National Oilwell Varco Inc., the largest U.S. oilfield equipment provider, said demand rose for some of its products and services in North America in recent weeks, as drillers put rigs back to work.
Shares of the company, which also reported a smaller-than-expected quarterly loss, rose as much as 5.9% to $33.10 in morning trading on July 28.
"Like others in our space, we believe we are seeing some isolated green shoots of activity," CEO Clay Williams said on a post-earnings call.
A 60% fall in global oil prices since mid-2014 has forced producers to scale back drilling and idle rigs, weighing on demand for equipment manufactured by companies such as National Oilwell.
But some producers have begun to return rigs to work, encouraged by U.S. crude prices touching $50 per barrel in late May. U.S. drillers have since added about 55 oil rigs.
The company was in discussions with customers in North America, the Middle East and other markets about equipment upgrades and new field opportunities, CFO Jose Bayardo said on the call.
These talks centered around land activity, with offshore opportunities expected to remain limited for the foreseeable future, he said. "We believe our land business will bottom in Q3 and begin to recover as we enter 2017."
However, the company said it was "not ready to call bottom yet."
The comment echoed that of Baker Hughes Inc., which said on July 28 that it did not expect a "meaningful" recovery in North America this year.
National Oilwell, which has been aggressively cutting costs to offset the impact of low crude oil prices, said it slashed about 10% of its workforce during the quarter. The company had about 44,000 employees at the end of the first quarter.
National Oilwell also said it is in the process of shutting down about 250 facilities since the downturn began in mid-2014.
Net loss attributable to National Oilwell was $217 million, or 58 cents per share, in the second quarter ended June 30, compared with a profit of $289 million, or 74 cents per share, one year earlier.
Excluding items, the company lost 30 cents per share, smaller than the average analyst estimate of 32 cents loss, according to Thomson Reuters I/B/E/S.
The Houston-based company's revenue more than halved to $1.72 billion, missing the average estimate of $1.79 billion.
National Oilwell's shares were up about 2% at $31.86 in late morning trading.
Up to July 27's close, shares had fallen about 27.2% over the past 12 months.
Recommended Reading
ONGC’s M Field Starts Production in Bay of Bengal
2024-01-09 - ONGC’s M Field represents the second phase of the larger 98/2 Block development project which is expected to reach peak production of 45,000 bbl/d and 10 MMcm/d.
US Drillers Cut Oil, Gas Rigs for Second Week in a Row
2024-01-12 - The oil and gas rig count, an early indicator of future output, fell by two to 619 in the week to Jan. 12, the lowest since November.
US Drillers Cut Oil, Gas Rigs for Third Week in a Row
2024-01-05 - The oil and gas rig count, an early indicator of future output, fell by one to 621 in the week to Jan. 5.
Prairie Operating Acquires More D-J Basin Assets for $94.5MM
2024-01-15 - Houston-based Prairie Operating Co. is scaling its D-J Basin footprint with a $94.5 million acquisition of Nickel Road Operating LLC.
Trio Petroleum to Restart McCool Ranch Oilfield
2024-01-07 - California’s Trio Petroleum plans to restart oilfield production at McCool Ranch, where six wells that previously reached a production peak of 400 bbl/d.