Welcome to the Fourth Quarter and Full Year 2013 Earnings Conference Call. My name is Shannon, 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 this conference is being recorded. I’ll now turn the call over to Mr. Loren Singletary, Vice President of Investor and Industry Relations. Mr. Singletary, you may begin.

Thank you, Shannon, and welcome everyone to the National Oilwell Varco fourth quarter and full year 2013 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, 2013, please note that some of the statements we make during this call may contain forecasts, 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 risks 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 as 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, let me turn the call over to Pete.

Thank you, Loren and good morning everyone. Earlier today, National Oilwell Varco announced fourth quarter 2013 earnings of $658 million or $1.53 per share on revenues of $6.2 billion and full year earnings of $2.33 billion or $5.44 per share on revenues of $22.8 billion. Factoring in pre-tax transaction cost or pre-tax gains, the quarterly results were $670 million or $1.56 per share and for the full year it was $2.36 billion or $5.52 per share. Clay and Jeremy will expand on these results later in the call. Additionally, we announced new capital equipment orders of $3.61 billion to raise our backlog to a record level of $16.24 billion. Our book-to-bill ratio for the quarter was over 1.4 to 1. This backlog is continuing to improve with the industry wide demand for the great products and services we provide. I’d like to thank all of our employees around the world for the continued professionalism and dedication to provide our customers with the best equipment and support in the industry. I’ll now turn the call over to Clay for more color on our quarter and year.

Thank you, Pete. National Oilwell Varco posted $5.52 for fully diluted share excluding extraordinary gains in transaction related charges in 2013. Earnings declined 7% from 2012 on the same pro forma basis as did operating margins and 7% lower North American rig counts, rising competition and high customer inventories, drill pipe, downhole tools and other consumables we manufacture were not fully offset by strengthening international markets. Additionally, high volumes of equipment destined for the offshore, moving to our plants at higher marginal cost, new rig floor layouts which negated learning curve effects for past years and straying supply chain together with low demand for pressure pumping equipment took a toll on Rig Technology margins for the year. Rig Technology margins bottomed in the second quarter and began to move up slightly through the second half of the year. Despite these challenges, National Oilwell Varco accomplished a great deal in 2013. All three segments posted record revenues for the year. NOV posted a record level of cash flow from operations of $3.4 billion buoyed by strong improvements in working capital efficiency. We made good progress divesting certain real estate and non-core assets acquired with our Ameron and Robbins & Myers acquisitions to free up additional cash. In fact late in the fourth quarter we executed an agreement to divest in industrial aggregates business to a strategic buyer, which will yield another -- roughly $100 million. Our strong outlook for cash flow prompted NOV to double its dividend last May and we expect another significant increase again in 2014. We’ve steadily increased our allocation of the capital we generate back to our shareholders, while still successfully executing our strategic plans and we expect this trend to continue through the coming year. Operationally our Rig Technology segment won a record $13.1 billion in…

Thanks, Clay. Since Clay already summarized the 2013 highlights, I’ll try to focus the majority of my commentary around our fourth quarter performance and our expectations for 2014. As Pete and Clay previously mentioned it was another record breaking quarter and year for National Oilwell Varco. For the fourth quarter 2013 the company posted net income of $658 million or $1.53 per fully diluted share excluding $16 million in pre tax transaction charges. Fourth quarter 2013 earnings were a record of $1.56 for fully diluted share up $0.22 per share or 16% from the third quarter 2013 and up $0.07 per share or 5% from the fourth quarter 2012. Quarterly revenue of $6.2 billion which was also a record improved 8.5% sequentially and 8.6% at year-over-year despite a challenging rig count environment which was relatively flat sequentially and down 3% from the fourth quarter of 2012. Excluding transaction charges from all periods and the gains resulting from the outstanding legal claim in the third quarter of 2013, operating profit for the quarter was $973 million, up 14% sequentially and up 2% from the fourth quarter of last year. Operating margins on this basis were 15.8% for the fourth quarter of 2013 compared to 15% for the third quarter of 2013 and 16.8% for the fourth quarter of last year. Sequentially, operating profit flow through our leverage on the 8.5% growth with a solid 25%. Now let’s turn to our segment operating results. The Rig Technology segment generated record revenues of $3.3 billion in the fourth quarter up 16% sequentially and up 14% compared to the fourth quarter 2012. Operating profit for the segment was $697 million and operating margins were 21.1%, essentially flat with the prior quarter. On the Q3 conference call, we expected Rig Tech revenues to increase in…

Thanks, Jeremy. I'm just going to have a couple of brief comments because I think Clay and Jeremy have really hit all the big topics quite well. The one thing I'd like to echo Clay on is really about technology. Technology marches on and as technology improves that changes rigs, I think a good proxy for this yesterday if any of you listened to the Helmerich & Payne conference call, they announced nine new contracts for newbuild rigs. Well, why would that happen if in fact there are rigs still stacked out there that people could pick up. I'll tell you why that can happen. It's a proxy for what's going on around the industry. The operators want the best rigs. They want to most highly technical rigs. Where do you get those? You get those from NOV. That's why I think that the rumor of the depth of order of new rigs is being greatly exaggerated. I'm very confident that things are going to continue on in a very positive fashion. I also believe what you're probably going to see overseas is a quicker response to shale than a lot of people are projecting. I think the world needs natural gas. We're getting ready to fire up hopefully within the next year or so, some LNG facilities here in the U.S. and I think that all bodes well for what we're doing. Finally, I'd just like to offer one note. One of our long-term executives, Haynes Smith is retiring today. Haynes has been with us for quite some time, has been the President of our Tuboscope, our fiberglass and our brand operations and we all want to wish Haynes the best in the future. So at this point, Shannon, I'd like to open it up for any questions people might have.

Absolutely. We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. (Operator Instructions). Our first question comes from Jim Crandell from Cowen & Company. Jim Crandell - Cowen & Company: Good morning, everyone.

Good morning, Jim. Jim Crandell - Cowen & Company: Pete, since the spin-off is March 31, I'm assuming this is your last time on the call as CEO and I just want to congratulate you on a terrific 13-year plus run as CEO.

Thank you, Jim. Jim Crandell - Cowen & Company: I guess, first of all, Pete, could you talk a little bit to the nontraditional demand for floaters? I think we probably can get a good handle on what SeaDrill, Noble, Ensco, et cetera are doing, but probably less so on the nontraditional demand which you had some positive things to say. Can you talk to that point in a little bit more detail?

Sure. And I think it's kind of ironic, Jim, that when you talk about the traditional players, the one you brought up with SeaDrill, because I would tell you back in '06 they were a business plan and they were one of the major nontraditional players and looked what they've built themselves into. And I think you're going to see the same thing in the long [ph]. There's a couple things that happened here. The shipyards want to stay buys and the shipyards are offering still very compelling economics for the build of these and there's still other folks that want to get in this business. And if you can get in this business with the new rig fleet, ala SeaDrill, ala Pacific Drilling, ala things that Ocean Rig is doing, I think there's still a lot of room for people to enter in because what you're going to do is you're going to marginalize the rigs that really don't have the technology and the rigs that are aged. So, we're seeing a lot of activity still in that arena. I'll ask Clay to kind of add a little bit of color to that.

You bet. Specifically, we're seeing entrepreneurs out of Asia and Europe interested in building rigs and moving forward on those projects. Many are talking to some of the shipyards in China and are impressed by the sorts of terms that those two bring to our offering and so pretty excited about that. That's the group of shipyard we do very well with because they recognize the value of a more complete NOV package to go into those. So, I think they see the opportunity here, I would stress to, although a lot as we talk about in our comments, a lot's been written about short-term demand in the deepwater and offshore arenas. If you are building a rig that's a two and a half to three, three and a half year project. So you're really sort of aiming for where the puck is going. We look out 2015, 2016, 2017 and see all the acreage that's been leased, that needs to be explored. I think that's really the target that they are focused on here. They don't appear to be too anxious about near-term outlook for demand for rigs. Jim Crandell - Cowen & Company: One other question about deepwater, guys; if I had to think about where I've been surprised the most on the upside in terms of NOV's performance. I mean there are number of areas, but I'm just amazed at how you have -- at how well you are doing in subsea deepwater BOP stacks. Pete, Can you talk to a little bit about some of the reasons for your, I guess your dominant market share here in 2013 in that area?

Well, Jim I think that at the end of the day we recognized early the importance of what was going to be for the subsea stacks. I think Macondo really kind of emphasized that and we put some very significant investments into our West Little York facility here in Houston and we got in early. I mean today we can actually test I believe seven BOPs simultaneously which is an industry leader, and so the fact of the matter is I think people have come to us and said, you saw it early, you guys have increased your capacity and we want to buy from you and I think coupled that with the fact that I talked about it all the time. We're in 63 countries with 1,250 locations around the world and that's a competitive advantage that I don't care where you are going to move your rig, I don't care what you are going to do. Well, we are going to support you. We have a company in South Africa that actually can redo and work BOPs that are on the West Coast of Africa and the East Coast of Africa. We do things in the Middle East. We've got facilities in Aberdeen. We've got facilities in Singapore that really can take care of that. So, I think a lot of it has been better technology, increased capacity and our ability to take care of our customers wherever they are in the world. Jim Crandell - Cowen & Company: Okay, and Pete, the last question I have, I think you commented that you expect you will end you first integrated or you hope to end your first integrated FPSO package by the end of 2014, I mean does it seem to you that this is going on, certainly is going slowly, but is it a surprise to you that it's going slowly and how are your oil company customers, I guess responding to the idea of standardization and offering an integrated package for an FPSO?

Jim, I’ll let Clay kind of expand on that. Jim Crandell - Cowen & Company: Okay.

That’s a great question. I would say they are very intrigued by the idea. They have been -- the oil companies together with FPSO owner operators have been a little frustrated with the economic results around building FPSO projects. As I mentioned in my comments, they tend to be very highly customized and focus on a particular field, and changes are made along the way, which introduces inefficiencies in the manufacturer or the construction of those large vessels. So, I think we're talking to people who are beginning to see problems with the status quo, and the key thing for us is we're talking to everybody involved up and down the food chain. So, everyone from oil companies to FPSO owner operators to engineering firms to shipyard’s are involved in the conversation. And I think all of us recognize that there ought to be a better way to pursue these. And so we're in fairly advanced conversations on one particular project that is the one I'm referring to, we hope to get done this year. In terms of the pace, these are large multi-billion dollar investments by IOCs and those of us who have spent time in this industry know that all those projects tend to move slowly and thoughtfully. So, what’s acquired before someone pulls the trigger on building an FPSO with sanctioning an entire field development and that's something that I think IOCs, NOCs tend to study quite closely. So, I guess we're not terribly surprised at the pace and I would add we're very pleased to see progress in this arena. So, very excited about what the future holds here. Jim Crandell - Cowen & Company: Okay, great. Thank you.

Thank you, Jim.

Our next question comes from Jeff Tillery from Tudor, Pickering, Holt.

Hi, good morning.

Good morning, Jeff.

Clay you mentioned in discussion around the Rig Tech outlook, some green shoots here in North America. Just curious are you seeing anything on kind of the intervention side or is it mostly rigs? Just discuss how you see this year playing out in terms of the land piece of the business?

Yes, specifically that was in intervention. In hydraulic fracture simulation equipment we had some -- I think Jeremy talked about this in his comments, some opportunistic sales of frac fleet equipment that we were able to meet out of inventory, so pleased with that. Within PS&S we manufacture hydraulic fracture unit, frac fleet pumps and we have four or five customers that we’re getting calls from here recently looking for replacement parts and new pumps. So we’re seeing kind of here and there indications that perhaps some folks are starting to work through their inventory of consumables. We hear back on the Rig Tech coil tubing side that units are – there were idled units late last year and that operators are wearing out frac fleet and coiled tubing units and parking those and then picking up the idled units. So there’s sort of this cycling going on of the fleet which is to be expected given the high pace of utilization and how hard this equipment has worked. And that’s really kind of the engine that’s going to drive future demand and past cycles have taught us that you run this equipment really, really hard and then once utilization hits a certain level then they got to come back to us and to our competitors to restock those consumables and buy new units. And so we’re not seeing a clear, I am not here to tell you that 2014 is the year that we come back with a vengeance, but we’re seeing a few anecdotal signs of encouragement out there across the North American market.

Okay. And my second question just around the offshore side of Rig Technology. The qualitative field it seems like the comfort level for you guys around execution whether that means commissioning or learning curve on some of the newer designed rigs is growing. I mean, can you just talk about the kind of -- some of the qualitative field as -- I mean as you’ve been kind of over that business now eight or nine months now, compared now versus how you felt April or May last year?

Well, we’re working really, really hard. I appreciate how professional that team is over there and the great job that they do with respect to the offshore projects and we’ve talked about this on past calls. First, we signed up a couple of years ago began signing up for new rig floor layouts for new class requirements ABS and DNV requirements around the rigs. We are sort of building new versions of these drilling rigs and we’ve lost some learning curve effects. The second thing we did is, we signed to build these rigs clearly – signed up to build these rigs very, very quickly. And so when you shape more than a year off of the construction schedule what we’ve learned and our shipyard partners have learned and our suppliers have learned is that, that’s a -- perhaps we don’t want to bridge too far. And so a lot of these projects ran into delays and problems and so as we approach the end of them we -- a lot of that, we’d say look, the owners in these projects look to our I&C efforts to sort of catch up. Now I&C you generally plan on five to six months of installation and commissioning work at the tail end of a rig and that’s assuming you have electricity hooked up to the rig floor, you’ve got mechanical hookups done, we’re relying on our shipyard partners to accomplish all that. What we found in these projects is that they’re running a little late due to no fault of our own, but we’re asked to commission these and three or four months to work around the clock which we never did in the previous cycle to work 24 hour operations with only partially completed hook-ups around the equipment. So, that's the specific margin headwind we have run into. We are committed to our customers. We are committed to get these rigs back on schedule and so we are doing that and we are incurring extra cost. And so what we are finding as we work through this is that we are making good progress. I think there will be a learning curve effect out there in 2014. I think as we kind of clear through this work and we are going to get better at it. We are also training a lot of people. Pete just a second ago mentioned our investments in our BOP infrastructure and a big part of that is investment in our teams. So we’ve opened our seventh NOV technical college. We have 350 new service technicians being trained currently moving through that system and so we are expanding our workforce to be able to accommodate this record backlog and extraordinary requirements that are being required by the market that we serve.

Thank you very much.

Thanks, Jeff.

Our next question comes from James West from Barclays.

Good morning, guys.

Good morning, James.

Pete you had mentioned in your prepared remarks right at the end there that you thought that international shales were going to take off a bit faster than what was anticipated by the market right now. We've heard kind of a mixed bag, I guess; from some of the diversified service companies around that, some fits and storage [ph], so we're just going to dig into that comment a little further and kind of what do you see in there that leaves you to that conclusion?

I think there's a couple of things, James, and if you take a look, for instance, right now Argentina is coming on very well for us. You've heard a lot of people talk about softness in Latin America, but quite frankly Latin America is a real positive place for us right now and Argentina is on them and that's almost all shales. If you can go back a year or two ago and in Russia, they were actually downplaying shales because they didn't want people getting too excited about it because that was kind of their – their main thing was shipping natural gas from Russia into Western Europe. But today even the Russians are saying, okay, we're going to start exporting our shales pretty rapidly. And we've been selling equipment into Russia pretty successfully and a lot of that equipment is going to be utilized to be able to take care of those shales. We also have manufacturing over in Minsk, Belarus that's doing very, very well when it comes to building equipment for the fracking that's necessary for the shales in Russia. So I think that's another area that's very positive. China is one and you've heard me say this before. China has some issues with pollution and they've burned a lot of coal and there's a quick and easy answer to that and that's the utilization of natural gas. And China needs natural gas and I think you'll see them exporting their shales probably more rapidly than people give them credit for. And I think I certainly understand the other opinion because there's a lot of infrastructure buildup that has to occur for this to happen more rapidly. However, as you've heard me say before, we're in the business of infrastructure buildup. And so we've actually sold equipment, coal tubing equipment and the like that we build in the U.S. into China. And so I think there's a lot of positive things as you look around the world at the opportunity on these shales and my belief is it's going to come to fruition sooner rather than later because the world needs it.

Okay.

Jim, if I can add something to that too. I think it's important to make a distinction between shales and shale technology because a lot of this demand that we see for hydraulic fracture stimulation or horizontal drilling for improved rig efficiency, we consider shale technology but they're being applied to the other reservoir rocks. And so more conventional reservoir rocks, tight sands, that sort of thing, I think we're seeing our E&P companies implying these things with the shale technologies to those and so that's further growing the pie for what NOV sells.

Okay, fair enough. And then one other question from me, maybe a little bit unfair question but I know you talked about book-to-bill being over 1 times in 1Q, do you think that's a reasonable expectation for the full year because you have this nontraditional demand coming for offshore rigs and you have the FPSO order potential coming or is that – or should we think about maybe it's (indiscernible)?

James, last year this time I was asked that question. We'll be over 1 and everybody kind of went oh, yeah, right. Well, I was wrong. It was 1.5. We've got a little bit of visibility into the first quarter and we feel very good, as Clay said in his remarks and Jeremy has said. But I think it's real difficult for us to make a projection at this point in time that this is exactly what we're going to see. I think that makes it difficult, but we feel very good about what we're seeing and we feel very good about who we're talking to. And I've also said this before, you don't buy – you aren't going to do an offshore rig without at least coming to NOV and getting a quotation from us. So, you mentioned why we use this as a stalking horse? And so we've got a pretty good visibility into the things that are going on and let's just say we like where we are and we feel pretty good. We wouldn't rule out the possibility.

Okay, got you. Thanks. Fair enough. Thanks, guys.

Thank you, James.

Our next question comes from Michael LaMotte from Guggenheim Securities

Thanks, guys. If I could follow-up on the international Tier 1 rigs question, the contractors; are you seeing more interest from indigenous or local contractors or are there global players looking to grow their international businesses?

It's really both, Michael. In Argentina, what we're doing with indigenous contractors, the Argentine government has waived importation duties on rig equipment between now and I think July 1. And so we're seeing a big surge in demand for rigs for that particular market; in the Middle East, more of the international players along with some of the local Middle East participants. Really who we try to target are joint contractors willing to bring that new technology, a differentiated offering into their particular market. And so where we've had the best luck in the past are with more forward thinking sort of drilling contractors who see the benefit, they see the impact that this new rig technology has made here in North America and they're really going in with the business plan and try to replicate that. Those are the folks that we tend to do the best with.

Thanks, Clay. In the Middle East, if I think about one of the advantages of North America, AC electric rig, it's the speed in which it can break down and move location. That doesn't necessarily transfer to the desert. What's the driver there for upgrades in desert class rigs?

Really more reliability and drilling efficiency focused. You're correct. Sometimes it depends on the market within the Middle East, sometimes quick move is less important. But I would say generally where we've done the best for the much larger rigs in the Middle East, so 2,000 and 3,000 horsepower land rigs. Moving doesn't matter because efficiency moves matters and the cost of moves matter. But really highly automated, reliable, big equipment is what we're seeing demand for over there. That's kind of our niche in that marketplace. I would add to that AC power is starting to get good traction over there. The U.S. market converted from DC electric to AC electric over the past decade or so (indiscernible). Middle East is lagging a little bit, but we're now seeing good demand for AC rigs in that marketplace.

And it also depends country-to-country, as Clay said, Michael, I mean places like Oman, the speed of movement is probably more critical than in the place like Saudi. So, it's kind of dependent but the good thing is in our (indiscernible), we've got products for all the needs over there.

Okay, great. And if I could just come back to the Argentina comment, quite a little bit about lifting the import restrictions on rig equipment for the next six months? I mean that's a pretty unusual move for the Argentine government. I imagine that there is quite a scramble to jump through that window. Can you talk about sort of the magnitude and what you're seeing there? And also does it extend to any frac equipment or is it just drilling packages?

I'm not sure on the last question, frac equipment versus drilling packages. It's important to our land rig business but in the context of $3.3 billion segment last quarter, it's moving the needle but not – that's a big ship to turn. So, glad to see it. Very, very pleased to be able to help that market upgrade its rig fleet and we're looking forward to executing on those projects. But this is – it is part of a much bigger business.

Great. Okay, guys, thanks. I'll turn it back.

Thanks, Michael.

Our final question comes from David Anderson from JPMorgan.

So a question on kind of the overall outlook on rig equipment on the newbuild floaters, clearly the market is very concerned that we're getting close to the end of the rig equipment cycle. Can you talk about the technology aspect and how that plays out? Do you think you can get kind of 20 floaters and 30 jack-ups that kind of baseline number or just kind of – be upgrade and kind of the high grading of the fleet, is that unreasonable to expect?

As you take a look at the jack-up numbers, I mean the jack-up numbers continue to defy the common logic. And I would say there is nothing common about that logic. The fact of the matter is that we – as Clay pointed out, 45% of the jack-ups are still over 30 years old and that's just the tough sell to people plus they don't have the flexibility to be able to drill. You can take a super 116-C newbuild with 450 foot legs and you can drill in 50 feet of water. You can't take a [max] [ph] supported slotted jackup and go drill 300 feet of water. So the flexibility is there. You got the same sort of thing with the big floaters. So I think there is potential – you’ve heard me say this before, if I give dates, I don’t give numbers and if I give numbers, I don’t want to give dates. So I think there is a lot of good out there, but I would be hesitant to zero it on absolute numbers at this point.

Okay. And then your current traditional rig package or on the Rig Tech revenue floater, Rig Tech is getting a little bit complicated these days, lot of moving parts. Just in your traditional rig package business, Clay you talked about the headwinds that you’ve been facing and that obviously installation and commissioning, but there is also some tailwinds coming up as you start seeing better pricing starting to flow through. How do we think about that part of your business, kind of headwinds turning into tailwinds? Is there -- is this kind of a two second quarter event as you would see it playing out or is there (indiscernible)?

David, we see sort of a gradual improvement in that business bolstered by two things. One is, we can measure margin in our backlog and we have seen that turn and start to move up and it’s not a big move, it’s a $16.2 billion backlog, is a big animal to turn. But it’s going the right direction in the last six months. And then the second thing is we know from experience learning curve effects are real. And as we start making second and third and fifth copies of these rig designs as our supply chain store that evens out given the extraordinary level of work we know that will have a positive impact on the P&L. And so we kind of dialogue that calculus and we’re looking -- I’d say over the next several quarters we should continue to march up the back up in EBIT margin.

Good. Thank you, Clay and Pete best of luck in your new adventure there.

Thank you. I appreciate it, David.

At this time, I’d like to turn the call back to Mr. Miller for closing remarks.

Well, we thank you all for calling in today and we look forward to talking to you at the end of the first quarter. Thanks very much.

Thank you ladies and gentlemen. This concludes today’s conference. Thank you for your participation. You may now disconnect.