National Oilwell Sees Falling Demand For Deepwater Rigs

Article title
National Oilwell Varco forecasts falling demand for deepwater rigs, overshadowing robust demand for jackups, used in shallower waters, as well as land rigs.


July 29 (Reuters) - National Oilwell Varco Inc, the largest U.S. oilfield equipment provider, forecast falling demand for deepwater rigs, overshadowing robust demand for jack-up rigs, used in shallower waters, as well as land rigs.

The company's orders for production equipment and new deepwater rigs, or floaters, would be limited in the third quarter, Chief Financial Officer Jeremy Thigpen said.

The company's forecast echoed that of rival Diamond Offshore Drilling Inc's, which warned last week that it expected the market for deepwater and utlra-deepwater rigs to be over supplied until 2016.

National Oilwell's shares fell 2 percent in morning trading as the warning overshadowed the company's better-than-expected profit that was driven by higher margins, especially in its rigs business.

U.S. oil and gas producers are turning their attention to lucrative shale fields in North America, boosting demand for land rigs, even as they shun more-expensive deepwater projects.

Still, National Oilwell booked $3.4 billion in new orders for oilfield equipment in the second quarter ended June 30, higher than the $3.15 billion a year earlier.

Strong Margins

The higher demand boosted revenue and margins at most of National Oilwell's businesses, helping the company report a better-than-expected profit for the fourth straight quarter.


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