Despite a crowded field, NOV is optimistic about customer adoption of its AI and edge technologies.
“A lot of these are new products being introduced, but the attention they’re getting is good,” Clay Williams, NOV’s chairman, president and CEO, said during a conference call on Feb. 2 discussing the company’s fourth quarter 2023 and full year earnings. “In the products that we’ve introduced though, we’ve gotten really good traction because we are demonstrating value.”
Williams said its strategy has been to develop the products with oil and gas company engineers seconded to NOV to determine what the customers want.
“It’s a lot of dialogue with our customers around ‘what do you really want and need?’ and ‘how can we add value?’” he said.
NOV is offering edge compute, edge to cloud and cloud-based solutions, and Williams said that during the fourth quarter, two independents adopted NOV’s new AI edge compute technology to identify downhole events like washouts hours earlier than traditional methods.
NOV is also “seeing gains in our one-click cloud data delivery and our new high frequency data services,” Williams said.
NOV has invested in its Max Edge platform, developed as a corporate resource that enables business units to develop products. Max Edge “facilitates the internet of things (IoT) and edge computing” and has gotten a lot of interest, he said. For one customer, Max Edge streamed completion data from a hundred rigs at a much higher rate than a previous service provider, he said.
“By the way, the edge [data distribution network] in the oil field is a lot tougher than a lot of other edges around the industrial space because rigs work in really remote areas, and spotty communications are kind of the norm. They always have been throughout my career,” Williams said. “We’ve done a lot to address that and bring the power of big data analytics, artificial intelligence algorithms to oil field operations.”
Real-time interaction with aggregated field data can help completions customers, he said, noting NOV had more than 3,500 active users for its Max Completion remote monitoring tool for completions operations when 2023 wrapped up.
Williams also noted that uptake of the company’s IntelliServ wired drill pipe is growing, with widespread adoption in the North Sea over the last couple of years and use in the Middle East.
Wired drill pipe, combined with NOV’s new managed pressure drilling (MPD) offering, is “pioneering a new and better way to drill” because it offers “unprecedented control and performance,” he said. “I believe this technology will become standard in the offshore arena in the coming decades.”
Looking back and ahead
“While 2022 was characterized by the recovery of activity in North America, 2023 saw continuing momentum in offshore and international markets that is underpinning the steady upcycle we believe will continue to unfold over the next several years,” Williams said.
NOV expects to continue to grow its revenues in Saudi Arabia in 2024 even with the kingdom’s postponement of plans to grow production capacity.
“We still expect the kingdom to remain quite busy as it drills to stem declines in conventional oil wells and it drills to develop unconventional gas,” Williams said.
2023 also saw renewed deepwater activity and exploration in places like Namibia and Suriname, along with brownfield developments offshore Norway and West Africa and in the Gulf of Mexico and greenfield developments offshore Brazil, Guyana and Australia, he said.
“There are so many areas that look so strong,” he said.
Williams on A&D
NOV evaluated around three dozen potential acquisitions in 2023 but didn’t close any deals last year, Williams noted. Of those possibilities, only two turned into deals. NOV recently completed its acquisition of Extract, a provider of artificial lift technologies and services.
“We expect to close another here in a couple of days,” he said.
At the same time, NOV is evaluating the business in its portfolio.
“We expect to divest one or possibly two businesses in the coming year and redeploy capital into higher performing opportunities,” he said. NOV has “businesses that have been in our portfolio that are terrific businesses, but frankly might be worth more to someone else.”
The numbers
NOV posted fourth quarter 2023 net income of $598 million on revenue of $2.34 billion, compared to third-quarter net income of $114 million on revenues of $2.19 billion. In fourth quarter 2022, NOV’s net income was $104 million on revenue of $2.07 billion.
For the full year, NOV reported $993 million in net income on revenues of $8.58 billion, compared to 2022, when NOV reported net income was $155 million on revenues of $7.24 billion.