National Oilwell Profit Beats Street, Rig Margins Up

National Oilwell Varco Inc, the largest U.S. oilfield equipment provider, reported a better-than-expected rise in profit for the fourth quarter in a row due to higher margins in its rig systems business.

The company said it booked $3.4 billion in new orders for oilfield equipment in the second quarter ended June 30, slightly higher than $3.15 billion a year earlier.

National Oilwell said it expects the strong demand to continue in the second half of the year.

The company's forecast is in stark contrast to that of rival Diamond Offshore Drilling Inc's, which warned last week that it expected rig oversupply to continue into 2016.

Margins at National Oilwell's rig systems business, which makes drilling equipment parts as well as land and offshore rigs, rose to 21.1 percent in the quarter from 18.9 percent, a year earlier.

The business accounts for nearly half of the company's total revenue. Total revenue rose 12 percent to $5.26 billion, but missed the average analyst estimate of $5.49 billion.

Operating margins rose to 18 percent from 16.5 percent.

Net income attributable to the company rose 17 percent to $619 million, or $1.44 per share in the quarter.

Adjusted profit was $1.61 per share, higher than the average analyst estimate of $1.44.

This is the first quarterly results National Oilwell has reported after recasting its 3 business units into 4 divisions. It completed the spin-off of its distribution business in the second quarter.

National Oilwell shares, which have risen 18 percent in the last year, closed at $84.70 on Monday on the New York Stock Exchange.

Reporting by Swetha Gopinath