• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Team3 national oilwell_varco_final
 

Team3 national oilwell_varco_final

on

  • 1,153 views

 

Statistics

Views

Total Views
1,153
Views on SlideShare
1,153
Embed Views
0

Actions

Likes
0
Downloads
7
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Team3 national oilwell_varco_final Team3 national oilwell_varco_final Presentation Transcript

    • National Oilwell Varco A closer look at the company’s strategic initiatives through Return Driven Strategy Framework. Arakelian, Victoria Team 3 Mashuk, AbdullahGurumurthy, Jayaram Moraes, Ricardo Hoffman, Aaron Mathur, Pankaj Rabello, Vitoria
    • NOV ranked No. 1 in 2008 in HoustonChronicle’s list of 100 companies. “Self-styled Wal-Mart of the oil patch”
    • Last 10 years performance resulted insuperior ROI compared to the industry. 100% 80% 60% 40% 21% ROI 40% 25% 33% 29% 27% 26% 23% 20% 13% 11% 12% 19% Average ROI 8% 9% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 LFY+1 LFY+2Mkt Imp 200% 130% IC 100% 20% 15% 62% 11% 9% 24% 0% 4% 6% 3% 0%Growth 0% Average Invested Capital Growth -7% -100% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 YTD 5Yr CAGR 4.0 Relative 3X 2.0 TSR Average Total Shareholder Return 0.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 LFY+1
    • NOV achieved many milestones since itsinception over 150 years ago. 1862 – 1987: 1997: begins series NOV of acquisitions 2005: National operated as 1999: The Oilwell and separate acquisition of Hitec Varco merged to companies ASA of Norway become NOV 1996: 2001: The first 2008: Merge Incorporation of completely with Grant National Oilwell, automated oil Prideco (mkt. Inc. and IPO drilling cap $32B) equipment
    • Industry: the price of oil and competitiveenvironment can impact performance.4000 100 International 803000 1089 US 952 1017 602000 40 Canada 1720 1790 18681000 20 440 438 West Texas 356 0 0 International Price 2006 2007 2008NOV VS. REVENUEMAIN COMPETITORS 2009 (M$) Clearly the leader amongNOV 12, 710 industry peersFCM TECHNOLOGIES 4,410 Only company that provideCAMERON CORPORATION 5,220 complete solutionBAKER HUGES 9,660 Operates globallySMITH INTERNATIONAL 8,220
    • Current success is linked to their strategicinitiatives. Constant Growth through mergers & acquisitions “snowball effect” International expansion through mergers & acquisitions All in One House
    • Constant Growth through Mergers &Acquisitions Deals Mergers & Acquisitions• 2005 National Oil buys Varco for $2.4B which let’s the acquisitions of more than 150(!) companies in 4 years
    • International expansion through mergers &acquisitions Reason to expand: • Industry is violent:International expansion: politics, economics,• 2008 Grant Prideco legislation, etc. buyout starts strategy of • Mideast Crisis led to write international expansion downs, Company still was from 30% To 70% in 5 profitable years 8
    • 9
    • All in One House Rig From Rig to petroleum & distribution: Unique rig technology: • Allows to install the drilling • Acquisitions has led the point in 3 months, as company to have all set of compared to 1 year services and solutions • Consists of 95% changeable parts, which are produced in house. • Allows to address the customers’ issues faster 10
    • National Oilwell Varco meets all the tenetsof the Return Driven Strategy. Wealth-creation that benefits all stakeholders Complete solution Big companies in for oilfield the oilfield industry industry Strive to new All-in-one-stop- Individual basis products and shop solution branding solutions Acquisitions of Big vigilant of Each brand with “Umbrella-Brand” Next Generation companies with customer own decision for all products Program synergy processes process and services Global Presence, Rig Technology, in-house R&D Regulatory compliance, Globalization awareness Constant Growth in Market Cap, Steady CFROI, internal control
    • Wal-Mart of Rigs &Buffet of oil deals 12
    • Appendix 1: Return Driven Strategy© Workbench 1996 Strategic Initiative DEFINE “WEALTH” ETHICALLY • Capture a significant portion of any increased level of expenditures by itsVIGILANCE TO customers for the construction of new drilling rigs and equipment as well as the DISCIPLINED PERFORMANCEFORCES OF CHANGE upgrade and refurbishment of existing drilling rigs and equipment. MEASUREMENT AND • Capitalizing on Increasing Demand for Higher Horsepower Drilling Machinery VALUATIONScientific/Technological: KEY CUSTOMER SEGMENTS & THEIR UNMET NEEDS• The Companys business is dependent Relevant ROI and Capital • Upstream oil & gas companies on and affected by the level of worldwide oil and gas drilling and • The advanced age of the existing fleet of drilling rigs Growth Benchmarks production activity, aging of the • Increasing drilling activity involving greater water depths and extended reach worldwide rig fleet which was • New drilling rig construction and the upgrading and capacity enhancement of existing generally constructed prior to 1982 rigsVALUE PROPOSITION * The company seeks to expand its market position by leveraging its * and the profitability and cash flow of oil and gas companies and drilling installed base of higher capacity drilling machinery and equipment, expanding its non-capital upstream contractors. Drilling activity has products business, building its information technology strategy, and making acquisitions to enhance its recently increased in the offshore and product line. deeper land markets, both of which COMPETENCIES TO INNOVATE, BRAND, AND DELIVER OFFERINGS Revenue Metrics & #s are particularly well served by the drilling machinery and equipment • higher horsepower drawworks, mud pumps and power swivels provide manufactured by the Company. • integrated information and process systems that enhance procurement, inventory management• Worldwide offshore mobile drilling rig and logistics activities utilization rate was over 90% and • Regionally centralized procurement, inventory and logistics operations in order to gain cost and active U.S. land rigs had increased 14% inventory utilization efficiencies while retaining responsiveness to local markets. compared to December 31, 1995.• Alliance/outsourcing trends among oil & gas companies SUPPORTING ACTIVITIES • strategic integration of the Companys distribution expertise, extensive Cost Related Metrics & #sGovernmental/Regulatory: distribution network and growing base of customer alliances provides an• Environment laws and regulations increased opportunity for cost effective marketing of the Companys have changed rapidly over the past 20 year which placed more restriction s manufactured equipment. and limitations on activities that may impact the environment. Compliance with these laws and regulations did not adversely affected the company’s financial condition.• The Comprehensive Environmental GENUINE ASSETS Response, Compensation and Liability • Large and geographically diverse network of distribution service centers in major Capital Investment Measures Act ("CERCLA") oil and gas producing areas • Purchasing leverage due to the volume of products soldDemographic/Cultural: • Breadth of available product lines • Information systems that offer customers enhanced online and onsite services.
    • Appendix 2: Return Driven Strategy© Workbench One Stop Shop DEFINE “WEALTH” ETHICALLYVIGILANCE TO DISCIPLINED PERFORMANCEFORCES OF CHANGE MEASUREMENT AND VALUATIONScientific/Technological: KEY CUSTOMER SEGMENTS & THEIR UNMET NEEDS • Rig Technology, Petroleum Services & Supplies, and Distribution Services Relevant ROI and Capital • Solutions and Customized Rigs For eg. The Ideal Rig has thousands of parts, and National Growth BenchmarksGovernmental/Regulatory: Oilwell Varco makes 95 percent of them.• Rig Assembling in the country * VALUE PROPOSITION * The company seeks to expand its market position by• The recent mideast crisis Revenue Metrics & #simpacted the company bottomline leveraging its installed base of higher capacity drilling machinery and equipment,with write down of assets. expanding its non-capital upstream products business, building its information technology strategy, and making acquisitions to enhance its product line. COMPETENCIES TO INNOVATE, BRAND, AND DELIVER OFFERINGS Cost Related Metrics & #sDemographic/Cultural: • The Company offers Supply Chain Solutions, Lifting and handling solutions, Renting the• Any disturbance in the oil rigs producing nations would • It designs its own pumps to be used in rigs Capital Investment Measures impact heavily the industry and • They want to be the one stop shop for oil and drilling equipment. the company. SUPPORTING ACTIVITIES • NOV IntelliServ is a joint venture between the Company and Schlumberger, Ltd., in which the Company holds a 55% interest and maintains operational control. GENUINE ASSETS 1. Rig Technology 2. Petroleum Services 3. Distribution services 4. Moving towards total solutions by acquisitions of smaller companies. They are really good in acquisitions, and trying to maintain customized different offering.
    • Appendix 3: Return Driven Strategy© Workbench National Oil Well and Varco Merger-2005 DEFINE “WEALTH” ETHICALLY Growing feeling from companies and investors that it is better to buy an establishedVIGILANCE TO Organization than to build on right from the scratch. DISCIPLINED PERFORMANCEFORCES OF CHANGE KEY CUSTOMER SEGMENTS & THEIR UNMET NEEDS MEASUREMENT AND • Merger employed together both of the company genuine assets and help NOV to VALUATIONScientific/Technological: become a dominant market leader .• Merger combined effort • NOI and VRC anticipated and responded correctly the ever-growing worldwide Relevant ROI and Capital from R&D of both of the demand for energy over the next few years. Growth Benchmarks companies and offered • Merger able to produced joint offering to target specifically oil and gas drilling next generation of energy industry which no other competitor couldn’t offered. 12% ROI and 130% IC product * VALUE PROPOSITION * “Customer from Oil and Gas drilling industry growth achieved in 2005 benefited from New Merger ability to respond with an unparallel level of after the merger` quality in capital equipment, expandable product and services” COMPETENCIES TO INNOVATE, BRAND, AND DELIVER OFFERINGS • Merger Brought and packaged together many of the most popular andGovernmental/Regulatory: respected product and services offering from oil and gas drilling industry. Revenue Metrics & #sFactors that facilitate M&A in • Merger helped NOV to covered a big part of the unmet need of customers 2005: from Oil and Gas Industry i.e. offered One stop solution provider or All in one- Opening up of European shop for Oil and Gad drilling production. Cost Related Metrics & #s market SUPPORTING ACTIVITIES- Growing sense of investors •Formed a new Entity NOI+VRC = NOV $40-50 million pretax cost about M&A •Merger offered excellent opportunities for the stockholders, employees and saving after the merger- Ease of M&A process customers of both companies, as National Oil well and Varco to better positioned- More availability of cash to compete effectively in the global market place. Capital Investment MeasuresBig mergers In 2005:-- P&G acquired Gillette $2.5 billion value of the-- Adidas acquired Reebok merger offered 170 million-- eBay acquired Skype shares from the new merger GENUINE ASSETS of NOI from which NOI get 51% andDemographic/Cultural: •Worldwide leader in the design, manufacture and sale of comprehensive systems Varco get 49% of the MergerMerger helped NOI and VRC to and components used in oil and gas drilling and production.better positioned to complete GENUINE ASSET of VRCeffectively in the global • A leading provider of Highly-engineered equipment to the worlds oil and gasmarket place. industry
    • Appendix 4: Return Driven Strategy© Workbench <Title of Strategic Initiative> DEFINE “WEALTH” ETHICALLY The Company has a long tradition of pioneering innovations which improve theVIGILANCE TO cost-effectiveness, efficiency, safety and environmental impact of oil and gas DISCIPLINED PERFORMANCEFORCES OF CHANGE operations. The Companys common stock is traded on the New York Stock MEASUREMENT AND Exchange under the symbol "NOV". The Company operates through three business VALUATIONScientific/Technological: segments: Rig Technology, Petroleum Services & Supplies, and Distribution Services. KEY CUSTOMER SEGMENTS & THEIR UNMET NEEDS•Fiber-optic measuring system Relevant ROI and Capitalin drill pipe Growth BenchmarksGovernmental/Regulatory: National Oilwell Varco will•Changes associated with * VALUE PROPOSITION * acquire all of Grant Pridecooperating in foreign countries for $23.20 in cash and 0.4498 of its own shares per GRP COMPETENCIES TO INNOVATE, BRAND, AND DELIVER OFFERINGS share. The deal values GRP at The Company has a long tradition of pioneering innovations which improve the $58 per share, a 22%Demographic/Cultural: cost-effectiveness, efficiency, safety and environmental impact of oil and gas premium to Friday’s closing•Majority of firms business is operations. price of $47.46.coming from overseas Revenue Metrics & #s SUPPORTING ACTIVITIES Cost Related Metrics & #s GENUINE ASSETS The Company believes that it has been a leader in the development of new technology and equipment to enhance the safety and productivity of drilling and well servicing processes and that its sales and earnings have been dependent, in Capital Investment Measures part, upon the successful introduction of new or improved products. Through its •Combined market cap of $32 internal development programs and certain acquisitions, the Company has b assembled an extensive array of technologies protected by a substantial number of trade and service marks, patents, trade secrets, and other proprietary rights.
    • Appendix 5: Additional InformationHistorically, drilling companies have ordered customized rigs that can take a year or more to design and build. Manystill take that long, but land drilling is so hot today, especially in North America, that National Oilwell Varco is turningout its trademarked Ideal Rig system in as little as three months.The Ideal Rig has thousands of parts, and National Oilwell Varco makes 95 percent of them — everything but theengines and air compressors. National Oilwell Varcos business is split between overseas and North Americanoperations, which include the U.S. and Canada. Thats about to change, thanks to the Grant Prideco addition.Miller said he expects international operations to account for 70 percent of business in five years as overseas drillingcontinues to expand and the Grant Prideco merger takes the company into new territory.Some of the hottest contractsNational Oilwell Varco is working on now involve rigs for major natural gas plays, including drilling in the Algeriandesert and in Russia, where the company recently signed a $400 million deal to build two floating rigs for theShtokman field in the Barents Sea.Clay Williams, the companys chief financial officer, said snapping up smaller rivals doesnt just take National OilwellVarco into new markets. It can mean striking technological pay dirt. The Natixis Bleichroeder report points to one gemof the Grant Prideco acquisition — the IntelliServ Network. Analyst Jeff Spittel calls it "a potentially game-changingtechnology" with great promise for future profits. IntelliServ embeds a fiber-optic measuring system in drill pipe thattells operators on the drill floor exactly what is going on thousands of feet below at the drill bit. The instantaneous datafeeds should mean more precise drilling and could prevent blowouts.
    • Been dedicated to provide highest qualityoilfield products and services since 1841 700 worldwide manufacturing, sales, and service centers Customer-focused solutions that meet the quality, productivity, and environmental requirements Worldwide leader in providing major mechanical components for land and offshore drilling rigs Provides Oil & Gas supply chain services through its network of distribution service cents 19
    • The incorporation in 1996 and subsequentIPO allowed the company to grow faster. IPO SNAPSHOT OPPORTUNITY EXCHANGE: NYSE Construction of new drilling rigs and equipment as well SHARES OFFERED: 4 million as the upgrade and refurbishment of existing drilling rigs POST-OFFERING SHARES: 17.7 and equipment. million Increasing Demand for Higher Horsepower Drilling PROPOSED OFFER PRICE: $ 17.0 - Machinery $ 15.0 ACTUAL OFFER PRICE: $ 17.0 TRENDS FIRST-DAY CLOSING PRICE: $ 20.1 90% offshore mobile drilling rig utilization and increased OFFERING AMOUNT: $ 68.0 million land rig utilization Alliance/outsourcing trends among oil & gas companies COMPETENCIES Large and geographically diverse network of distribution service centers Purchasing leverage due to the volume of products sold Breadth of available product lines Information systems that offer customers enhanced online and onsite services.
    • Multiple acquisition allowed NOV tobecome one stop shop. Opportunities: NOV wants to become a one stop shop for oil and drilling equipments Their main offerings : Rig Technology, Petroleum Services & Supplies and Distribution Services Trends NOV started from the year 1998 to 2006 have acquired approximately 150 companies to diversify their portfolio. Growth as seen in CFROI They develop complete solutions for the oil and drilling companies for their rigs. NOV is contemplating of venturing into alternative energy sources Core Competencies In a rig manufactured by NOV, 95% parts are from its companies which it acquired. Their main strategy is acquiring and making deals with companies to offer different solutions to the oil and drilling companies.
    • National OilWell and Varco merger (2005)expanded product and services.MERGER SNAPSHOT Opportunities $2.5 billion value of the merger Merger employed together both of the company offered 170 million shares. genuine assets and help NOV to become a NOI get 51% and Varco get 49% dominant market leader . of the Merger $40-50 million pretax cost saving after the merger Value Proposition 12% ROI and 130% IC growth New Merger Provided unparallel level of quality in achieved in 2005 after the merger capital equipment, expandable product and services Competencies Merger offered excellent opportunities for the stockholders, employees and customers of both companies and positioned better to compete effectively in global market place.
    • Grant Prideco Merger (2008)is the catalystfor international expansion.MERGER SNAPSHOT Opportunities $7.5 billion value of cash and Merger build a model of synergy for NOV-- a one-stop stock merger with Houston based shop for all a drillers needs, from derricks to drill bits Grad Prideco Combined Market Cap of $32 billion Value Proposition New Merger advances NOV strategic goal of providing 86% of Merger to NOV and 14% more products and services to Oil Machinery sector. to Grant Pridecco 5% increase in EPS in 2008 Competencies $60 million of Pretax Cost saving Merger benefited the stakeholders by creating a larger, more diversified company that is better positioned to compete in the global marketplace
    • Citations/Bibliography http://impeller.net/magazine/news_en/dx9FCz.asp http://www.getfilings.com/comp/k0001021860.html http://www.nov.com/Home.aspx http://finance.mapsofworld.com/merger-acquisition/2005.html