Demand for the latest rig technology, expanded shale drilling overseas and the need to replace equipment used in harsh environments will drive growth for National Oilwell Varco, CEO Pete Miller said Wednesday.
"These will be the overriding themes as we look at this industry over the next couple of years," Miller told analysts during a conference call after the oil field equipment maker reported its fourth-quarter earnings.
National Oilwell Varco said it gained new traction in the quarter as North America rig counts rose, the company sped the pace of working off backlogs, and prices for its products and services stabilized after a year of decline.
Fourth-quarter net income was $394 million, or 94 cents per share, compared with $585 million in the October-December quarter a year ago. But net income rose 2.3 percent from the third quarter of 2009.
Fourth-quarter revenue was $3.13 billion, down from $3.81 billion the year before, but up 1.3 percent from the third quarter.
"Although we are early in the new year, we are very encouraged by what we see so far and believe the foundation has been laid for a meaningful recovery," said Clay Williams, senior vice president and chief financial officer.
For the full year 2009, income was down 25 percent to $1.47 billion on revenue that fell 5.4 percent to $12.71 billion.
Williams said cost-cutting and greater efficiencies helped offset losses from falling prices for the company's products and services in the economic downturn.
Williams said prices appeared to stabilize in the fourth quarter after falling about 25 percent from 2008 peaks, but it could still be several quarters before they begin ticking up again.
Brian Uhlmer, director of research for Pritchard Capital Partners in Houston, said National Oilwell Varco distinguished itself in the increase in orders it picked up during the fourth quarter.
The company added $624 million in orders to its capital equipment backlog.
"A lot of their manufacturing peers have been really slow in getting orders picked back up," Uhlmer said.
Uhlmer said National Oilwell Varco will be able to take advantage of the capital- intensive nature of new drilling in shale and deep-water wells, which is hard on equipment.
"Previously, most of their equipment would have a 30-year life. Now, under higher pressures and higher temperatures, the equipment has more of a 10-year life," Uhlmer said.
Copyright (c) 2010, Houston Chronicle. Distributed by McClatchy-Tribune Information Services.
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