What: Shares of National Oilwell Varco (NYSE:NOV) were slammed on Wednesday, down more than 13% by 10:45 a.m. ET on Wednesday. Fueling the sell-off was the company's fourth-quarter earnings report, which didn't leave investors much to cheer about.

So what: National Oilwell Varco's fourth quarter can be summed up in the following quote from CEO Clay Williams:

Tumbling oil prices brought capital austerity and sharply lower oilfield activity, which is intensifying as we enter 2016.

This slowdown in oil-field activity and spending led to an 18% quarter-over-quarter decline in National Oilwell Varco's revenue and an even steeper drop in earnings, which fell from $0.61 per share last quarter to just $0.23 per share in the fourth quarter. Among its many issues were expenses, which jumped up 7.1% over last quarter after falling 15% in the prior quarter.

Also concerning was the steep slump in the backlog of its key rig systems segment. After pulling $843 million in revenue out of its backlog during the quarter, the total backlog fell by 24% over last quarter to just over $6 billion. Worse yet, it only booked $89 million in new orders, which is a precipitous dive from the prior quarter, when new orders totaled $367 million.

Analysts from energy investment bank Tutor, Pickering, Holt & Co. summed up the market's reaction to the company's results by saying that they were "much worse than we expected." They also noted that this was its "most challenging quarter in some time reflect[ing] the harsh reality" that the sharp downturn in spending from oil and gas companies is having on the business.

Now what: Times are very tough in the energy patch, which is having a big impact on National Oilwell Varco's results. Worse yet, conditions have deteriorated further in 2016 due to the continued volatility of the price of oil. That's going to keep the pressure on its financial results because the price of oil needs to recover before oil companies will start spending again.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.