Welcome to the National Oilwell Varco 2012 fourth and full-year earnings. My name is Dawn, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that the conference is being recorded. I will now turn the call over to Loren Singletary, Vice President of Investor and Industry Relations. Mr. Singletary, you may begin.

Thanks Dawn, and welcome everyone to the National-Oilwell Varco fourth quarter and full-year 2012 earnings conference call. With me today is Pete Miller, Chairman and CEO of National Oilwell Varco, Clay Williams, President and Chief Operating Officer and Jeremy Thigpen, Senior Vice President and Chief Financial Officer. Before we begin this discussion of National Oilwell Varco's financial results for its fourth quarter and fiscal year ended December 31, 2012, please note that some of the statements we make during this call may contain forecast, projections and estimates including but not limited to comments about our outlook for the company's business. These are forward-looking statements within the meaning of the Federal Securities laws, based on limited information as of today, which is subject to change. They are subject to risk and uncertainties and actual results may differ materially. No one should assume that these forward-looking statements remain valid later in the quarter or later in the year. I refer you to the latest Forms 10-K and 10-Q National Oilwell Varco has on file with the Securities and Exchange Commission for a more detailed discussion of the major risk factors affecting our business. Further information regarding these as well as supplemental financial and operating information maybe found within our press release on our website at www.nov.com or in our filings with the SEC. Later on this call, we will answer your questions which we ask you to limit to two, in order to permit more participation. Now, I will turn the call over to Pete for his opening comments.

Thanks Loren, and welcome everyone to our year-end 2012 earnings conference call. Earlier today we announced fourth quarter earnings of $1.56 per share on revenues of $5.7 billion. After excluding $51 million in transaction charges and $69 million tax benefit, earnings were $1.49 per share. For the year, we are in $5.91 per share excluding transaction charges and the tax benefit on revenues of $20 billion. Our earnings per share in 2012 increased 24% from 2011. We are very pleased with these record revenues and profits and believe they are the direct result of our outstanding employees, delivering great products with exemplary execution. Jeremy and Clay will expand on these results in a moment. Additionally, we announced new capital equipment orders for the quarter of $2.42 billion or 1.1:1 book to bill ratio. This equates to a quarter ending backlog of $11.9 billion, a record for us. This exceeds our prior record that we achieved in the third quarter of 2008. We will provide more color on this backlog later in the call. I would like to thank all the wonderful employees of National-Oilwell Varco for producing these record-breaking results by all measures. Thanks for all you do. Now I will turn the call over to Clay.

Thank you, Pete. As Pete mentioned, we did generate record earnings of $5.91 per share for 2012, up 24% year-over-year and up 17% from our prior feedback in 2008. A very strong result. We also generated record EBITDA of $4.3 billion in the year and record operating profit of $3.7 billion in the year, and as Pete mentioned, we finished the year with a rig technology backlog of a record level of $11.9 billion after having added $9.4 billion in orders through the year. NOV's results are accredited to the hard work and dedication over 60,000 terrific employees and I am grateful for the work that they do and congratulate them on a terrific year. As we enter 2013, we see cross currents in the markets we serve. Demand for offshore floating rigs and equipment is strong and constructive, but markets for land equipment and services across North America remain hesitant. Underpinned by new build floating rig demand, Rig Technology's book-to-bill order ratio remained above one every quarter this year, successfully surpassing rising revenue out of backlog their total record $7.7 billion for the year. Offshore drilling contractor steadily committed capital through 2012 to expand our deepwater fleets and we believe that this will continue through 2013. Our outlook for continued strong deepwater orders is a view that appears to be out of step with Wall Street's conventional wisdom, which seems likely to have convinced itself that deepwater rig ordering will slow. Candidly, we do not understand why. Why one unlevered after-tax returns are in the high teens for new rig construction projects. Why one delivery times are shrunk by year or more, bring the first dollar project revenue closure and enhancing IRRs. Why when recent payment terms offered by shipyards, particular Chinese yards entering the fray are extraordinarily attractive…

Thanks, Clay. As Clay and Pete just mentioned, this was a record-breaking quarter and year. For the quarter National Oilwell Varco earned $668 million, or $1.56 per fully diluted share on $5.7 billion in revenue. Excluding the impact from $51 million in pretax transaction charges and a net $69 million tax benefit related to certain foreign tax credits, we earned net income of $638 million or $1.49 per fully diluted share. Operating profit for the quarter was $903 million, up $14 million from the third quarter and up $55 million from the fourth quarter of last year on a GAAP basis. Excluding transaction charges from all periods, Q4 operating profit was $954 million, up 1% from the third quarter and up 11% from the fourth quarter of last year. Operating margins on this basis were 16.8% in the fourth quarter of 2012 compared to 17.8% in the third quarter and 20.2% in the fourth quarter of last year. Sequential operating flow-through or leverage was 2% on a 7% increase in sales which is lower than we typically see for three reasons. The first and probably most important was product mix in our rig tech business. The second factor was, we referenced in Q3 conference call and Clay reinforced in his opening comments, was the degradation of pricing in a number of our PS&S businesses in the U.S. The final factor was the incremental expense associated with various growth initiatives that are underway throughout the organization, including the cost associated with integrating numerous acquisitions. I will provide more color on each of these areas as I recap the quarter and the year for each the segment. Despite this lower than typical flow-through, Q4 marked a record finish to a record year for NOV. 2012 for National Oilwell Varco generate record net…

Great. Thanks, Jeremy, and I would like to talk a little bit about some of the things that we've discussed in the past, because they all seem to remain intact right. And basically that's shales, deepwater, the best-in-class technology that we offer and our international presence. I think all of these things continue to dictate the strategy of the company. I think the shales in particular, when you to the oily shales, whether it's up in the Bakken or down in the Eagle Ford, I think they will continue to give us a great presence in especially with [PS and S-pipe] businesses in our distribution business that really can parlay good things in there. More interestingly, I really do think you are going to see an escalation of shale drilling internationally. It's gone slow, I think a lot of people are of the opinion that maybe it's not going to ramp up as rapidly as you think, but I think that will change. I'd just give you an example. I was in China earlier this week visiting with some shipyards that have just committed on some semi and jack-ups to us, and at the same time the pollution in Beijing was just unbelievable. I mean, people couldn't even go to work. It's so bad. China, as we all know will move very rapidly in fixing things and the quick fix on pollution like that is pretty simple. That is called natural gas, and the natural gas they have in the shales in China, I think you will start to see a real escalation of things like that in the international arena. The reality is that natural gas is very clean burning and that you are going to see more demand of that around the world and we are prepared to…

(Operator Instructions) Our first question comes from Brain Uhlmer from Global Hunter. Please go ahead.

Hi, good morning, gentlemen. I have a whole list of questions and I will start with and one follow-up to that. First, Jeremy, I think a great job, your first time on this call, keeping up with Pete and Clay and your alacrity in providing those guidance details.

Thank you. I appreciate that.

I wanted to start off with some thing that’s material here to your comments on the RBN and your confidence in enclosing that acquisition in the next several weeks because the arm spread has definitely widened. I was curious, are there going to be any stipulations to that closing of that deal that will require you to sell any portions of RBN or what gives you that confidence it is going to close in a couple of weeks, as clearly, it looks like the market makes otherwise right now.

Well, Brian, we continue to provide answers to questions that the government might have and we continue to push to a close here in about two or three weeks. I think Robbins & Myers has issued a press release giving the date of the closing and we continue to push to that and believe that's what's going to occur.

And that there will be no, you are going to be in its entirety, correct?

That is where we are right now.

Beautiful. Thank you. And as my follow-up completely unrelated, you say that Rig Tech margins might tick up in Q1. I was curious maybe the progression as we go through the year and the statement might, does that have more to do with a mix issue or more to do with closing out the start-ups and getting everything done like you said in Brazil and Korea or there are some cost on that and what makes it unlike to it will and as that progress as we get through 2013?

This is Jeremy. I think, the might is really related to all those things that we talked about on the call. There's a significant impact to all of our pressure pumping equipment, the coiled tubing unit, land rig in North America, that's going to weigh heavily on margins and then we do have a lot of startup cost associated with the Flexibles plan in Brazil. Again, the product mix with more FPSO-related revenues flowing in more reservoir-related revenues flowing in, we just think all of those are going to present some challenges for us and how those work through the system throughout the year kind of remains to be seen.

Yes. On the positive side, Brian, aftermarket in that space is doing terrific, particularly wrapped around offshore rigs coming in for the five-year surveys, and then we kind of cover these in our opening comments. There's lots of puts and takes here, but as Jeremy mentioned, lots of negatives and we are hopeful though that the offset will be the aftermarket side of that business, which is very accretive to the market.

Thank you. Our next question comes from Jim Crandell from Dahlman Rose. Please go ahead.

Pete, I know you like to look at your sort of order picture on a more than one quarter basis, and looking forward let's say 12 months out by the end of '13, do you think there is absolute chance that your of backlog could be higher than it is today and also could you address in a little bit more detail what you are seeing with sort of granularity in the FPSO market that makes you optimistic today.

Jim, we are very optimistic that 2013 is going to see a good order, and I think that obviously the way we do backlog as I told you many times we had to cut it off on a day-specific, but I would expect 2013 to really be an excellent year and I would certainly expect over 1 to 1 book-to-bill on it. I think as we take a look at the FPSO market, we're getting pretty excited about it. It's not similar to, when you look at a lot of the people that are subsea production and they kind of keep moving out to the right and many of the same ways the FPSO business is moving a little bit to the right, but it's still something that is pretty exciting. We are starting to see as Clay mentioned in his comments earlier, we've done a lot of the feed studies, but we are also starting to kind of see a lot of the stuff development orders. We have received some orders on some products in the first quarter that are not included in the backlog currently, but the fact of the matter is, if you kind of take a look at it, it's almost inescapable. You look at all these deepwater rigs that we are putting out there and they are drilling and they are not drilling for practice. They are drilling to discover oil and gas and the approved solution when they discover that oil and gas, in most cases there's going to be the FPSOs, and we think with what we have with NKT and what we have with our APL business that we are going to be positioned to be able to take advantage of that. So, we are still pretty bullish on it and we think as you go more into this year, you will see a lot more materialization of orders.

Okay. Thank you, Pete, and my follow-up is that, I guess, Clay, you addressed in your comment about the ultra deepwater market. I think one of the things that would maybe limit the ordering from the large U.S. or formerly U.S.-based contract is that the pressure, at least they feel to returning cash to shareholder, either making large dividend payments, MLPs and the like of that sort of slowing down their process. Do you see actually a difference at this point, Pete or Clay and the likelihood of the U.S. companies ordering more ultradeepwater rigs versus some of your European companies like Seadrill, Pacific, Ocean Rig, Odfjell and those kinds of companies?

That, you know, Jim, it really varies by company. I know that many of them are wrestling with the decision of allocating capital in to new growth prospects versus returning to shareholders and they are all taking that question very, very seriously. I would also add, a lot of them have a lot of projects underway currently that they are very busy with. But I have got to tell you, as a group, the U.S. based, publicly traded companies are in as good a mood as I have ever seen them. They see a lot of prospect out there in the marketplace, lots of opportunities to grow their businesses. And candidly, I think you go back five, six years ago the market demonstrated this, if they don’t act on those opportunities, somebody will. You have recently seen a lot of entrepreneurs now getting back in this space as well. So there are big returns to be had out there. Something like 300 deepwater fields that have been announced that haven’t been developed. 2012 was a record year in terms of announcement of discoveries in the deepwater. As Pete said, there is a lot of drilling and FPSO development to come and that takes a lot of deepwater rigs. So I think whether or not it’s the U.S. based organizations or their European counterparts or others around the globe getting into the fray, I think somebody is going to continue to build lot of deepwater rigs.

Okay, and Pete, just as clarification, were you saying that based on your trip to China, you think now that will major contract drillers order ultradeepwater drillships from Chinese yards now going forward?

I think they are going to be in the mix, Jim. But I think that a lot of them will be some of the Chinese drillers. You are starting to see people like Cosul and some of the bigger Chinese folks try to be major players. I think you will see some of the Norwegian pipe companies that will be looking at the Chinese shipyards. But I think Chinese shipyards are clearly going to be a player. They are getting in the mix and I think they are getting better at what they do.

So you think your customer mix in new ultradeepwater rig orders could change a fair amount going forward from what it has been over the last couple years?

You know, Jim, it has been a cyclical deal. If you go back to '06 and '07, you have a lot of what we were called speculators and we said at the time, they weren’t speculators but they were people who were really going to develop in to quite good operations and you see people like Seadrill and Ocean Rig and Odfjell and Pacific today. Then we kind of went in to the more traditional folks, the Transoceans, then the Nobles and the Atwoods and the Rowans and then I think you start to have some other people coming back in to the marketplace today. So it is really kind of a shift in customer base but it is one that we are positioned with very well and we like where we are.

Thank you. Our next question comes from Will Herbert from Simmons & Company. Please go ahead. Will Herbert - Simmons & Company: Thanks, good morning. Great, thank you. Continuing with the next question, Pete and Clay, with regard to the type of floaters that you are seeing from an increased standpoint. Is it still mostly drillships? Or are you getting more semisubmersibles in the mix?

Bill, we are starting a few more semis come in the mix. I think as you take a look at it, a lot of the drillships are really exploratory and when you start going into exploitation of fields, the semisubmersibles offer a few advantages there but we are still a lot of drillships as well. But we are starting to pick up a lot on the semisubmersible and of course, we are in a great position either way. Our DEP, our drilling equipment package fits quite well on either way. So we kind of like where we are in that. But it’s a little bit of a shifting mix in that. Will Herbert - Simmons & Company: And when you talk about a book-to-bill meeting or exceeding one time this year, what's going to be the mix of the inbound on a year-over-year basis in terms of relative to 2012? Do you expect your deepwater DEPs to match the numbers in 2012? Call 24, 25 packages? Or is it a significant ramp in FPSOs? It sounds like North American capital equipment is going to be lower, international possibly higher in terms of onshore. How does that mix configure with regard to reaching both develop one times?

Bill, you described it pretty well actually. I think you covered all the bases. Yes. What pressure North American land, obviously year-over-year, continued interest in deepwater as Pete said more, we got a high expectations for Brazil to contribute the more deepwater orders as well as broader ordering around the globe in deepwater, so kind of a broadly speaking a shift away from land towards more deepwater. Will Herbert - Simmons & Company: Okay. And then last one for me, Jeremy, with regard to the roadmap for Rig Tech margins for the balance of the year. Sounds like fat to up in the first quarter, so let's call that, you know, whatever 23%, but how does that evolve over the course of 2013? Do we exit at a higher rate or do we kind of average sort of a sub-25% margins for the year and it's pretty flat for the balance of 2013?

Yes. I think pretty flat for the balance of 2013. Will Herbert - Simmons & Company: Okay. Great. Thank you very much, guys.

Thank you. Our next question comes from Ed Muztafago from Societe Generale. Please go ahead.

I was wondering if you maybe talk a little bit more about the FPSO dilution side and Rig Tech, and I guess what I am trying to understand there is that just an issue of restructuring of those businesses to get them up to the core Rig Tech margin, or is that business just somewhat price-challenged right now given the activity levels that are going on in order?

Yes. Actually, it's not actually price-challenged it's more volume-challenged at this point. We had a big downturn in surf equipment 2010 and 2011, and we've kind of been gradually trying to creep out of that I would say, but volume has been an issue, one number. Number two, Jeremy spoke to this quite. His comments about fact that we're building a big plant for Flexibles pipe in Brazil, and so that's a specific project-driven drag with start-up costs in Brazil and those are going to continue for some time getting that going in our flexible pipe business, but the I think the main thing we need there are volumes to pick up, because the pricing we've been getting particularly for flexible pipe lately is really pretty good incremental margins on a project-by-project are pretty good, so it's much more kind of, we are I think well-positioned for in the market really comes on strong. And as Pete said a moment ago, we believe the market is going to come on strong

So, I mean, it sounds to me that absent any further pricing improvements, you can probably get there volume picks up, which you are sort of I guess predicting this year, but if we get a pretty upsurge in ordering then what do you think can happen there on pricing?

I think the outlook for pricing improvement obviously rises with demand and as volumes rise, those two things kind of go hand-in-hand and so we always try to be thoughtful about pricing and try to make sure we are getting paid for the good value that we deliver. So, certainly as those opportunities present themselves, we are going to act on them. But at this point, it's really more, right now, we need more loading in our infrastructure and our plans and that would help.

Okay. I guess, just as second question on the M&A side of the business. Can you guys talk to sort of what you are seeing in terms of the potential for more large scale M&A and really how that might sort of ducktail into what your use of cash might be post closing the RBN acquisition?

As you take a look at M&A, we've always been very opportunistic, Ed, and when especially means you are talking about large larger deals, it really is question of just time and patience, and yes we talk about this a lot. I mean, when you are doing those deals, the moon and stars kind of have to align appropriately, you have to make sure that the stock prices are there both, ours and theirs, talking some of the larger deals. So, we'll continue to be opportunistic and take a look at whatever is out there. There is a lot of things that strategically we still want to do, and so we are going to continue to be active in the market. On the other side though, on especially on our some of the deals, it's always been our experience that it really is advantageous to be able to take advantage of that in down markets. There is a lot o folks that when things are good, they think they are never going to get bad, and they are bad, they think they are never going to get good. So, we like to kind of pounce and be able to do some things when we need to and when things are a little softer. So, we will continue to be very aggressive in the M&A area and we will continue to look at a lot of different things that fit with our strategic plan that we have got and to fit into the things that we want to do.

Yes, sure. I mean $500 million in Q4 is not exactly a small amount. Okay, thanks a lot, guys. I really appreciate it.

Thank you. Our next question comes from Kurt Hallead from RBC Capital Markets. Please go ahead.

So you guys did a great job outlining the prospects and you guys are knowing better and tuned to the market than we guys are. I just want to dig a little bit further on the outlook here as you guys indicated for rig tech and rig tech orders. You identified some opportunity sets. Clay, you mentioned a number of entrepreneurs coming into the market. Last time the entrepreneurs were basically headquartered out of Norway. Where do you see this next rung of entrepreneurs emerging from?

Some are in Norwegian, but Kurt, we have inbound inquiries from lots of places around the globe. So we are happy to work with whoever we find credit worthy and understands the value that NOV can provide to their new business opportunities. But suffice to say the strong returns that are possible in deepwater rig building haven't gone unnoticed by lots of entrepreneurs around the globe.

Then I want to follow-up too. Pete, you mentioned you were in China, I guess earlier in the week. You mentioned a number of Chinese yards getting very aggressive in trying to fill their business backlog. I am sure you are finding every way possible to help them in that process. A mutually beneficial operation, I am sure. But I know that there has been a number of questions over the years about the quality and the timeliness of what comes out of the Chinese yards. So what, in your mind Pete, what you think is changing, what has changed and what gives you the kind of confidence that you have that China is going to be able to improve on their quality and delivery times?

Kurt, that's a great question. I can answer it pretty simply and it's called the learning curve. As you take look and even if you go back to the Korean yards, it took the Korean yards a period of time to learn and figure out what's going on. If you go back to the mid-90s, there were some issues in all yards about getting this step done appropriately. I think in China, there is a couple of things that give me a little bit more confidence. I think some of the yards have changed management. They have brought different people in. They have brought people in from Korea. They have brought people from Singapore. They have brought folks in that understand the way to do things. I like the professionalism that I am seeing out of these yards. In particular, I met with the chairman of a couple of yards while I was there this past weekend and I like what I am seeing. I am seeing very much of the western style of management, a very good understanding of safety, a very good understanding of quality and they also know that they need NOV to help them. That's what I like the most about them. And the fact of the matter is that they know that having us there, we can help them scale some of those challenges that they have. So I feel pretty good, and again, from when I started it comes back to really the learning curve, and I think they have gotten on that learning curve and they are going to do better in the future.

Great and I don’t want to leave Jeremy out of the mix. So I am going to bend the rule here a little bit. So Jeremy, you were kind enough to answer the question on the prospect for rig technology margins throughout the course of the year. So I am going to ask you about PSS. How do you see PSS margins evolving?

I think at the start the year, we will probably see a slight dip as we have referenced earlier in the comments. Then, really it's going to be dependent on return of activity in North America. All those businesses in PS&S are heavily tied to North America land, and as that market goes, so goes the PS&S group in terms of margin. There are companies out there who have speculated on their calls that rig counts will increase in Q1 and into Q2. We are not yet seeing that. But we are definitely looking for it. As you see those rig counts start to tick up and drilling contractors and well service firms start to work again, they will start buying products and services from us and so will our margins.

Thank you. Our last question comes from Marshall Adkins from Raymond James. Please go ahead.

Good morning, guys. After Clay's diatribe, I feel like I really need to start my question with the word, why. So why are those PS&S margins holding up better than most of us saw? I mean you've seen a lot of the North American names really take a hit with a lower rig count last quarter, but you guys seem to be remarkably resilient. Is it the offshore side? Is it international? Help me understand what's going on there.

Sure. Offshore and international certainly helped, but the real issue is a lot of people don't understand that we do have backlog in the PS&S businesses. It's not backlog that we recognize when we report to you guys, but its backlog that's kind of two, three, four-month out. And when you see rig activity decline and you see the drilling contractors and well service firms start to slow down, we still have backlog that we are working off over the next three to four months and so you won't see it really impact us until three or four months after you see activity decline and that's kind of where we are hitting right now in Q1. And so, we've worked up these backlogs in Q4, we are now back kind of that in day-to-day business and now it's when you kind of start to expect, revenues to decline a little bit and margins to erode a little bit.

Okay. Good helpful. On the Rig Tech side, again, very helpful guidance there, the pricing in the backlog, though, it seems like some of the other guys are starting to see the backlog price and they expect the pricing to move up over the course of the year and the flat margin that you foresee for Rig Tech, are we seeing better pricing in that and that being offset by other things out there or is it just flat pricing?

Bear in mind, our Rig Tech backlog is heavily dominated by long-term projects and so the margins moved slowly, but, Marshall, and I kind of touched on this in my comments. The pricing we are seeing out there selling rig equipment continues to bump up against ceilings and competitive forces and so forth and has never gotten back to where it was in '07 and '08, so I would say pricing is, it's good. I don't want to give you a wrong impression. These were good pieces of work and good projects and we are excited about them, I don't think they are going to lead to the kind of margins that we saw a couple of years ago and that's the constraint that we are facing out there, so I would say here in the recent near-term, pricing has been pretty stable across most products in rig offshore, Lands is definitely under pressure. Frac fleets, well service rigs those sorts of things. Land rigs, definitely under pressure with the downturn in North America.

I'll also add too, Marshall, that when you buy NOV, you are not buying necessarily on price either. We are selling quality and we are not going to equal the (Inaudible) then we tell all of our customers, if it's about the lowest bid then don't worry about us, because we are not going to be there. We are here to make money, but we are also here to provide outstanding products and that's what we do. And so, I think that's why we continue to have, even though sometimes we have margin erosion we continue to still have pretty darn solid margins for manufacturing products, so we are going to continue to price aggressively, we have to keep our eye on the competition, but we think we provide value and that value has got some margin behind it.

You mentioned the long lead times in that backlog. If you get more out of Brazil, does that stretch up lead times even longer?

Probably it will. I think, as you are taking a look at some of the Brazilian shipyards, that comes back to what I was just mentioning earlier on the Chinese that there is a learning curve there and our guess is the first couple of drillships that some of these yards do will take longer than what traditionally we've seen out of the Korean shipyards.

Yes, makes sense. Thanks, guys.

Thank you. I will now turn the call back to Mr. Miller for closing comments.

Thank you all very much for listening in and we look forward to talking to you again on our first quarter 2013 conference call. Thank you very much.

Thank you, ladies and gentlemen. A digital replay is available of this call today. You may dial 188-843-7419, or 1-630-652-3042. The pass code for the replay is 33821804. This concludes today's conference. Thank you for participating. You may disconnect.