HOUSTON – The CEO of National Oilwell Varco says he wouldn’t be surprised to see the number of active drilling rigs fall modestly next year after oil prices have dropped more than $20 a barrel in recent months.
“We have not yet heard of any rigs being laid down due to lower oil prices,” NOV Chief Executive Clay Williams told investors in a conference call early Thursday. “But it’s far too early for this to be the final word on 2015 activities.”
Williams said that historically, lower prices haven’t affected activity until three or four months have passed as oil and gas producers drill out their rig contracts.
“We are cautious right now because it is difficult for us to envision $20 lower oil prices not taking at least a modest toll on activity,” he said. “Perhaps this means that rig counts won’t increase as much as we expected.”
NOV reported Thursday its third-quarter profit rose 10 percent on higher demand for rig equipment and wellbore technologies amid a surge of hydraulic fracturing activity in West Texas and elsewhere.
It posted a profit of $699 million, or $1.63 a share, in the July-September period, compared to $636 million, or $1.49 a share, in the same period last year. Revenue increased from $4.8 billion to $5.6 billion.
Williams said NOV is cautiously optimistic about 2015 but is bullish on 2016. He said even if the market faces a downturn next year, the company’s $14.3 billion backlog of equipment orders and its diverse products should see it through tougher times.
“Specifically, we expect to continue to invest in technologies required to produce the 150-plus discoveries made in the deep water over the past seven years,” Williams said. “We will invest in new technologies that have opened up unconventional shales and deep-water provinces.”
In the third quarter, earnings for NOV’s rig systems business rose 35 percent to $533 million, as its aftermarket segment grew 13 percent to $229 million. Its wellbore technologies unit expanded profits 25 percent to $278 million.
The company announced $3 billion in share buybacks.
NOV shares fell $1.97 to $70.76 on the New York Stock Exchange.
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