National Oilwell Varco Reports Fourth Quarter and Full Year 2017 Results

HOUSTON–(BUSINESS WIRE)–National Oilwell Varco, Inc. (NYSE: NOV) today reported a fourth quarter
2017 net loss of $14 million, or $0.04 per share. Revenues for the
fourth quarter were $1.97 billion, an increase of seven percent compared
to the third quarter and an increase of 16 percent from the fourth
quarter of 2016. Operating loss for the fourth quarter was $111 million,
or 5.6 percent of sales. Adjusted EBITDA (operating profit excluding
depreciation, amortization, and other items) for the fourth quarter was
$197 million, or 10.0 percent of sales, an increase of $30 million from
the third quarter. Other items were $133 million, pre-tax, and primarily
consisted of charges for inventory write-downs, facility closures and
severance. Cash flow from operations for the fourth quarter was $321
million.

Revenues for the full year 2017 were $7.30 billion, operating loss was
$277 million, and net loss was $237 million, or $0.63 per share. Other
items were $190 million, pre-tax, and primarily consisted of charges for
inventory write-downs, facility closures and severance. Adjusted EBITDA
for the full year was $611 million, or 8.4 percent of sales, and cash
flow from operations was $832 million.

“Solid execution and success in our efforts to reposition the Company
resulted in a $289 million improvement in Adjusted EBITDA on a $53
million increase in revenue in 2017,” commented Clay Williams, Chairman,
President and CEO. “Our team continues to position the Company in the
markets that matter most to our customers, by investing in technologies
that drive better economics for our clients. As a result our mix has
shifted substantially. NOV now generates approximately 65 percent of its
revenues from land markets and 44 percent of its revenues from North
America.”

“Our diverse global franchise that leverages capabilities across
business lines is focused on developing improvements in drilling
automation, multi-stage completions, predictive analytics and
condition-based maintenance, and deepwater project economics. Advances
on these and other initiatives have us well positioned to capitalize on
improving industry fundamentals in 2018 and beyond.”

Wellbore Technologies

Wellbore Technologies generated revenues of $715 million in the fourth
quarter of 2017, an increase of three percent from the third quarter and
an increase of 35 percent from the fourth quarter of 2016. Demand for
the segment’s essential products, technologies and services continues to
drive growth that outpaced global activity levels during the fourth
quarter. Operating loss was $21 million, or 2.9 percent of sales.
Adjusted EBITDA was $107 million, or 15.0 percent of sales, an increase
of 14 percent sequentially and an increase of $87 million from the prior
year. Higher volumes and improved pricing resulted in 59 percent
sequential Adjusted EBITDA incrementals (the change in Adjusted EBITDA
divided by the change in revenue).

Completion & Production Solutions

Completion & Production Solutions generated revenues of $690 million, an
increase of one percent from the third quarter and an increase of 15
percent from the fourth quarter of 2016. Revenues from growing
deliveries of pressure pumping equipment and composite pipe, more than
offset lower revenues from offshore products. Operating profit was $19
million or 2.8 percent of sales. Adjusted EBITDA was $74 million, or
10.7 percent of sales, a decrease of 24 percent sequentially and an
increase of seven percent from the prior year. Higher costs and lower
throughput in offshore products and processing equipment adversely
impacted EBITDA margins.

Backlog for capital equipment orders for Completion & Production
Solutions at December 31, 2017 was $1.07 billion. New orders during the
quarter were $501 million, representing a book-to-bill of 125 percent
when compared to the $401 million of orders shipped from backlog. The
majority of the segment’s business units secured orders in excess of 100
percent book-to-bill. The order book included topside equipment for an
FPSO and strong bookings for coiled tubing equipment.

Rig Technologies

Rig Technologies generated revenues of $614 million, an increase of 20
percent from the third quarter and an increase of $1 million from the
fourth quarter of 2016. Revenues improved from shipments to customers
that deferred deliveries from the third quarter, increased order intake,
and a seasonal improvement in service and repair work. Operating loss
was $51 million, or 8.3 percent of sales. Adjusted EBITDA was $70
million, or 11.4 percent of sales, an increase of 75 percent
sequentially and a decrease of one percent from the prior year. Higher
volumes drove the improvement in Adjusted EBITDA.

Backlog for capital equipment orders for Rig Systems at December 31,
2017 was $1.89 billion. New orders during the quarter were $169 million.

Significant Events and Achievements

NOV introduced and booked several orders for its new DSGD-425 drawworks
for land applications. The new drawworks simultaneously addresses the
market need for greater lifting and hoisting capabilities while reducing
footprint and weight compared to traditional units. The low-inertia
design and optimized gear ratios enable faster tripping times and
enhanced responsiveness, maximizing the benefits from autodrillers and
NOVOS™ process automation.

NOV’s optimization and automation solutions continued to gain traction
in North America and the international market. Five simultaneous
automation projects, including a recently deployed integrated automation
project with a major operator in Alaska, were run in the fourth quarter
using eVolve™ optimization services. The Company also secured its first
eVolve closed-loop drilling automation project in the Middle East and
was awarded another automation contract with an independent operator in
North America, with both projects scheduled to begin in mid-2018.

NOV sold two strings, a total of 50,000 feet, of IntelliServ™ wired
drill pipe to a major North American land drilling contractor. This
marks the first sale of IntelliServ pipe to a land drilling contractor
and reflects the growing demand from leading operators for the benefits
of high-speed wired drill-pipe telemetry and associated optimization and
automation services.

NOV signed its first contract for the Seabox™ subsea water treatment
system. The contract was signed with a major operator who will deploy
the system at an offshore installation in the third quarter of 2018 for
an extended test during the 2018/2019 winter season. The Seabox system
eliminates the need for expensive, bulky topside equipment by enabling
water treatment to be done directly at the seabed and water to be pumped
straight into the injection well. This will allow the operator to
optimize waterflooding and improve oil recovery. Two successful pilot
projects, backed by the Norwegian Research Council and several major oil
companies, have demonstrated that the Seabox system reduces water
treatment costs versus traditional topsides systems.

NOV advanced its leadership position in shaped cutter technologies,
introducing five new innovative geometries for implementation in wide
ranges of vertical and directional applications and varying rock
strengths. The new ION™ 4D cutter geometry combines point loading to
fracture with a ploughing effect to enhance a bit’s ability to shear
through formations. An operator drilling in the Williston Basin utilized
an 8¾-in. Tektonic™ drill bit that was modernized with the new ION 4D
geometry concept to complete a 1,974-ft lower vertical section to the
kickoff point in 12.3 on-bottom hours, taking ROP from 134.5 ft/hr (the
previous record with this design) to 160.9 ft/hr—a 20 percent
improvement.

NOV was awarded a significant contract for the supply of several major
topside packages for an FPSO redeployment in Malaysia. The project’s
scope of work requires an integrated approach to refurbish and construct
the packages for the FPSO. While topside packages are often delivered
from several suppliers, the key components of this package—including an
export gas metering skid, inlet separator module, fuel gas/gas
dehydration module, export gas compressor BOP module, triethylene glycol
(TEG) regeneration/flash gas compressor module, high-pressure flare
knockout drum skid, and interconnecting piping—are being delivered by
NOV, with fabrication taking place at NOV’s facility in Batam,
Indonesia. The project provides NOV with the opportunity to demonstrate
its ability to address the FPSO industry’s most persistent
challenges—interface compatibility and time-related cost overruns.

NOV acquired Remacut, a provider of offshore construction solutions, in
early November 2017. Remacut was integrated into NOV’s Marine
& Construction business unit within the newly formed Rig Technologies
operating segment. Combining Remacut with NOV’s industry leading heavy
lift solutions and engineering services allows the Company to offer
comprehensive solutions for the pipe and cablelay markets.

NOV’s Tuboscope and Rig Technologies businesses collaborated to complete
the first comprehensive offshore riser inspection in the Gulf of Mexico.
The project utilized the Company’s recently introduced phased-array tool
to allow the main riser tube and choke/kill lines to be scanned without
having to tear down the riser or bring the joints to shore. Inspecting
the riser while still offshore mitigates both the risk and cost of
transporting the riser back to shore, increases in-service time, and,
using NOV’s proprietary condition-based monitoring technology and
cross-business expertise, enables substantial cost savings.

NOV continued to expand its drilling fluids business and gain market
share in Argentina, receiving over $30 million in drilling fluids
contracts that build on the Company’s earlier success in the region. The
additional awards were given by a major operator for projects in Tierra
del Fuego and the provinces of Chubut and Santa Cruz.

NOV ran its symmetric propagation wave resistivity (SPR)
logging-while-drilling tool for the first time in conjunction with the
Tolteq™ iSeries measurement-while-drilling (MWD) tool. The Company
developed an interface between the SPR tool and MWD tool that enables
real-time data transmission, allowing NOV’s customers to offer
directional drilling and logging services in markets where resistivity
measurements are typically acquired while drilling, including the Middle
East and Russia. Additionally, NOV received its first orders for the
Tolteq iSeries NXT top-mount pulser, the first of the modules from the
new iSeries NXT platform. The top-mount pulser provides improved data
transmission rates and shock and vibration resistance over previous
offerings, which is especially important in performance-focused
unconventional markets.

NOV successfully delivered an APL submerged SAL™ system with yoke
(SSY™), the first of its kind, to a major LNG shipping Company. The SSY,
which is designed to permanently moor ships and floating structures that
are producing and storing hydrocarbons in shallow waters, allows the
vessel to passively weathervane and incorporates pipework, valves,
swivel, and a flexible riser to enable natural gas import to the vessel
for liquefaction. The FPSO was hooked up on time as the world’s first
converted FLNG unit, operating offshore Cameroon.

NOV secured two long-term contracts for condition-based maintenance
(CBM) programs with major offshore drilling companies; one for BOPs and
one for risers. The CBM programs deliver a commercially favorable
total-cost-of-ownership reduction for the customers versus their
historical spending on maintenance and repairs, transitioning the
customers’ maintenance scheduling from their current calendar-based
regime to cost-optimized, condition-based maintenance planning. These
CBM agreements increase NOV’s scope of maintenance and provide a
consistent revenue stream while allowing the Company to increase the
customers’ in-service time, decrease inspection costs, and help ensure
components are only replaced when necessary.

Other Corporate Items

As of December 31, 2017, the Company had $1.44 billion in cash and cash
equivalents and total debt of $2.71 billion. NOV had $3.0 billion
available on its revolving credit facility as of December 31, 2017. The
unsecured credit facility matures in June of 2022 and is subject to one
primary covenant, a maximum debt-to-capitalization ratio of 60 percent.
As of December 31, 2017, NOV had a debt-to-capitalization ratio of 16.1
percent.

Fourth Quarter and Full Year Earnings Conference Call

NOV will hold a conference call to discuss its fourth quarter and full
year 2017 results on February 6, 2018 at 10:00 AM Central Time (11:00 AM
Eastern Time). The call will be broadcast simultaneously at www.nov.com/investors.
A replay will be available on the website for 30 days.

About NOV

National Oilwell Varco (NYSE: NOV) is a leading provider of technology,
equipment, and services to the global oil and gas industry. NOV has been
pioneering innovations that improve the cost-effectiveness, efficiency,
safety, and environmental impact of oil and gas operations since 1862.
The depth and breadth of NOV’s offerings support customers’ full-field,
drilling, completion, and production needs. NOV powers the industry that
powers the world.

Visit www.nov.com
for more information.

Cautionary Statement for the Purpose of the “Safe Harbor” Provisions
of the Private Securities Litigation Reform Act of 1995

Statements made in this press release that are forward-looking in nature
are intended to be “forward-looking statements” within the meaning of
Section 21E of the Securities Exchange Act of 1934 and may involve risks
and uncertainties. These statements may differ materially from the
actual future events or results. Readers are referred to documents filed
by National Oilwell Varco with the Securities and Exchange Commission,
including the Annual Report on Form 10-K, which identify significant
risk factors which could cause actual results to differ from those
contained in the forward-looking statements.

Contacts

National Oilwell Varco, Inc.
Loren Singletary, (713) 346-7807
[email protected]