Houston, Texas-based National Oilwell Varco, the oilfield services company has announced a major $5.9 billion-dollar loss which the company attributes to a “generational oilfield downturn.”
According to Clay Williams, National Oilwell Varco’s CEO …
“NOV continues to face challenging cross-currents as it navigates a generational oilfield downturn. International and offshore markets are exhibiting growth, while North America land markets are declining as customers slash spending. Nevertheless, consolidated results improved sequentially in each of our three business segments, as we pivot to higher-growth areas. We were pleased to see demand for NOV’s technology and equipment from international and offshore customers drive our third consecutive quarter of rising bookings for capital equipment.”
“Though we are well-positioned to support growth in the offshore and international markets as customers increase activity after years of curtailed spending, severe capital austerity and lower activity in North America are resulting in a rapid change in our business mix. This presents NOV with both opportunities and challenges. Growing backlogs will allow us to better balance loading and improve absorption across NOV’s global footprint, while the mix shift creates potential for temporary inventory and payment dislocations. We are nevertheless resolute on improving the working capital intensity of our business as we execute through the second half of the year.”
“The increased emphasis on capital discipline from our customer base is driving them to do more with less, and it has become clear in the second quarter that this approach is not going away anytime soon. Recognition of this challenging market dynamic, as well as lower equity values and diminished availability of capital for the energy sector led to the Company’s significant impairment charge this quarter. In this environment NOV is focused on cutting our cost structure and managing working capital to improve cash flow and return on capital, while we continue to address our customers’ most challenging needs with the critical technology and equipment that NOV provides.”
With 35,000 employees located in 65 nations, one almost expects a perfunctory announcement of restructuring and layoffs.
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