NOV Sees 10% Increase in 2Q 2007 Earnings

National Oilwell Varco reported that for the second quarter ended June 30, 2007 it earned net income of $318.5 million, or $1.79 per fully diluted share, compared to first quarter ended March 31, 2007 net income of $275.9 million, or $1.55 per fully diluted share. Earnings per share more than doubled from the second quarter of 2006, when the Company earned $147.9 million or $0.84 per fully diluted share.

Revenues for the second quarter of 2007 were $2,384.9 million, an increase of 10 percent from the first quarter of 2007 and an increase of 44 percent from the second quarter of 2006. Operating profit for the quarter was $497.2 million or 20.8 percent of sales. Operating profit flow-through, or the increase in operating profit divided by the increase in revenue, was 32 percent from the first quarter of 2007 to the second quarter of 2007, and was 34 percent from the second quarter of 2006 to the second quarter of 2007.

Backlog for capital equipment orders for the Company's Rig Technology segment at June 30, 2007 increased to $7.2 billion, compared to $6.4 billion at March 31, 2007, with new orders during the quarter of $1.8 billion. The increase in the Company's backlog for capital equipment reflected the strong demand for its drilling equipment products, particularly for international offshore rigs.

Pete Miller, Chairman, President and CEO of National Oilwell Varco, remarked, "We are very pleased with the strong results we achieved this quarter. Our solid operating results were due to the strong demand for our oilfield products and services, especially capital equipment products, and the efficient execution of our business. Our record backlog for drilling equipment leads us to believe that we can continue to build off of the positive results we have achieved so far this year. I am extremely proud of the job our employees have done to meet the needs of our customers. We remain optimistic about market conditions for the remainder of this year."

Rig Technology

Second quarter revenues for the Rig Technology segment were $1,409.2 million, an increase of 16 percent over the first quarter of 2007 and an increase of 67 percent from the second quarter of 2006. Operating profit for this segment was $340.8 million, or 24.2 percent of sales, an increase of 27 percent from the first quarter. Operating profit flow-through from the first quarter of 2007 to the second quarter of 2007 was 38 percent, and operating profit flow-through from the second quarter of 2006 to the second quarter of 2007 was 37 percent. Revenue out of backlog for the segment rose 21 percent sequentially and 82 percent year-over-year, to $957 million for the second quarter of 2007.

Petroleum Services & Supplies

Revenues for the second quarter of 2007 for the Petroleum Services & Supplies segment were $746.1 million, up 8 percent compared to first quarter results and up 26 percent from the second quarter of 2006. Operating profit was $177.8 million, or 23.8 percent of revenue, an increase of 4 percent from the first quarter. Operating profit flow-through from the first quarter of 2007 to the second quarter of 2007 was 13 percent, and operating profit flow-through from the second quarter of 2006 to the second quarter of 2007 was 33 percent. Strong results from most of the group's businesses around the world overcame a general decline in Canada.

Distribution Services

The Distribution Services segment generated second quarter revenues of $344.8 million, representing a 2 percent decrease from the first quarter and an 8 percent increase from the second quarter of 2006. Second quarter operating profit was $23.1 million or 6.7 percent of sales, $1.8 million lower than the first quarter and $2.9 million higher than the second quarter of 2006. Strong top line growth in domestic markets did not overcome soft market conditions in Canada.

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