The volatile oil markets took a toll on many companies across sectors, but for companies like National Oilwell Varco, the downturn was "unusually grim and painful," according to CEO Clay Williams in a call to discuss the company's 2016 results. "Frankly, I'm glad 2016 is behind us."
Fourth-quarter sales for the manufacturer of equipment and components used in oil and gas drilling were up 3 percent from the third quarter – the first sequential rise in two years. But in a year-over-year comparison, sales were down 38 percent. And the company still recorded a significant loss of $714 million for the period.
"In the fourth quarter, we benefited from rising momentum in North American shale plays in particular, which we expect to accelerate," Williams said. "Our international markets still face headwinds for a quarter or two and offshore markets continue to trend down, so we still have challenges ahead. Nevertheless, $50 oil has been a welcome relief."
Oil prices fell to $29 per barrel in January 2016, but have been generally rising since, staying around $50 since September 2016. And while many would like to return to the $100 bbl seen in 2014, there are no expectations that that will happen any time soon.
"I attribute my gray hair to the many previous downturns I've been through, 1986, 1991, 1999, 2002, and 2009," Williams said. "They all required difficult decisions and cost reductions, but this one has been unusually grim and painful."
But there are also opportunities that come from hard times, he said. "In a low oil price world, accomplishing lower cost per barrel becomes a necessity for our customers." NOV has been investing in research and development of new technologies to make drilling and transfer more efficient, including automation technologies and machine learning. This "rig of the future" will be able to assess environmental and geographic conditions to determine the most effective way to drill in a given area – and adapt to existing conditions.
It's also using predictive analytics tools to warn customers of component fatigue before a catastrophic event, such as a blowout, occurs.
The technology of the future has become the technology of today, he said. And that's "very, very exciting."