No surprise here. I’m expecting to see this sort of thing, industry wide, as companies vie to deleverage their balance sheets. Dividends will be cut. Earnings guidance will be slashed or suspended. The strong shall survive and weather the storm.
Co sees Q1 revs down 20% QoQ to $2.16 bln vs $2.38 bln Capital IQ Consensus. Importantly, although the near-term outlook remains challenging, NOV remains strong financially. NOV’s total debt decreased by over $500 million during the first three months of 2016 and the decision to reduce the dividend is expected to improve future net cash flow by ~$615 million per year.
“We believe the dramatic reductions in capital spending are accelerating global production declines, setting the stage for a recovery in demand for NOV equipment and technologies. Reducing our dividend will allow us to preserve capital to invest in future growth opportunities and enhance the core capabilities our customers will need when industry activity increases.”
The smaller companies will likely sing a more optimistic tune, in a delusional effort to assuage investors. The clock is ticking. The industry cannot thrive at $40 WTI.
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