National Oilwell Beats Street on Cost Cuts

National Oilwell Varco Inc, the largest U.S. oilfield equipment provider, reported a higher-than-expected quarterly profit as cost cuts helped offset the impact of a fall in global drilling activity.

The U.S. rig count has slumped to a five-year low as oil producers idle rigs due to a 50 percent drop in global oil prices since June last year.

To cope with falling demand for oilfield services and equipment, National Oilwell, like its rivals, is cutting jobs and costs. The company said last month that it would cut its Norwegian workforce by 1,500 by the end of this year.

Expenses fell more than 18 percent to $417 million in the second quarter ended June 30 from a year earlier, the company said.

"The operating margins delivered by our segments this quarter reflect our focus on reducing costs to become more efficient," Chief Executive Clay Williams said in a statement.

Operating margins at the company's rig systems business, which accounted for nearly half of total revenue, rose to 20.5 percent from 19.3 percent in the first quarter.

However, total order backlog fell to $10.22 billion in the second quarter from $11.89 billion in the first quarter.

Net income attributable to the company fell to $289 million, or 74 cents per share, in the second quarter, from $619 million, or $1.44 per share, a year earlier.

Excluding one-time items, National Oilwell earned 77 cents per share, above the average analyst estimate of 64 cents, according to Thomson Reuters I/B/E/S.

The Houston-based company's revenue fell 25.6 percent to $3.91 billion, slightly above analysts' average estimate of $3.86 billion.

The company had said in April that it expected revenue to fall for the next few quarters.

Up to Monday's close, National Oilwell's stock had fallen about 51 percent in the last year. The Dow Jones Oil and Gas Titans 30 Index had declined 31.5 percent in the same period.

(Reporting by Shubhankar Chakravorty