US drilling and production contractor National Oilwell Varco (NOV) reported a $126 million net profit for the first quarter of 2023, up from its loss of $50 million reported in the same quarter last year.
The company’s first quarter 2023 revenue of $1.96 billion was up 27% year-on-year albeit down 5% sequentially from the previous quarter.
“Our first quarter results show continued strong demand and year-over-year growth,” chief executive Clay Williams said.
“On a consolidated basis, revenue increased 27% compared to the first quarter of 2022, and our orders for capital equipment exceeded our shipments out of backlog by 9%.”
“While the decline in North American natural gas prices may be a near-term headwind, the recovery in offshore and international activity is continuing to build strong momentum.”
Supply chain disruptions
Wellbore Technologies’ revenue was negatively impacted by supply chain challenges disrupting drill pipe operations, which will continue to be disrupted into the second quarter, Williams said during the earnings call on Thursday. The supply chain issues should clear up by the second half of the year, he said.
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Williams said unplanned events at one of its vendors’ steel mills in the last few months led to a lack of raw materials for drill pipe. This slowed growth in its Wellbore Technologies business segment, but overall the company is improving from supply chain issues arising since the Covid-19 pandemic.
“Not withstanding our drill pipe manufacturing challenges, our Wellbore Technologies segment executed very well and has continued to advance several new technologies leading to market share gains and bids and digital products,” Williams said.
Despite these disruptions, Wellbore Technologies’ revenue was $745 million, up more than 22% from the same quarter last year.
NOV has been facing supply chain issues since the Covid-19 pandemic began, stating that — as a contractor rather than an operator — it is positioned later in the upcycle, so those improvements are still in progress.
NOV’s income is on the rise after last year’s net income of $155 million and a loss of $250 million in 2021, largely due to Covid-19 and supply chain disruptions. However, income is not quite back to pre-pandemic levels, the company said.