly in R&D over the years to improve product performance.
Financial Performance
NOV’s revenues grew consistently from $2.1 billion in 2000 to over $22 billion in 2014 driven by acquisitions and high oil and gas capital spending. The downturn of 2015-16 impacted sales which declined to $7.3 billion in 2016. Despite recovering activity, revenues have remained subdued in the $8.5-9 billion range.
The company generated net losses between 2015 and 2017 amidst the industry headwinds. Results turned positive in 2018 with strengthening markets. For the first 9 months of 2022, NOV had revenues of $7.1 billion and net income of $42 million. Margins have been pressured by inflationary costs, supply chain constraints and operational disruptions.
NOV has maintained a strong balance sheet. The company is focused on achieving profitable growth, market share gains, new product development and increased cash flows. Acquisitions remain a key aspect of NOV’s strategy to complement its portfolio.
Outlook
While near term industry challenges persist, NOV sees multi-year upcycle potential with rising energy demand, low inventories and need for supply security. Its Rig Technologies segment outlook remains robust with elevated offshore spending. Some key drivers for NOV include:
- Growing drilling activity and well completions requiring NOV’s equipment & services
- Increased shale activity, deepwater projects and competitive rig upgrades
- Adoption of new technologies and digital solutions for optimization
- Decarbonization and sustainable drilling solutions
- Aftermarket services and equipment replacements
NOV is well positioned to benefit from higher upstream capital budgets. It remains committed to enhancing shareholder value through strategies focused on market leadership, innovation and financial discipline.
Conclusion
National Oilwell Varco is a leading oilfield manufacturer with a diverse product range, global scale and strong brand recognition. While the recent industry downturn and macroeconomic uncertainties have posed challenges, NOV remains optimistic on the multi-year growth potential. Backed by its technology leadership and extensive installed base, NOV seems ready to capitalize on higher upstream spending ahead.