National Oilwell Varco 2011 Annual Report Download - page 17

Index to Financial Statements
Rocky Mountain region sometimes decline in the late fourth quarter or early first quarter due to harsh winter weather. The segments fiberglass and composite tubulars
business in China has typically declined in the first quarter due to the impact of weather on manufacturing and installation operations, and due to business slowdowns
associated with the Chinese New Year.
The Company anticipates that the seasonal trends described above will continue. However, there can be no guarantee that spending by the Companys customers will
continue to follow patterns seen in the past or that spending by other customers will remain the same as in prior years.
Marketing and Distribution Network
Substantially all of our Rig Technology capital equipment and spare parts sales, and a large portion of our smaller pumps and parts sales, are made through our direct sales
force and distribution service centers. Sales to foreign oil companies are often made with or through agent or representative arrangements. Products within Petroleum
Service & Supplies are rented and sold worldwide through our own sales force and through commissioned representatives. Distribution & Transmission sales are made
directly through our network of distribution service centers.
The Rig Technology segments customers include drilling contractors, shipyards and other rig fabricators, well servicing companies, pressure pumpers, national oil
companies, major and independent oil and gas companies, supply stores, and pipe-running service providers. Demand for its products is strongly dependent upon capital
spending plans by oil and gas companies and drilling contractors, and the level of oil and gas well drilling activity. Rig Technology purchases can represent significant capital
expenditures, and are often sold as part of a rig fabrication or major rig refurbishment package. Sometimes these packages cover multiple rigs, and often the Company bids
jointly with other related product and services providers, such as rig fabrication yards and rig design firms.
The Petroleum Services & Supplies segments customers for tubular services include major and independent oil and gas companies, national oil companies, oilfield
equipment and product distributors and manufacturers, drilling and workover contractors, oilfield service companies, pressure pumpers, pipeline operators, pipe mills,
manufacturers and processors, and other industrial companies. Certain tubular inspection and tubular coating products and services often are incorporated as a part of a tubular
package sold by tubular supply stores to end users. The Company primarily has direct operations in the international marketplace, but operates through agents in certain
markets.
The Petroleum Services & Supplies segments customers for drilling services are predominantly major and independent oil and gas companies, national oil companies,
drilling contractors, well servicing companies, providers of drilling fluids, and other oilfield service companies. This segment operates sales and distribution facilities at
strategic locations worldwide to service areas with high drilling activity. Strategically located service and engineering facilities provide specialty repair and maintenance
services to customers. Sales of capital equipment are sometimes made through rig fabricators, and often are bid as part of a rig fabrication package or rig refurbishment
package. Sometimes these packages cover multiple rigs, and often the Company bids jointly with other related service providers.
The Distribution & Transmission segments distribution services sales are made through our network of distribution service centers. Customers for our products and services
include drilling and other service contractors, exploration and production companies, supply companies and nationally owned or controlled drilling and production companies.
The Distribution & Transmission segments customers for transmission products and services primarily include local, state and federal agencies, developers and general
contractors.
The Companys foreign operations, which include significant operations in Canada, Europe, the Far East, the Middle East, Africa and Latin America, are subject to the risks
normally associated with conducting business in foreign countries, including foreign currency exchange risks and uncertain political and economic environments, which may
limit or disrupt markets, restrict the movement of funds or result in the deprivation of contract rights or the taking of property without fair compensation. Government-owned
petroleum companies located in some of the countries in which the Company operates have adopted policies (or are subject to governmental policies) giving preference to the
purchase of goods and services from companies that are majority-owned by local nationals. As a result of such policies, the Company relies on joint ventures, license
arrangements and other business combinations with local nationals in these countries. In addition, political considerations may disrupt the commercial relationship between the
Company and such government-owned petroleum companies. Although the Company has not experienced any material problems in foreign countries arising from
nationalistic policies, political instability, economic instability or currency restrictions, there can be no assurance that such a problem will not arise in the future. As discussed
in Item 7A. Quantitative and Qualitative Disclosures about Market Risk, the Venezuelan government devalued its currency in 2010. See Note 15 to the Consolidated
Financial Statements for information regarding geographic revenue information.
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