National Oilwell Profit Drilled by Drop in Rigs

HOUSTON (TheStreet) -- National Oilwell Varco(NOV Quote) felt the sting of declining rig counts and charges as the company reported a 48% drop in net income.

On Tuesday, the Houston-based concern, known as a maker and servicer of oil and gas drilling equipment, said second-quarter profit came to $220 million, or 53 cents per share. In the second quarter of 2008, the company reported nearly double that at $421 million, or $1.04 per share.

Still, after excluding a slew of one-off items, the company said it would have earned 90 cents a share in the quarter.

Total revenue also dropped to $3.01 billion from $3.33 billion in the year-earlier period. Two segments of its operations -- distribution services, and petroleum services and supplies -- saw near 30% sales declines, while revenues in its rig technology unit stayed relatively flat.

On average, analysts polled by Thomson Reuters expected the company to report earnings at 87 cents along with revenues of $3.07 billion.

According to several industry-wide reports over the last few months, a sharp drop in the number of drilling rigs has accompanied cutbacks in production and exploration, along with declines in commodity prices. National Oilwell said the declining rig counts around the globe, along with significant pricing pressure in North America, hit the company in the quarter.

"We are using this time to streamline our business and invest for future growth, while continuing to execute on our customer's requirements," CEO Pete Miller said in a press release. "While the timing of a recovery remains uncertain, we plan to emerge stronger, faster and more efficient when significant drilling activity inevitably resumes."