- Cut to save $615 million a year; revenue down 20 percent
- Demand falls to 'new record lows': CEO Clay Williams
National Oilwell Varco Inc., the biggest U.S. maker of oilfield equipment, slashed its quarterly dividend by 89 percent as the global crude price crash cuts demand from customers to record lows.
The company’s board cut the dividend to 5 cents a share from 46 cents, Houston-based National Oilwell said in a statement Monday. The move will save the equipment provider about $615 million a year in future net cash flow.
America’s oil drillers have been idling rigs since October 2014 after a global glut sent prices tumbling. More than 1,200 rigs have been parked since then with the industry eliminating more than 250,000 jobs and $100 billion in investment last year. National Oilwell said first quarter revenue this year fell about 20 percent from the $2.7 billion recorded in the fourth quarter.
“Substantial decreases" by drilling customers are “driving activity levels to new record lows, resulting in significantly diminished demand for equipment and services," Chief Executive Officer Clay Williams said in the statement.
National Oilwell fell 5.5 percent to $27.51 at 9:56 a.m. in New York trading. The shares have lost about 18 percent this year.
The company cut total debt by more than $500 million during the first quarter and remains “financially strong," Williams said. “We believe the dramatic reductions in capital spending are accelerating global production declines, setting the stage for a recovery in demand," he said.