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NOV Inc.

NOV Inc.NOVEarnings & Financial Report

NYSE · Industrials · Oil & Gas Field Machinery & Equipment

NOV Inc., formerly National Oilwell Varco, is an American multinational corporation based in Houston, Texas. It is a worldwide provider of equipment and components used in oil and gas drilling and production operations, oilfield services, and supply chain integration services to the upstream oil and gas industry. The company conducts operations in more than 500 locations across six continents, operating through two reporting segments: Energy Equipment and Energy Products and Services.

What changed in NOV Inc.'s 10-K — 2022 vs 2023

Top changes in NOV Inc.'s 2023 10-K

232 paragraphs added · 226 removed · 192 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

53 edited+7 added−10 removed100 unchanged
As an independent supplier, Directional Drilling Technologies provides critical technologies required for efficient directional well drilling and enables service companies, drilling contractors, and E&P operators worldwide to deliver productive wells cost-effectively and reliably. • WellSite Services is a leading provider of solids control and waste management equipment and services, advanced wellhead cellar systems, managed-pressure-drilling systems, and wellsite logistics solutions.
As an independent supplier, Directional Drilling Technologies provides critical technologies required for efficient directional well drilling and enables service companies, drilling contractors, and E&P operators worldwide to deliver productive wells cost-effectively and reliably. 6 • WellSite Services is a leading provider of solids control and waste management equipment and services, advanced wellhead cellar systems, managed-pressure-drilling systems, and wellsite logistics solutions.
Additionally, certain past events have increased the industry’s risk profile with government regulatory bodies, which have shown a strong preference for OEM service contractor critical equipment maintenance. 2 Digital products and technologies. NOV’s size, scale, and breadth of knowledge provide inherent competitive advantages in technology relative to smaller, less-diversified organizations.
Additionally, certain past events have increased the industry’s risk profile with government regulatory bodies, which have shown a strong preference for OEM service contractor critical equipment maintenance. Digital products and technologies. NOV’s size, scale, and breadth of knowledge provide inherent competitive advantages in technology relative to smaller, less-diversified organizations.
Using IntelliServ wired drill pipe telemetry services, M/D Totco harnesses NOV’s unique ability to connect electronic tools downhole with surface automation equipment to transform drilling performance using highspeed downhole data. 6 Completion & Production Solutions provides critical technologies to optimize the well completion process and production phase of a well’s lifecycle.
Using IntelliServ wired drill pipe telemetry services, M/D Totco harnesses NOV’s unique ability to connect electronic tools downhole with surface automation equipment to transform drilling performance using highspeed downhole data. Completion & Production Solutions provides critical technologies to optimize the well completion process and production phase of a well’s lifecycle.
Customers may prefer standardized equipment from NOV, a well-capitalized market leader with which they can enter into long-term service agreements that offer big-data analytics and condition monitoring to maximize uptime and reduce the total cost of equipment ownership. Large installed base of equipment.
Customers may prefer standardized equipment from NOV, a well-capitalized market leader with which they can enter into long-term service agreements that offer big-data analytics and condition monitoring to maximize uptime and reduce the total cost of equipment ownership. 2 Large installed base of equipment.
Primary manufacturing and service facilities are located in Houston, Texas; Dubai, UAE; Al Jubail, Saudi Arabia; New Iberia, Louisiana; Stavanger and Kristiansand, Norway; Mexicali, Mexico; Pune, India; and Singapore. Raw Materials The Company believes that materials and components used in its operations are generally available from multiple sources.
Primary manufacturing and service facilities are located in Houston, Texas; Dubai, UAE; Al Jubail, Saudi Arabia; New Iberia, Louisiana; Stavanger and Kristiansand, Norway; Mexicali, Mexico; Pune, India; Singapore; and Korea. Raw Materials The Company believes that materials and components used in its operations are generally available from multiple sources.
Extremely harsh winter weather can reduce oilfield operations in far northern or high-altitude locations, including parts of Colorado, Canada, Russia and China, and the annual thaw (or “breakup”) in Canada makes some unimproved roads inaccessible to heavy equipment during part of each second quarter.
Extremely harsh winter weather can reduce oilfield operations in far northern or high-altitude locations, including parts of Colorado, Canada and China, and the annual thaw (or “breakup”) in Canada makes some unimproved roads inaccessible to heavy equipment during part of each second quarter.
In 2019, NOV acquired a minority interest in Keystone Tower Systems (“KTS”), which has developed a patented tapered spiral-welding process that enables automated wind tower section production. If perfected, this proprietary process could significantly decrease tower 4 section production times and reduce costs.
In 2019, NOV acquired a minority interest in Keystone Tower Systems (“KTS”), which has developed a patented tapered spiral-welding process that enables automated wind tower section production. If perfected, this proprietary process could significantly decrease tower section production times and reduce costs.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Seasonal Nature of the Company’s Business Historically, activity levels of some of the Company’s segments have followed seasonal trends to some degree.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 9 Seasonal Nature of the Company’s Business Historically, activity levels of some of the Company’s segments have followed seasonal trends to some degree.
ITEM 1. B USINESS General NOV Inc. (“NOV” or the “Company”) is a leading independent equipment and technology provider to the global energy industry. Originally founded in 1862, NOV and its predecessor companies have spent 161 years helping transform oil and gas field development and improving its cost-effectiveness, efficiency, safety, and environmental impact.
ITEM 1. B USINESS General NOV Inc. (“NOV” or the “Company”) is a leading independent equipment and technology provider to the global energy industry. Originally founded in 1862, NOV and its predecessor companies have spent 162 years helping transform oil and gas field development and improving its cost-effectiveness, efficiency, safety, and environmental impact.
The segment contains the following business units: • Downhole is a leading independent drilling and intervention equipment supplier with engineering teams, manufacturing facilities, supply hubs, and service centers situated in oil and gas activity regions with a constantly evolving product portfolio that includes downhole drilling motors, SelectShift TM motors, agitator systems, and fishing and thru-tubing tools.
The segment contains the following business units: • Downhole is a leading independent drilling and intervention equipment supplier with engineering teams, manufacturing facilities, supply hubs, and service centers situated in oil and gas activity regions with a constantly evolving product portfolio that includes downhole drilling motors, agitator systems, and fishing and thru-tubing tools.
The Maestro system functions in real-time with the ongoing rig operations and optimizes power consumption on the rig to reduce emissions. NOV’s Ecoboost system enables peak power shaving in hydraulic power systems and results in less active pumps needed which results in reduced fuel consumption and emissions savings of up to 80%.
The Maestro system functions in real-time with the ongoing rig operations and optimizes power consumption on the rig to reduce emissions. NOV’s EcoBooster™ system enables peak power shaving in hydraulic power systems and results in less active pumps needed which results in reduced fuel consumption and emissions savings of up to 80%.
The Company’s 554 physical locations include various size manufacturing plants, research facilities, machine shops, office buildings, warehouses, and distribution centers where between 20 to 1,100 people work and repair shops, rental tool bases, sales offices and other small locations where between 5 to 200 people work.
The Company’s 548 physical locations include various size manufacturing plants, research facilities, machine shops, office buildings, warehouses, and distribution centers where between 20 to 1,100 people work and repair shops, rental tool bases, sales offices and other small locations where between 5 to 200 people work.
With operations in 62 countries, NOV has developed an efficient worldwide distribution network and relationships with virtually every oil and gas producer, service company, and contractor. NOV uses its customer relationships and distribution capabilities to accelerate the commercialization of new products and technologies.
With operations in 61 countries, NOV has developed an efficient worldwide distribution network and relationships with virtually every oil and gas producer, service company, and contractor. NOV uses its customer relationships and distribution capabilities to accelerate the commercialization of new products and technologies.
As of December 31, 2022, the Company held a substantial number of granted patents and pending patent applications worldwide, including U.S. patents and U.S. patent applications as well as patents and patent applications in a variety of other countries. Expiration dates of such patents range from 2023 to 2042.
As of December 31, 2023, the Company held a substantial number of granted patents and pending patent applications worldwide, including U.S. patents and U.S. patent applications as well as patents and patent applications in a variety of other countries. Expiration dates of such patents range from 2024 to 2042.
Successful safety programs and campaigns are also shared across the Company’s operations, including: • Stop Work Authority – all NOV employees have the authority, responsibility, and duty to stop an unsafe act, practice, or job. • Life Saving Rules – standardized rules aligning NOV with industry partners to reduce the risk of serious injury or death associated with critical hazards in the workplace. • Fresh-Eyes – program coordinating safety walk-throughs, observations, and improvements at peer NOV facilities. • Safety stand downs – pausing normal operations for general safety meetings or to address a specific risk.
Successful safety programs and campaigns are also shared across the Company’s operations, including: • Stop Work Authority – all NOV employees have the authority, responsibility, and duty to stop an unsafe act, practice, or job. • Life Saving Rules – standardized rules aligning NOV with industry partners to reduce the risk of serious injury or death associated with critical hazards in the workplace. • Safety Audits – program coordinating safety walk-throughs, observations, and improvements at NOV facilities. • Safety stand downs – pausing normal operations for general safety meetings or to address a specific risk.
Across NOV’s global workforce, women make up 15% of all employees, 22% of salaried employees, 10% of the C-Suite and hold 20% of the Company’s Board of Directors seats. Career satisfaction and skills NOV tracks and monitors data on the employee experience including hiring, turnover, and promotion trends.
Across NOV’s global workforce, women make up 15% of all employees, 23% of salaried employees, 22% of the C-Suite and hold 22% of the Company’s Board of Directors seats. Career satisfaction and skills NOV tracks and monitors data on the employee experience including hiring, turnover, and promotion trends.
The Company’s Code of Ethics is also posted on its website. The information posted on the Company’s website is not incorporated by reference into this Annual Report on Form 10-K. 12
The Company’s Code of Ethics is also posted on its website. The information posted on the Company’s website is not incorporated by reference into this Annual Report on Form 10-K. 13
Primary facilities are located in Houston, Conroe, Navasota, and Cedar Park, Texas; Veracruz, Mexico; Nisku, Canada; and Dubai, UAE. Completion & Production Solutions designs, manufactures, and integrates technologies for well completions, oil and gas production, and industrial markets.
Primary facilities are located in Houston, Conroe, Navasota, and Cedar Park, Texas; Veracruz, Mexico; Nisku, Canada; Dubai, UAE; China; and Saudi Arabia. Completion & Production Solutions designs, manufactures, and integrates technologies for well completions, oil and gas production, and industrial markets.
Primary facilities are located in Houston, and Fort Worth, Texas; Tulsa, Oklahoma; Senai, Malaysia; Qingdau, Shandong, China; Kalundborg, Denmark; Superporto du Acu, Brazil; Manchester, England; Dammam, Saudi Arabia; Aberdeenshire, Scotland, UK; and Mt. Union, Pennsylvania. Rig Technologies provides drilling rig components, complete land drilling rigs, and offshore drilling equipment packages.
Primary facilities are located in Houston, and Fort Worth, Texas; Tulsa, Oklahoma; Senai, Malaysia; Qingdau, Shandong, China; Kalundborg, Denmark; Superporto du Acu, Brazil; Manchester, England; Dammam, Saudi Arabia; Aberdeenshire, Scotland, UK; and Mt. Union, Pennsylvania. 10 Rig Technologies provides drilling rig components, complete land drilling rigs, offshore drilling equipment packages, cranes and renewable energy equipment and technology.
There can be no assurance that the backlog amounts will ultimately be realized as revenue, or that the Company will earn a profit on backlog work. Backlog for Completion & Production Solutions at December 31, 2022, 2021 and 2020 was $1.6 billion, $1.3 billion and $0.7 billion, respectively.
There can be no assurance that the backlog amounts will ultimately be realized as revenue, or that the Company will earn a profit on backlog work. Backlog for Completion & Production Solutions at December 31, 2023, 2022 and 2021 was $1.8 billion, $1.6 billion and $1.3 billion, respectively.
NOV’s employee base includes: • Inventors, designers, scientists, and engineers (including mechanical, electrical, chemical, hydraulic, materials, computer, software, data analytics, and other disciplines) who design and improve the equipment, electronics, software, services and process that bring value to NOV’s customers. • Technical sales, marketing and training professionals who educate customers, the industry, and our own organization about NOVs’ many products, services, and unique capabilities. • Supply chain, logistics, warehousing, and quality testing professionals who ensure our factories, workshops, repair centers and field technicians have the right materials and tools to do their jobs efficiently. 10 • Production and service planners and schedulers, project managers, and process design and Quality Health Safety and Environmental professionals who plan, manage, and monitor the activities of our workforce to ensure high-quality, efficient, safe, and environmentally compliant operations. • Machinists, metal fabricators, welders, assemblers, pipe fitters, riggers, electronics technicians, system integrators, composite material fabricators, paint and industrial coatings specialists, and other skilled trade professionals who use a wide variety of industrial processes, tools, and techniques to transform raw materials and purchased components into the many products NOV sells. • Field service engineers, mechanics, and technicians who maintain, service, repair, and upgrade NOV equipment and, in some cases, assist customers with its operation. • Business leaders and managers who create business strategies and targets, assess goals and priorities, and allocate resources to ensure NOV’s employees have the tools they need to get the job done and further build the Company’s competitive advantages. • Support function professionals, including: Information Technology, Human Resources, Legal, Compliance, Clerical, and Accounting and Finance who support operations to keep the business infrastructure and administrative burdens flowing.
NOV’s employee base includes: • Inventors, designers, scientists, and engineers (including mechanical, electrical, chemical, hydraulic, materials, computer, software, data analytics, and other disciplines) who design and improve the equipment, electronics, software, services and process that bring value to NOV’s customers. • Technical sales, marketing and training professionals who educate customers, the industry, and our own organization about NOVs’ many products, services, and unique capabilities. • Supply chain, logistics, warehousing, and quality testing professionals who ensure our factories, workshops, repair centers and field technicians have the right materials and tools to do their jobs efficiently. • Production and service planners and schedulers, project managers, and process design and Quality Health Safety and Environmental professionals who plan, manage, and monitor the activities of our workforce to ensure high-quality, efficient, safe, and environmentally compliant operations. • Machinists, metal fabricators, welders, assemblers, pipe fitters, riggers, electronics technicians, system integrators, composite material fabricators, paint and industrial coatings specialists, and other skilled trade professionals who use a wide variety of industrial processes, tools, and techniques to transform raw materials and purchased components into the many products NOV sells. • Field service engineers, mechanics, and technicians who maintain, service, repair, and upgrade NOV equipment and, in some cases, assist customers with its operation. • Business leaders and managers who create business strategies and targets, assess goals and priorities, and allocate resources to ensure NOV’s employees have the tools they need to get the job done and further build the Company’s competitive advantages. • Support function professionals, including: Information Technology, Human Resources, Legal, Compliance, Clerical, and Accounting and Finance who support operations to keep the business infrastructure and administrative burdens flowing. 11 Thirty-six percent of NOV employees work in the United States, 21% in Europe, 14% in Latin America, 12% in the Asia Pacific region, 11% in the Middle East and Africa, 4% in Canada and 2% in China.
NOV’s continuous pursuit of cyclical technological initiatives enhances its ability to drive long-term customer and shareholder value. The 3 Company also outsources non-critical machining operations with lower tolerance requirements during increased activity and brings the machining operations back into Company-owned facilities during down-cycles for lower cost and effective utilization.
During down-cycles, the Company’s focus is internal efficiency and technological advancement. NOV’s continuous pursuit of cyclical technological initiatives enhances its ability to drive long-term customer and shareholder value. The Company also outsources non-critical machining operations with lower tolerance requirements during increased activity and brings the machining operations back into Company-owned facilities during down-cycles for lower cost and effective utilization.
Backlog for Rig Technologies at December 31, 2022, 2021 and 2020, was $2.8 billion, $2.8 billion and $2.7 billion, respectively. Human Capital NOV’s 32,307 global, diverse employees use their skill and expertise to provide the products and services that help our customers operate safely, efficiently, sustainably, and competitively.
Backlog for Rig Technologies at December 31, 2023, 2022 and 2021, was $2.9 billion, $2.8 billion and $2.8 billion, respectively. Human Capital NOV’s 33,676 global, diverse employees use their skill and expertise to provide the products and services that help our customers operate safely, efficiently, sustainably, and competitively.
Further, with geothermal power generation’s recently renewed traction, NOV has developed new proprietary products that address many unique geothermal production challenges and is investigating certain novel geothermal energy forms that could expand the worldwide geothermal power generation market. Carbon Capture and Sequestration NOV is positioned to play a meaningful role in the growing carbon capture and sequestration industry.
Further, with geothermal power generation’s recently renewed traction, NOV has developed new proprietary products that address many unique geothermal production challenges worldwide. Carbon Capture and Sequestration NOV is positioned to play a meaningful role in the growing carbon capture and sequestration industry.
NOV is working to become a value-added partner capable of meaningfully reducing project execution risk by leveraging the Company’s broad and growing portfolio of relevant technology, extensive track record of successfully managing complex marine projects, relationships with global shipyards, and robust global supply chain accustomed to stringent quality and traceability.
NOV is working to become a value-added partner capable of meaningfully reducing project execution risk by leveraging the Company’s broad and growing portfolio of relevant technology, extensive track record of successfully managing complex marine projects, relationships with global shipyards, and robust global supply chain accustomed to stringent quality and traceability. 4 Onshore Wind NOV is developing technology to lower onshore wind’s LCOE by economically constructing increasingly tall wind towers.
Additionally, in time the process could enable in-field manufacturing operations, which could reduce costs and eliminate many logistical limitations of transporting the larger-diameter sections necessary for tall tower developments. KTS’s first commercial line is currently undergoing testing and commissioning before commercial production commences within NOV’s facility in Pampa, TX. NOV is developing a fit-for-purpose onshore wind tower erection system.
Additionally, in time the process could enable in-field manufacturing operations, which could reduce costs and eliminate many logistical limitations of transporting the larger-diameter sections necessary for tall tower developments. KTS’s first commercial line is continuing testing and commissioning before commercial production commences within NOV’s facility in Pampa, TX.
NOV’s core design and manufacturing competencies for large, industrial capital equipment, including cranes, lifting tools, and rotating machinery, uniquely position NOV to develop fit-for-purpose wind components and installation equipment to facilitate building onshore wind turbines at higher hub heights.
Consequently, wind turbine size and tower height have been increasing steadily for several years. NOV’s core design and manufacturing competencies for large, industrial capital equipment, including cranes, lifting tools, and rotating machinery, uniquely position NOV to develop fit-for-purpose wind components and installation equipment to facilitate building onshore wind turbines at higher hub heights.
Business Segment Overview NOV executes its business strategy under the following three segments: Wellbore Technologies provides the critical technologies, equipment, and services required to maximize customer oil and gas drilling efficiencies and economics.
Prior to January 1, 2024, NOV executed its business strategy under the following three segments: Wellbore Technologies provides the critical technologies, equipment, and services required to maximize customer oil and gas drilling efficiencies and economics.
Some programs include: Powering Excellence designed for current and potential business leaders, Supervisor Training and Resources (STAR) and Leading Self and Others designed for new managers, as well as many other courses through the Company’s dedicated Technical Training Centers based in Houston, Singapore, UAE, Norway, UK, and South America.
Some programs include: Powering Excellence designed for current and potential business leaders, Supervisor Training and Resources (STAR) and Leading Self and Others designed for new managers, as well as many other courses through the Company’s dedicated Technical Training Centers based in Houston, Singapore, UAE, Norway, UK, and South America. 12 Available Information The Company’s principal executive offices are located at 10353 Richmond Avenue, Houston, Texas 77042.
Flexible pipes are highly engineered, complex, helically wound structures composed of multiple unbonded steel and composite layers, allowing them to withstand the demanding pressures and tensile loads of deepwater production while remaining resistant to wave- and tidal-induced fatigue.
The business unit manufactures flexible subsea pipe systems designed to operate worldwide in demanding offshore conditions. Flexible pipes are highly engineered, complex, helically wound structures composed of multiple unbonded steel and composite layers, allowing them to withstand the demanding pressures and tensile loads of deepwater production while remaining resistant to wave- and tidal-induced fatigue.
The Company’s competition consists primarily of publicly traded oilfield service and equipment companies and smaller independent equipment manufacturers in the oil and gas, industrial, and renewable energy equipment markets. 8 The Company’s foreign operations, which include significant operations in the Middle East, Africa, Latin America, the Far East, Canada and Europe are subject to the risks normally associated with conducting business in foreign countries, including foreign currency exchange risks and uncertain political and economic environments, which may limit or disrupt markets, restrict the movement of funds or result in the deprivation of contract rights or the taking of property without fair compensation.
The Company’s foreign operations, which include significant operations in the Middle East, Africa, Latin America, the Far East, Canada and Europe are subject to the risks normally associated with conducting business in foreign countries, including foreign currency exchange risks and uncertain political and economic environments, which may limit or disrupt markets, restrict the movement of funds or result in the deprivation of contract rights or the taking of property without fair compensation.
FGS also supplies packaged, UL-certified fiberglass pipe and tank solutions to the fuel handling market, as well as supporting chemical, industrial, hydrogen, and mining applications with corrosion and abrasion-resistant piping systems, tanks, and structural components. • Process and Flow Technologies (“PFT”) provides integrated processing, production, and pumping equipment to energy producers.
FGS also supplies packaged, UL-certified fiberglass pipe and tank solutions to the fuel handling market, ducting that meets FM 4910 specs for clean rooms, FM 4922 requirements for Fume and Smoke Exhaust Ducts, as well as supporting chemical, industrial, hydrogen, and mining applications with corrosion and abrasion-resistant piping systems, tanks, and structural components. 7 • Process and Flow Technologies (“PFT”) provides integrated processing, production, and pumping equipment to energy producers.
Available Information The Company’s principal executive offices are located at 10353 Richmond Avenue, Houston, Texas 77042. Its telephone number is (346) 223-3000. Further information about the Company’s products and services can be found on its website at: www.nov.com. The Company’s common stock is traded on the New York Stock Exchange under the symbol “NOV”.
Its telephone number is (346) 223-3000. Further information about the Company’s products and services can be found on its website at: www.nov.com. The Company’s common stock is traded on the New York Stock Exchange under the symbol “NOV”.
Manufacturing and Service Locations The manufacturing processes for the Company’s products generally consist of machining, welding and fabrication, heat treating, assembly of manufactured and purchased components, and testing. Most equipment is manufactured primarily from alloy steel.
Manufacturing and Service Locations The manufacturing processes for the Company’s products generally consist of machining, welding and fabrication, heat treating, assembly of manufactured and purchased components, and testing. Most equipment is manufactured primarily from alloy steel. The availability and price of alloy steel castings, forgings, purchased components, and bar stock is critical to the production and timing of shipments.
The availability and price of alloy steel castings, forgings, purchased components, and bar stock is critical to the production and timing of shipments. 9 Wellbore Technologies designs, manufactures, rents, and sells a variety of equipment and technologies used to perform drilling operations, and offers services that optimize their performance, including: solids control and waste management equipment and services, drilling fluids, premium drillpipe, wired pipe, drilling optimization services, tubular inspection and coating services, instrumentation, downhole tools, and drill bits.
Wellbore Technologies designs, manufactures, rents, and sells a variety of equipment and technologies used to perform drilling operations, and offers services that optimize their performance, including: solids control and waste management equipment and services, drilling fluids, premium drillpipe, wired pipe, drilling optimization services, tubular inspection and coating services, instrumentation, downhole tools, and drill bits.
NOV’s iNOVaTHERM™ waste management system incorporates thermal desorption technology that efficiently minimizes and treats drilling waste at the source for safe on-site disposal, significantly reducing carbon-emitting activities, such as barge vessel trips, crane lifts, and trucking transport.
An added benefit of the EcoBooster™ system is improved equipment performances as the hydraulic response is quicker from the accumulators than from ramping up the pumps. 5 NOV’s iNOVaTHERM™ waste management system incorporates thermal desorption technology that efficiently minimizes and treats drilling waste at the source for safe on-site disposal, significantly reducing costly carbon-emitting activities, such as barge vessel trips, crane lifts, and trucking transport.
The prices paid by the Company for its raw materials may be affected by, among other things, energy, steel, and other commodity prices; tariffs and duties on imported materials; and foreign currency exchange rates.
The prices paid by the Company for its raw materials may be affected by, among other things, energy, steel, and other commodity prices; tariffs and duties on imported materials; and foreign currency exchange rates. The Company has experienced rising, declining, and stable prices for milled steel and standard grades and has generally seen stainless alloy product prices continue to rise.
The Company believes an employee base with different education, training, and life experiences (gender, age, religion, race, ethnicity, cultural background, sexual orientation, language, education, abilities, perspectives, etc.) can lead to more innovative and creative business solutions, more informed decision-making, greater employee engagement, and better retention and recruitment of top talent. 11 In support of this commitment, NOV has communicated a Diversity and Inclusion Statement from the CEO to our employees and has implemented training programs covering the Company’s Code of Conduct and Business Ethics, Unconscious Bias , and Harassment in the Workplace .
The Company believes an employee base with different education, training, and life experiences (gender, age, religion, race, ethnicity, cultural background, sexual orientation, language, education, abilities, perspectives, etc.) can lead to more innovative and creative business solutions, more informed decision-making, greater employee engagement, and better retention and recruitment of top talent.
Onshore Wind NOV is developing technology to lower onshore wind’s LCOE by economically constructing increasingly tall wind towers. Higher hub heights allow turbines to reach stronger winds, significantly increasing energy capture, lowering energy cost, and expanding the regions where wind projects can be profitably developed. Higher hub heights are also required for larger, more efficient turbines.
Higher hub heights allow turbines to reach stronger winds, significantly increasing energy capture, lowering energy cost, and expanding the regions where wind projects can be profitably developed. Higher hub heights are also required for larger, more efficient turbines. The combination of larger turbines and steadier, higher winds improves wind farm economics.
These services include real-time condition monitoring, remote control, data analytics, condition-based maintenance, and process optimization, which improve performance and enable more proactive aftermarket support. • Subsea Production Systems (“SPS”) provides technical innovation to reduce cost and improve subsea infrastructure and customer productivity. The business unit manufactures flexible subsea pipe systems designed to operate worldwide in demanding offshore conditions.
Certain products and systems are integrated with monitoring and optimization services, leveraging NOV’s Max TM digital ecosystem. These services include real-time condition monitoring, remote control, data analytics, condition-based maintenance, and process optimization, which improve performance and enable more proactive aftermarket support. • Subsea Production Systems (“SPS”) provides technical innovation to reduce cost and improve subsea infrastructure and customer productivity.
Over the past few years, the Company has seen a more pronounced level of spending during the fourth quarter, and a decline in the first quarter, in certain of its businesses, which it believes is related to annual budgetary cycles.
The Company typically realizes a more pronounced level of spending during the fourth quarter, and a decline in the first quarter, in certain of its businesses, which it believes is related to annual budgetary cycles and winter weather. On average, first quarter revenues through the past five years have declined 9.1% sequentially from the fourth quarter.
NOV’s top drives, blowout preventers, drill pipe, drill pipe inspection and coating, liner hangers, completion tools, drill bits, and full land rig packages have been a critical part of global geothermal development.
Geothermal Today, many of NOV’s oil and gas products are used for drilling geothermal wells which produce steam that turns surface-mounted turbines to generate electricity. NOV’s top drives, blowout preventers, drill pipe, drill pipe inspection and coating, liner hangers, completion tools, drill bits, and full land rig packages have been a critical part of global geothermal development.
NOV serves major-diversified, national, and independent service companies, contractors, and energy producers in 62 countries, operating under three segments: Wellbore Technologies, Completion & Production Solutions, and Rig Technologies.
NOV serves major-diversified, national, and independent service companies, contractors, and energy producers in 61 countries. Prior to January 1, 2024, NOV, operated under three segments: Wellbore Technologies, Completion & Production Solutions, and Rig Technologies. Effective January 1, 2024, NOV consolidated its reporting structure into two segments: Energy Equipment and Energy Products and Services.
The short term power peaks are covered with flow from accumulators connected to the ringline piping by a smart valve. An added benefit of Ecoboost is improved equipment performances as the hydraulic response is quicker from the accumulators than from ramping up the pumps.
The short term power peaks are covered with flow from accumulators connected to the ringline piping by a smart valve.
The business unit is a national leading manufacturer of premium spun-cast concrete, tapered steel, and innovative fiberglass poles for diverse applications. Known for durability, aesthetic design, superior lead times, and differentiated field services, Pole Products provides bundled installed products to the telecom, utility, and transportation infrastructure markets.
The business unit is a national leading manufacturer of premium spun-cast concrete, tapered steel, and innovative fiberglass poles for diverse applications.
As commodity prices rise, the industry typically enters an expansionary phase, and equipment orders increase. NOV is able to ramp up manufacturing capacity quickly to capture the up-cycle value while meeting customer demand. During down-cycles, the Company’s focus is internal efficiency and technological advancement.
The Company also benefits from a customer base requiring technically complex equipment for use in extreme environments. 3 NOV’s infrastructure leverages the energy industry’s cyclicality. As commodity prices rise, the industry typically enters an expansionary phase, and equipment orders increase. NOV is able to ramp up manufacturing capacity quickly to capture the up-cycle value while meeting customer demand.
XLS is the sole provider of a proprietary line of wedge thread connections on large-bore pipe.
XLS is the sole provider of a proprietary line of wedge thread connections on large-bore pipe. In addition, XLS supplies connector products with threads machined on high strength forging material and then welded to the pipe.
In addition to lower operating emissions and greater power density, the Ideal eFrac™ system is less disruptive to neighboring communities due to its reduced noise and smaller footprint, requiring 40 percent fewer truckloads for delivery. 5 NOV’s eDrive™ system for wireline skids and hybrid wireline trucks provides a more sustainable solution for interventions by making customers’ operations less impactful on the environment and strengthening regulatory compliance.
The patent-pending Ideal eFrac system enhances wellsite safety by reducing complexity and removing personnel from hazardous environments. In addition to lower operating emissions and greater power density, the Ideal eFrac system is less disruptive to neighboring communities due to its reduced noise and smaller footprint, requiring 40 percent fewer truckloads for delivery.
Rig Technologies is the global leader in the engineering, manufacturing, and support of advanced drilling equipment packages and related capital equipment for oil and gas wells. The segment also designs, builds, installs, and supports renewable energy equipment and technology, with a focus on wind and solar.
The segment also designs, builds, installs, and supports renewable energy equipment and technology, with a focus on wind and solar.
In addition, XLS supplies connector products with threads machined on high strength forging material and then welded to the pipe. 7 • Completion Tools solves the most pressing needs of the global completions marketplace, including lowering well cost through operational efficiency maximization, significant water consumption reduction, and increased production and ultimate recovery.
The high fatigue loading on our flush OD/ID connectors make them the top choice for conductor supported platforms (CSP's). • Completion Tools solves the most pressing needs of the global completions marketplace, including lowering well cost through operational efficiency maximization, significant water consumption reduction, and increased production and ultimate recovery.
Constructing onshore wind towers currently requires large crawler cranes, which provide advantaged mobility at low and moderate hub heights but are significantly less efficient at high hub heights. NOV’s technology, built upon the intellectual property, control systems, and experience developed through mobile desert and arctic drilling rig design, uses a tower crane in conjunction with a unique mobility system.
NOV’s technology, built upon the intellectual property, control systems, and experience developed through mobile desert and arctic drilling rig design, uses a tower crane in conjunction with a unique mobility system. This patent-pending combination creates a structurally-sound, mobile tower crane that is expected to significantly improve the safety, reliability, and efficiency of tall wind tower installation processes.
Building on its processing equipment portfolio, PFT offers turret mooring systems, top side process modules, integrated engineering, and project management to supply comprehensive topside solutions for the offshore production industry, including floating production, storage, and offloading (“FPSO”) and floating liquified natural gas (“FLNG”) vessels.
These products and services come together to supply comprehensive solutions for the offshore production industry, including floating production, storage, and offloading (“FPSO”) and floating liquified natural gas (“FLNG”) vessels. Leveraging processing expertise, PFT is now moving into carbon capture, including carbon capture technology, complementary processing like CO2 dehydration, and mooring systems to load and offload carbon from floating units.
Sales to foreign oil companies are often made with or through representative arrangements.
Sales to foreign oil companies are often made with or through representative arrangements. The Company’s competition consists primarily of publicly traded oilfield service and equipment companies and smaller independent equipment manufacturers in the oil and gas, industrial, and renewable energy equipment markets.
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The Company also benefits from a customer base requiring technically complex equipment for use in extreme environments.
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In 2023, NOV took a controlling interest in KTS and began reporting KTS' financial results on a consolidated basis. NOV is developing a fit-for-purpose onshore wind tower erection system. Constructing onshore wind towers currently requires large crawler cranes, which provide advantaged mobility at low and moderate hub heights but are significantly less efficient at high hub heights.
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Using sophisticated tools to precisely place a wellbore several miles into the earth, and then physically cracking open reservoir rock using large volumes of highly abrasive fluids pumped at extremely high pressures, is incredibly rough on equipment, creating recurring sales opportunities for equipment replacement and aftermarket sales and service. NOV’s infrastructure leverages the energy industry’s cyclicality.
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NOV’s eDrive™ system for wireline skids and hybrid wireline trucks provides a more sustainable solution for interventions by making customers’ operations less impactful on the environment and strengthening regulatory compliance.
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The combination of larger turbines and steadier, higher winds improves wind farm economics. Consequently, wind turbine size and tower height have been increasing steadily for several years.
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Business Segment Overview In an effort to drive further operational and financial efficiencies, the Company announced plans to consolidate its operational structure into two segments, Energy Equipment and Energy Products and Services. NOV’s new operational structure became effective January 1, 2024. The Company plans to begin reporting the new segment information beginning in the first quarter of 2024.
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This patent-pending combination creates a structurally-sound, mobile tower crane that is expected to significantly improve the safety, reliability, and efficiency of tall wind tower installation processes. Geothermal Today, many of NOV’s oil and gas products are used for drilling geothermal wells which produce steam that turns surface-mounted turbines to generate electricity.
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Building on its processing equipment portfolio, PFT provides technology with a focus on products in the interface between seabed and floating units, stern discharge systems, bow loading systems, top side process modules, integrated engineering, and project management.
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The patent-pending Ideal eFrac™ system enhances wellsite safety by reducing complexity and removing personnel from hazardous environments.
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Known for durability, aesthetic design, superior lead times, and differentiated field services, Pole Products provides bundled installed products to the telecom, utility, and transportation infrastructure markets. 8 Rig Technologies is the global leader in the engineering, manufacturing, and support of advanced drilling equipment packages and related capital equipment for oil and gas wells.
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Using our extensive processing expertise, PFT is now moving into the Carbon Capture market with both carbon capture technology and complementary processing technologies such as CO2 dehydration. Certain products and systems are integrated with monitoring and optimization services, leveraging NOV’s Max TM digital ecosystem.
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Diversity and inclusion NOV is committed to maintaining a diverse workforce, individual inclusion, and equal opportunities.
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The Company has experienced rising, declining, and stable prices for milled steel and standard grades in line with broader economic activity and has generally seen specialty alloy prices continue to rise, driven primarily by escalation in the price of the alloying agents.
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In support of this commitment, NOV has communicated a Diversity and Inclusion Statement from the CEO to our employees and has implemented training programs covering the Company’s Code of Conduct and Business Ethics, Unconscious Bias , and Harassment in the Workplace .
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Thirty-six percent of NOV employees work in the United States, 21% in Europe, 15% in Latin America, 12% in the Asia Pacific region, 10% in the Middle East and Africa, 4% in Canada and 2% in China.
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The Company suspended its employer contributions to the 401(k)-retirement savings plan during the pandemic but began reinstating the contributions during the fourth quarter of 2021.
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During the COVID-19 pandemic NOV implemented programs tailored to each location that may include, among other things, working from home, virtual meetings, social distancing, masking, contact tracing and quarantining, facility and machine sanitizing, staggered work shifts, and staggered workdays. Diversity and inclusion NOV is committed to maintaining a diverse workforce, individual inclusion, and equal opportunities.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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The following factors, in addition to others not listed, could reduce our margins on these contracts, adversely impact completion of these contracts, adversely affect our position in the market or subject us to contractual penalties: • financial challenges for consumers of our capital equipment; 13 • credit market conditions for consumers of our capital equipment; • our failure to adequately estimate costs for making this equipment; • our inability to deliver equipment that meets contracted technical requirements; • our inability to maintain our quality standards during the design and manufacturing process; • our inability to secure parts made by third party vendors at reasonable costs and within required timeframes; • unexpected increases in the costs of raw materials; • our inability to manage unexpected delays due to weather, shipyard access, labor shortages, public health crises such as the COVID-19 pandemic or other factors beyond our control; • the imposition of tariffs or duties between countries, which could materially affect our global supply chain.
The following factors, in addition to others not listed, could reduce our margins on these contracts, adversely impact completion of these contracts, adversely affect our position in the market or subject us to contractual penalties: • financial challenges for consumers of our capital equipment; • credit market conditions for consumers of our capital equipment; • our failure to adequately estimate costs for making this equipment; • our inability to deliver equipment that meets contracted technical requirements; • our inability to maintain our quality standards during the design and manufacturing process; • our inability to secure parts made by third party vendors at reasonable costs and within required timeframes; • unexpected increases in the costs of raw materials; • our inability to manage unexpected delays due to weather, shipyard access, labor shortages, public health crises such as the COVID-19 pandemic or other factors beyond our control; • the imposition of tariffs or duties between countries, which could materially affect our global supply chain.
Among the factors that can adversely affect our business and consolidated results of operations are the following: • Inability to access raw materials and components; • Suppliers putting the Company on allocations; • Higher prices for raw materials and components; • Delays and higher costs for shipping and transportation; • Labor shortages and absences; • Wage and other labor cost inflation; • Government regulation; and • Travel restrictions; • Increased labor costs; • Liabilities resulting from an inability to perform services due to limited manpower availability or an inability to travel to perform the services; • Other contractual or other legal claims from our customers resulting from supply chain, transportation or other business disruption.
Among the factors that can adversely affect our business and consolidated results of operations are the following: • Inability to access raw materials and components; • Suppliers putting the Company on allocations; • Higher prices for raw materials and components; • Delays and higher costs for shipping and transportation; • Labor shortages and absences; • Wage and other labor cost inflation; • Government regulation; and • Travel restrictions; 16 • Increased labor costs; • Liabilities resulting from an inability to perform services due to limited manpower availability or an inability to travel to perform the services; • Other contractual or other legal claims from our customers resulting from supply chain, transportation or other business disruption.
Actions taken by our competitors and changes in local policies, preferences or regulations could impact our ability to compete in certain markets and adversely affect our financial results. 14 A significant portion of our revenue is derived from our non-United States operations, which exposes us to risks inherent in doing business in each of the many countries in which we operate.
Actions taken by our competitors and changes in local policies, preferences or regulations could impact our ability to compete in certain markets and adversely affect our financial results. A significant portion of our revenue is derived from our non-United States operations, which exposes us to risks inherent in doing business in each of the many countries in which we operate.
Our businesses are subject to numerous federal, state and local laws, regulations and policies governing environmental protection, zoning and other matters. These laws and regulations have changed frequently in the past and it is reasonable to expect additional changes in the future. If existing regulatory requirements change, we may be required to make significant unanticipated capital and operating expenditures.
Our businesses are subject to numerous international, federal, state and local laws, regulations and policies governing environmental protection, zoning and other matters. These laws and regulations have changed frequently in the past and it is reasonable to expect additional changes in the future. If existing regulatory requirements change, we may be required to make significant unanticipated capital and operating expenditures.
Oil and gas prices, which are determined by the marketplace, may remain below a range that is acceptable to certain of our customers, which could continue the reduced demand for our products and have a material adverse effect on our financial condition, results of operations and cash flows. There are risks associated with certain contracts for our equipment.
Oil and gas prices, which are determined by the marketplace, may remain below a range that is acceptable to certain of our customers, which could continue the reduced demand for our products and have a material adverse effect on our financial condition, results of operations and cash flows. 14 There are risks associated with certain contracts for our equipment.
LCOE is used to compare different methods of electricity generation on a consistent basis. Making-up 1. To assemble and join parts to form a complete unit (e.g., to make up a string of drill pipe). 2. To screw together two threaded pieces. 3. To mix or prepare (e.g., to make up a tank of mud). 4.
LCOE is used to compare different methods of electricity generation on a consistent basis. 25 Making-up 1. To assemble and join parts to form a complete unit (e.g., to make up a string of drill pipe). 2. To screw together two threaded pieces. 3. To mix or prepare (e.g., to make up a tank of mud). 4.
The Company could also become involved in investigations of consumers of our products at significant cost to the Company. We could be adversely affected if we fail to comply with any of the numerous federal, state and local laws, regulations and policies that govern environmental protection, zoning and other matters applicable to our businesses.
The Company could also become involved in investigations of consumers of our products at significant cost to the Company. We could be adversely affected if we fail to comply with any of the numerous international, federal, state and local laws, regulations and policies that govern environmental protection, zoning and other matters applicable to our businesses.
Several rods screwed together make up the link between the pumping unit on the surface and the pump at the bottom of the well. Tensioner A system of devices installed on a floating offshore drilling rig to maintain a constant tension on the riser pipe, despite any vertical motion made by the rig.
Several rods screwed together make up the link between the pumping unit on the surface and the pump at the bottom of the well. 26 Tensioner A system of devices installed on a floating offshore drilling rig to maintain a constant tension on the riser pipe, despite any vertical motion made by the rig.
Also called a borehole or hole. Wireline A slender, rodlike or threadlike piece of metal usually small in diameter, that is used for lowering special tools (such as logging sondes, perforating guns, and so forth) into the well. Also called slick line.
Also called a borehole or hole. Wireline A slender, rodlike or threadlike piece of metal usually small in diameter, that is used for lowering special tools (such as logging sondes, perforating guns, and so forth) into the well. Also called slick line. 27
Levelized Cost of Energy (“LCOE”) A measure of the average net present cost of electricity generation for a generating plant over its lifetime. The LCOE is calculated as the ratio between all the discounted costs over the lifetime on an electricity generating plant divided by a discounted sum of the actual energy 23 amounts delivered.
Levelized Cost of Energy (“LCOE”) A measure of the average net present cost of electricity generation for a generating plant over its lifetime. The LCOE is calculated as the ratio between all the discounted costs over the lifetime on an electricity generating plant divided by a discounted sum of the actual energy amounts delivered.
Under these circumstances, we might be required to reduce or cease operations or conduct site remediation or other corrective action which could adversely impact our operations and financial condition. 18 Our businesses expose us to potential environmental, product or personal injury liability.
Under these circumstances, we might be required to reduce or cease operations or conduct site remediation or other corrective action which could adversely impact our operations and financial condition. Our businesses expose us to potential environmental, product or personal injury liability.
Violations of anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could have a material adverse effect on our business, consolidated results of operations and consolidated financial condition. 21 GLOSSARY OF OILFIELD TERMS (Sources: Company management; “A Dictionary for the Petroleum Industry,” The University of Texas at Austin, 2001.) API Abbr: American Petroleum Institute Annulus The open space around pipe in a wellbore through which fluids may pass.
Violations of anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could have a material adverse effect on our business, consolidated results of operations and consolidated financial condition. 23 GLOSSARY OF OILFIELD TERMS (Sources: Company management; “A Dictionary for the Petroleum Industry,” The University of Texas at Austin, 2001.) API Abbr: American Petroleum Institute Annulus The open space around pipe in a wellbore through which fluids may pass.
The Paris Agreement requires countries to review and 19 “represent a progression” in their intended nationally determined contributions, which set greenhouse gases emission reduction goals, every five years.
The Paris Agreement requires countries to review and “represent a progression” in their intended nationally determined contributions, which set greenhouse gases emission reduction goals, every five years.
These cyber-security risks have not resulted in any material adverse interruption in our business to date but pose an ongoing threat of material interruption to our business activities. 16 Our ability to hire and retain qualified personnel at competitive cost could materially affect our operations and growth potential.
These cyber-security risks have not resulted in any material adverse interruption in our business to date but pose an ongoing threat of material interruption to our business activities. 17 Our ability to hire and retain qualified personnel at competitive cost could materially affect our operations and growth potential.
The situation is complicated by actual and potential governmental and legal actions taken by the Russian Federation in response to the sanctions, which could expose our employees to adverse legal consequences in Russia, including potential criminal penalties. Other sanctions have been enacted related to Belarus and Belarussian interests.
The situation is complicated by actual and potential governmental and legal actions taken by the Russian Federation in response to the sanctions, which could expose our employees to adverse legal consequences in Russia, including potential criminal penalties. Other sanctions have been enacted related to Belarus and Belarusian interests.
However, unfavorable market conditions or financial difficulties experienced by our customers may result in cancellation of contracts or the delay or abandonment of projects. Any such developments could have a material adverse effect on our operating results and financial condition.
However, unfavorable market conditions or financial difficulties experienced by our customers have in the past and may in the future result in cancellation of contracts or the delay or abandonment of projects. Any such developments could have a material adverse effect on our operating results and financial condition.
We sometimes provide engineered skid packages of processing equipment or complex equipment in the form of multi-year contracts, without price escalation clauses. Some of these contracts are required by our customers, primarily national oil companies (NOCs).
We sometimes provide engineered skid packages of processing equipment or complex equipment in the form of multi-year contracts, without price escalation clauses. Some of these contracts are required by our customers, including national oil companies (NOCs).
Our revenues and operations are subject to the risks normally associated with conducting business in foreign countries, including: • uncertain political, social and economic environments; • social unrest, acts of terrorism, war and other armed conflict; • public health crises and other catastrophic events, such as the COVID-19 pandemic; • trade and economic sanctions, export controls, and other restrictions imposed by the United States, European Union or other countries; • restrictions under the United States Foreign Corrupt Practices Act (“FCPA”) or similar legislation, as well as foreign anti-bribery and anti-corruption laws; • confiscatory taxation, tax duties, complex and everchanging tax regimes or other adverse tax policies; • exposure to expropriation of our assets and other actions by foreign governments; • deprivation of contract rights; • restrictions on the repatriation of income or capital; • inflation; and • currency exchange rate fluctuations and devaluations.
Our revenues and operations are subject to the risks normally associated with conducting business in foreign countries, including: • uncertain political, social and economic environments; • social unrest, acts of terrorism, war and other armed conflict, such as the conflicts in Ukraine, Israel and the broader Middle East; • public health crises and other catastrophic events, such as the COVID-19 pandemic; • trade and economic sanctions, export controls, and other restrictions imposed by the United States, European Union or other countries; • restrictions under the United States Foreign Corrupt Practices Act (“FCPA”) or similar legislation, as well as foreign anti-bribery and anti-corruption laws; • confiscatory taxation, tax duties, complex and everchanging tax regimes or other adverse tax policies; • exposure to expropriation of our assets and other actions by foreign governments; • deprivation of contract rights; • restrictions on the repatriation of income or capital; • inflation; and • currency exchange rate fluctuations and devaluations.
Any of these events could adversely affect our financial condition, results of operations and cash flows. An impairment of goodwill or other indefinite lived intangible assets could reduce our earnings. The Company has approximately $1.5 billion of goodwill and $0.2 billion of other intangible assets with indefinite lives as of December 31, 2022.
Any of these events could adversely affect our financial condition, results of operations and cash flows. An impairment of goodwill or other indefinite lived intangible assets could reduce our earnings. The Company has approximately $1.6 billion of goodwill and $0.2 billion of other intangible assets with indefinite lives as of December 31, 2023.
As of December 31, 2022, we had a backlog of capital equipment to be manufactured, assembled, tested and delivered by Completion & Production Solutions and Rig Technologies in the amount of $1.6 billion and $2.8 billion, respectively.
As of December 31, 2023, we had a backlog of capital equipment to be manufactured, assembled, tested and delivered by Completion & Production Solutions and Rig Technologies in the amount of $1.8 billion and $2.9 billion, respectively.
See additional discussion on “Goodwill and Other Indefinite – Lived Intangible Assets” in Critical Accounting Estimates of Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We have expanded and grown our businesses through acquisitions and continue to pursue a growth strategy but we cannot assure that attractive acquisitions will be available to us at reasonable prices or at all.
See additional discussion on “Goodwill and Other Indefinite – Lived Intangible Assets” in Critical Accounting Estimates of Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 18 We have expanded and grown our businesses through acquisitions and continue to pursue a growth strategy but we cannot assure that attractive acquisitions will be available to us at reasonable prices or that such acquisitions will result in the outcomes we anticipate.
For example, section 232 tariffs on steel may increase our costs, reduce margins or otherwise adversely affect the Company; and • export sanctions, controls or other trade restrictions, which could affect our ability to manufacture, sell, or receive payment for our equipment and/or services.
For example, section 232 tariffs on steel may increase our costs, reduce margins or otherwise adversely affect the Company; and • trade or travel restrictions, including export sanctions, trade controls or other supply chain interruption, which could affect our ability to manufacture, sell, or receive payment for our equipment and/or services.
Approximately 64% of our revenues in 2022 were derived from operations outside the United States (based on revenue destination). Our foreign operations include significant operations in every oil producing region in the world.
Approximately 66% of our revenues in 2023 were derived from operations outside the United States (based on revenue destination). Our foreign operations include significant operations in every oil producing region in the world.
The Company could be subject to changes in its tax rates, the adoption of new tax legislation, tax audits, or exposure to additional tax liabilities that could have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition.
In some instances, we could suffer a material adverse effect to the results of our joint ventures and our consolidated results of operations. 21 The Company could be subject to changes in its tax rates, the adoption of new tax legislation, tax audits, or exposure to additional tax liabilities that could have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition.
Additionally, developing non-infringing technologies could increase our costs. If a license were unavailable, we might be unable to continue providing a particular service or product, which could adversely affect our financial condition, results of operations and cash flows.
Royalty payments under licenses from third parties, if available, could increase our costs. Additionally, developing non-infringing technologies could increase our costs. If a license were unavailable, we might be unable to continue providing a particular service or product, which could adversely affect our financial condition, results of operations and cash flows.
As a consequence of the conflict in Ukraine and related sanctions on activities related to Russia and Belarus, we recorded impairment and other charges of $127 million for the year ended December 31, 2022. In addition to customs laws, trade regulations and sanctions, our operations in countries outside the United States are subject to anti-corruption laws.
As a consequence of the conflict in Ukraine and related sanctions on activities related to Russia and Belarus, we recorded impairment and other charges of $4.2 million and $126.8 million for the years ended December 31, 2023 and 2022, respectively. 22 In addition to customs laws, trade regulations and sanctions, our operations in countries outside the United States are subject to anti-corruption laws.
Future laws, regulations, treaties, international obligations, reporting obligations related to greenhouse gases (GHG), climate change, and activism related to environmental, social and governance (ESG) could adversely impact our business, may increase compliance obligations and could have a material adverse effect on our business, consolidated results of operations and consolidated financial condition.
Even a partially uninsured claim, if successful and of significant size, could have a material adverse effect on our consolidated financial statements. 20 Future laws, regulations, treaties, international obligations, reporting obligations related to greenhouse gases (GHG), climate change, and activism related to environmental, social and governance (ESG) could adversely impact our business, may increase compliance obligations and could have a material adverse effect on our business, consolidated results of operations and consolidated financial condition.
In addition, NOCs often operate in countries with unsettled political conditions, war, civil unrest, or other types of community issues. These issues may also result in cost over-runs, delays, and project losses.
In addition, NOCs often possess substantial leverage in the event of dispute or disagreement regarding performance under an agreement and they often operate in countries with unsettled political conditions, war, civil unrest, or other types of community issues. These issues may also result in cost over-runs, delays, and project losses.
The adoption of any future federal, state, or local laws or implementing regulations imposing reporting obligations on, or limiting or banning, the hydraulic fracturing process could make it more difficult to complete natural gas and oil wells and could have a material adverse effect on our business, consolidated results of operations and consolidated financial condition. 17 Various federal and state legislative and regulatory initiatives, as well as actions in other countries, have been or could be undertaken which could result in additional requirements or restrictions being imposed on hydraulic fracturing operations.
The adoption of any future federal, state, or local laws or implementing regulations imposing reporting obligations on, or limiting or banning, the hydraulic fracturing process could make it more difficult to complete natural gas and oil wells and could have a material adverse effect on our business, consolidated results of operations and consolidated financial condition.
Governments also impose economic sanctions against certain countries, persons, and entities that can restrict or prohibit transactions involving such countries, persons, and entities. This in turn can restrict, limit or prevent our conduct of business in certain jurisdictions. For our operations outside the United States, we are required to comply with United States laws and other international regulations.
This in turn can restrict, limit or prevent our conduct of business in certain jurisdictions. For our operations outside the United States, we are required to comply with applicable United States laws and other applicable international regulations.
The willingness of oil and gas operators to make capital expenditures to explore for and produce oil and natural gas and the willingness of oilfield service companies to invest in capital equipment will continue to be influenced by numerous factors over which we have no control, including the: • current and anticipated future prices for oil and natural gas; • volatility of prices for oil and natural gas; • ability or willingness of the members of the Organization of Petroleum Exporting Countries (“OPEC”) and other countries, such as Russia, to maintain or influence price stability through voluntary production limits; • sanctions and other restrictions placed on certain oil producing countries, such as Russia, Iran, and Venezuela; • level of production by non-OPEC countries including production from U.S. shale plays; • level of excess production capacity; • cost of exploring for and producing oil and gas; • level of drilling activity and drilling rig dayrates; • worldwide economic activity and associated demand for oil and gas; • public health crises and other catastrophic events, such as the COVID-19 pandemic; • availability and access to potential hydrocarbon resources; • governmental political requirements, regulation and energy policies; • fluctuations in political conditions in the United States and abroad; • currency exchange rate fluctuations and devaluations; • development of alternate energy sources; and • environmental regulations.
The demand and pricing for our products and services will continue to be influenced by numerous factors over which we have no control, including the: • current and anticipated future prices for oil and natural gas and volatility in supply and demand and pricing for oil and natural gas; • the impact on markets from the Organization of Petroleum Exporting Countries (“OPEC”) and other countries, such as Russia, based on voluntary production limits; • interruptions in supply chains caused by war, geo-political conflict, trade sanctions or other restrictions placed on oil producing countries, such as Russia, Iran, and Venezuela or otherwise placed on trade and commerce; • level of production by non-OPEC countries including production from U.S. shale plays; • level of excess production capacity; • cost of exploring for and producing oil and gas; • level of drilling activity and drilling rig dayrates; • catastrophic events, such as public health crises, e.g., the COVID-19 pandemic or other geopolitical events, such as war or terrorist activities, • availability and access to potential hydrocarbon resources; • governmental political requirements, regulation and energy policies; • evolving environmental and climate change policies and regulations and fluctuations in political conditions in the United States and abroad which adversely impact exploration or development of oil or gas; • currency exchange rate fluctuations and devaluations; and • development of alternate energy sources.
In response to these sanctions, we ceased new investments in Russia and have curtailed our activities in Russia. During the third quarter of 2022, we sold our business in Belarus and committed to a plan to sell our business in Russia. The sale is subject to government approval under Russian law.
In response to these sanctions, we ceased new investments in Russia and have curtailed our activities in Russia. During the third quarter of 2022, we sold our business in Belarus and entered into an agreement to sell our business in Russia. The sale is subject to various government approvals in Russia and other jurisdictions.
These include Executive Orders requiring a review of current U.S. federal lands leasing and permitting practices, as well as a temporary halt of new leasing of U.S. federal lands and offshore waters available for oil and gas exploration. The Executive Orders halting the leasing of U.S. federal lands were challenged in court and remain subject to litigation.
These include Executive Orders requiring a review of current U.S. federal lands leasing and permitting practices, as well as a temporary halt of new leasing of U.S. federal lands and offshore waters available for oil and gas exploration. In February 2021, the United States formally re-joined the Paris Agreement.
The tools, techniques, methodologies, programs and components we use to provide our services may infringe upon the intellectual property rights of others. Infringement claims generally result in significant legal and other costs and may distract management from running our core business. Royalty payments under licenses from third parties, if available, could increase our costs.
See Note 12 to the Consolidated Financial Statements for further discussion. 15 The tools, techniques, methodologies, programs and components we use to provide our services may infringe upon the intellectual property rights of others. Infringement claims generally result in significant legal and other costs and may distract management from running our core business.
Further, in some instances, direct or indirect consumers of our products and services, entities providing financing for purchases of our products and services or members of the supply chain for our products and services may become involved in governmental investigations, internal investigations, political or other enforcement matters.
Any of these events could have a material adverse effect on our business, financial condition, results of operations and cash flows. 19 Further, in some instances, direct or indirect consumers of our products and services, entities providing financing for purchases of our products and services or members of the supply chain for our products and services may become involved in governmental investigations, internal investigations, political or other enforcement matters.
The reel is an integral part of the coiled tubing unit, which consists of several devices that ensure the tubing can be safely and efficiently inserted into the well from the surface.
Coiled Tubing A continuous string of flexible steel tubing, often hundreds or thousands of feet long, that is wound onto a reel, often dozens of feet in diameter. The reel is an integral part of the coiled tubing unit, which consists of several devices that ensure the tubing can be safely and efficiently inserted into the well from the surface.
Torque wrench Spinning wrench with a gauge for measuring the amount of torque being applied to the connection. Turret Mechanical device that allows a floating vessel to rotate around stationary flowlines, umbilicals, and other associated risers. Well completion 1.
Turret Mechanical device that allows a floating vessel to rotate around stationary flowlines, umbilicals, and other associated risers. Well completion 1.
We cannot assure that we will successfully integrate the operations and assets of any acquired business with our own or that our management will be able to effectively manage any new lines of business. Any inability on the part of management to integrate and manage acquired businesses and their assumed liabilities could adversely affect our business and financial performance.
We cannot assure that acquisitions will result in the financial, operational or other benefits that we anticipate and we cannot assure that we will successfully integrate the operations and assets of any acquired business with our own or that our management will be able to effectively manage any new lines of business.
The cutting element is steel teeth, tungsten carbide buttons, industrial diamonds, or polycrystalline diamonds (“PDCs”). These teeth, buttons, or diamonds penetrate and gouge or scrape the formation to remove it. The circulating element permits the passage of drilling fluid and utilizes the hydraulic force of the fluid stream to improve drilling rates.
Bit The cutting or boring element used in drilling oil and gas wells. The bit consists of a cutting element and a circulating element. The cutting element is steel teeth, tungsten carbide buttons, industrial diamonds, or polycrystalline diamonds (“PDCs”). These teeth, buttons, or diamonds penetrate and gouge or scrape the formation to remove it.
In addition, we may need to incur substantial indebtedness to finance future acquisitions. We cannot assure that we will be able to obtain this financing on terms acceptable to us or at all.
Any inability on the part of management to integrate and manage acquired businesses and their assumed liabilities could adversely affect our business and financial performance. In addition, we may need to incur substantial indebtedness to finance future acquisitions. We cannot assure that we will be able to obtain this financing on terms acceptable to us or at all.
Steerable Technologies Tools that allow for steering the BHA towards a target while rotating from surface. String The entire length of casing, tubing, sucker rods, or drill pipe run into a hole. 24 Sucker rod A special steel pumping rod.
String The entire length of casing, tubing, sucker rods, or drill pipe run into a hole. Sucker rod A special steel pumping rod.
Blowout An uncontrolled flow of gas, oil or other well fluids into the atmosphere. A blowout, or gusher, occurs when formation pressure exceeds the pressure applied to it by the column of drilling fluid. A kick warns of an impending blowout. Blowout Preventer (BOP) Series of valves installed at the wellhead while drilling to prevent the escape of pressurized fluids.
Drill collars provide weight on the bit to keep it in firm contact with the bottom of the hole. Blowout An uncontrolled flow of gas, oil or other well fluids into the atmosphere. A blowout, or gusher, occurs when formation pressure exceeds the pressure applied to it by the column of drilling fluid. A kick warns of an impending blowout.
The shipment of goods, services, and technology across international borders subjects us to extensive trade laws and regulations.
The shipment of goods, services, and technology across international borders subjects us to extensive trade laws and regulations. Our import and export activities are governed by the trade, customs, and other laws and regulations in the countries in which we operate.
Differences in views, and disagreements, among joint venture parties may result in delayed decision making and disputes on important issues. In some instances, we could suffer a material adverse effect to the results of our joint ventures and our consolidated results of operations.
Differences in views, and disagreements, among joint venture parties may result in delayed decision making and disputes on important issues.
Each formation is given a name, frequently as a result of the study of the formation outcrop at the surface and sometimes based on fossils found in the formation.
Also used on the seafloor to tie wells and subsea equipment together. Formation A bed or deposit composed throughout of substantially the same kind of rock; often a lithologic unit. Each formation is given a name, frequently as a result of the study of the formation outcrop at the surface and sometimes based on fossils found in the formation.
Borehole Enlargement (“BHE”) The process of opening up or enlarging the internal diameter of the wellbore. This is typically done with under-reamers, reamers, or hole openers. Bottomhole Assembly (“BHA”) The lower portion of the drillstring including (if used): the bit, bit sub, mud motor, stabilizers, drillcollar, heavy-weight drillpipe, jarring devices, and crossovers for various thread forms.
Bottomhole Assembly (“BHA”) The lower portion of the drillstring including (if used): the bit, bit sub, mud motor, stabilizers, drillcollar, heavy-weight drillpipe, jarring devices, and crossovers for various thread forms. Carbon-Neutral The state of achieving net zero carbon dioxide emissions with removal or simply eliminating carbon dioxide emissions altogether.
In rotary drilling, several drill collars are joined to the bottom end of the drill pipe column, and the bit is attached to the end of the drill collars. Drill collars provide weight on the bit to keep it in firm contact with the bottom of the hole.
The circulating element permits the passage of drilling fluid and utilizes the hydraulic force of the fluid stream to improve drilling rates. In rotary drilling, several drill collars are joined to the bottom end of the drill pipe column, and the bit is attached to the end of the drill collars.
Since the elevators are directly connected to the traveling block, or to the integrated traveling block in the top drive, when the driller raises or lowers the block or the top-drive unit, the drill pipe is also raised or lowered. 22 Fiberglass-reinforced spoolable pipe A spoolable glass fiber-reinforced epoxy composite tubular product for onshore oil and gas gathering and injection systems, with superior corrosion resistant properties and lower installed cost than steel.
Fiberglass-reinforced spoolable pipe A spoolable glass fiber-reinforced epoxy composite tubular product for onshore oil and gas gathering and injection systems, with superior corrosion resistant properties and lower installed cost than steel. 24 Flexible pipe A dynamic riser that connects subsea production equipment to a topside facility allowing for the flow of oil, gas, and/or water.
Our import and export activities are governed by the trade, customs, and other laws and regulations in the countries in which we operate. 20 Moreover, many countries, including the United States, control the export, re-export, and in-country transfer of certain goods, services, and technology and impose related export recordkeeping and reporting obligations.
Moreover, many countries, including the United States, control the export, re-export, and in-country transfer of certain goods, services, and technology and impose related export recordkeeping and reporting obligations. Governments also impose economic sanctions against certain countries, persons, and entities that can restrict or prohibit transactions involving such countries, persons, and entities.
Removed
The COVID-19 pandemic and related economic repercussions have had and are expected to continue to have a significant impact on our business. Negative impacts arising from the COVID-19 pandemic continue to adversely affect a number of jurisdictions and disrupt pre-pandemic economic activities. For example, lockdowns in China have disrupted supply chains for the Company’s vendors and products.
Added
We may also have disputes with competitors concerning our technology or payment for licenses of our technology. For example, we have on-going litigation concerning payments due under some of our technology licenses.
Removed
The 15 Company’s ability to manufacture equipment and perform services could also be impaired and the Company could be exposed to liabilities resulting from additional interruption or delay in its ability to perform due to limited manpower, travel restrictions, difficulty obtaining visas, adverse health consequences to employees, supply chain disruption, inflationary pressures, and materials shortages.
Added
Various federal and state legislative and regulatory initiatives, as well as actions in other countries, have been or could be undertaken which could result in additional requirements or restrictions being imposed on hydraulic fracturing operations.
Removed
The Company continues to see operational disruption due to work force and supply chain impacts and closure or limitations imposed on our facilities as well as work force regulations. We may face loss of workers, labor shortages, litigation, fines and/or other adverse consequences resulting from vaccine mandates and enforcement of other COVID-19 regulations.
Added
Laws and regulations in some jurisdictions, for example in the EU Corporate Sustainability Reporting Directive ("CSRD") and the California Climate Corporate Data Accountability Act and Climate-Related Financial Risk Act, impose obligations in future years to report GHG emissions.
Removed
Disputes may arise regarding application of force majeure and other contract provisions and allocation of responsibility among customers, the Company, and suppliers, resulting in material added cost and/or litigation. Our customers may attempt to cancel or delay projects, cancel contracts, or may invoke force majeure clauses.
Added
Calculation of some GHG emissions can involve uncertainty and lack precision because of the absence of reliable inputs or methods to perform such calculations. Accordingly, the EU CSRD and California regulations and other similar regulations give rise to litigation risk concerning the required disclosures.
Removed
Our customers may also seek to delay or may default on their payments to us. As a result, the Company may be exposed to additional costs, liabilities and risks which could materially, adversely impact our financial performance and results.
Added
Additionally, the IRS is examining the Company’s tax returns for 2017 and 2018 and has proposed an adjustment to certain restructuring steps which occurred in 2017. The Company and its advisors believe these restructuring steps were properly completed in accordance with U.S. tax laws and regulations and has appealed the proposed adjustment.
Removed
These potential operational and service delays resulting from the COVID-19 pandemic and long tail supply chain disruption could result in contractual or other legal claims from our customers or with our vendors. At this time, it is not possible to quantify all these risks, but the combination of these factors could have a material impact on our financial results.
Added
However, if the Company is unsuccessful in the appeals process, the IRS proposed adjustment would be substantially offset by the utilization of foreign tax credit carryforwards which subsequently expired unused or are fully reserved by a valuation allowance and $48 million additional income tax expense would be owed.
Removed
Any of these events could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Added
The Company is monitoring developments related to the OECD’s Global Anti-Base Erosion Model Rules (“Pillar Two”), which will become effective during 2024 in numerous jurisdictions. The Company does not anticipate the provisions of Pillar Two will have a material impact on the Company’s effective tax rate in the future.
Removed
Even a partially uninsured claim, if successful and of significant size, could have a material adverse effect on our consolidated financial statements.
Added
Blowout Preventer (BOP) Series of valves installed at the wellhead while drilling to prevent the escape of pressurized fluids. Borehole Enlargement (“BHE”) The process of opening up or enlarging the internal diameter of the wellbore. This is typically done with under-reamers, reamers, or hole openers.
Removed
As a result of the review of leasing and permitting practices, the U.S. Department of the Interior has recommended increasing the royalty rate payable to the U.S. government by operators, as well as bonding requirements and emissions requirements for operators.
Added
Since the elevators are directly connected to the traveling block, or to the integrated traveling block in the top drive, when the driller raises or lowers the block or the top-drive unit, the drill pipe is also raised or lowered.
Removed
Some form of these recommendations may become applicable to operations on U.S. federal leases, which could have a negative effect on exploration and production of oil and natural gas given the increased costs associated with any such changes. In February 2021, the United States formally re-joined the Paris Agreement.
Removed
The Company is assessing various provisions contained in the Inflation Reduction Act of 2022 (the “IRA”) including increased production and manufacturing credits as well as the new Corporate Alternative Minimum Tax. The Company does not anticipate that these provisions will materially impact its results from operations or its effective tax rate.
Removed
Automatic Roughneck A large, self-contained pipe-handling machine used by drilling crew members to make up and break out tubulars. The device combines a spinning wrench, torque wrench, and backup wrenches. Bit The cutting or boring element used in drilling oil and gas wells. The bit consists of a cutting element and a circulating element.
Removed
Carbon-Neutral The state of achieving net zero carbon dioxide emissions with removal or simply eliminating carbon dioxide emissions altogether. Coiled Tubing A continuous string of flexible steel tubing, often hundreds or thousands of feet long, that is wound onto a reel, often dozens of feet in diameter.
Removed
Flexible pipe A dynamic riser that connects subsea production equipment to a topside facility allowing for the flow of oil, gas, and/or water. Also used on the seafloor to tie wells and subsea equipment together. Formation A bed or deposit composed throughout of substantially the same kind of rock; often a lithologic unit.

Item 2. Properties

Properties — owned and leased real estate

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Union, Pennsylvania Manufacturing of fiberglass products 135,000 24 Owned Rig Technologies: Houston, Texas Bammel Facility, Repairs, Service, Aftermarket Parts, Administrative & Sales Offices 608,718 33 Leased 7/31/2028 Houston, Texas Manufacturing Plant of Drilling Equipment 511,964 36 Leased 4/30/2027 Houston, Texas West Little York Manufacturing Facility, Repairs, Service, Administrative & Sales Offices 484,794 51 Owned New Iberia, Louisiana Repair, Services and Spares facility 170,000 17 Leased 9/30/2027 Singapore Manufacturing, Repairs, Service, Field Service/Training, Administrative & Sales Offices 133,659 4 Leased 1/5/2024 Dubai, UAE Repair & Overhaul of Drilling Equipment, Warehouse & Sales Office 39,433 2 Leased 7/14/2036 Al Jubail, Saudi Arabia Manufacturer and Service of Drilling Rigs and Equipment 668,293 113 Leased 11/17/2050 Corporate: Houston, Texas Corporate and Shared Administrative Offices 441,029 3 Leased 1/31/2041 *Building owned but land leased.
Union, Pennsylvania Manufacturing of fiberglass products 135,000 24 Owned Rig Technologies: Houston, Texas Bammel Facility, Repairs, Service, Aftermarket Parts, Administrative & Sales Offices 608,718 33 Leased 7/31/2028 Houston, Texas Manufacturing Plant of Drilling Equipment 511,964 36 Leased 4/30/2027 Houston, Texas West Little York Manufacturing Facility, Repairs, Service, Administrative & Sales Offices 484,794 51 Owned New Iberia, Louisiana Repair, Services and Spares facility 170,000 17 Leased 9/30/2027 Singapore Manufacturing, Repairs, Service, Field Service/Training, Administrative & Sales Offices 133,659 4 Leased 1/5/2029 Dubai, UAE Repair & Overhaul of Drilling Equipment, Warehouse & Sales Office 39,433 2 Leased 7/14/2036 Al Jubail, Saudi Arabia Manufacturer and Service of Drilling Rigs and Equipment 668,293 113 Leased 11/17/2050 Corporate: Houston, Texas Corporate and Shared Administrative Offices 441,029 3 Leased 1/31/2041 *Building owned but land leased.
PR OPERTIES The Company owned or leased approximately 554 facilities worldwide as of December 31, 2022, including the following principal manufacturing, service, distribution and administrative facilities: Building Property Lease Size Size Owned / Termination Location Description (SqFt) (Acres) Leased Date Wellbore Technologies: Navasota, Texas Manufacturing Facility & Administrative Offices 562,112 196 Owned Conroe, Texas Manufacturing Facility of Drill Bits and Downhole Tools, Administrative & Sales Offices 275,383 28 Owned Houston, Texas Sheldon Road Inspection Facility 319,365 197 Owned Veracruz, Mexico Manufacturing Facility of Tool Joints, Warehouse & Administrative Offices 303,400 42 Owned Houston, Texas Holmes Rd Complex: Manufacturing, Warehouse, Coating Manufacturing Plant & Corporate Office 351,377 41 Owned Cedar Park, Texas Instrumentation Manufacturing Facility, Administrative & Sales Offices 215,778 34 Owned Dubai, UAE Manufacturing Facility of Downhole Tools, Distribution Warehouse 184,492 8 Leased 1/29/2031 Conroe, Texas Solids Control Manufacturing Facility, Warehouse, Administrative & Sales Offices, and Engineering Labs 153,750 42 Owned Houston, Texas Manufacturing of plastic thread products 158,250 7 Owned Completion & Production Solutions: Senai, Malaysia Manufacturing Facility of Fiber Glass Products 284,701 14 Owned* 10/31/2027 Kalundborg, Denmark Flexibles Manufacturing, Warehouse, Shop & Administrative Offices 485,067 38 Owned Superporto du Acu, Brazil Flexibles Manufacturing, Warehouse, Shop & Administrative Offices 464,885 30 Owned* 10/19/2031 Manchester, England Manufacturing, Assembly & Testing of PC Pumps and Expendable Parts, Administrative & Sales Offices 365,872 27 Owned Houston, Texas Manufacturing of Wireline and Pressure Performance Equipment, Warehouse and Administrative Offices 383,750 26 Leased 6/30/2041 Fort Worth, Texas Coiled Tubing Manufacturing Facility, Warehouse, Administrative & Sales Offices 345,000 24 Owned Qingdau, Shandong, China Manufacturing of fiber-reinforced tubular products 277,331 25 Leased 10/26/2036 Tulsa, Oklahoma Manufacturing Facility of Pumps, Warehouse and Administrative & Sales Offices 222,625 10 Owned Houston, Texas Manufacturing of fiber-reinforced tubular products & Administrative Offices 130,873 7 Leased 4/30/2026 Kintore, Aberdeenshire, Scotland, UK Manufacturing & Servicing of Elmar, ASEP and Anson Equipment 198,651 13 Leased 9/3/2037 Dammam, Saudi Arabia Manufacturing of fiberglass products 213,484 23 Leased 12/7/2036 Mt.
PR OPERTIES The Company owned or leased approximately 548 facilities worldwide as of December 31, 2023, including the following principal manufacturing, service, distribution and administrative facilities: Building Property Lease Size Size Owned / Termination Location Description (SqFt) (Acres) Leased Date Wellbore Technologies: Navasota, Texas Manufacturing Facility & Administrative Offices 562,112 196 Owned Conroe, Texas Manufacturing Facility of Drill Bits and Downhole Tools, Administrative & Sales Offices 275,383 28 Owned Houston, Texas Sheldon Road Inspection Facility 319,365 197 Owned Veracruz, Mexico Manufacturing Facility of Tool Joints, Warehouse & Administrative Offices 339,636 42 Owned Houston, Texas Holmes Rd Complex: Manufacturing, Warehouse, Coating Manufacturing Plant & Corporate Office 351,377 41 Owned Cedar Park, Texas Instrumentation Manufacturing Facility, Administrative & Sales Offices 215,778 34 Owned Dubai, UAE Manufacturing Facility of Downhole Tools, Distribution Warehouse 184,492 8 Leased 1/29/2031 Conroe, Texas Solids Control Manufacturing Facility, Warehouse, Administrative & Sales Offices, and Engineering Labs 153,750 42 Owned Houston, Texas Manufacturing of plastic thread products 158,250 7 Owned Completion & Production Solutions: Senai, Malaysia Manufacturing Facility of Fiber Glass Products 284,701 14 Owned* 10/31/2027 Kalundborg, Denmark Flexibles Manufacturing, Warehouse, Shop & Administrative Offices 485,067 38 Owned Superporto du Acu, Brazil Flexibles Manufacturing, Warehouse, Shop & Administrative Offices 464,885 31 Owned* 10/19/2031 Manchester, England Manufacturing, Assembly & Testing of PC Pumps and Expendable Parts, Administrative & Sales Offices 365,872 27 Owned Houston, Texas Manufacturing of Wireline and Pressure Performance Equipment, Warehouse and Administrative Offices 383,750 26 Leased 6/30/2041 Fort Worth, Texas Coiled Tubing Manufacturing Facility, Warehouse, Administrative & Sales Offices 345,000 24 Owned Qingdau, Shandong, China Manufacturing of fiber-reinforced tubular products 277,331 25 Leased 10/26/2036 Tulsa, Oklahoma Manufacturing Facility of Pumps, Warehouse and Administrative & Sales Offices 222,625 10 Owned Houston, Texas Manufacturing of fiber-reinforced tubular products & Administrative Offices 130,873 7 Leased 4/30/2026 Kintore, Aberdeenshire, Scotland, UK Manufacturing & Servicing of Elmar, ASEP and Anson Equipment 198,651 13 Leased 9/3/2037 Dammam, Saudi Arabia Manufacturing of fiberglass products 213,484 23 Leased 12/7/2036 Mt.
We own or lease approximately 321 repair and manufacturing facilities that refurbish and manufacture new equipment and parts, 101 service centers that provide inspection and equipment rental and 132 engineering, sales and administration facilities. 26
We own or lease approximately 302 repair and manufacturing facilities that refurbish and manufacture new equipment and parts, 110 service centers that provide inspection and equipment rental and 136 engineering, sales and administration facilities. 29

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” contained herein. 28 PERFORMANCE GRAPH The graph below compares the cumulative total shareholder return on our common stock to the S&P 500 Index, the S&P Oil & Gas Equipment & Services Index, the PHLX Oil Service Index, and the S&P Oil & Gas Equipment Index.
“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” contained herein. 31 PERFORMANCE GRAPH The graph below compares the cumulative total shareholder return on our common stock to the S&P 500 Index, the S&P Oil & Gas Equipment & Services Index, the PHLX Oil Service Index, and the S&P Oil & Gas Equipment Index.
The total shareholder return assumes $100 invested on December 31, 2017 in NOV Inc., the S&P 500 Index, the S&P Oil & Gas Equipment & Services Index, the PHLX Oil Service Index, and the S&P Oil & Gas Equipment Index. It also assumes reinvestment of all dividends.
The total shareholder return assumes $100 invested on December 31, 2018 in NOV Inc., the S&P 500 Index, the S&P Oil & Gas Equipment & Services Index, the PHLX Oil Service Index, and the S&P Oil & Gas Equipment Index. It also assumes reinvestment of all dividends.
The shares were not part of a publicly announced program to purchase common stock. 30
The shares were not part of a publicly announced program to purchase common stock. 33
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the New York Stock Exchange (NYSE) under the symbol “NOV”. As of February 3, 2023, there were 1,864 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the New York Stock Exchange (NYSE) under the symbol “NOV”. As of February 2, 2024, there were 1,738 holders of record of our common stock.
Cash dividends declared were $0.05 per share in each quarter of 2022 and $0.05 per share in the fourth quarter of 2021, aggregating $78 million and $20 million for the years ended December 31, 2022 and 2021, respectively.
Cash dividends declared were $0.05 per share in each quarter of 2023 and 2022, aggregating $79 million and $78 million for the years ended December 31, 2023 and 2022, respectively.
The results shown in the graph below are not necessarily indicative of future performance. 12/17 12/18 12/19 12/20 12/21 12/22 NOV Inc. 100.00 71.73 70.52 38.88 38.52 59.99 S&P 500 100.00 95.62 125.72 148.85 191.58 156.89 S&P Oil & Gas Equipment & Services Index 100.00 58.53 64.70 41.26 52.64 86.75 PHLX Oil Service Index 100.00 54.78 54.48 31.56 38.10 61.53 S&P Oil & Gas Equipment Index 100.00 52.98 48.40 27.40 30.75 49.98 29 This information shall not be deemed to be ‘‘soliciting material’’ or to be ‘‘filed’’ with the Commission or subject to Regulation 14A (17 CFR 240.14a-1-240.14a-104), other than as provided in Item 201(e) of Regulation S-K, or to the liabilities of section 18 of the Exchange Act (15 U.S.C. 78r).
The results shown in the graph below are not necessarily indicative of future performance. 12/18 12/19 12/20 12/21 12/22 12/23 NOV Inc. 100.00 98.32 54.20 53.71 83.63 82.09 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 S&P Oil & Gas Equipment & Services Index 100.00 110.54 70.50 89.93 148.21 150.90 PHLX Oil Service Index 100.00 99.45 57.60 69.55 112.31 114.47 S&P Oil & Gas Equipment Index 100.00 91.36 51.72 58.05 94.34 101.02 This information shall not be deemed to be ‘‘soliciting material’’ or to be ‘‘filed’’ with the Commission or subject to Regulation 14A (17 CFR 240.14a-1-240.14a-104), other than as provided in Item 201(e) of Regulation S-K, or to the liabilities of section 18 of the Exchange Act (15 U.S.C. 78r). 32 Purchases of Equity Securities by the Issuer and Affiliated Purchasers Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs October 1 through October 31, 2023 290 $ 20.49 — — November 1 through November 30, 2023 12,392 20.34 — — December 1 through December 31, 2023 217 19.03 — — Total (1) 12,899 $ 20.32 — (1) The shares listed as “purchased” during the fourth quarter of 2023 were withheld from employee’s vested restricted stock grants, as required for income taxes, and retired.
Removed
Purchases of Equity Securities by the Issuer and Affiliated Purchasers Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs October 1 through October 31, 2022 2,196 $ 18.51 — — November 1 through November 30, 2022 — — — — December 1 through December 31, 2022 217 22.55 — — Total (1) 2,413 18.88 — (1) The shares listed as “purchased” during the fourth quarter of 2022 were withheld from employee’s vested restricted stock grants, as required for income taxes, and retired.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

73 edited+24 added−9 removed47 unchanged
NOV remains committed to improving organizational efficiencies while focusing on the development and commercialization of innovative products and services, including technologies to reduce environmental impact of oil and gas operations, and technologies to accelerate the energy transition that are responsive to the longer-term needs of NOV’s customers.
NOV remains committed to improving organizational efficiencies while focusing on the development and commercialization of innovative products and services, including technologies to reduce the environmental impact of oil and gas operations and technologies to accelerate the energy transition that are responsive to the longer-term needs of NOV’s customers.
The starting point for each 39 of the reporting unit’s cash flow from operations is the detailed annual plan or updated forecast. Cash flows beyond the specific operating plans were estimated using a terminal value calculation, which incorporated historical and forecasted financial cyclical trends for each reporting unit and considered long-term earnings growth rates.
The starting point for each of the reporting unit’s cash flow from operations is the detailed annual plan or updated forecast. Cash flows beyond the specific operating plans were estimated using a terminal value calculation, which incorporated historical and forecasted financial cyclical trends for each reporting unit and considered long-term earnings growth rates.
We continue to expect to fund future cash acquisitions primarily with cash flow from operations and borrowings, including the unborrowed portion of the revolving credit facility or new debt issuances, but may also issue additional equity 38 either directly or in connection with acquisitions.
We continue to expect to fund future cash acquisitions primarily with cash flow from operations and borrowings, including the unborrowed portion of the revolving credit facility or new debt issuances, but may also issue additional equity either directly or in connection with acquisitions.
With operations in approximately 554 locations across six continents, NOV designs, manufactures and services a comprehensive line of drilling, well servicing and offshore construction equipment; sells and rents drilling motors, specialized downhole tools, and rig instrumentation; performs inspection and internal coating of oilfield tubular products; provides drill cuttings separation, management and disposal systems and services; and provides expendables and spare parts used in conjunction with the Company’s large installed base of equipment.
With operations in approximately 548 locations across six continents, NOV designs, manufactures and services a comprehensive line of drilling, well servicing and offshore construction equipment; sells and rents drilling motors, specialized downhole tools, and rig instrumentation; performs inspection and internal coating of oilfield tubular products; provides drill cuttings separation, management and disposal systems and services; and provides expendables and spare parts used in conjunction with the Company’s large installed base of equipment.
The annual tax provision includes the impact of income tax charges and benefits for changes to liabilities that the Company considers appropriate, as well as related interest. Tax exposure items primarily include potential challenges to intercompany pricing and certain operating expenses that may not be deductible in foreign jurisdictions.
The annual tax provision includes the impact of income tax provisions and benefits for changes to liabilities that the Company considers appropriate, as well as related interest. Tax exposure items primarily include potential challenges to intercompany pricing and certain operating expenses that may not be deductible in foreign jurisdictions.
Results of Operations in 2021 Compared to 2020 Information related to the comparison of our operating results between the years 2021 and 2020 is included in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our 2021 Form 10-K filed with the SEC and is incorporated by reference into this annual report on Form 10-K.
Results of Operations in 2022 Compared to 2021 Information related to the comparison of our operating results between the years 2022 and 2021 is included in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our 2022 Form 10-K filed with the SEC and is incorporated by reference into this annual report on Form 10-K.
A consolidated joint venture of the Company borrowed $120 million against a $150 million bank line of credit for the construction of a facility in Saudi Arabia. Interest under the bank line of credit is based upon LIBOR plus 1.40%. The bank line of credit contains a financial covenant regarding maximum debt-to-equity ratio of 75%.
A consolidated joint venture of the Company borrowed $120 million against a $150 million bank line of credit for the construction of a facility in Saudi Arabia. Interest under the bank line of credit is based upon SOFR plus 1.40%. The bank line of credit contains a financial covenant regarding maximum debt-to-equity ratio of 75%.
The Company has continued to invest in developing and advancing products and technologies, contributing to the obsolescence of certain older products in a dramatically-shifted and more highly competitive recovering market, but also ensuring that the portfolio of products and services offered by the Company will meet customer needs in 2022 and beyond.
The Company has continued to invest in developing and advancing products and technologies, contributing to the obsolescence of certain older products in a dramatically-shifted and more highly competitive recovering market, but also ensuring that the portfolio of products and services offered by the Company will meet customer needs in 2024 and beyond.
Unless indicated otherwise, results of operations are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Certain reclassifications have been made to the prior year financial statements to conform with the 2022 presentation.
Unless indicated otherwise, results of operations are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Certain reclassifications have been made to the prior year financial statements to conform with the 2023 presentation.
For the year-ended 2022, the effective tax rate was negatively impacted by current year losses in certain jurisdictions with no tax benefit, partially offset by favorable adjustments related to foreign currency translation gains and the utilization of losses and tax credits for prior year tax returns. 35 For the year ended December 31, 2021 the effective tax rate was negatively impacted by losses in certain jurisdictions with no tax benefit, partially offset by favorable adjustments related to utilization of losses and tax credits for prior year tax returns.
For the year ended December 31, 2022, the effective tax rate was negatively impacted by losses in certain jurisdictions with no tax benefit, partially offset by favorable adjustments related to the foreign currency translation gains and the utilization of losses and tax credits for prior year tax returns.
See sources below. 31 The following table details the U.S., Canadian, and international rig activity and West Texas Intermediate Oil prices for the past nine quarters ended December 31, 2022 on a quarterly basis: Source: Rig count: Baker Hughes, Inc.
See sources below. 34 The following table details the U.S., Canadian, and international rig activity and West Texas Intermediate Oil prices for the past nine quarters ended December 31, 2023 on a quarterly basis: Source: Rig count: Baker Hughes, Inc.
The Company has the right to increase the commitments under this agreement to an aggregate amount of up to $3.0 billion upon the consent of only those lenders holding any such increase. Interest under the multicurrency facility is based upon LIBOR, NIBOR or CDOR plus 1.25% subject to a ratings-based grid or the U.S. prime rate.
The Company has the right to increase the commitments under this agreement to an aggregate amount of up to $3.0 billion upon the consent of only those lenders holding any such increase. Interest under the multicurrency facility is based upon Secured Overnight Financing Rate (SOFR), NIBOR or CDOR plus 1.25% subject to a ratings-based grid or the U.S. prime rate.
Although numerous factors can affect the timing of revenue out of backlog (including, but not limited to, customer change orders and supplier accelerations or delays), the Company reasonably expects approximately $799 million of revenue out of backlog in 2023 and the remaining in 2024 and thereafter.
Although numerous factors can affect the timing of revenue out of backlog (including, but not limited to, customer change orders and supplier accelerations or delays), the Company reasonably expects approximately $810 million of revenue out of backlog in 2024 and the remaining in 2025 and thereafter.
The Company had $504 million of outstanding letters of credit at December 31, 2022, primarily in the U.S. and Norway, that are under various bilateral letter of credit facilities. Letters of credit are issued as bid bonds, advanced payment bonds and performance bonds.
The Company had $495 million of outstanding letters of credit at December 31, 2023, primarily in the U.S. and Norway, that are under various bilateral letter of credit facilities. Letters of credit are issued as bid bonds, advanced payment bonds and performance bonds.
There can be no assurance that additional financing for acquisitions will be available at terms acceptable to us. As of December 31, 2022, the Company had $62 million of unrecognized tax benefits.
There can be no assurance that additional financing for acquisitions will be available at terms acceptable to us. As of December 31, 2023, the Company had $67 million of unrecognized tax benefits.
The credit facility contains a financial covenant regarding maximum debt-to-capitalization ratio of 60%. As of December 31, 2022, the Company was in compliance with a debt-to-capitalization ratio of 27.7% and had no outstanding letters of credit issued under the facility, resulting in $2.0 billion of available funds.
The credit facility contains a financial covenant regarding maximum debt-to-capitalization ratio of 60%. As of December 31, 2023, the Company was in compliance with a debt-to-capitalization ratio of 23.9% and had no outstanding letters of credit issued under the facility, resulting in $2.0 billion of available funds.
As of December 31, 2022, the Company has a carrying value of $114 million in borrowings related to this line of credit. The Company has $10 million in payments related to this line of credit due in the next twelve months.
As of December 31, 2023, the Company has a carrying value of $104 million in borrowings related to this line of credit. The Company has $10 million in payments related to this line of credit due in the next twelve months.
Although numerous factors can affect the timing of revenue out of backlog (including, but not limited to, customer change orders and supplier accelerations or delays), the Company reasonably expects approximately $1,299 million of revenue out of backlog in 2023 and approximately $303 million of revenue out of backlog in 2024 and thereafter.
Although numerous factors can affect the timing of revenue out of backlog (including, but not limited to, customer change orders and supplier accelerations or delays), the Company reasonably expects approximately $1,393 million of revenue out of backlog in 2024 and approximately $429 million of revenue out of backlog in 2025 and thereafter.
The average 2022 worldwide rig count (as measured by Baker Hughes) increased significantly when compared to 2021.
The average 2023 worldwide rig count (as measured by Baker Hughes) increased when compared to 2022.
At December 31, 2022, approximately 28 percent of the capital equipment backlog was for offshore products and approximately 95 percent of the capital equipment backlog was destined for international markets. Eliminations and corporate costs Eliminations and corporate costs were $253 million for the year ended December 31, 2022 compared to $186 million for the year ended December 31, 2021.
At December 31, 2023, approximately 27 percent of the capital equipment backlog was for offshore products and approximately 95 percent of the capital equipment backlog was destined for international markets. Eliminations and corporate costs Eliminations and corporate costs were $274 million for the year ended December 31, 2023 compared to $253 million for the year ended December 31, 2022.
The following table summarizes our net cash provided by (used in) continuing operating activities, continuing investing activities and continuing financing activities for the periods presented (in millions): Year Ended December 31, 2022 2021 2020 Net cash provided by (used in) operating activities $ (179 ) $ 291 $ 926 Net cash used in investing activities (238 ) (196 ) (144 ) Net cash used in financing activities (96 ) (189 ) (259 ) Significant uses of cash during 2022 • Cash flows used in operating activities were $179 million.
The following table summarizes our net cash provided by (used in) continuing operating activities, continuing investing activities and continuing financing activities for the periods presented (in millions): Year Ended December 31, 2023 2022 2021 Net cash provided by (used in) operating activities $ 143 $ (179 ) $ 291 Net cash used in investing activities (293 ) (238 ) (196 ) Net cash used in financing activities (103 ) (96 ) (189 ) Significant uses of cash during 2023 • Cash flows provided by operating activities were $143 million.
Net revenue recognized from performance obligations satisfied in previous periods was $37 million for the year ended December 31, 2022 primarily due to change orders. Goodwill The Company has approximately $1.5 billion of goodwill as of December 31, 2022.
Net revenue recognized from performance obligations satisfied in previous periods was $39 million for the year ended December 31, 2023 primarily due to change orders. 42 Goodwill The Company has approximately $1.6 billion of goodwill as of December 31, 2023.
The Company’s outstanding debt at December 31, 2022 consisted primarily of $1,090 million in 3.95% Senior Notes, $495 million in 3.60% Senior Notes, and other debt of $145 million. The Company was in compliance with all covenants at December 31, 2022. Long-term lease liabilities totaled $549 million at December 31, 2022.
The Company’s outstanding debt at December 31, 2023 consisted primarily of $1,091 million in 3.95% Senior Notes, $495 million in 3.60% Senior Notes, and other debt of $139 million. The Company was in compliance with all covenants at December 31, 2023. Long-term lease liabilities totaled $558 million at December 31, 2023.
You should also consider carefully the statements under “Risk Factors” which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements, and additional disclosures we make in our press releases and ‎Forms 10-Q, and 8-K. We also suggest that you listen to our quarterly earnings release conference calls with financial analysts.
You should also consider carefully the statements under “Risk Factors” which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements, and additional disclosures we make in our press releases and Forms 10-Q, and 8-K.
Excluding the Other Items from all periods, fourth quarter 2022 Adjusted EBITDA was $231 million, compared to $195 million in the third quarter of 2022 and $69 million in the fourth quarter of 2021.
Excluding the Other Items from all periods, fourth quarter 2023 Adjusted EBITDA was $294 million, compared to $267 million in the third quarter of 2023 and $231 million in the fourth quarter of 2022.
The realization of remaining deferred tax assets is primarily dependent on future taxable income. Any reduction 40 in future taxable income including but not limited to any future restructuring activities may require that the Company record an additional valuation allowance against deferred tax assets.
Any reduction in future taxable income including but not limited to any future restructuring activities may require that the Company record an additional valuation allowance against deferred tax assets.
As of December 31, 2022, the joint venture was in compliance. Upon completion of the facility construction in the fourth quarter of 2022, the Company will not have future borrowings on the line of credit, with repayments beginning December 2022 and final payment no later than June 2032.
As of December 31, 2023, the joint venture was in compliance. The facility construction was completed in the fourth quarter of 2022, and the joint venture will not have future borrowings on the line of credit. The line of credit repayment schedule began in December 2022 with final payment no later than June 2032.
Operating profit from Wellbore Technologies was $304 million for the year ended December 31, 2022, an increase of $230 million compared to the year ended December 31, 2021. Operating profit percentage for 2022 was 10.9 percent compared to an operating profit percentage of 3.8 percent in 2021.
Operating profit from Wellbore Technologies was $423 million for the year ended December 31, 2023, an increase of $119 million compared to the year ended December 31, 2022. Operating profit percentage for 2023 was 13.3 percent compared to an operating profit percentage of 10.9 percent in 2022.
During 2022, 2021, and 2020 we recorded inventory provision charges (credits) to inventory reserves of $(18) million, $73 million, and $367 million, respectively, consisting primarily of obsolete and surplus inventories. At December 31, 2022 and 2021, inventory reserves totaled $378 and $444 million, or 17.3% and 25.0% of gross inventory, respectively.
During 2023, 2022, and 2021 we recorded inventory provision charges (credits) to inventory reserves of $28 million, $(18) million, and $73 million, respectively, consisting primarily of obsolete and surplus inventories. At December 31, 2023 and 2022, inventory reserves totaled $354 and $378 million, or 14.1% and 17.3% of gross inventory, respectively.
At December 31, 2022, approximately 56 percent of the capital equipment backlog was for offshore products and approximately 69 percent of the capital equipment backlog was destined for international markets.
At December 31, 2023, approximately 66 percent of the capital equipment backlog was for offshore products and approximately 78 percent of the capital equipment backlog was destined for international markets.
As of December 31, 2022, approximately $756 million of the $1,069 million of cash and cash equivalents was held by our foreign subsidiaries and the earnings associated with this cash could be subject to foreign withholding taxes and incremental U.S. taxation if transferred among countries or repatriated to the U.S.
As of December 31, 2023, approximately $728 million of the $816 million of cash and cash equivalents was held by our foreign subsidiaries and the earnings associated with this cash, if repatriated to the U.S., could be subject to foreign withholding taxes and incremental U.S. taxation.
Operating profit from Completion & Production Solutions was $69 million for the year ended December 31, 2022 compared to an operating loss of $65 million for 2021, an improvement of $134 million. Operating profit percentage for 2022 was 2.7 percent compared to operating loss percentage of 3.3 percent in 2021.
Operating profit from Completion & Production Solutions was $188 million for the year ended December 31, 2023 compared to an operating profit of $69 million for 2022, an improvement of $119 million. Operating profit percentage for 2023 was 6.2 percent compared to operating profit percentage of 2.7 percent in 2022.
Management expects to see continued growth in these areas as low carbon power becomes a larger portion of the global energy supply. 32 EXECUTIVE SUMMARY NOV Inc. generated revenue of $7.24 billion in 2022, which was higher than the prior year due to higher industry activity as a result of higher oil and gas prices.
Management expects to see continued growth in these areas as low carbon power becomes a larger portion of the global energy supply. 35 EXECUTIVE SUMMARY NOV generated revenue of $8.58 billion in 2023, which was higher than the prior year due to higher industry activity.
( www.bakerhughes.com ); West Texas Intermediate Crude Price, Natural Gas Price: US Department of Energy, Energy Information Administration ( www.eia.doe.gov ). The average price per barrel of West Texas Intermediate Crude was $94.81 in 2022, an increase of 39% over the average price for 2021 of $67.99 per barrel.
( www.bakerhughes.com ); West Texas Intermediate Crude Price, Natural Gas Price: US Department of Energy, Energy Information Administration ( www.eia.doe.gov ). The average price per barrel of West Texas Intermediate Crude was $77.64 in 2023, a decrease of 18% over the average price for 2022 of $94.81 per barrel.
As of December 31, 2022, backlog for capital equipment orders for Completion & Production Solutions was $1.60 billion, an increase of 8 percent from the third quarter of 2022 and an increase of 24 percent from the fourth quarter of 2021.
As of December 31, 2023, backlog for capital equipment orders for Completion & Production Solutions was $1.82 billion, an increase of $196 million from the third quarter of 2023 and an increase of $220 million from the fourth quarter of 2022.
Results of Operations The following table summarizes the Company’s revenue and operating profit (loss) by operating segment (in millions): Year Ended December 31, % Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Revenue: Wellbore Technologies $ 2,777 $ 1,959 $ 1,867 41.8 % 4.9 % Completion & Production Solutions 2,588 1,963 2,433 31.8 % (19.3 )% Rig Technologies 2,034 1,739 1,919 17.0 % (9.4 )% Eliminations (162 ) (137 ) (129 ) (18.2 )% (6.2 )% Total Revenue $ 7,237 $ 5,524 $ 6,090 31.0 % (9.3 )% Operating Profit (Loss): Wellbore Technologies $ 304 $ 74 $ (858 ) 310.8 % 108.6 % Completion & Production Solutions 69 (65 ) (977 ) 206.2 % 93.3 % Rig Technologies 144 43 (362 ) 234.9 % 111.9 % Eliminations and corporate costs (253 ) (186 ) (228 ) (36.0 )% 18.4 % Total Operating Profit (Loss) $ 264 $ (134 ) $ (2,425 ) 297.0 % 94.5 % Operating Profit (Loss)%: Wellbore Technologies 10.9 % 3.8 % (46.0 )% Completion & Production Solutions 2.7 % (3.3 )% (40.2 )% Rig Technologies 7.1 % 2.5 % (18.9 )% Total Operating Profit (Loss) % 3.6 % (2.4 )% (39.8 )% Years Ended December 31, 2022 and December 31, 2021 Wellbore Technologies Revenue from Wellbore Technologies for the year ended December 31, 2022 was $2,777 million, an increase of $818 million, or 42%, compared to the year ended December 31, 2021.
Results of Operations The following table summarizes the Company’s revenue and operating profit (loss) by operating segment (in millions): Year Ended December 31, % Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Revenue: Wellbore Technologies $ 3,172 $ 2,777 $ 1,959 14.2 % 41.8 % Completion & Production Solutions 3,034 2,588 1,963 17.2 % 31.8 % Rig Technologies 2,608 2,034 1,739 28.2 % 17.0 % Eliminations (231 ) (162 ) (137 ) (42.6 %) (18.2 %) Total Revenue $ 8,583 $ 7,237 $ 5,524 18.6 % 31.0 % Operating Profit (Loss): Wellbore Technologies $ 423 $ 304 $ 74 39.1 % 310.8 % Completion & Production Solutions 188 69 (65 ) 172.5 % 206.2 % Rig Technologies 314 144 43 118.1 % 234.9 % Eliminations and corporate costs (274 ) (253 ) (186 ) (8.3 %) (36.0 %) Total Operating Profit (Loss) $ 651 $ 264 $ (134 ) 146.6 % 297.0 % Operating Profit (Loss)%: Wellbore Technologies 13.3 % 10.9 % 3.8 % Completion & Production Solutions 6.2 % 2.7 % (3.3 %) Rig Technologies 12.0 % 7.1 % 2.5 % Total Operating Profit (Loss) % 7.6 % 3.6 % (2.4 %) Years Ended December 31, 2023 and December 31, 2022 Wellbore Technologies Revenue from Wellbore Technologies for the year ended December 31, 2023 was $3,172 million, an increase of $395 million, or 14%, compared to the year ended December 31, 2022.
Other Items included in operating profit for Wellbore Technologies were $60 million for the year ended December 31, 2022 and $31 million for the year ended December 31, 2021. 34 Completion & Production Solutions Revenue from Completion & Production Solutions for the year ended December 31, 2022 was $2,588 million, an increase of $625 million, or 32%, compared to the year ended December 31, 2021.
Other Items included in operating profit for Wellbore Technologies were $44 million for the year ended December 31, 2023 and $60 million for the year ended December 31, 2022. 37 Completion & Production Solutions Revenue from Completion & Production Solutions for the year ended December 31, 2023 was $3,034 million, an increase of $446 million, or 17%, compared to the year ended December 31, 2022.
The capital equipment backlog was $2,793 million at December 31, 2022, an increase of $26 million, or 1 percent, from backlog of $2,767 million at December 31, 2021.
The capital equipment backlog was $2,868 million at December 31, 2023, an increase of $75 million, or 3 percent, from backlog of $2,793 million at December 31, 2022.
During the fourth quarter of 2022, third quarter of 2022, and fourth quarter of 2021, pre-tax other items: goodwill, intangible and long-lived asset impairment charges, inventory charges, severance accruals, and other charges and credits (collectively “Other Items”), were $(8) million, $63 million, and $8 million, respectively.
During the fourth quarter of 2023, third quarter of 2023, and fourth quarter of 2022, pre-tax other items: inventory charges, severance accruals, and other charges and credits (collectively “Other Items”), were $55 million, $7 million, and $(8) million, respectively.
The Company’s annual tax provision is based on taxable income, statutory rates and tax planning opportunities available in the various jurisdictions in which it operates. The determination and evaluation of the annual tax provision and tax positions involves the interpretation of the tax laws in the various jurisdictions in which the Company operates.
Income taxes have been recorded based upon the tax laws and rates of the countries in which the Company operates and income is earned. The Company’s annual tax provision is based on taxable income, statutory rates and tax planning opportunities available in the various jurisdictions in which it operates.
The price for West Texas Intermediate Crude Oil was $73.39 per barrel at February 3, 2023, a decrease of 11 percent from the fourth quarter of 2022 average. The price for natural gas was $2.41 per mmbtu at February 3, 2023, a decrease of 56 percent from the fourth quarter of 2022 average.
The price for West Texas Intermediate Crude Oil was $72.28 per barrel at February 2, 2024, a decrease of 8 percent from the fourth quarter of 2023 average. The price for natural gas was $2.08 per mmbtu at February 2, 2024, a decrease of 24 percent from the fourth quarter of 2023 average.
Rig Technologies Rig Technologies generated revenues of $620 million in the fourth quarter of 2022, an increase of 21 percent from the third quarter of 2022 and an increase of 44 percent from the fourth quarter of 2021. Operating profit was $80 million, or 12.9 percent of sales, and included a credit of $11 million from Other Items.
Rig Technologies Rig Technologies generated revenues of $766 million in the fourth quarter of 2023, an increase of 12 percent from the third quarter of 2023 and an increase of 24 percent from the fourth quarter of 2022. Operating profit was $111 million, or 14.5 percent of sales, and included a credit of $18 million from Other Items.
At December 31, 2021, cash and cash equivalents were $1,591 million and total debt was $1,713 million.
At December 31, 2022, cash and cash equivalents were $1,069 million and total debt was $1,730 million.
Rig Technologies Revenue from Rig Technologies for the year ended December 31, 2022 was $2,034 million, an increase of $295 million, or 17%, compared to the year ended December 31, 2021. Operating profit from Rig Technologies was $144 million for the year ended December 31, 2022, an improvement of $101 million compared to 2021.
Rig Technologies Revenue from Rig Technologies for the year ended December 31, 2023 was $2,608 million, an increase of $574 million, or 28%, compared to the year ended December 31, 2022. Operating profit from Rig Technologies was $314 million for the year ended December 31, 2023, an improvement of $170 million compared to 2022.
Other items consist of charges and credits related to (in millions): Three Months Ended Year Ended December 31, September 30, December 31, 2022 2021 2022 2022 2021 Other items by category: Russia Impairment and other charges $ 2 $ — $ 76 $ 127 $ — Inventory (10 ) (1 ) (13 ) (35 ) (13 ) Severance, facility closures and other — 9 — 22 72 Total other items $ (8 ) $ 8 $ 63 $ 114 $ 59 36 The following tables set forth the reconciliation of Adjusted EBITDA to its most directly comparable GAAP financial measures (in millions): Three Months Ended Year Ended December 31, September 30, December 31, 2022 2021 2022 2022 2021 Operating profit (loss): Wellbore Technologies $ 110 $ 50 $ 74 $ 304 $ 74 Completion & Production Solutions 50 (16 ) 21 69 (65 ) Rig Technologies 80 1 22 144 43 Eliminations and corporate costs (78 ) (50 ) (62 ) (253 ) (186 ) Total operating profit (loss) $ 162 $ (15 ) $ 55 $ 264 $ (134 ) Other Items, net: Wellbore Technologies $ (1 ) $ 2 $ 31 $ 60 $ 31 Completion & Production Solutions — 2 19 36 1 Rig Technologies (11 ) 3 13 — 22 Corporate 4 1 — 18 5 Total Other Items $ (8 ) $ 8 $ 63 $ 114 $ 59 (Gain)/Loss on Sales of Fixed Assets Wellbore Technologies $ — $ (3 ) $ 1 $ — $ (1 ) Completion & Production Solutions 1 — — (3 ) (1 ) Rig Technologies — — (1 ) — (2 ) Corporate — 4 1 3 2 Total (Gain)/Loss on Sales of Fixed Assets $ 1 $ 1 $ 1 $ — $ (2 ) Depreciation & amortization: Wellbore Technologies $ 37 $ 39 $ 39 $ 150 $ 158 Completion & Production Solutions 15 16 16 62 62 Rig Technologies 19 17 18 73 71 Corporate 5 3 3 16 15 Total depreciation & amortization $ 76 $ 75 $ 76 $ 301 $ 306 Adjusted EBITDA: Wellbore Technologies $ 146 $ 88 $ 145 $ 514 $ 262 Completion & Production Solutions 66 2 56 164 (3 ) Rig Technologies 88 21 52 217 134 Eliminations and corporate costs (69 ) (42 ) (58 ) (216 ) (164 ) Total Adjusted EBITDA $ 231 $ 69 $ 195 $ 679 $ 229 Reconciliation of Adjusted EBITDA: GAAP net income (loss) attributable to Company $ 104 $ (40 ) $ 32 $ 155 $ (250 ) Noncontrolling interests (5 ) (3 ) 3 — 5 Provision for income taxes 42 14 29 83 15 Interest expense 21 19 19 78 77 Interest income (7 ) (2 ) (6 ) (19 ) (9 ) Equity (income) loss in unconsolidated affiliate (36 ) (1 ) (12 ) (68 ) 5 Other (income) expense, net 43 (2 ) (10 ) 35 23 Depreciation and amortization 76 75 76 301 306 (Gain)/Loss on Sales of Fixed Assets 1 1 1 — (2 ) Other Items (8 ) 8 63 114 59 Total Adjusted EBITDA $ 231 $ 69 $ 195 $ 679 $ 229 37 Liquidity and Capital Resources At December 31, 2022, the Company had cash and cash equivalents of $1,069 million, and total debt of $1,730 million.
Other items consist of charges and credits related to (in millions): Three Months Ended Year Ended December 31, September 30, December 31, 2023 2022 2023 2023 2022 Other items by category: Russia Impairment and other charges $ 1 $ 2 $ 3 $ 4 $ 127 Inventory (3 ) (10 ) (6 ) (20 ) (35 ) Voluntary early retirement program 42 — 10 52 — Royalty discount 25 — — 25 — Earnout (25 ) — — (25 ) Severance, facility closures and other 15 — — 15 22 Total other items $ 55 $ (8 ) $ 7 $ 51 $ 114 39 The following tables set forth the reconciliation of Adjusted EBITDA to its most directly comparable GAAP financial measures (in millions): Three Months Ended Year Ended December 31, September 30, December 31, 2023 2022 2023 2023 2022 Operating profit: Wellbore Technologies $ 76 $ 110 $ 123 $ 423 $ 304 Completion & Production Solutions 44 50 47 188 69 Rig Technologies 111 80 86 314 144 Eliminations and corporate costs (70 ) (78 ) (73 ) (274 ) (253 ) Total operating profit $ 161 $ 162 $ 183 $ 651 $ 264 Other Items, net: Wellbore Technologies $ 42 $ (1 ) $ 3 $ 44 $ 60 Completion & Production Solutions 25 — 2 26 36 Rig Technologies (18 ) (11 ) (3 ) (31 ) — Corporate 6 4 5 12 18 Total other items $ 55 $ (8 ) $ 7 $ 51 $ 114 (Gain)/Loss on Sales of Fixed Assets Wellbore Technologies $ 1 $ — $ — $ 1 $ — Completion & Production Solutions — 1 1 (4 ) (3 ) Rig Technologies — — — — — Corporate — — (1 ) — 3 Total (gain)/loss on Sales of Fixed Assets $ 1 $ 1 $ — $ (3 ) $ — Depreciation & amortization: Wellbore Technologies $ 41 $ 37 $ 40 $ 155 $ 150 Completion & Production Solutions 17 15 17 66 62 Rig Technologies 16 19 17 66 73 Corporate 3 5 3 15 16 Total depreciation & amortization $ 77 $ 76 $ 77 $ 302 $ 301 Adjusted EBITDA: Wellbore Technologies $ 160 $ 146 $ 166 $ 623 $ 514 Completion & Production Solutions 86 66 67 276 164 Rig Technologies 109 88 100 349 217 Eliminations and corporate costs (61 ) (69 ) (66 ) (247 ) (216 ) Total Adjusted EBITDA $ 294 $ 231 $ 267 $ 1,001 $ 679 Reconciliation of Adjusted EBITDA: GAAP net income attributable to Company $ 598 $ 104 $ 114 $ 993 $ 155 Noncontrolling interests (3 ) (5 ) (6 ) (8 ) — Provision (benefit) for income taxes (460 ) 42 48 (373 ) 83 Interest expense 23 21 23 88 78 Interest income (7 ) (7 ) (5 ) (28 ) (19 ) Equity income in unconsolidated affiliate (18 ) (36 ) (16 ) (119 ) (68 ) Other expense, net 28 43 25 98 35 (Gain)/Loss on Sales of Fixed Assets 1 1 — (3 ) — Depreciation and amortization 77 76 77 302 301 Other Items, net: 55 (8 ) 7 51 114 Total Adjusted EBITDA $ 294 $ 231 $ 267 $ 1,001 $ 679 40 Liquidity and Capital Resources At December 31, 2023, the Company had cash and cash equivalents of $816 million, and total debt of $1,725 million.
Segment Performance Wellbore Technologies Wellbore Technologies generated revenues of $762 million in the fourth quarter of 2022, an increase of three percent from the third quarter of 2022 and an increase of 32 percent from the fourth quarter of 2021. Operating profit was $110 million, or 14.4 percent of sales, and included $1 million in credits in Other Items.
Segment Performance Wellbore Technologies Wellbore Technologies generated revenues of $824 million in the fourth quarter of 2023, an increase of three percent from the third quarter of 2023 and an increase of eight percent from the fourth quarter of 2022. Operating profit was $76 million, or 9.2 percent of sales, and included $42 million in Other Items.
We will continue to assess our inventory levels and inventory offerings for our customers, which could require the Company to record additional allowances to reduce the value of its inventory. Such changes in our estimates or assumptions could be material under weaker market conditions or outlook.
We will continue to assess our inventory levels and inventory offerings for our customers, which could require the Company to record additional allowances to reduce the value of its inventory.
Key industry indicators for the past three years include the following: % increase (decrease) 2022 v 2022 v 2022* 2021* 2020* 2021 2020 Active Drilling Rigs: U.S. 721 475 436 51.8 % 65.4 % Canada 175 132 90 32.6 % 94.4 % International 851 755 825 12.7 % 3.2 % Worldwide 1,747 1,362 1,351 28.3 % 29.3 % West Texas Intermediate Crude Prices (per barrel) $ 94.81 $ 67.99 $ 39.33 39.4 % 141.1 % Natural Gas Prices ($/mmbtu) $ 6.38 $ 3.88 $ 2.01 64.4 % 217.4 % * Averages for the years indicated.
Key industry indicators for the past three years include the following: % increase (decrease) 2023 v 2023 v 2023* 2022* 2021* 2022 2021 Active Drilling Rigs: U.S. 689 721 475 (4.4 %) 45.1 % Canada 177 175 132 1.1 % 34.1 % International 948 851 755 11.4 % 25.6 % Worldwide 1,814 1,747 1,362 3.8 % 33.2 % West Texas Intermediate Crude Prices (per barrel) $ 77.64 $ 94.81 $ 67.99 (18.1 %) 14.2 % Natural Gas Prices ($/mmbtu) $ 2.54 $ 6.38 $ 3.88 (60.2 %) (34.5 %) * Averages for the years indicated.
For the year ended December 31, 2022, the Company reported an operating profit of $264 million compared to an operating loss of $134 million in 2021, and net income attributable to the Company of $155 million, or $0.39 per fully diluted share compared to a net loss of $250 million or $0.65 per share during 2021.
For the year ended December 31, 2023, the Company reported an operating profit of $651 million compared to an operating profit of $264 million in 2022, and net income attributable to the Company of $993 million, which included the release of valuation allowances on deferred tax assets of $485 million, or $2.50 per fully diluted share compared to a net income of $155 million or $0.39 per fully diluted share during 2022.
The Company currently has recorded valuation allowances that the Company intends to maintain until it is more likely than not the deferred tax assets will be realized. Income tax expense recorded in the future will be reduced to the extent of decreases in the Company’s valuation allowances.
As of December 31, 2023, the Company has recorded valuation allowances of $346 million that the Company intends to maintain until it is more likely than not the deferred tax assets will be realized.
The average natural gas price in 2022 was $6.38 per mmbtu, an increase of 64% percent compared to the 2021 average of $3.88 per mmbtu. Average rig activity worldwide increased 28% percent for the full year in 2022 compared to 2021.
The average natural gas price in 2023 was $2.54 per mmbtu, a decrease of 60% compared to the 2022 average of $6.38 per mmbtu. Average rig activity worldwide increased 4% for the full year in 2023 compared to 2022.
The average crude oil price for the fourth quarter of 2022 was $82.79 per barrel, and natural gas was $5.51 per mmbtu. At February 3, 2023, there were 1,008 rigs actively drilling in North America, compared to the fourth quarter average of 965 rigs, an increase of 4 percent.
The average crude oil price for the fourth quarter of 2023 was $78.41 per barrel, and natural gas was $2.74 per mmbtu. At February 2, 2024, there were 851 rigs actively drilling in North America, comprised of U.S. and Canada, compared to the fourth quarter average of 804 rigs, an increase of 6 percent.
It requires significant judgement and the use of estimates and assumptions regarding significant future events such as the amount, timing and character of income, deductions and tax credits. Changes in tax laws, regulations, and treaties, foreign currency exchange restrictions or the Company’s level of operations or profitability in each jurisdiction could impact the tax liability in any given year.
Changes in tax laws, regulations, and treaties, foreign currency exchange restrictions or the Company’s level of operations or profitability in each jurisdiction could impact the tax liability in any given year.
Completion & Production Solutions Completion & Production Solutions generated revenues of $738 million in the fourth quarter of 2022, an increase of eight percent from the third quarter of 2022 and an increase of 34 percent from the fourth quarter of 2021. Operating profit was $50 million, or 6.8 percent of sales.
Completion & Production Solutions Completion & Production Solutions generated revenues of $803 million in the fourth quarter of 2023, an increase of six percent from the third quarter of 2023 and an increase of nine percent from the fourth quarter of 2022. Operating profit was $44 million, or 5.5 percent of sales, and included $25 million in Other Items.
Forward–Looking Statements The Private Securities Litigation Reform Act of 1995 provides safe harbor provisions for forward-looking information. Some of the information in this document contains, or has incorporated by reference, forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements.
The adoption of this optional relief did not have a material impact on the consolidated financial statements. Forward–Looking Statements The Private Securities Litigation Reform Act of 1995 provides safe harbor provisions for forward-looking information. Some of the information in this document contains, or has incorporated by reference, forward-looking statements.
New orders booked improved 13 percent sequentially to $557 million, representing a book-to-bill of 118 percent when compared to the $472 million of orders shipped from backlog.
New orders booked during the quarter increased 28 percent sequentially and totaled $676 million, representing a book-to-bill of 132 percent when compared to the $513 million of orders shipped from backlog.
Provision for income taxes The effective tax rate for the year ended December 31, 2022 was 34.9 percent, compared to (6.5) percent for 2021.
The increase in expense was primarily due to higher foreign exchange losses for 2023. 38 Provision for income taxes The effective tax rate for the year ended December 31, 2023 was (60.9) percent, compared to 34.9 percent for 2022.
The Completion & Production Solutions segment monitors its capital equipment backlog to plan its business. New orders are added to backlog only when the Company receives a firm written order for major completion and production components or a signed contract related to a construction project.
New orders are added to backlog only when the Company receives a firm written order for major completion and production components or a signed contract related to a construction project. The capital equipment backlog was $1,822 million at December 31, 2023, an increase of $220 million, or 14 percent from backlog of $1,602 million at December 31, 2022.
Other expense, net Other expense, net was $35 million for the year ended December 31, 2022 compared to $23 million for the year ended December 31, 2021. The increase in expense was primarily due to higher foreign exchange losses for 2022.
Other expense, net Other expense, net was $98 million for the year ended December 31, 2023 compared to $35 million for the year ended December 31, 2022.
Forward-looking statements typically are identified by use of terms such as “may,” “believe,” “plan,” “will,” “expect,” “anticipate,” “estimate,” “should,” “forecast,” and similar words, although some forward-looking statements are expressed differently. We may also provide oral or written forward-looking information in other materials we release to the public.
Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements typically are identified by use of terms such as “may,” “believe,” “plan,” “will,” “expect,” “anticipate,” “estimate,” “should,” “forecast,” and similar words, although some forward-looking statements are expressed differently.
Operating profit percentage for 2022 was 7.1 percent compared to 2.5 percent in 2021. Included in operating profit are Other Items related to Russia impairment and other charges, gains on sales of previously reserved inventory, severance costs and facility closure costs. Other Items included in operating profit for Rig Technologies was $22 million for the year ended December 31, 2021.
Included in operating profit are gains on sales of previously reserved inventory, release of an earnout accrual, charges related to a VERP, and other charges. Other items included in operating profit for Rig Technologies was a credit of $31 million for the year ended December 31, 2023 and none recorded for the year ended December 31, 2022.
This included changes in the primary components of our working capital (inventories, contract assets, and accounts payable). • Capital expenditures were $214 million. • Business acquisitions, net of cash acquired, were $49 million. • Payments of $78 million in dividends to our shareholders.
This included changes in the primary components of our working capital (inventories, contract assets, and accounts payable). • Capital expenditures were $283 million. • Business acquisitions, net of cash acquired, were $22 million. • Payments of $79 million in dividends to our shareholders. 41 Other The effect of the change in exchange rates on cash was zero for the year ended December 31, 2023, and a decrease of $9 million, and $7 million for the years ended December 31, 2022 and 2021, respectively.
Forward-looking information involves risk and uncertainties and reflects our best judgment based on current information.
We may also provide oral or written forward-looking information in other materials we release to the public. Forward-looking information involves risk and uncertainties and reflects our best judgment based on current information.
Oil and gas prices have been and are likely to continue to be volatile. See Item 1A. “Risk Factors”. The Company conducts its operations through three business segments: Wellbore Technologies, Completion & Production Solutions and Rig Technologies. See Item 1. “Business”, for a discussion of each of these business segments.
The Company plans to begin reporting the new segment information beginning in the first quarter of 2024. Prior to January 1, 2024, the Company conducted its operations through three business segments: Wellbore Technologies, Completion & Production Solutions and Rig Technologies. See Item 1. “Business”, for a discussion of each of these business segments.
New capital equipment orders booked during the quarter totaled $254 million, representing a book-to-bill of 99 percent when compared to the $257 million of orders shipped from backlog. At December 31, 2022, backlog for capital equipment orders for Rig Technologies was $2.79 billion, an increase of $26 million, or 1 percent, from backlog of $2.77 billion at December 31, 2021.
New capital equipment orders booked during the quarter totaled $214 million, representing a book-to-bill of 68 percent when compared to the $314 million of orders shipped from backlog.
Income Taxes The Company is U.S. registered and is subject to income taxes in the U.S. The Company operates through various subsidiaries in a number of countries throughout the world. Income taxes have been recorded based upon the tax laws and rates of the countries in which the Company operates and income is earned.
Such changes in our estimates or assumptions could be material under weaker market conditions or outlook. 43 Income Taxes The Company is U.S. registered and is subject to income taxes in the U.S. The Company operates through various subsidiaries in a number of countries throughout the world.
Adjusted EBITDA increased $36 million sequentially and $67 million from the prior year to $88 million, or 14.2 percent of sales. Strong demand for aftermarket parts and services combined with improving global supply chains, and an increase in capital equipment deliveries drove the improved results.
Adjusted EBITDA increased $9 million sequentially and increased $21 million from the prior year to $109 million, or 14.2 percent of sales. Results reflect seasonal increases in aftermarket activities supplemented by continued improvements in deliveries of spare parts and strong year-end capital equipment sales.
For the fourth quarter ended December 31, 2022, revenue was $2.07 billion, a $184 million or 10 percent increase compared to the third quarter of 2022. The Company reported net income of $104 million, or $0.26 per fully diluted share, an improvement of $72 million, or $0.18 per fully diluted share, from the third quarter of 2022.
For the fourth quarter ended December 31, 2023, revenue was $2.34 billion, a $158 million or seven percent increase compared to the third quarter of 2023.
Included in operating profit are Other Items related to Russia impairment and other charges, gains on sales of previously reserved inventory, severance costs and other charges and credits. Other items included in operating profit (loss) for Completion & Production Solutions was $36 million for the year ended December 31, 2022 and $1 million for the year ended December 31, 2021.
Other items included in operating profit for Completion & Production Solutions was $26 million for the year ended December 31, 2023 and $36 million for the year ended December 31, 2022. The Completion & Production Solutions segment monitors its capital equipment backlog to plan its business.
Diminished global oil and gas inventories and productive capacity resulting from underinvestment in the industry over the last seven years, along with rising energy security risks, and higher commodity prices should continue to spur increased oilfield activity and demand for the Company’s equipment and technology.
Geopolitical risks and concerns regarding a slowing global economy, among other macro environment uncertainties, may drive volatility and could pressure commodity prices near-term; however, management believes diminished global oil and gas production capacity and rising energy security risks will continue to spur increased oilfield activity and demand for the Company’s equipment and technology.
Adjusted EBITDA increased $10 million sequentially and $64 million from the prior year to $66 million, or 8.9 percent of sales. Growing demand for completion equipment and greater progress on the segment’s growing backlog of offshore projects drove improved results.
Adjusted EBITDA increased $19 million sequentially and increased $20 million from the prior year to $86 million, or 10.7 percent of sales. Improved revenue and profitability were primarily the result of strong year-end capital equipment sales and continued margin improvement in the segment’s project backlog.
An increase in the valuation allowance would result in additional income tax expense in such period and could have a significant impact on future earnings. Recently Issued and Recently Adopted Accounting Standards See Note 2 – Summary of Significant Accounting Policies (Part IV, Item 15 of this Form 10-K) for further discussion.
An increase in the valuation allowance would result in additional income tax expense in such period and could have a significant impact on future earnings. 44 Recently Issued and Recently Adopted Accounting Standards In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848).” Topic 848, as amended, applies only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.
Adjusted EBITDA increased $1 million sequentially and $58 million from the prior year to $146 million, or 19.2 percent of sales. Accelerating demand in international markets was partially offset by lingering supply chain disruptions, which delayed product deliveries.
Adjusted EBITDA decreased $6 million sequentially and increased $14 million from the prior year to $160 million, or 19.4 percent of sales. Growing demand from international markets more than offset declining activity in North America. Profitability was affected by a less favorable sales mix, an increase in employee benefit expense, the devaluation of the Argentine peso, and other costs.
Removed
Compared to the fourth quarter of 2021, revenue increased $556 million or 37 percent, and net income improved $144 million.
Added
Oil and gas prices have been and are likely to continue to be volatile. See Item 1A. “Risk Factors”. In an effort to drive further operational and financial efficiencies, the Company consolidated NOV’s operational structure into two segments, Energy Equipment and Energy Products and Services, effective January 1, 2024.
Removed
Oil & Gas Equipment and Services Market and Outlook During 2020, the COVID-19 outbreak rapidly spread across the world, driving sharp demand destruction for crude oil as countries took measures that curtailed economic activity to slow the spread of the outbreak.
Added
The Company reported net income of $598 million, which included the release of valuation allowances, or $1.51 per fully diluted share, an improvement of $484 million, or $1.22 per fully diluted share, from the third quarter of 2023. Compared to the fourth quarter of 2022, revenue increased $270 million or 13 percent, and net income improved $494 million.
Removed
Companies across the industry responded with severe capital spending budget cuts, curtailed production, cost reductions, personnel layoffs, facility closures and bankruptcy filings. Towards 33 the end of 2020 and into 2021, commodity prices stabilized and began to recover resulting in improving industry activity levels in North America.
Added
At December 31, 2023, backlog for capital equipment orders for Rig Technologies was $2.87 billion, a decrease of $100 million from the third quarter of 2023 and an increase of $75 million from the fourth quarter of 2022. 36 Oil & Gas Equipment and Services Market and Outlook Despite the recent volatility in commodity prices, management believes the industry is in the early stages of an extended recovery that began in 2021 with the gradual reopening of global economies following the COVID-19 pandemic.
Removed
During 2021, greater availability of COVID-19 vaccines resulted in the gradual reopening of economies around the world. Pent-up consumer and industrial demand combined with government economic stimulus programs amplified the global recovery, improving economic activity, and driving higher demand for oil and gas.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Occasionally a portion of borrowings under our credit facility could be denominated in multiple currencies which could expose us to market risk with exchange rate movements. These instruments carry interest at a pre-agreed upon percentage point spread from either LIBOR, NIBOR or CDOR, or at the U.S. prime rate.
Occasionally a portion of borrowings under our credit facility could be denominated in multiple currencies which could expose us to market risk with exchange rate movements. These instruments carry interest at a pre-agreed upon percentage point spread from either SOFR, NIBOR or CDOR, or at the U.S. prime rate.
Under our credit facility, we may, at our option, fix the interest rate for certain borrowings based on a spread over LIBOR, NIBOR or CDOR for 30 days to six months.
Under our credit facility, we may, at our option, fix the interest rate for certain borrowings based on a spread over SOFR, NIBOR or CDOR for 30 days to six months.
The Company estimates that a hypothetical 10% movement of all applicable foreign currency exchange rates on the transactional exposures could affect net income by $27 million and the translational exposures could affect Other Comprehensive Income by $33 million. The counterparties to forward contracts are major financial institutions.
The Company estimates that a hypothetical 10% movement of all applicable foreign currency exchange rates on the transactional exposures could affect net income by $37 million and the translational exposures could affect Other Comprehensive Income by $37 million. The counterparties to forward contracts are major financial institutions.
These operations also have net assets and liabilities not denominated in the functional currency, which exposes us to changes in foreign currency exchange rates that impact income. During the years ended December 31, 2022, 2021 and 2020, the Company reported foreign currency losses of $25 million, $16 million and $2 million, respectively.
These operations also have net assets and liabilities not denominated in the functional currency, which exposes us to changes in foreign currency exchange rates that impact income. During the years ended December 31, 2023, 2022 and 2021, the Company reported foreign currency losses of $84 million, $25 million and $16 million, respectively.
We do not use foreign currency forward contracts for trading or speculative purposes. The Company had other financial market risk sensitive instruments (cash balances, overdraft facilities, accounts receivable and accounts payable) denominated in foreign currencies with transactional exposures totaling $340 million and translation exposures totaling $325 million as of December 31, 2022.
We do not use foreign currency forward contracts for trading or speculative purposes. The Company had other financial market risk sensitive instruments (cash balances, overdraft facilities, accounts receivable and accounts payable) denominated in foreign currencies with transactional exposures totaling $468 million and translation exposures totaling $367 million as of December 31, 2023.
There were no outstanding letters of credit issued under the credit facility resulting in $2.0 billion of funds available under this credit facility. Additionally, the Company’s joint venture has a $120 million bank line of credit for the construction of a facility in Saudi Arabia. Interest under the bank line of credit is based upon LIBOR plus 1.40%.
Additionally, the Company’s joint venture has a $120 million bank line of credit for the construction of a facility in Saudi Arabia. Interest under the bank line of credit is based upon SOFR plus 1.40%.
The credit ratings and concentration of risk of these financial institutions are monitored on a continuing basis.
The credit ratings and concentration of risk of these financial institutions are monitored on a continuing basis. Because these contracts are net-settled the Company’s credit risk with the counterparties is limited to the foreign currency rate differential at the end of the contract.
Because these contracts are net-settled the Company’s credit risk with the counterparties is limited to the foreign currency rate differential at the end of the contract. 41 Interest Rate Risk At December 31, 2022, borrowings consisted of $1,090 million in 3.95% Senior Notes, $495 million in 3.60% Senior Notes, and other debt of $145 million.
Interest Rate Risk At December 31, 2023, borrowings consisted of $1,091 million in 3.95% Senior Notes, $495 million in 3.60% Senior Notes, and other debt of $139 million. There were no outstanding letters of credit issued under the credit facility resulting in $2.0 billion of funds available under this credit facility.

Other NOV 10-K year-over-year comparisons