Please ensure Javascript is enabled for purposes of website accessibility

CEO Pete Miller Discusses the Difference Between Private and National Oil Companies

By Taylor Muckerman – Feb 24, 2014 at 9:05AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

National Oil Varco works with clients ranging from Argentina and Brazil to Chevron and Exxon; Miller discusses the differences.

With operations in over 1160 locations worldwide, National Oilwell Varco (NOV -1.07%) is a leading provider of equipment and services to the oil and gas industry through its three segments; Rig Technology, Petroleum Services & Supplies, and Distribution & Transmission. CEO Merrill "Pete" Miller has held a number of senior executive positions with NOV, beginning in 1996. Miller also serves on the boards of Chesapeake Energy Corporation (CHKA.Q), Offshore Energy Center, Petroleum Equipment Suppliers Association, and Spindletop International.

In this video segment Miller describes NOV's perspective on working with national oil companies, from Argentina to China to Russia, versus major corporations, and how they meet the needs of such diverse clients. The full version of the interview can be found here.

A full transcript follows the video.

Think the days of $100 oil are gone? Think again. In fact, the market is heading in that direction now. But for investors that are positioned to profit from the return of $100 oil, it can't come soon enough. To help investors get rich off of rising oil prices, our top analysts prepared a free report that reveals three stocks that are bound to soar as oil prices climb higher. To discover the identities of these stocks instantly, access your free report by clicking here now.

Taylor Muckerman: Just to touch on offshore one more time, with Brazil, it's been kind of a frustrating market for the offshore community with Petrobras (PBR 1.58%) and the Brazilian government kind of holding back on some of the auctions.

They talk about the Libra Field being auctioned off, hopefully in October, and now the Brazilian government is becoming a little bit more lenient on gasoline prices within the country, and even talking about helping Petrobras fund some of their drilling initiatives down there.

What do you see, moving forward with this? Do you see it loosening up? Is it finally going to realize its true potential, do you think?

Pete Miller: I think ultimately it's going to realize the true potential, but Brazil's just a different place to work. They've had infrastructure problems ... when you take a look at it, supporting the offshore business they've got one base, and that's essentially Macaé.

Well, Macaé is high jack. If you miss your boat slot there, you're going to have big problems getting your equipment out to the rig.

I think today, though, we're starting to open up different bases around the country. I think within the next three or four years the infrastructure will catch up, and I think Brazil will become a much smoother place to do business because of that.

Muckerman: Very good to hear.

Sticking with South America a little bit, shale gas is going to probably be a huge business there, especially in Argentina. Chevron (CVX -0.29%) signing over a billion-dollar deal with YPF down there. Then you look at China, also, with huge shale reserves estimated by the EIA.

I'm just wondering how you plan on attacking these international markets that really have been untapped when you compare them to the U.S. and Canadian shale, that we've really been able to exploit.

Miller: Yeah. We're actually in great shape on being able to do that, because both countries -- Argentina that you mentioned, and China -- we've got wonderful infrastructure already in place for NOV.

But interestingly, we're actually building rigs in Fort Worth, Texas, and shipping them to China, to help exploit the Chinese shale plays. I think they know that they need help. If you look at Sinopec (SHI 1.73%), they've invested in the Eagle Ford. You look at SINOC, they've invested in the Mississippi Lime and different places like that.

That's not so much because they believe in the American market, but a lot of that's to learn. They want to get it figured out. China needs shale gas. They need it in the worst way. They've got pollution problems; a quick and easy solution for them is natural gas, and we're going to be there to help.

I believe, over the next four or five years, you're going to see international shale plays become every bit as important as the domestic shale plays, to NOV.

Muckerman: When you look at countries like China and Russia, and countries with national oil companies, what's the difference when you're trying to operate with them, versus larger integrateds like an Exxon (XOM -0.35%) or a Shell (RDS.B), for instance?

Miller: I think for the most part it's the bureaucracy. It's the quickness of decisions being made. When you're dealing with an Exxon or a Chevron, they're big companies. They're looking at things from a strictly financial basis, and they're going to make quick decisions.

I think when you're talking about national oil companies, they've got to make decisions that not only look at the financial side, but also look at the political and the social side. They want a lot more local content and different things like that, and it's a longer process.

You learn how to deal with it, but we've been overseas for so long that it's second nature to us, being able to deal with people like that, and companies.

catsloth has no position in any stocks mentioned. The Motley Fool recommends Chevron and National Oilwell Varco. The Motley Fool owns shares of National Oilwell Varco. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

ExxonMobil Stock Quote
$113.21 (-0.35%) $0.40
Chevron Stock Quote
$183.70 (-0.29%) $0.54
NOV Stock Quote
$22.22 (-1.07%) $0.24
Royal Dutch Shell plc Stock Quote
Royal Dutch Shell plc
Chesapeake Energy Stock Quote
Chesapeake Energy
Petroleo Brasileiro Stock Quote
Petroleo Brasileiro
$10.30 (1.58%) $0.16
Sinopec Shanghai Petrochemical Stock Quote
Sinopec Shanghai Petrochemical
$15.30 (1.73%) $0.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.