Oilfield services and equipment provider National Oilwell Varco said Wednesday that its Board of Directors elected to suspend the quarterly dividend until further notice.
Clay Williams, Chairman, President, and CEO said: "With the view that capital is becoming increasingly scarce and valuable within our industry, we believe that it is in the best long-term interest of NOV’s shareholders to suspend our dividend,”
“While NOV’s balance sheet and access to capital remain strong, the global economic shutdown has resulted in heightened uncertainty and an opaque outlook for the oilfield service industry.
"Thus, we feel that it is prudent to preserve the $77 million per year of cashflow from the dividend while we navigate through present market challenges, reduce costs, improve efficiencies, and position the Company for the eventual market recovery.”"
During the first quarter presentation last month, Clayton said that the Covid-19 and a historic drop in oil prices caused "what is likely to be one of the most severe downturns in our industry’s 161-year history."
He also said in April that despite the situation NOV was "well-positioned to weather the storm, with a strong balance sheet, ample liquidity, and a focus on cost control."
"We expect this downturn to get much worse during the second quarter, so we are intensifying our cost-cutting efforts to position NOV appropriately for the challenges ahead," Clayton said in 1Q presentation on April 27.
NOV's Net loss for the first quarter of 2020 was $2.05 billion, which included non-cash, pre-tax charges of $2.25 billion.
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