By Nathalie Tadena
National Oilwell Varco Inc.'s (NOV) second-quarter earnings rose
26% as the oilfield-services equipment manufacturer posted
better-than-expected revenue, with gains across its segments.
The company's earnings have strengthened over the past year as
oil-and-gas producers boost their capital expenditures, often
spending heavily on complex equipment that can extract
harder-to-reach reserves through unconventional means like
hydraulic fracturing and horizontal drilling.
"All three segments posted higher sequential and year-over-year
revenues and operating profit, and we are pleased at the high level
of demand we continue to see for new drilling equipment," said
Chairman and Chief Executive Pete Miller.
Producers are now poised to move much of their spending in North
America to areas that yield more oil and natural-gas liquids
instead of cheap natural gas--a shift that could generate yet more
demand for National Oilwell's products.
The company has grown to be become the sector's dominant
equipment maker through mergers. In May, the company agreed to
acquire CE Franklin Ltd. (CFT.T), which provides products and
services to the energy industry, for about C$231 million. It also
recently completed its acquisition of Schlumberger Ltd.'s (SLB)
Wilson business, which distributes pipe, valves and other products
to the oil patch, in a deal that vastly expands National Oilwell's
footprint.
National Oilwell reported a profit of $605 million., or $1.42 a
share, up from $481 million, or $1.13 a share, a year earlier.
Excluding transaction charges, adjusted per-share earnings rose to
$1.46 from $1.14. Revenue increased 35% to $4.73 billion.
Analysts polled by Thomson Reuters had projected a per-share
profit of $1.40 and revenue of $4.44 billion.
Gross margin narrowed to 27.9% from 30.9%.
Backlog at the company's rig-technology business reached $11.28
billion as of June 30, up 46% from a year earlier up 9% from the
prior quarter. New orders in the segment, National Oilwell's
largest, rose to $2.22 billion, from $1.91 billion in the prior
quarter.
Revenue in the rig technology segment increased 27% from a year
earlier, while the petroleum services and supplies unit saw revenue
rise 31%. Sales from the distribution and transmission segment were
up 84%.
Shares closed at $67.33 Wednesday and were inactive premarket.
The stock has fallen 12% over the past three months.
-Write to Nathalie Tadena at nathalie.tadena@dowjones.com
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