BY JEFF REINKE
Partnering with suppliers like Snap-on Industrial and acquiring distributors like Wilson Industries has enabled National Oilwell Varco to take full advantage of the burgeoning oil and gas marketplace, while diversifying its industrial reach.
There are a number of strong opinions and debatable fac- tors relating to oil and natural gas production in the U.S. Regardless of one’s opinion on environmental concerns such
as the Keystone pipeline or approaches like fracking, there are
two things that remain unarguable: First, there has been a huge
increase in oil and natural gas activity. And second, the workers at
these sites are ready to pay top dollar for the tools and supplies
they need to continue operating safely and efficiently.
According to recent reports from IHS and PricewaterhouseCoo-per, U.S. oil production recently topped seven million barrels/day
for the first time in 20 years, with estimates putting production
at nine million barrels per day in the near future. This makes the
U.S. the third largest oil producer in the world, behind only Russia
and Saudi Arabia (In case you were wondering, the U.S. consumes
about 19 million barrels a day).
This year alone, oil and natural gas production will add almost
$240 billion to its now seven percent ($1.1 trillion) slice of the U.S.
GDP. According to PwC, these numbers would make the U.S. oil and
gas industry the 16th largest economy in the world, just behind the
GDPs of Mexico and South Korea but larger than Saudi Arabia. In
comparison, U.S. manufacturing contributes enough economic push
to represent the 12th largest economy in the world.
Much of this activity stems from oil deposits like the Bakken for-
mation in North Dakota, as well as those found at the Eagle Ford,
TX site. Large natural gas deposits in North Texas and the Marcel-
lus Shale, which is spread across New York, Ohio, Pennsylvania, and
West Virginia, are also driving the industry. Record high natural
gas production translates to historically low prices for consumers,
which has led to oil imports registering a 17-year low, according to
Mergers, Acquisitions & Growth
Obviously, distributors focusing on the oil and gas markets have
enjoyed the momentum, but few have parlayed this growth like
National Oilwell Varco. NOV personifies the definition of a one-stop shop, as it designs, manufactures, and sells major mechanical
components for both land and offshore drilling rigs, including the
actual rig itself (which will run between $10-$15 million).
The company also acts as a distributor in providing tools, hard-
ware, and other miscellaneous supplies, including office furniture
July/August 2013 / INDUSTRIAL DISTRIBUTION 15