COVER STORY/
Looking Ahead NOV’s Clay Williams Believes New Technology, Great People Give the Oil and Gas Industry a Bright Future By Kristin Hincke, PESA
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(OECD) countries. The other half is consumed by the five out of six people that live in non-OECD countries.
He joined Shell in the 1980s when Saudi Arabia similarly flooded the market with crude to drive out higher-cost producers and gain market share. The experience and how the industry handled the situation made an indelible mark on him.
“Like us, the 1.3 billion people in OECD countries want to do what they can to protect our planet,” he said. “But the 6.4 billion people in non-OECD countries are fighting for a better standard of living that requires energy. UN human population growth forecasts call for non-OECD countries to grow by another 1.5 billion people over the next 20 years. If you just hold their per capita consumption of oil constant that adds about 600,000 barrels per day per year required just to maintain standards of living.”
lay Williams, Chairman, President, CEO, National Oilwell Varco, is no stranger to oilfield downturns.
“I spent the first several years of my career in a really tough downturn,” he said. “It dawned on me during this time, the folks that are still here really do care about this industry, and I think that is something pretty special. I’m proud of what this industry does, but it’s a tough industry.” While the industry is facing an unprecedented downturn, Williams believes it has significant growth potential in the future. “The world is going to continue to utilize more oil and gas to lift people out of poverty and improve their standards of living,” he said. “There’s never been an industry that’s had a greater, more positive impact on the standard of living of mankind.” As the cost of capital increases during the downturn, NOV is following the path set by management teams in previous downturns by reducing costs and increasing capital efficiency to drive better returns. Williams believes the rising cost of capital for the services sector is compounded by the narrative surrounding peak oil. He pointed out that nearly half of the world’s 93 million barrels of oil used each day is consumed by the one in six people that live in Organization for Economic Cooperation and Development
Williams acknowledges the servicing and manufacturing sector as being overbuilt, which creates business challenges. As American producers adjust their 2020 budgets and drilling plans, subsectors within oilfield services and equipment will need consolidation. “Generally, industries that have a more consolidated industry structure tend to generate better returns on capital as opposed to industries that are more fragmented,” Williams said, “so structures that are more consolidated tend to be healthier for the long term.” While leadership at NOV has made difficult decisions including workforce reductions to improve financial performance during this downturn, the company is focused on M&A as a strategy to help NOV not just navigate this time, but to be in a position to thrive when the upturn comes. “We’ve continued to do M&A, but we’ve actually gotten more focused on smaller companies where we find we tend to drive higher returns,” Williams explained. “We
