NOV records $1.5 billion net loss for the fourth quarter

Houston-based National Oilwell Varco on Wednesday posted a $1.52 billion net loss for the final three months of the year amid the ongoing oil crash.

The oilfield equipment and services giant saw its revenues drop 60 percent in the quarter, but NOV also recorded $1.63 billion in pre-tax impairment charges. NOV saw its stock value fall by more than 10 percent Wednesday morning after the earnings report was released.

For the full year, NOV took a $767 million net loss, down from a $2.5 billion profit in 2014. NOV’s 2015 revenues dropped 33 percent from the year prior.

NOV Chairman, President and CEO Clay Williams said the “deteriorating market conditions” proved worse than anticipated in the fourth quarter as oil prices continued to crater, including “sharp volume decline and the renewed pricing pressure we’ve seen.”

“NOV remains well positioned for the eventual recovery, whenever it comes and wherever it shows up first,” Williams said. “We have a tough road ahead, but we are laying the groundwork for our future success”

Several energy companies have waited to post large impairment charges in the fourth quarter to address the shrinking values of their assets and more.

Schlumberger posted a $1 billion fourth-quarter loss, while Halliburton recorded a smaller $28 million net loss.

In an analyst note, Tudor, Pickering, Holt & Co. called NOV’s earnings “much worse than we envisioned,” adding that the “most challenging quarter in some time reflects the harsh reality” of exploration and production companies slamming the brakes on spending.

On a per-share basis, NOV’s earnings were 40 cents a share after being adjusted for one-time costs. That’s down from $1.84 a share a year prior.

Williams said the “lower-for-longer” period of low oil prices will eventually push demand to grow and provide the foundation for an eventual recovery. But he emphasized that NOV is not expecting much recovery in 2016, including a challenging first half of the year with more reduced revenues.

He said NOV cut its workforce, including contractors, by 25 percent in 2015 and closed 75 facilities. Williams said he expects cuts to continue through the first half of 2016. NOV employed about 57,000 people globally as recently as 2014, including more than 14,000 in the Houston area. NOV counted among Houston’s largest energy employers.

Williams contended NOV still has a strong balance sheet and will look to make acquisitions going forward. NOV made seven smaller acquisitions last year, growing in areas where production remains strong like Saudi Arabia and Russia.

Earlier this week, NOV said it plans to cut 129 Houston workers as the company closes its North Houston manufacturing facility near Greenspoint at Air Center Boulevard. The company said it will lay off workers in phases, beginning last week and lasting until June. NOV said some workers had been laid off with little advance notice, and that those employees had been provided additional pay and benefits.

In November, NOV said it was cutting 120 employees as it shuttered a plant in San Angelo. Williams has said the company will continue slashing costs wherever possible, including shuttering plants.