National Oilwell, Saudi Aramco Team Up To Form Joint Venture

Houston-based energy equipment supplier National Oilwell Varco (NYSE:NOV) recently entered into a memorandum of understanding with Saudi Arabian Oil Co. or Saudi Aramco to form a joint venture (JV) in Saudi Arabia.

While National Oilwell will own 70% interest in the JV, Aramco will hold the remaining 30% interest. The JV will be supported by a commitment from Nabors Industries Ltd. (NYSE:NBR) which entered into a partnership with Aramco to purchase fifty onshore drilling rigs over ten years. The memorandum of understanding contains detailed commercial term sheet and is subject to negotiations.

The JV will manufacture high-specification land rigs and drilling equipments and will offer certain aftermarket services. The deal will also create a training center for Saudi technicians to maintain and operate the drilling technology of JV. It will create over 1,000 jobs and lead to economic growth. The formation of the JV is expected to strengthen National Oilwell‘s drilling technology franchise as well as support Aramco’s supply chain integration initiative.

The deal with National Oilwell is just one of the several major energy deals signed by Saudi Aramco during President Donald Trump’s recent visit to Saudi Arabia. Aramco has inked $50 billion worth agreements with major U.S. oil and gas service companies including McDermott International, Inc. (NYSE:MDR) , Schlumberger Ltd. (NYSE:SLB) , General Electric Company (NYSE:GE), Exxon Mobil Corporation (NYSE:XOM) among many others. These agreements emphasize upon the strategic collaboration of Saudi Arabia and United States linking Saudi Vision 2030 with America’s growth objectives. The deals are likely to enhance the business synergy with U.S. as well as attract investors to the country.

Zacks Rank

Houston, TX-based National Oilwell is a world leader in the designing, manufacturing and selling of comprehensive systems, components, products, and equipment used in oil and gas drilling and production worldwide.

In the last six months, the Zacks categorized Oil and Gas Mechanical & Equipment industry has witnessed a decline of 12%. However, shares of National Oilwell have outperformed the industry by declining just 4%.

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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