Waiting for offshore orders as the Middle East stabilizes

Waiting for the next big wave

NOV is tied to the next oil and gas spending cycle. The company makes the heavy machinery used on rigs, wells, production systems, and vessels. This gives it leverage if international and offshore projects speed up through late 2026 and into 2027.

The first half of 2026 brought a mix of challenges and relief. A conflict in the Middle East delayed equipment deliveries and slowed service work in Q1. By Q2, management noted that regional conditions had stabilized into a new norm. This allowed NOV to clear delayed orders and post better margins, though the timeline for a major order recovery was pushed back slightly.

The key metric to watch is book-to-bill. Energy Equipment orders remained below 100 percent of shipments through the first half of 2026. This means the company shipped more equipment than it booked in new orders, draining its backlog to $4.23 billion.

The bull case is that energy security concerns will force customers to approve more offshore and international work soon. The bear case is that tariffs, soft North American activity, and delayed project approvals keep orders weak. Finn scores show a balanced view because the long-cycle setup is real, but the latest order data is not yet strong enough to confirm the breakout.

Tools, parts, and service

NOV makes money by designing, building, renting, and selling equipment used across oil and gas drilling, completion, intervention, and production. Some sales are quick-cycle, like drill bits, tools, pipe, services, and rentals. Others are large capital projects, like offshore drilling packages, production systems, cranes, and subsea equipment.

A large installed base matters. Once a rig or production system uses NOV equipment, customers often need spare parts, repairs, upgrades, software, and field service. That aftermarket work can be highly profitable, but it requires smooth logistics and travel access to global sites.

NOV also sells into marine, industrial, cable lay, offshore wind, geothermal, and carbon capture related markets. These are useful options, but offshore wind has become less clear. Management previously noted that visibility into future offshore wind orders is poor after forecasts for turbine capacity additions dropped significantly.

The model can generate strong free cash flow in good parts of the cycle. NOV aims to return at least 50 percent of excess free cash flow to shareholders each year. That promise depends on collections, project billings, margins, and whether customers keep ordering new equipment.

What NOV sells

Two ways to feel the cycle

Segment mix uses early 2026 segment revenue from NOV's 10-Q: Energy Products and Services revenue of $897 million and Energy Equipment revenue of $1.19 billion. Shares are based on total segment revenue before company-level eliminations.

What could go wrong

In one breath