Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of ~~July 26, 2019~~April 17, 2020 the registrant had ~~385,896,425~~388,223,024 shares of common stock, par value $0.01 per share, outstanding.

	June 30,			December 31,			March 31,			December 31,
	2019			2018			2020			2019
ASSETS
Current assets:
Cash and cash equivalents	$	1,121		$	1,427		$	1,115		$	1,171
Receivables, net		1,973			2,101			1,879			1,855
Inventories, net		2,858			2,986			2,032			2,197
Contract assets		585			565
Contract assets, net								639			643
Prepaid and other current assets		229			200			237			247
Total current assets		6,766			7,279			5,902			6,113
Property, plant and equipment, net		2,356			2,797			2,003			2,354
Lease right-of-use assets, operating		452			—			399			444
Lease right-of-use assets, financing		246			—			211			230
Deferred income taxes		—			11
Goodwill		3,206			6,264			1,515			2,807
Intangibles, net		900			3,020			534			852
Investment in unconsolidated affiliates		294			301			57			282
Other assets		129			124			69			67
Total assets	$	14,349		$	19,796		$	10,690		$	13,149
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	695		$	722		$	662		$	715
Accrued liabilities		955			1,088			888			949
Contract liabilities		455			458			470			427
Current portion of lease liabilities		116			7			115			114
Accrued income taxes		—			66			28			42
Total current liabilities		2,221			2,341			2,163			2,247
Lease liabilities		696			222			646			674
Long-term debt		2,483			2,482			2,002			1,989
Deferred income taxes		177			564			69			140
Other liabilities		285			298			256			253
Total liabilities		5,862			5,907			5,136			5,303
Commitments and contingencies
Stockholders’ equity:
Common stock - par value $.01; 1 billion shares authorized; 385,904,225 and 383,426,654 shares issued and outstanding at June 30, 2019 and December 31, 2018		4			4
Common stock - par value $.01; 1 billion shares authorized; 388,222,777 and 385,886,682 shares issued and outstanding at March 31, 2020 and December 31, 2019								4			4
Additional paid-in capital		8,441			8,390			8,518			8,507
Accumulated other comprehensive loss		(1,392	)		(1,437	)		(1,655	)		(1,423	)
Retained earnings		1,358			6,862			(1,381	)		690
Total Company stockholders' equity		8,411			13,819			5,486			7,778
Noncontrolling interests		76			70			68			68
Total stockholders’ equity		8,487			13,889			5,554			7,846
Total liabilities and stockholders’ equity	$	14,349		$	19,796		$	10,690		$	13,149

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2019			2018			2019			2018			2020			2019
Revenue	$	2,132		$	2,106		$	4,072		$	3,901		$	1,883		$	1,940
Cost of revenue		2,070			1,751			3,754			3,259			1,659			1,684
Gross profit		62			355			318			642			224			256
Selling, general and administrative		417			303			721			591			283			304
Goodwill and indefinite-lived intangible asset impairment		3,186			—			3,186			—			1,378			—
Long-lived asset impairment		2,187			—			2,187			—			513			—
Operating profit (loss)		(5,728	)		52			(5,776	)		51
Operating loss														(1,950	)		(48	)
Interest and financial costs		(25	)		(23	)		(50	)		(47	)		(22	)		(25	)
Interest income		6			5			12			12			3			6
Equity income (loss) in unconsolidated affiliates		(2	)		(1	)		(2	)		1
Equity loss in unconsolidated affiliates														(233	)		—
Other income (expense), net		(8	)		(3	)		(26	)		(50	)		(3	)		(18	)
Income (loss) before income taxes		(5,757	)		30			(5,842	)		(33	)
Loss before income taxes														(2,205	)		(85	)
Provision (benefit) for income taxes		(373	)		5			(383	)		8			(156	)		(10	)
Net income (loss)		(5,384	)		25			(5,459	)		(41	)
Net loss														(2,049	)		(75	)
Net income attributable to noncontrolling interests		5			1			7			3			(2	)		2
Net income (loss) attributable to Company	$	(5,389	)	$	24		$	(5,466	)	$	(44	)
Net loss attributable to Company													$	(2,047	)	$	(77	)

Net income (loss) attributable to Company per share:
Net loss attributable to Company per share:
Basic	$	(14.11	)	$	0.06		$	(14.35	)	$	(0.12	)	$	(5.34	)	$	(0.20	)
Diluted	$	(14.11	)	$	0.06		$	(14.35	)	$	(0.12	)	$	(5.34	)	$	(0.20	)

Cash dividends per share	$	0.05		$	0.05		$	0.10		$	0.10		$	0.05		$	0.05

Weighted average shares outstanding:
Basic		382			378			381			377			383			380
Diluted		382			381			381			377			383			380

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2019			2018			2019			2018			2020			2019
Net income (loss)	$	(5,384	)	$	25		$	(5,459	)	$	(41	)
Net loss													$	(2,049	)	$	(75	)
Currency translation adjustments		18			(223	)		38			(187	)		(180	)		20
Changes in derivative financial instruments, net of tax		3			(14	)		7			(1	)		(52	)		4
Comprehensive loss		(5,363	)		(212	)		(5,414	)		(229	)		(2,281	)		(51	)
Comprehensive income attributable to noncontrolling interest		5			1			7			3			(2	)		2
Comprehensive loss attributable to Company	$	(5,368	)	$	(213	)	$	(5,421	)	$	(232	)	$	(2,279	)	$	(53	)

	Six Months Ended						Three Months Ended
	June 30,						March 31,
	2019			2018			2020			2019
Cash flows from operating activities:
Net loss	$	(5,459	)	$	(41	)	$	(2,049	)	$	(75	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		331			347			105			177
Provision for inventory losses		327			32			125			14
Deferred income taxes		(369	)		17			(62	)		(9	)
Equity loss in unconsolidated affiliates								233			—
Goodwill and indefinite-lived intangible asset impairment		3,186			—			1,378			—
Long-lived asset impairment		2,187			—			513			—
Other, net		75			41			45			21
Change in operating assets and liabilities, net of acquisitions:		—
Receivables		144			87			(27	)		326
Inventories		(193	)		(150	)		47			(152	)
Contract assets		(20	)		49			(5	)		26
Prepaid and other current assets		(29	)		(30	)		9			(4	)
Accounts payable		(33	)		88			(54	)		(49	)
Accrued liabilities		(172	)		(313	)		(142	)		(234	)
Contract liabilities		(3	)		89			43			(46	)
Income taxes payable		(66	)		(71	)		(15	)		(45	)
Other assets/liabilities, net		(17	)		(35	)		(105	)		12
Net cash provided (used) by operating activities	$	(111	)		110
Net cash provided by (used by) operating activities								39		$	(38	)

Cash flows from investing activities:
Purchases of property, plant and equipment		(97	)		(102	)		(68	)		(43	)
Business acquisitions, net of cash acquired		(65	)		(280	)		—			(65	)
Other		6			22			15			1
Net cash used in investing activities	$	(156	)	$	(360	)	$	(53	)	$	(107	)

Cash flows from financing activities:
Cash dividends paid		(38	)		(38	)		(19	)		(19	)
Other		(1	)		18			(24	)		(1	)
Net cash used in financing activities		(39	)		(20	)		(43	)		(20	)
Effect of exchange rates on cash		—			(30	)		1			8
Decrease in cash and cash equivalents		(306	)		(300	)
Increase (decrease) in cash and cash equivalents								(56	)		(157	)
Cash and cash equivalents, beginning of period		1,427			1,437			1,171			1,427
Cash and cash equivalents, end of period	$	1,121		$	1,137		$	1,115		$	1,270

Supplemental disclosures of cash flow information:
Cash payments during the period for:
Interest	$	41		$	46		$	3		$	5
Income taxes	$	70		$	50		$	14		$	29

	Common Stock		Additional Paid in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings (Loss)			Total Company Stockholders' Equity			Noncontrolling Interests			Total Stockholders' Equity			Shares Outstanding		Common Stock		Additional Paid in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings (Loss)			Total Company Stockholders' Equity			Noncontrolling Interests			Total Stockholders' Equity
Balance at December 31, 2018	$	4	$	8,390	$	(1,437	)	$	6,862		$	13,819		$	70		$	13,889
Balance at December 31, 2019																					386	$	4	$	8,507		$	(1,423	)	$	690		$	7,778		$	68		$	7,846
Net income (loss)		—		—		—			(77	)		(77	)		2			(75	)		—		—		—			—			(2,047	)		(2,047	)		(2	)		(2,049	)
Other comprehensive income		—		—		24			—			24			—			24
Other comprehensive income (loss), net																					—		—		—			(232	)		—			(232	)		—			(232	)
Cash dividends, $0.05 per common share		—		—		—			(19	)		(19	)		—			(19	)		—		—		—			—			(19	)		(19	)		—			(19	)
Adoption of new accounting standard																					—		—		—			—			(5	)		(5	)		—			(5	)
Noncontrolling interest		—		—		—			—			—			3			3			—		—		—			—			—			—			2			2
Stock-based compensation		—		12		—			—			12			—			12			—		—		27			—			—			27			—			27
Common stock issued		—		6		—			—			6			—			6			2		—		1			—			—			1			—			1
Balance at March 31, 2019	$	4		8,408		(1,413	)		6,766			13,765			75			13,840
Net income (loss)		—		—		—			(5,389	)		(5,389	)		5			(5,384	)
Other comprehensive income		—		—		21			—			21			—			21
Cash dividends, $0.05 per common share		—		—		—			(19	)		(19	)		—			(19	)
Noncontrolling interest		—		—		—			—			—			(4	)		(4	)
Stock-based compensation		—		32		—			—			32			—			32
Common stock issued		—		1		—			—			1			—			1
Balance at June 30, 2019	$	4	$	8,441	$	(1,392	)	$	1,358		$	8,411		$	76		$	8,487
Withholding taxes																					—		—		(17	)		—			—			(17	)		—			(17	)
Balance at March 31, 2020																					388	$	4	$	8,518		$	(1,655	)	$	(1,381	)	$	5,486		$	68		$	5,554

	Common Stock		Additional Paid in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings (Loss)			Total Company Stockholders' Equity			Noncontrolling Interests			Total Stockholders' Equity			Shares Outstanding		Common Stock		Additional Paid in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings (Loss)			Total Company Stockholders' Equity			Noncontrolling Interests		Total Stockholders' Equity
Balance at December 31, 2017	$	4	$	8,234	$	(1,110	)	$	6,966		$	14,094		$	66		$	14,160
Net loss		—		—		—			(68	)		(68	)		—			(68	)
Other comprehensive income		—		—		49			—			49			—			49
Cash dividends, $0.05 per common share		—		—		—			(19	)		(19	)		—			(19	)
Adoption of new accounting standards		—		—		—			4			4			—			4
Noncontrolling interest		—		—		—			—			—			3			3
Stock-based compensation		—		19		—			—			19			—			19
Common stock issued		—		3		—			—			3			—			3
Balance at March 31, 2018	$	4	$	8,256	$	(1,061	)	$	6,883		$	14,082		$	69		$	14,151
Net income		—		—		—			24			24			1			25
Other comprehensive loss		—		—		(237	)		—			(237	)		—			(237	)
Balance at December 31, 2018																					383	$	4	$	8,390		$	(1,437	)	$	6,862		$	13,819		$	70	$	13,889
Net income (loss)																					—		—		—			—			(77	)		(77	)		2		(75	)
Other comprehensive income (loss), net																					—		—		—			24			—			24			—		24
Cash dividends, $0.05 per common share		—		—		—			(19	)		(19	)		—			(19	)		—		—		—			—			(19	)		(19	)		—		(19	)
Noncontrolling interest		—		—		—			—			—			(2	)		(2	)		—		—		—			—			—			—			3		3
Stock-based compensation		—		30		—			—			30			—			30			—		—		33			—			—			33			—		33
Common stock issued		—		20		—			—			20			—			20			3		—		3			—			—			3			—		3
Balance at June 30, 2018	$	4	$	8,306	$	(1,298	)	$	6,888		$	13,900		$	68		$	13,968
Withholding taxes																					—		—		(18	)		—			—			(18	)		—		(18	)
Balance at March 31, 2019																					386	$	4	$	8,408		$	(1,413	)	$	6,766		$	13,765		$	75	$	13,840

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States requires management to make estimates and assumptions that affect reported and contingent amounts of assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The accompanying unaudited consolidated financial statements of National Oilwell Varco, Inc. (“NOV” or the “Company”) present information in accordance with GAAP in the United States for interim financial information and the instructions to Form 10-Q and applicable rules of Regulation S-X. They do not include all information or footnotes required by GAAP in the United States for complete consolidated financial statements and should be read in conjunction with the Company’s ~~2018~~2019 Annual Report on Form 10-K.

In our opinion, the consolidated financial statements include all adjustments, which are of a normal recurring nature unless otherwise disclosed, necessary for a fair presentation of the results for the interim periods. Certain reclassifications have been made to the prior year financial statements in order for them to conform with the current presentation, including the reclassification of $229 million from the December 31, 2018 debt balance to lease liabilities. The results of operations for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 are not necessarily indicative of the results to be expected for the full year.

The fair values of cash and cash equivalents, receivables and payables ~~was~~were approximately the same as their presented carrying values because of the short maturities of these instruments. The fair value of long-term debt is provided in Note 8, and the fair values of derivative financial instruments are provided in Note 11.

	June 30,			December 31,			March 31,			December 31,
	2019			2018			2020			2019
Raw materials and supplies	$	637		$	614		$	531		$	577
Work in process		522			501			377			364
Finished goods and purchased products		2,606			2,505			1,983			2,099
		3,765			3,620			2,891			3,040
Less: Inventory reserve		(907	)		(634	)		(859	)		(843	)
Total	$	2,858		$	2,986		$	2,032		$	2,197

	June 30,		December 31,		March 31,		December 31,
	2019		2018		2020		2019
Compensation	$	258	$	331	$	176	$	270
Vendor costs		135		127		130		121
Fair value of derivatives						97		24
Warranties		101		105		86		90
Taxes (non-income)		99		124		74		112
Fair value of derivatives		20		23
Insurance						53		57
Commissions						33		31
Interest		7		7		25		8
Other		335		371		214		236
Total	$	955	$	1,088	$	888	$	949

The components of accumulated other comprehensive loss are as follows (in millions):

				Derivative			Defined									Derivative			Defined
	Currency			Financial			Benefit						Currency			Financial			Benefit
	Translation			Instruments,			Plans,						Translation			Instruments,			Plans,
	Adjustments			Net of Tax			Net of Tax			Total			Adjustments			Net of Tax			Net of Tax			Total
Balance at December 31, 2018	$	(1,396	)	$	(14	)	$	(27	)	$	(1,437	)
Balance at December 31, 2019													$	(1,403	)	$	(4	)	$	(16	)	$	(1,423	)
Accumulated other comprehensive income (loss) before reclassifications		38			4			—			42			(180	)		(56	)		—			(236	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			3			—			3			—			4			—			4
Balance at June 30, 2019	$	(1,358	)	$	(7	)	$	(27	)	$	(1,392	)
Balance at March 31, 2020													$	(1,583	)	$	(56	)	$	(16	)	$	(1,655	)

The components of amounts reclassified from accumulated other comprehensive income (loss) are as follows (in millions):

	Six Months Ended June 30,																				Three Months Ended March 31,
	2019										2018										2020										2019
	Currency		Derivative			Defined					Currency		Derivative			Defined					Currency		Derivative			Defined					Currency		Derivative		Defined
	Translation		Financial			Benefit					Translation		Financial			Benefit					Translation		Financial			Benefit					Translation		Financial		Benefit
	Adjustments		Instruments			Plans		Total			Adjustments		Instruments			Plans		Total			Adjustments		Instruments			Plans		Total			Adjustments		Instruments		Plans		Total
Revenue	$	—	$	1		$	—	$	1		$	—	$	(1	)	$	—	$	(1	)	$	—	$	—		$	—	$	—		$	—	$	—	$	—	$	—
Cost of revenue		—		3			—		3			—		(5	)		—		(5	)		—		5			—		5			—		1		—		1
Tax effect		—		(1	)		—		(1	)		—		2			—		2			—		(1	)		—		(1	)		—		—		—		—
	$	—	$	3		$	—	$	3		$	—	$	(4	)	$	—	$	(4	)	$	—	$	4		$	—	$	4		$	—	$	1	$	—	$	1

The Company’s reporting currency is the U.S. dollar. A majority of the Company’s international entities in which there is a substantial investment have the local currency as their functional currency. As a result, currency translation adjustments resulting from the process of translating the entities’ financial statements into the reporting currency are reported in other comprehensive income (loss). ~~The Company recorded~~For the three months ended March 31, 2020, a majority of these local currencies weakened against the U.S. dollar, resulting in other comprehensive loss of $180 million compared to other comprehensive income of ~~$18 million and $38~~$20 million for the three ~~and six~~ months ended ~~June 30, 2019, respectively and loss of $223 million and $187 million for the three and six months ended June 30, 2018, respectively.~~March 31, 2019.

The effect of changes in the fair values of derivatives designated as cash flow hedges are accumulated in other comprehensive income (loss), net of tax, until the underlying transactions they hedge are realized. The movement in other comprehensive income (loss) from period to period will be the result of the combination ofof: 1) changes in fair value of open derivatives ($-56 million during the three months ended March 31, 2020); and, 2) the outflow of other comprehensive income (loss) related to cumulative changes in the fair value of derivatives that have settled in the current ~~period. The accumulated effect was other comprehensive income of $3~~period ($4 million ~~(net of tax of $1 million) and $7 million (net of tax of $2 million) for~~during the three ~~and six~~ months ended June 30, 2019, respectively. The accumulated effect was other comprehensive loss of $14 million (net of tax of $5 million) and $1 million (net of tax of $0 million) for the three and six months ended June 30, 2018, respectively.March 31, 2020).

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2019			2018			2019			2018			2020			2019
Revenue:
Wellbore Technologies	$	850		$	793		$	1,657		$	1,504		$	691		$	807
Completion & Production Solutions		663			738			1,244			1,408			675			581
Rig Technologies		671			651			1,274			1,134			557			603
Eliminations		(52	)		(76	)		(103	)		(145	)		(40	)		(51	)
Total revenue	$	2,132		$	2,106		$	4,072		$	3,901		$	1,883		$	1,940

Operating profit (loss):
Wellbore Technologies	$	(3,295	)		38		$	(3,276	)	$	50		$	(663	)		19
Completion & Production Solutions		(1,932	)		40			(1,967	)		56			(1,013	)		(35	)
Rig Technologies		(422	)		62			(391	)		80			(202	)		31
Eliminations and corporate costs		(79	)		(88	)		(142	)		(135	)		(72	)		(63	)
Total operating profit (loss)	$	(5,728	)	$	52		$	(5,776	)	$	51		$	(1,950	)	$	(48	)

Operating profit (loss)%:
Wellbore Technologies														(95.9	%)		2.4	%
Completion & Production Solutions														(150.1	%)		(6.0	%)
Rig Technologies														(36.3	%)		5.1	%
Total operating profit (loss)%														(103.6	%)		(2.5	%)

Sales from one segment to another generally are priced at estimated equivalent commercial selling prices; however, segments originating an external sale are credited with the full profit to the Company. Eliminations include intercompany transactions conducted between the ~~three~~3 reporting segments that are eliminated in consolidation. Intrasegment transactions are eliminated within each segment.

	Three Months Ended				Six Months Ended					Three Months Ended
	June 30,				June 30,					March 31,
	2019		2018		2019		2018			2020		2019
Other Items:
Other items in operating profit:
Wellbore Technologies	$	3,345	$	—	$	3,343	$	(3	)	$	715	$	(2	)
Completion & Production Solutions		1,939		—		1,950		3			1,054		11
Rig Technologies		474		—		476		6			238		2
Eliminations and corporate costs		11		—		11		(18	)		16		—
Total other items	$	5,769	$	—	$	5,780	$	(12	)
Total other items in operating profit										$	2,023	$	11

~~Second~~First quarter ~~2019~~2020 operating profit (loss) includes pre-tax charges for impairment of goodwill, indefinite-lived and finite-lived intangible and long-lived tangible assets ($~~5,373~~1,891 million); inventory charges ($~~302 million); a Voluntary Early Retirement Program ($89~~114 million); and, severance, facility closures and other items ($518 million). First quarter 2019 operating profit includes pre-tax charges for ~~severance,~~inventory, facility closure and other items ($11 million). ~~First quarter 2018 operating profit includes a pre-tax net credit for severance, facility closures and reserve adjustments ($12 million).~~

The following table disaggregates the Company’s revenue by major geographic and market segment destination. In the table, North America includes the U.S. and Canada (in millions):

	Three Months Ended June 30,																						Three Months Ended March 31,
	2019											2018											2020											2019
			Completion											Completion											Completion											Completion
	Wellbore		& Production		Rig							Wellbore		& Production		Rig							Wellbore		& Production		Rig							Wellbore		& Production		Rig
	Technologies		Solutions		Technologies		Eliminations			Total		Technologies		Solutions		Technologies		Eliminations			Total		Technologies		Solutions		Technologies		Eliminations			Total		Technologies		Solutions		Technologies		Eliminations			Total
North America	$	461	$	282	$	127	$	—		$	870	$	449	$	342	$	143	$	—		$	934	$	361	$	225	$	77	$	—		$	663	$	460	$	269	$	141	$	—		$	870
International		375		364		523		—			1,262		326		374		472		—			1,172		313		437		470		—			1,220		331		296		443		—			1,070
Eliminations		14		17		21		(52	)		—		18		22		36		(76	)		—		17		13		10		(40	)		—		16		16		19		(51	)		—
	$	850	$	663	$	671	$	(52	)	$	2,132	$	793	$	738	$	651	$	(76	)	$	2,106	$	691	$	675	$	557	$	(40	)	$	1,883	$	807	$	581	$	603	$	(51	)	$	1,940

Land	$	679	$	456	$	171	$	—		$	1,306	$	660	$	509	$	208	$	—		$	1,377	$	529	$	416	$	151	$	—		$	1,096	$	665	$	405	$	215	$	—		$	1,285
Offshore		157		190		479		—			826		115		207		407		—			729		145		246		396		—			787		126		160		369		—			655
Eliminations		14		17		21		(52	)		—		18		22		36		(76	)		—		17		13		10		(40	)		—		16		16		19		(51	)		—
	$	850	$	663	$	671	$	(52	)	$	2,132	$	793	$	738	$	651	$	(76	)	$	2,106	$	691	$	675	$	557	$	(40	)	$	1,883	$	807	$	581	$	603	$	(51	)	$	1,940

Six Months Ended June 30,

2019

2018

Completion

Completion

Wellbore

& Production

Rig

Wellbore

& Production

Rig

Technologies

Solutions

Technologies

Eliminations

Total

Technologies

Solutions

Technologies

Eliminations

Total

North America

$
921

$
551

$
268

$
—

$
1,740

$
864

$
634

$
278

$
1,776

International

706

660

966

—

2,332

608

732

785

2,125

Eliminations

30

33

40

(103
)

—

32

42

71

(145
)

—

$
1,657

$
1,244

$
1,274

$
(103
)

$
4,072

$
1,504

$
1,408

$
1,134

$
(145
)

$
3,901

Land

$
1,344

$
861

$
386

$
—

$
2,591

$
1,243

$
955

$
380

$
2,578

Offshore

283

350

848

—

1,481

229

411

683

1,323

Eliminations

30

33

40

(103
)

—

32

42

71

(145
)

—

$
1,657

$
1,244

$
1,274

$
(103
)

$
4,072

$
1,504

$
1,408

$
1,134

$
(145
)

$
3,901

Net revenue recognized from performance obligations ~~partially~~ satisfied in previous periods was ~~$34 million and $47~~$4 million for the ~~six~~three months ended ~~June 30, 2019 and June 30, 2018, respectively,~~March 31, 2020, primarily due to change orders.

Remaining performance obligations represents the transaction price of firm orders for all revenue streams for which work has not been performed on contracts with original expected duration of one year or more. ~~The Company does~~We do not disclose the remaining performance obligations of royalty contracts, service contracts for which there is a right to invoice, and short-term contracts that are expected to have a duration of one year or less. As of ~~June 30, 2019,~~March 31, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was ~~$2,545~~$3,558 million. The Company expects to recognize approximately ~~23 percent of~~$937 million in revenue for the remaining performance obligations in ~~2019~~2020, and ~~77 percent~~$2,621 million in 2021 and thereafter.

Contract assets include unbilled amounts when revenue recognized exceeds the amount billed to the customer under contracts where revenue is recognized over-time. Contract liabilities consist of customer billings in excess of revenue recognized under over-time contracts, customer advance payments and deferred revenue.

The changes in the carrying amount of net contract assets and contract liabilities are as follows (in millions):

	Contract Assets			Contract Liabilities			Contract Assets			Contract Liabilities
Balance at December 31, 2018	$	565		$	458
Balance at December 31, 2019							$	643		$	427
Provision								(4	)		-
Billings		(478	)		278			(84	)		282
Revenue recognized		557			(279	)		99			(233	)
Currency translation adjustments and other		(59	)		(2	)		(15	)		(6	)
Balance at June 30, 2019	$	585		$	455
Balance at March 31, 2020							$	639		$	470

~~There were no impairment losses recorded on contract assets for the periods ending June 30, 2019 or 2018.~~

Effective January 1, 2019 the Company adopted the new US GAAP accounting rules in ASC Topic 842, Leases (ASC 842), using the modified retrospective method. The Company elected to follow the package of practical expedients provided under the transition guidance within ASC 842, the practical expedient to account for lease and non-lease components as a single lease, and to not include leases with an initial term of less than 12 months in lease assets and liabilities.

At adoption of ASC 842, January 1, 2019, the Company had lease right-of-use assets of $786 million ($537 million operating and $249 million financing) and lease liabilities of $839 million ($554 million operating and $285 million financing). The adoption had no material effect on retained earnings.

The Company leases certain facilities and equipment to support its operations around the world. These leases generally require the Company to pay maintenance, insurance, taxes and other operating costs in addition to rent. Renewal options are common in longer term leases; however, it is rare that the Company initially intends that a lease option will be exercised due to the cyclical nature of the Company’s business. Residual value guarantees are not typically part of the Company’s leases. Occasionally, the Company sub-leases excess facility space, generally at terms similar to the source lease. The Company reviews agreements at inception to determine if they include a lease and, when they do, uses its incremental borrowing rate to determine the present value of the future lease payments as most do not include implicit interest rates.

At adoption of ASC 842, for those existing leases that included a periodic rent adjustment based on an index (or a similar variable rate), the asset and liability balances were updated with the January 1, 2019 index. Going forward, new such leases are initially valued at the index rate in effect on the lease commencement date, and, for all continuing such leases, subsequent changes in variable rates will be recorded to expense.

	June 30,		December 31,		March 31,		December 31,
	2019		2018		2020		2019
Current portion of lease liabilities:
Operating	$	88	$	—	$	83	$	84
Financing		28		7		32		30
Total	$	116	$	7	$	115	$	114

	June 30,		December 31,		March 31,		December 31,
	2019		2018		2020		2019
Long-term portion of lease liability:
Operating	$	431	$	—	$	394	$	424
Financing		265	$	222		252	$	250
Total	$	696	$	222	$	646	$	674

~~Supplemental information related to the Company’s leases is as follows (in millions):~~

~~Future minimum lease commitments for leases with initial or remaining terms of one year or more at June 30, 2019, are payable as follows (in millions):~~

The Company has a ~~$3.0~~$2.0 billion, five-year unsecured revolving credit facility, which expires on ~~June 27, 2022.~~October 30, 2024. The Company has the right to increase the ~~aggregate~~ commitments under this agreement to an aggregate amount of up to ~~$4.0~~$3.0 billion upon the consent of only those lenders holding any such increase. Interest under the multicurrency facility is based upon LIBOR, NIBOR or CDOR plus 1.125% subject to a ratings-based grid or the U.S. prime rate. The credit facility contains a financial covenant regarding maximum debt-to-capitalization ratio of 60%. As of ~~June 30, 2019,~~March 31, 2020, the Company was in compliance with a debt-to-capitalization ratio of ~~24.6%~~29.2%.

Additionally, theCompany has a $150 million bank line of credit for the construction of a facility in Saudi Arabia. Interest under the bank line of credit is based upon LIBOR plus 1.40%. The bank line of credit contains a financial covenant regarding maximum debt-to-equity ratio of 75%. As of March 31, 2020, the Company was in compliance.

The Company has a commercial paper program under which borrowings are classified as long-term since the program is supported by the ~~$3.0~~$2.0 billion, five-year credit facility. At ~~June 30, 2019,~~March 31, 2020, there were no0 commercial paper borrowings, and there were no0 outstanding letters of credit issued under the credit facility, resulting in ~~$3.0~~$2.0 billion of funds available under this credit facility.

The Company had ~~$491~~$524 million of outstanding letters of credit at ~~June 30, 2019,~~March 31, 2020, primarily in the U.S. and Norway, that are under various bilateral letter of credit facilities. Letters of credit are issued as bid bonds, advanced payment bonds and performance bonds.

At ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the fair value of the Company’s unsecured Senior Notes approximated ~~$2,355~~$1,445 million and ~~$2,211~~$1,947 million, respectively. The fair value of the Company’s debt is estimated using Level 2 inputs in the fair value hierarchy and is based on quoted prices for those ofor similar instruments. At March 31, 2020 and December 31, 2019, the carrying value of the Company’s unsecured Senior Notes approximated $1,981 million and $1,980 million, respectively.

The effective tax ~~rates~~rate for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~were 6.5%~~was 7.1% and ~~6.6%~~11.8%, ~~respectively, compared to 16.7% and (24.3)% for the same periods in 2018.~~respectively. The ~~Company’s ability to realize~~Company established valuation allowances on deferred tax assets ~~is now limited to items supported by reversing deferred~~for losses and tax ~~liabilities as a result of recent losses.~~credits generated in 2020 and 2019. The change in the effective tax rate from ~~2018~~2019 to ~~2019~~2020 was impacted by a change in jurisdictional mix of income between the two periods and ~~2019~~2020 was negatively impacted by the impairment of nondeductible goodwill ~~and the establishment of additional valuation allowance~~ partially offset by ~~the reduction in uncertain tax positions due to a settlement.~~

~~For the three and six months ended June 30, 2018, the Company utilized the discrete-period method to compute its interim tax provision due to significant variations in the relationship between~~an income tax ~~expense~~benefit of $123 million from the Coronavirus Aid, Relief, and ~~pre-tax accounting income~~Economic Security Act (CARES Act) that was enacted on March 27, 2020 allowing net operating losses originating in 2018, 2019 or ~~loss. For the three and six months ended June 30,~~2020 to be carried back five years. The Company anticipates filing a refund claim to carryback its 2019 ~~the Company estimated and recorded~~United States net operating loss to its 2014 tax ~~based on~~year which will result in a ~~full year effective tax rate.~~cash refund of $123 million.

The Company’s stock-based compensation plan, known as the National Oilwell Varco, Inc. 2018 Long-Term Incentive Plan (the “2018 Plan”), was approved by shareholders on May 11, 2018 and amended and restated on May 28, 2019. The 2018 Plan provides for the granting of stock options, restricted stock, restricted stock units, performance awards, phantom shares, stock appreciation rights, stock payments and substitute awards. The number of shares authorized under the 2018 Plan is 20.2 million. The 2018 Plan is also subject to a fungible ratio concept, such that the issuance of stock options and stock appreciation rights reduces the number of available shares under the 2018 Plan on a 1-for-1 basis, and the issuance of other awards reduces the number of available shares under the 2018 Plan on a 2.5-for-1 basis. At March 31, 2020, 1,348,877 shares remain available for future grants under the 2018 Plan. The Company also has outstanding awards under its other stock-based compensation plan known as the National Oilwell Varco, Inc. Long-Term Incentive Plan (the “Plan”), however the Company is no longer granting awards under the Plan.

On ~~May 28, 2019,~~February 25, 2020, under the 2018 Plan, the Company granted ~~65,752 restricted~~1,650,262 stock ~~awards~~options with a fair value of ~~$21.90~~$5.83 per ~~share.~~option and an exercise price of $20.23 per share; 2,535,174 shares of restricted stock and restricted stock units with a fair value of $20.23 per share; and performance share awards to senior management employees with potential payouts varying from 0 to 1,063,274 shares. The ~~awards were granted to non-employee members of~~stock options vest over a three-year period from the ~~board of directors~~grant date. The restricted stock and restricted stock units vest in 3 equal annual installments commencing on the first anniversary of the grant date. The 2020 performance share awards can be earned based on performance against two established goals over a three-year performance period. The performance share awards are divided into two independent parts that are subject to two separate performance metrics: 85% with a TSR (total shareholder return) goal and 15% with an internal NVA (“National Oilwell Varco Value Added”) (return on capital metric) goal.Performance against the TSR goal is determined by comparing the performance of the Company’s TSR with the TSR performance of the members of the OSX index for the three-year performance period. The TSR portion of the performance share awards is subject to vesting cap equal to 100% of Target Level if the Company’s absolute TSR is negative, regardless of relative TSR results. Conversely, if the Company’s absolute TSR is greater than 15% annualized over the three-year performance period the payout amount shall not be less than 50% of Target Level, regardless of relative TSR results.The NVA goal is based on the Company’s improvement in NVA from the beginning of the performance period until the end of the performance period. NVA shall be calculated as an amount equal to the Company’s (a) gross cash earnings less (b) average gross operating assets times an amount equal to a required return on assets.

Total stock-based compensation for all stock-based compensation arrangements under the Plan and the 2018 Plan was ~~$30~~$27 million and ~~$63~~$33 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~respectively and $31 million and $58 million for the three and six months ended June 30, 2018,~~ respectively.

The total income tax benefit recognized in the Consolidated Statements of Income (Loss) for all stock-based compensation arrangements under the Plan was ~~$4 million~~nil and $8$4 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~and $4 million and $6 million for the three and six months ended June 30, 2018,~~ respectively.

The Company ~~uses~~is exposed to certain risks relating to its ongoing business operations. The primary risk managed by using derivative ~~financial~~ instruments ~~to manage its~~is the foreign currency exchange rate ~~risk.~~risk associated with sourcing goods and services in a currency different than the

currency of sale. Forward currency contracts are executed to manage the foreign ~~currency~~ exchange ~~rate~~ risk on forecasted revenues and expenses denominated in currencies other than the functional currency of the operating unit (cash flow hedge). ~~The~~In addition, the Company ~~also~~ executes forward currency contracts to manage the foreign currency ~~exchange rate~~ risk on recognized nonfunctional currency monetary accounts (non-designated ~~hedge)~~hedge).

~~Forward~~The Company had the following outstanding foreign currency forward contracts ~~consist of~~at March 31, 2020 (in millions):

	Currency Denomination				Currency Denomination
	June 30,		December 31,		March 31,		December 31,
Foreign Currency	2019		2018		2020		2019
South Korean Won	KRW	17,600	KRW	—	KRW	17,600	KRW	17,600
Norwegian Krone	NOK	4,199	NOK	5,229	NOK	5,232	NOK	5,377
Russian Ruble					RUB	1,274	RUB	1,012
U.S. Dollar	USD	680	USD	631	USD	536	USD	686
Mexican Peso	MXN	156	MXN	204	MXN	458	MXN	115
Euro	EUR	171	EUR	172	EUR	207	EUR	188
Japanese Yen					JPY	191	JPY	36
South African Rand	ZAR	124	ZAR	124	ZAR	124	ZAR	124
Japanese Yen	JPY	121	JPY	121
British Pound Sterling					GBP	38	GBP	20
Danish Krone	DKK	15	DKK	35	DKK	25	DKK	21
Singapore Dollar	SGD	38	SGD	—	SGD	18	SGD	42
British Pound Sterling	GBP	23	GBP	12
Canadian Dollar	CAD	2	CAD	—	CAD	1	CAD	3

To protect against the volatility of forecasted foreign currency cash flows resulting from forecasted revenues and expenses, the Company has instituted a cash flow hedging program. For derivative instruments that are designated and qualify as a cash flow hedge, the gain or loss on the derivative instrument is recorded in accumulated other comprehensive income (loss) and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings (e.g., in “revenues” when the hedged transactions are cash flows associated with forecasted revenues). The Company includes time value in hedge relationships.

The Company expects $9$41 million of the accumulated other comprehensive income (loss) will be reclassified into earnings within the next twelve ~~months with an offset by gains from the underlying transactions resulting in no impact to earnings or cash flow.~~

The Company enters into forward exchange contracts to hedge certain nonfunctional currency monetary accounts. The gain or loss on the derivative instrument is recognized in ~~earnings in~~ other income (expense), together with the changes in the hedged nonfunctional monetary accounts.

The amount of gain (loss) recognized in other income (expense), net was ($7)43) million and ~~($3)~~$4 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~and ($19) million and ($8) million for the three and six months ended June 30, 2018,~~ respectively.

The Company has the following fair values of its derivative instruments and their balance sheet classifications (in millions):

	Asset Derivatives					Liability Derivatives					Asset Derivatives					Liability Derivatives
		Fair Value					Fair Value					Fair Value					Fair Value
	Balance Sheet	June 30,		December 31,		Balance Sheet	June 30,		December 31,		Balance Sheet	March 31,		December 31,		Balance Sheet	March 31,		December 31,
	Location	2019		2018		Location	2019		2018		Location	2020		2019		Location	2020		2019
Derivatives designated as hedging instruments under ASC Topic 815

Foreign exchange contracts	Prepaid and other current assets	$	1	$	2	Accrued liabilities	$	16	$	17	Prepaid and other current assets	$	7	$	5	Accrued liabilities	$	65	$	18
Foreign exchange contracts	Other Assets		—		—	Other liabilities		3		11	Other Assets		3		4	Other liabilities		21		2

Total derivatives designated as hedging instruments under ASC Topic 815		$	1	$	2		$	19	$	28		$	10	$	9		$	86	$	20

Derivatives not designated as hedging instruments under ASC Topic 815

Foreign exchange contracts	Prepaid and other current assets	$	4	$	4	Accrued liabilities	$	4	$	6	Prepaid and other current assets	$	15	$	8	Accrued liabilities	$	32	$	6
Foreign exchange contracts	Other Assets		1		—	Other Liabilities		—		2	Other Assets		2		1	Other Liabilities		—		—

Total derivatives not designated as hedging instruments under ASC Topic 815		$	5	$	4		$	4	$	8		$	17	$	9		$	32	$	6

Total derivatives		$	6	$	6		$	23	$	36		$	27	$	18		$	118	$	26

The following table sets forth the computation of weighted average basic and diluted shares outstanding (in millions, except per share data):

	Three Months Ended					Six Months Ended						Three Months Ended
	June 30,					June 30,						March 31,
	2019			2018		2019			2018			2020			2019
Numerator:
Net income (loss) attributable to Company	$	(5,389	)	$	24	$	(5,466	)	$	(44	)
Net loss attributable to Company												$	(2,047	)	$	(77	)
Denominator:
Basic—weighted average common shares outstanding		382			378		381			377			383			380
Dilutive effect of employee stock options and other
unvested stock awards		—			3		—			—			—			—
Diluted outstanding shares		382			381		381			377			383			380

Net income (loss) attributable to Company per share:
Net loss attributable to Company per share:
Basic	$	(14.11	)	$	0.06	$	(14.35	)	$	(0.12	)	$	(5.34	)	$	(0.20	)
Diluted	$	(14.11	)	$	0.06	$	(14.35	)	$	(0.12	)	$	(5.34	)	$	(0.20	)

Cash dividends per share	$	0.05		$	0.05	$	0.10		$	0.10		$	0.05		$	0.05

~~Companies~~ASC Topic 260, “Earnings Per Share” requires companies with unvested participating securities ~~are required~~ to utilize a two-class method for the computation of net income attributable to Company per share. The two-class method requires a portion of net income attributable to Company to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends or dividend equivalents, if declared. Net income (loss) attributable to Company allocated to these participating securities was immaterial for ~~each of~~ the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 and ~~2018.~~therefore not excluded from net income attributable to Company per share calculation.

The Company had stock options outstanding that were anti-dilutive totaling ~~25 million and 21~~27 million shares ~~for the three~~ and ~~six months ended June 30, 2019, compared to 18~~21 million shares for each of the three ~~and six~~ months ended ~~June 30, 2018.~~March 31, 2020 and 2019, respectively.

On ~~May 29, 2019,~~February 27, 2020, the Company announced that its Board of Directors declared a cash dividend of $0.05 per share. The cash dividend was paid on ~~June 28, 2019,~~March 27, 2020, to each stockholder of record on ~~June 14, 2019.~~March 13, 2020. Cash dividends were $19 million ~~and $38 million~~ for ~~each~~both the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018, respectively.~~2019. The declaration and payment of future dividends is at the discretion of the Company’s Board of Directors and will be dependent upon the Company’s results of operations, financial condition, capital requirements and other factors deemed relevant by the Company’s Board of Directors.

~~The Company had approximately $6.3 billion of goodwill and $0.4 billion of other intangible assets with indefinite lives at May 31, 2019.~~ The Company tests ~~these~~ intangible assets for impairment annually, or more frequently if events or circumstances indicate they could be impaired. Potential impairment indicators include, ~~(but~~but are not limited ~~to)~~to: a sustained increase in worldwide inventories of oil or gas, or sustained reductions in: worldwide oil and gas prices or drilling activity; the profitability or cash flow of oil and gas companies or drilling contractors; available financing or other capital ~~investment~~ for oil and gas companies or drilling contractors; the market capitalization of the Company or its customers; or, capital investments by drilling companies and oil and gas companies.

The unprecedented global oil and gas ~~market~~ downturn that began in 2014 has repeatedly exhibited ~~brief~~ signs of recovery that subsequently faded. ~~During~~There have been three points when, in management’s judgement, based on the information available at the time, market factors, events and circumstances clearly indicated a fundamental shift to a more prolonged downturn and shallower recovery than had been expected. As a result, management reduced its forecasts in the third quarter of 2016, the second quarter of 2019 ~~several~~and the first quarter of 2020. Forecasts were based on management’s judgement of the information management had at the time the forecast was made, which often included, but was not limited to: internally developed market ~~indicators hit new decade-lows, consistent with a more prolonged downturn~~intelligence and sales forecasts; formal and informal communications from customers and other industry participants about their economic outlook and spending plans; 3rd party industry analysts and information compilers and the reports and forecasts they publish; and, industry-specific and general global economic statistics, outlook and forecasts from Governmental and other sources. These external sources assisted management in developing our views regarding forecasted rig counts and capital spending by our customers, among other matters.

During the first quarter of 2020 the widely publicized and discussed coronavirus (COVID-19) outbreak rapidly spread across the world, driving sharp demand destruction for crude oil as whole economies ordered curtailed activity. Members of the ~~industry~~Organization of the Petroleum Exporting Countries and ~~diminished probability of a stronger near-term recovery.~~other producing countries (OPEC+), including Russia, met in early March to discuss additional production cuts to help stabilize prices, however, the group could not come to an agreement and production was instead increased into the already oversupplied market, decimating oil prices. The result was the Company’s stock price ~~reached~~reaching a ~~fourteen-year~~new low during the quarter and its market capitalization ~~was~~falling below its carrying value. ~~Also, during~~West Texas Intermediate (WTI), a key benchmark for the ~~quarter, the Oil Services Index (OSX), an indicator~~US oil market, fell more than $40 per barrel from January 1, 2020 to March 31, 2020 (losing two thirds of ~~the health~~its value in 90 days) to its lowest level in nearly two decades. As travel restrictions and ~~the cost of capital of the oil and gas services industry (and of the Company’s primary customer base), hit a low not seen since 2004. The OSX traded~~government directives to shut down ~~approximately 14 percent from the first quarter~~businesses increase, demand is expected to continue declining in the second quarter of ~~2019, reflecting a policy of capital discipline adopted by oil and gas producers during the quarter, diminished access to capital, and a higher cost of capital to oilfield services firms.~~2020. Management reduced its ~~outlook~~forecast accordingly.

In the Company’s view, falling rig count levels in the ~~second~~first quarter and a depressed outlook provided ~~tangible proof~~evidence to the equity markets that oil and gas producers were committed to reduced levels of capital investment in drilling, which will ~~lead to reduced~~further reduce levels of demand for capital equipment and oilfield services ~~which will lead to reduced levels of demand for the capital equipment~~ that the Company sells to its ~~oilfield services~~ customers. ~~Additionally,~~Also, due to the ~~second quarter saw the number of oilfield services firms declaring bankruptcy grow, including one~~prolonged poor market conditions, capital availability to many of the Company’s ~~large-cap peers~~customers became even more limited and ~~substantial customers.~~is unlikely to improve near-term. In management’s judgement the ~~current~~ facts and circumstances including those described above constituted a triggering event in the ~~second~~first quarter which indicated the Company’s goodwill and other long-lived assets may be impaired. The Company performed a detailed ~~Step 1~~ analysis under ASC 350, incorporating this refined outlook, which determined that the fair values were less than the respective carrying values for all of the following reporting units: Rig Equipment, Marine Construction, Downhole, ReedHycalog, IntelliServ, Grant Prideco, Tuboscope, Wellsite Services, Intervention & Stimulation Equipment, Floating Production Systems, XL Systems, Subsea Production Systems, Fiberglass Systems and Process & Flow TechnologiesCompany’s business units (“Reporting Units”).

The Company primarily uses the discounted cash flow method to estimate the fair value of its ~~reporting units~~Reporting Units when conducting the impairment test, but also considers the comparable companies and representative transaction methods to validate the test result and management’s forecast and other expectations, where possible. The valuation techniques used in the test were consistent with those used during previous testing. Fair value of the ~~reporting unit~~Reporting Unit is determined using significant unobservable inputs, or level 3 in the fair value hierarchy. These inputs are based on internal management estimates, forecasts and ~~judgments,~~judgements, using discounted cash ~~flow.The~~flow. The inputs used in the test were updated to reflect management’s judgement, current market conditions and forecasts.

The discounted cash flow was based on management’s forecast of operating performance for each ~~reporting unit.~~Reporting Unit. The two main assumptions used, which bear the risk of change and could impact the test result, include the forecast cash flow from operations from each of the Company’s ~~reporting units~~Reporting Units and their respective weighted average cost of capital. The starting point for each of the ~~reporting unit’s~~Reporting Unit’s cash flow from operations was the detailed ~~mid-year plan,~~forecast, modified to incorporate our revised outlook, as appropriate. The ~~reporting unit~~Reporting Unit carrying values were adjusted based on the long-lived asset impairment assessment noted below. Cash flows beyond the plan or forecast were estimated using a terminal value calculation which incorporated historical and forecasted financial cyclical trends for each ~~reporting unit~~Reporting Unit and considered long-term earnings growth rates. Financial and credit market volatility directly impacts our fair value measurement through the weighted average cost of capital used to determine a discount rate. During times of volatility, significant ~~judgment~~judgement must be applied to determine whether credit changes are a short-term or long-term trend.

~~During~~For the ~~second~~first quarter of ~~2019,~~2020, the Company recorded ~~a $3,099~~$1,295 million in impairment ~~charge~~charges to goodwill and ~~a $87~~$83 million ~~charge~~in charges to indefinite-lived intangible assets.

Following the impairment ~~charge, the effected reporting units~~charges, several Reporting Units did not have a fair value substantially in excess of their book value. Further deterioration of market conditions, in management’s judgement, beyond those incorporated into the extended forecast by management, ~~could~~will likely result in additional impairment charges. The remaining goodwill balance for these ~~reporting units~~Reporting Units at ~~June 30, 2019~~March 31, 2020 is as follows: Rig Equipment ($~~851~~661 million), Marine Construction ($~~154 million), Downhole ($265~~51 million), ReedHycalog ($~~359~~124 million), ~~Grant Prideco~~M/D Totco ($~~194~~32 million), ~~Tuboscope~~Wellsite ($~~37 million), WellSite Services ($305 million), Intervention and Stimulation Equipment ($7 million), Floating Production Systems ($60~~174 million), XL Systems ($6564 million), ~~Fiber Glass~~Fiberglass Systems ($~~526~~346 million), and Process and Flow Technologies ($~~353 million), and Completion Tools ($25~~63 million).

The Company has approximately $1.52 billion of goodwill, by segment as follows (in millions):

Impairment of Long-Lived Assets (Excluding Goodwill and Other Indefinite-Lived Intangible Assets)

~~The Company had approximately $2.6 billion of property, plant and equipment and $2.5 billion of other intangible assets with finite lives as of May 31, 2019.~~ Long-lived assets, which include property, plant and equipment, right of use, and ~~identified~~finite-lived intangible

assets, comprise a significant amount of the Company’s total assets. The Company makes ~~judgments~~judgements and estimates in conjunction with the carrying value of these assets, including amounts to be capitalized, depreciation and amortization methods and estimated useful lives.

The Company ~~identified~~identifies its Reporting Units as individual asset groups. The carrying values of these asset groups are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. An impairment loss is recorded in the period in which it is determined that the carrying amount of the asset is not recoverable based on estimated future undiscounted cash flows. We estimate the fair value of these intangible and fixed assets using an income approach that requires the Company to make long-term forecasts of its future revenues and costs related to the assets subject to review. These forecasts require assumptions about demand for the Company’s products and services, future market conditions and technological developments. The forecasts are dependent upon assumptions including those regarding oil and gas prices, the general outlook for the global oil and gas industry, available financing for the Company’s customers, political stability in major oil and gas producing areas, and the potential obsolescence of various types of equipment we sell, among other factors. Financial and credit market volatility directly impacts our fair value measurement through our income forecast. Changes to these assumptions, including, but not limited to: sustained declines in worldwide rig counts below current analysts’ ~~forecasts,~~forecasts; collapse of spot and futures prices for oil and ~~gas,~~gas; significant deterioration of external financing for our ~~customers,~~customers; higher risk premiums or higher cost of ~~equity,~~equity; or any other significant adverse economic news could require a provision for impairment.

During the ~~second~~first quarter of ~~2019,~~2020, the results of the Company's test for impairment of goodwill and indefinite-lived intangible assets, and the other negative market indicators described above, were a triggering event that indicated that its long-lived tangible assets and ~~definite-lived~~finite-lived intangible assets were impaired. ~~Recoverability testing was performed at certain asset groups and yielded an estimated undiscounted net cash flow below the carrying amount of the related assets, and impairment was indicated.~~

Impairment testing performed ~~as of June 1, 2019~~in the first quarter resulted in the determination that certain long-lived assets associated with most of the Company’s asset groups were not recoverable. The estimated fair value of these asset groups was below the carrying value and as a result, during the ~~second~~first quarter of ~~2019,~~2020, the Company recorded an impairment ~~charge~~charges of ~~$1,901~~$209 million to customer relationships, patents, trademarks, tradenames, and other finite-lived intangible assets, ~~$230~~$262 million to property, plant and equipment, and ~~$56~~$42 million for right-of-use assets. Additionally, the Company recorded a $224 million impairment on its equity investment in unconsolidated affiliates.

The Company has approximately ~~$3.2 billion of goodwill, by segment as follows (in millions):~~

Accumulated goodwill impairment was $2,457 million at March 31, 2019, and $5,556 million at June 30, 2019. Additions during the second quarter 2019 were $4 million, adjustments were $8 million and impairments were $3,099 million.

~~At June 30, 2019, the Company has approximately $900~~$534 million of identified intangible assets, by segment as follows (in millions):

	Wellbore Technologies			Completion & Production Solutions			Rig Technologies			Total			Wellbore Technologies			Completion & Production Solutions			Rig Technologies			Total
Balance at December 31, 2018	$	1,735		$	1,005		$	280		$	3,020
Balance at December 31, 2019													$	326		$	275		$	251		$	852
Impairment		(1,298	)		(690	)		—			(1,988	)		(78	)		(214	)		—			(292	)
Additions		9			—			—			9			—			—			—			—
Amortization		(87	)		(45	)		(14	)		(146	)		(4	)		(6	)		(7	)		(17	)
Currency translation adjustments and other		(10	)		13			2			5			(2	)		(5	)		(2	)		(9	)
Balance at June 30, 2019	$	349		$	283		$	268		$	900
Balance at March 31, 2020													$	242		$	50		$	242		$	534

At ~~June 30, 2019,~~March 31, 2020, the Company’s Wellbore Technology segment recorded ~~$73~~$71 million, Completion and Production Solutions recorded ~~$146~~$221 million and Rig Technology reported ~~$67~~$12 million of the total ~~$287~~$304 million impairment related to property, plant and equipment and right-of-use assets.

Our business is ~~affected~~governed by ~~governmental~~ laws and regulations ~~relating~~promulgated by U.S. federal and state governments and regulatory agencies, as well as international governmental authorities in the many countries in which we conduct business, including those related to the oilfield service ~~industry, including, health, safety~~industry. In the United States these governmental authorities include: the U.S. Department of Labor, the Occupational Safety and Health Administration (“OSHA”), the Environmental Protection Agency, the Bureau of Land Management, the Department of Treasury, Office of Foreign Asset Controls, state and international environmental ~~laws~~agencies and ~~regulations, as well as customs and trade laws and regulations.~~many others. We ~~have not incurred~~are unaware of any ~~known,~~ material unreserved liabilities in connection with our compliance with such laws. New laws, regulations and enforcement policies may result in additional, presently unquantifiable or unknown, costs or liabilities.

The Company is exposed to customs and regulatory risk in the countries in which we do business or to which we transport goods. For example, the effects of the United Kingdom’s withdrawal from the European Union, known as Brexit may have a negative impact on our results from operations. Uncertainty concerning the legal and regulatory risks of Brexit, include: (i) supply chain risks resulting from lack of trade agreements, potential changes in customs administrations or tariff; (ii) revenue risk, loss of customers or increased costs; (iii) delays in delivery of materials to the Company or delay in delivery by the Company; (iv) the need for renegotiation of agreements; and other business disruptions. In addition, trade regulations and laws may adversely impact our ability to do business in certain countries, e.g., Iran, Syria, Russia and Venezuela. Such trade regulations can be complex and present compliance challenges which could result in future liabilities.

~~The Company is~~ involved in various claims, regulatory agency audits and pending or threatened legal actions involving a variety of matters. ~~In many instances, the~~The Company maintains insurance that covers many of the claims arising from risks associated with the business activities of the Company, including claims for premises liability, product liability and other such claims. The Company carries substantial insurance to cover such risks above a self-insured retention. The Company believes, and the Company’s experience has been, that such insurance has been ~~sufficient~~enough to cover such risks. See Item 1A. Risk Factors.

The Company is also a party to claims, threatened and actual litigation, private arbitration, internal investigations of potential regulatory and compliance matters arising from ordinary ~~day to day~~day-to-day business activities in which parties, including government authorities, assert claims against the Company for a broad spectrum of potential claims and theories of liability, including: individual employment law claims, collective actions or class actions under ~~federal~~ employment laws, intellectual property claims, (such as alleged patent infringement, and/or misappropriation of trade secrets), premises liability claims, environmental, product liability claims, warranty claims, personal injury claims arising from allegedly defective products, negligence or other theories of liability, alleged regulatory violations, alleged ~~improper payments under~~violations of anti-corruption and anti-bribery laws and other commercial claims seeking recovery for alleged actual or exemplary ~~damages.~~damages or fines and penalties. For ~~many such~~some contingent claims, the Company’s insurance coverage is inapplicable or an exclusion to coverage may apply. In such instances, settlement or other resolution of such contingent claims could have a material financial or reputational impact on the Company.

Asof ~~June 30,~~December 31, 2019, the Company recorded reserves in an amount believed to be ~~enough~~sufficient, given the range of potential outcomes, for contingent liabilities representing all contingencies believed to be probable. These reserves include all costs expected for reclamation of a closed barite mine and product liability claims, as well as other circumstances involving material claims.

The Company has assessed the potential for additional losses above the amounts accrued as well as potential losses for matters that are not probable but are reasonably possible. The litigation process as well as the final outcome of regulatory oversight is inherently uncertain, and our best ~~judgment~~judgement concerning the probable outcome of litigation or regulatory enforcement matters may prove to be incorrect in some instances. The total potential loss on these matters cannot be determined; however, in our opinion, any ultimate liability, to the extent not otherwise provided for, will not materially affect our financial position, cash flow or results of operations. These estimated liabilities are based on the Company’s assessment of the nature of these matters, their progress toward resolution, the advice of legal counsel and outside experts as well as management’s experience. Of course, because of uncertainty and risk inherent to litigation and arbitration, the actual liabilities incurred may exceed our estimated liabilities and reserves, which could have a material financial or reputational impact on the Company. In many instances, the Company’s products and services embody or incorporate trade secrets or patented inventions. From time to time, we are engaged in disputes concerning protection of trade secrets and confidential information, patents and other intellectual property rights. Such disputes frequently involve complex, factual, technical and/or legal issues which result in high costs to adjudicate our rights and difficulty in predicting the ultimate outcome. Because of the importance of the Company’s intellectual property to the Company’s performance, an adverse result in such disputes could materially and adversely impact our financial performance.

Further, in some instances, direct or indirect consumers of our products and services, entities providing financing for purchases of our products and services or members of the supply chain for our products and services have become involved in governmental investigations, internal investigations, political or other enforcement matters. In such circumstances, such investigations may adversely impact the ability of consumers of our products, entities providing financial support to such consumers or entities in the supply chain to timely perform their business plans or to timely perform under agreements with us. We may, from time to time, become involved in these investigations, at substantial cost to the Company. We also are subject to trade regulations and other regulatory compliance in which the laws and regulations of different jurisdictions conflict or trade regulations may conflict with contractual terms. In such circumstances, our compliance with U.S. laws and regulations may subject us to risk of fines, penalties or contractual liability in other jurisdictions. Our efforts to actively manage such risks may not always be successful which could lead to negative impacts on revenue or earnings.

The Company is exposed to customs and regulatory risk in the countries in which we do business or to which we transport goods. For example, the effects of the United Kingdom’s withdrawal from the European Union, known as Brexit, may have a negative impact on our results from operations. Uncertainty concerning the legal and regulatory risks of Brexit, include: (i) supply chain risks resulting from lack of trade agreements, potential changes in customs administrations or tariffs; (ii) revenue risk, loss of customers or increased costs; (iii) delays in delivery of materials to the Company or delay in delivery by the Company; and (iv) the need for renegotiation of agreements; and other business disruptions. In addition, trade regulations and laws may adversely impact our ability to do business in certain countries, e.g.: Iran, Syria, Russia and Venezuela. Such trade regulations can be complex and present compliance challenges which could result in future liabilities.

As a result of the recent COVID-19 pandemic, the Company may be exposed to additional liabilities and risks. “Shelter-in-Place” orders in response to the COVID-19 pandemic have resulted in a severe slowdown in economic activity, and a sharp reduction in oil activity and a corresponding decline in demand for oil. This has and will lead to a sharp reduction in drilling activity in North America and reduction of activity internationally. The persistence of this supply/demand imbalance has caused oil prices to drop precipitously, to the lowest prices in decades.

As a result of these market conditions, demand for our products and services will decline. Our customers may attempt to cancel or delay projects, cancel contracts or may invoke force majeure clauses. Our customers may also seek to delay or may default on their payments to us. Further, we have seen, and expect to see, an increasing number of energy companies filing bankruptcy. Our collection of receivables could be materially delayed and/or impaired.

20The Company also may be exposed to liabilities resulting from operational delays due to supply chain disruption and closure or limitations imposed on our facilities and work force, from “shelter in place” orders around the world. The Company’s ability to perform services could also be impaired and the Company could be exposed to liabilities resulting from interruption in its ability to perform due to limited manpower and travel restrictions. These potential operational and service delays resulting from the COVID-19 pandemic could result in contractual or other legal claims from our customers. At this time, it is not possible to quantify these risks, but the combination of these factors could have a material impact on our financial results.

In August 2017, the FASB issued Accounting Standard Update No. 2017-12 “Derivatives and Hedging – Targeted Improvements to Accounting for Hedging Activities” (ASU 2017-12). This update improves the financial reporting of hedging relationships and simplifies the application of the hedge accounting guidance. ASU 2017-12 is effective for fiscal periods beginning after December 15, 2018, and for interim periods within those fiscal years. The Company adopted this update on January 1, 2019, with no material impact.

In March 2016, the FASB issued ASC Topic 842, “Leases” (ASC Topic 842), which supersedes the lease requirements in ASC Topic No. 840 “Leases” and most industry-specific guidance. This update increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASC Topic 842 is effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years. The Company adopted ASU Topic 842 on January 1, 2019. Refer to Note 7, ~~Leases, for the impact of this adoption on the Company’s financial statements.~~

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act (the “Tax Act”). The Company adopted ASU Topic 2018-02 on January 1, 2019 and elected not to reclassify stranded tax effects caused by tax reform from AOCI to retained earnings.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments. This update improves financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope. ASU 2016-13 is effective for fiscal periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted this update on January 1, 2020, with no material impact. The Company estimates its reserves using information about past events, current conditions and risk characteristics of each customer, and reasonable and supportable forecasts relevant to assessing risk associated with the collectability of Trade Accounts Receivables, Contract Assets, Unbilled Accounts Receivables, and Long-Term Receivables. The Company’s customer base, mostly in the oil and gas industry, have generally similar collectability risk characteristics, although larger and state-owned customers may have lower risk than smaller independent customers. As of March 31, 2020, allowance for bad debts and contract assets totaled $138 million.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” This ASU eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of accounting for income taxes. ASU 2019-12 is effective for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted. Management is currently ~~evaluating~~assessing the ~~effect~~impact of adopting ~~this standard.~~ASU 2019-12 on the company’s financial position, results of operations and cash flows.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

National Oilwell Varco, Inc. (the “Company”) is a leading independent provider of equipment and technology to the upstream oil and gas industry. The Company designs, manufactures ~~sells~~ and services a comprehensive line of drilling and well servicing equipment; sells and rents drilling motors, specialized downhole tools, and rig instrumentation; performs inspection and internal coating of oilfield tubular products; provides drill cuttings separation, management and disposal systems and services; and provides expendables and spare parts used in conjunction with the Company’s large installed base of equipment. The Company also manufactures coiled tubing and high-pressure fiberglass and composite tubing and sells and rents advanced in-line inspection equipment to makers of oil country tubular goods. The Company has a long tradition of pioneering innovations which improve the cost-effectiveness, efficiency, safety, and environmental impact of oil and gas operations.

Unless indicated otherwise, results of operations are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Certain reclassifications have been made to prior period financial information in order to conform with current period presentation. The Company discloses Adjusted EBITDA (defined as Operating Profit excluding Depreciation, Amortization and, when applicable, Other Items) in its periodic earnings press releases and other public disclosures to provide investors additional information about the results of ongoing operations. See Non-GAAP Financial Measures and Reconciliations in Results of Operations for an explanation of our use of non-GAAP financial measures and reconciliations to their corresponding measures calculated in accordance with GAAP.

The Company’s Wellbore Technologies segment designs, manufactures, rents, and sells a variety of equipment and technologies used to perform drilling operations, and offers services that optimize their performance, including: solids control and waste management equipment and services; ~~drilling fluids;~~ portable power generation; premium drill pipe; wired pipe; drilling optimization and automation services; tubular inspection, repair and coating services; rope access inspection; instrumentation; measuring and monitoring; downhole and fishing tools; steerable technologies; hole openers; and drill bits.

Wellbore Technologies focuses on oil and gas companies and supports drilling contractors, oilfield service companies, and oilfield equipment rental companies. Demand for the segment’s products and services depends on the level of oilfield drilling activity by oil and gas companies, drilling contractors, and oilfield service companies.

The Company’s Completion & Production Solutions segment integrates technologies for well completions and oil and gas production. The segment designs, manufactures, and services equipment and technologies needed for hydraulic fracture stimulation, including downhole multistage fracturing tools, pressure pumping trucks, blenders, sanders, hydration units, injection units, flowline, and manifolds; well intervention, including coiled tubing units, coiled tubing, and wireline units and tools; well construction, including premium connections and liner hangers; onshore production, including composite pipe, surface transfer and progressive cavity pumps, and artificial lift systems; and, offshore production, including floating production systems and subsea production technologies.

Completion & Production Solutions supports service companies and oil and gas companies. Demand for the segment’s products depends on the level of oilfield completions and workover activity by oilfield service companies and drilling contractors, and capital spending plans by oil and gas companies and oilfield service companies.

The Company’s Rig Technologies segment makes and supports the capital equipment and integrated systems needed to drill oil and gas wells on land and offshore as well as other marine-based markets, including offshore wind vessels. The segment designs, manufactures and sells land rigs, offshore drilling equipment packages, including installation and commissioning services, and drilling rig components that mechanize and automate the drilling process and rig functionality. Equipment and technologies the segment brings to customers include: substructures, derricks, and masts; cranes; jacking systems; pipe lifting, racking, rotating, and assembly systems; fluid transfer technologies, such as mud pumps; pressure control equipment, including blowout preventers; power transmission systems, including drives and generators; rig instrumentation and control systems; mooring, anchor, and deck handling machinery; and pipelay and construction systems. The segment also provides spare parts, repair, and rentals as well as comprehensive remote equipment monitoring, technical support, field service, and customer training through an extensive network of aftermarket service and repair facilities strategically located in major areas of drilling operations around the world.

Rig Technologies supports land and offshore drillers. Demand for the segment’s products depends on drilling contractors’ and oil and gas companies’ capital spending plans, specifically capital expenditures on rig construction and refurbishment; and secondarily on the overall level of oilfield drilling activity, which drives demand for spare parts, service, and repair for the segment’s large installed base of equipment.

In our annual report on Form 10-K for the year ended December 31, ~~2018,~~2019, we identified our most critical accounting policies. In preparing the financial statements, we make assumptions, estimates and judgments that affect the amounts reported. We periodically evaluate our estimates and judgments that are most critical in nature which are related to revenue recognition (See Note 6); allowance for doubtful accounts; inventory reserves; impairment of long-lived assets (excluding goodwill and other indefinite-lived intangible assets); goodwill and other indefinite-lived intangible assets; purchase price allocation of acquisitions; warranties; and income taxes. Our estimates are based on historical experience and on our future expectations that we believe are reasonable. The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results are likely to differ from our current estimates and those differences may be material.

For the ~~second~~first quarter ended ~~June 30, 2019,~~March 31, 2020, the Company generated ~~revenues~~a net loss of ~~$2.13 billion, an increase of 10 percent~~$2,047 million, compared to a net loss of $385 million in the fourth quarter of 2019 and a net loss of $77 million in the first quarter of 2019. Operating loss for the first quarter of 2020 was $1,950 million, compared to an operating loss of $349 million in the fourth quarter of 2019 and an ~~increase~~operating loss of ~~one percent from~~$48 million in the ~~second~~first quarter of ~~2018. Operating loss for~~2019. First quarter 2020 Adjusted EBITDA was $178 million, compared to $288 million in the ~~second~~fourth quarter of 2019 ~~was $5.7 billion,~~ and ~~net loss was $5.4 billion. Operating loss and net income include a non-cash, pre-tax charge~~$140 million in the first quarter of $5.37 billion related to impairments of goodwill, intangibles, and other assets (See Note 14). Adjusted EBITDA (operating profit excluding depreciation, amortization, and other items) increased $55 million sequentially to $195 million, or 9.1 percent of sales. Other items totaled $5.8 billion and included impairment charges, inventory charges, severance accruals, and restructuring costs.2019.

Wellbore Technologies generated revenues of ~~$850~~$691 million in the ~~second~~first quarter of 2020, a decrease of 10 percent from the fourth quarter of 2019 ~~an increase~~and a decrease of ~~five~~14 percent from the first quarter of ~~2019 and an increase of seven percent from the second quarter of 2018. Improving global market conditions drove a 14 percent~~2019. The sequential ~~improvement~~decline in revenue was primarily due to seasonality in international markets ~~outside North America, while U.S. revenue increased two percent amid declining~~and lower drilling activity ~~levels.~~levels in North America. Operating loss was ~~$3.30 billion~~$663 million and ~~includes $3.35 billion~~included $715 million of other items. Adjusted EBITDA increased 15 percent sequentially to $134 million, or 15.8 percent of sales. Higher volumes and cost savings initiatives resulted in 40 percent Adjusted EBITDA incrementals (the change in Adjusted EBITDA divided by the change in~~revenue).~~

Completion & Production Solutions generated revenues of ~~$663~~$675 million in the ~~second~~first quarter of 2020, a decrease of 16 percent from the fourth quarter of 2019 and an increase of 1416 percent from the first quarter of ~~2019~~2019. Deteriorating conditions in the North American completions market, seasonality and alogistical disruptions from COVID-19 related restrictions contributed to the sequential decrease of 10 percent from the second quarter of 2018. Most of the segment’s business units posted sequential revenue increases on rising demand from international and offshore markets for completion and production-related equipment.in results. Operating loss was ~~$1.93 billion~~$1,013 million and ~~includes $1.94 billion~~included $1,054 million in other items. Adjusted EBITDA ~~increased 86 percent sequentially to $52 million, or 7.8 percent of sales.~~

New orders ~~booked~~ during the quarter totaled ~~$548~~$335 million ~~marking~~for the ~~segment’s highest quarterly order intake in five years and~~quarter, representing a book-to-bill of ~~145~~81 percent when compared to the ~~$379~~$416 million of orders shipped from backlog. ~~At June 30, 2019, backlog~~Backlog for capital equipment orders for Completion & Production Solutions at March 31, 2020 was ~~$1.22~~$1.19 billion.

Rig Technologies generated revenues of ~~$671~~$557 million in the ~~second~~first quarter of 2020, a decrease of 27 percent from the fourth quarter of 2019 ~~an increase~~and a decrease of 11eight percent from the first quarter of ~~2019 and an increase of three percent from the second quarter of 2018. The segment realized greater contributions from offshore projects and growing demand for aftermarket parts and services.~~2019. Operating loss was ~~$422~~$202 million and included ~~$474~~$238 million of other items. Adjusted EBITDA ~~increased 32 percent sequentially~~was $56 million. Revenues were impacted by lower sales of capital equipment and a decrease in aftermarket revenue, due in part to ~~$74 million, or 11.0 percent of sales.~~

New orders booked during the quarter ~~grew 14 percent to $310~~totaled $146 million, representing a book-to-bill of ~~109~~70 percent when compared to the ~~$284~~$208 million of orders shipped from backlog. At ~~June 30, 2019,~~March 31, 2020, backlog for capital equipment orders for Rig Technologies was ~~$3.17~~$2.93 billion.

Following approximately two and a half years of steady improvements in oil prices and global drilling activity levels, commodity prices declined sharply during the fourth quarter of 2018 due to stronger than expected growth in USU.S. oil production and concerns regarding the global economy. These developments, along with pressure from investors on North American exploration and production companies to reduce investments and generate free cash flow, led to uncertainty in 2019 capital budgets and caused certain customers to accelerate deliveries of equipment prior to year-end. As a result ~~NOV reported improved operations during the fourth quarter~~ of ~~2018, despite oil prices that fell over 40 percent late in the year.~~

~~The uncertainty surrounding~~reduced 2019 budgets, and ~~the pull-forward of equipment deliveries into 2018, led to~~despite a ~~sharp reduction~~modest recovery in ~~NOV’s first quarter of 2019 revenues; however,~~ commodity prices, ~~increased, and the Company’s bookings improved allowing each of the Company’s three operating segments to realize a sequential improvement~~drilling activity levels in the ~~second quarter.~~

~~During~~U.S. declined throughout last year resulting in the ~~second quarter~~first double digit percentage decrease in the average annual rig count since 2016. While the North American market deteriorated, the new-found capital austerity and fiscal discipline exhibited by U.S. operators along with declining production from underinvestment in overseas markets and rapidly growing demand for LNG inspired greater levels of 2019, several market indicators hit new decade-lows, consistent with a more prolonged downturn for the industry and diminished probability of a stronger near-term recovery. The Oil Services Index (OSX), an indicator of the health and the cost of capital of theconfidence from international oil and gas ~~services~~companies. The industry (and of the Company’s primary customer base), hit a new low not seen since 2004, reflecting a policy of capital discipline adopted by oil and gas producers during the quarter, diminished access to and aentered 2020 anticipating higher cost of capital, to oilfield services firms. In the Company’s view, falling rig count levels in the second quarter provided tangible proof to the equity markets that oil and gas producers were committed to reduced levels of capital investment in drilling, which will lead to reduced levels of demand for oilfield services, which will lead to reduced levels of demand for the capital equipment that the Company sells to its oilfield services customers. Management reduced its outlook accordingly, resulting in a significant impairment of goodwill, intangibles, and other assets (See Note 14).

~~Slowly improving activity in~~ international and offshore ~~markets, and growing market share for certain of NOV’s products and services, are expected to partially~~activity levels would mostly offset the ~~near-term~~ongoing effects of capital austerity in the North American land ~~marketplace. Longer-term,~~marketplace, where a meaningful recovery was not expected before 2021.

During the ~~Company remains optimistic regarding improvements~~first quarter of 2020, the widely publicized and discussed coronavirus (COVID-19) outbreak rapidly spread across the world, driving sharp demand destruction for crude oil as whole economies ordered curtailed activity. In response to declining demand for crude oil, members of the Organization of the Petroleum Exporting Countries and other producing countries (OPEC+), including Russia, met in early March to discuss additional production cuts to help stabilize prices. The group failed to reach an agreement, and production was instead increased into the already oversupplied market, ~~fundamentals~~decimating oil prices and rapidly filling worldwide oil storage facilities. OPEC+ eventually reached an agreement in April 2020 to reduce production, which had a muted effect on oil prices due to the belief that the cuts were significantly less than the demand destructions caused by COVID-19. As a result, companies across the industry responded with severe capital spending budget cuts, cost cuts, personnel layoffs, facility closures and bankruptcy filings.

Management expects industry activity levels and spending by customers to decrease throughout the remainder of 2020 as ~~existing~~ oil ~~and gas fields~~supplies continue to ~~deplete~~increase and ~~numerous major projects to replenish supply have been deferred or canceled while global~~ demand ~~continues to grow. Notwithstanding this optimism, the market outlook~~destruction from COVID-19 remains. NOV remains ~~uncertain and NOV is~~ committed to streamlining ~~its~~ operations and improving organizational efficiencies while continuing to ~~invest~~focus on investing in ~~developing and acquiring new~~innovative products and services, including environmentally friendly technologies, that are responsive to the longer-term needs of our customers. We believe this strategy will further advance the Company’s competitive position, regardless of the market environment.

The Company’s results are dependent on, among other things, the level of worldwide oil and gas drilling, well remediation activity, the prices of crude oil and natural gas, capital spending by other oilfield service companies and drilling contractors, and worldwide oil and gas inventory levels. Key industry indicators for the ~~second~~first quarter of 2020 and 2019, and ~~2018, and~~ the ~~first~~fourth quarter of 2019 include the following:

							%			%									%			%
							2Q19			2Q19									1Q20			1Q20
	2Q19*		2Q18*		1Q19*		2Q18			1Q19			1Q20*		1Q19*		4Q19*		1Q19			4Q19
Active Drilling Rigs:
U.S.		989		1,037		1,046		(4.6	%)		(5.4	%)		784		1,046		821		-25.0	%		(4.5	%)
Canada		83		105		185		(21.0	%)		(55.1	%)		196		185		139		5.9	%		41.0	%
International		1,138		968		1,029		17.6	%		10.6	%		1,073		1,029		1,111		4.3	%		(3.4	%)
Worldwide		2,210		2,110		2,260		4.7	%		(2.2	%)		2,053		2,260		2,071		-9.2	%		(0.9	%)

West Texas Intermediate Crude Prices (per barrel)	$	59.78	$	68.03	$	54.83		(12.1	%)		9.0	%	$	45.99	$	54.83	$	56.92		(16.1	%)		(19.2	%)

Natural Gas Prices ($/mmbtu)	$	2.51	$	2.82	$	2.87		(11.0	%)		(12.5	%)	$	1.88	$	2.87	$	2.36		(34.5	%)		(20.3	%)

The following table details the U.S., Canadian, and international rig activity and West Texas Intermediate Crude Oil prices for the past nine quarters ended ~~June 30, 2019,~~March 31, 2020, on a quarterly basis:

Source: Rig count: Baker Hughes, Inc. (www.bakerhughes.com); West Texas Intermediate Crude Oil and Natural Gas Prices: Department of Energy, Energy Information Administration (www.eia.doe.gov).

The worldwide quarterly average rig count decreased ~~two~~one percent, ~~(from 2,260 to 2,210),~~ and the U.S. decreased five percent (from ~~1,046~~821 to ~~989)~~784), in the ~~second~~first quarter of ~~2019~~2020 compared to the ~~first~~fourth quarter of 2019. The average per barrel price of West Texas Intermediate Crude Oil ~~increased nine~~decreased 19 percent (from ~~$54.83~~$56.92 per barrel to ~~$59.78~~$45.99 per barrel) and natural gas prices decreased 1320 percent (from ~~$2.87~~$2.36 per mmbtu to ~~$2.51~~$1.88 per mmbtu) in the ~~second~~first quarter of ~~2019~~2020 compared to the fourth quarter of ~~2018.~~2019.

~~At July 26, 2019, there were 1,073~~U.S. rig activity at April 17, 2020 was 529 rigs, ~~actively drilling in North America, which remained flat with~~decreasing 33 percent compared to the ~~second~~first quarter of 2020 average of ~~1,072~~784 rigs. The price for West Texas Intermediate Crude Oil was ~~$56.20~~at $18.27 per barrel at ~~July 26, 2019, a decrease of 6%~~April 17, 2020, decreasing 60 percent from the ~~second~~first quarter of ~~2019~~2020 average. The price for natural gas was ~~$2.17~~at $1.75 per mmbtu at ~~July 26, 2019, a decrease of 14%~~April 17, 2020, decreasing seven percent from the ~~second~~first quarter of ~~2019~~2020 average.

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2019			2018			2019			2018			2020			2019
Revenue:
Wellbore Technologies	$	850		$	793		$	1,657		$	1,504		$	691		$	807
Completion & Production Solutions		663			738			1,244			1,408			675			581
Rig Technologies		671			651			1,274			1,134			557			603
Eliminations		(52	)		(76	)		(103	)		(145	)		(40	)		(51	)
Total revenue	$	2,132		$	2,106		$	4,072		$	3,901		$	1,883		$	1,940

Operating profit (loss):
Wellbore Technologies	$	(3,295	)		38		$	(3,276	)	$	50		$	(663	)		19
Completion & Production Solutions		(1,932	)		40			(1,967	)		56			(1,013	)		(35	)
Rig Technologies		(422	)		62			(391	)		80			(202	)		31
Eliminations and corporate costs		(79	)		(88	)		(142	)		(135	)		(72	)		(63	)
Total operating profit (loss)	$	(5,728	)	$	52		$	(5,776	)	$	51		$	(1,950	)	$	(48	)

Operating profit (loss)%:
Wellbore Technologies														(95.9	%)		2.4	%
Completion & Production Solutions														(150.1	%)		(6.0	%)
Rig Technologies														(36.3	%)		5.1	%
Total operating profit (loss)%														(103.6	%)		(2.5	%)

Three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019. Revenue from Wellbore Technologies was ~~$850~~$691 million for the three months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~$793~~$807 million for the three months ended ~~June 30, 2018, an increase~~March 31, 2019, a decrease of ~~$57~~$116 million or seven percent. For the six months ended June 30, 2019, revenue from Wellbore Technologies was $1,657 million compared to $1,504 million for the six months ending June 30, 2018, an increase of $153 million or 1014 percent.

Operating loss from Wellbore Technologies was ~~$3,295~~$663 million for the three months ended ~~June 30, 2019~~March 31, 2020 compared to an operating profit of ~~$38~~$19 million for the three months ended ~~June 30, 2018,~~March 31, 2019, a decrease of $3,333 million. For the six months ended June 30, 2019, operating loss from Wellbore Technologies was $3276 million compared to operating profit of $50 million for the six months ending June 30, 2018, a decrease of $3326$682 million primarily due to the impairment of certain assets.

Three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019. Revenue from Completion & Production Solutions was ~~$663~~$675 million for the three months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~$738~~$581 million for the three months ended ~~June 30, 2018, a decrease~~March 31, 2019, an increase of ~~$75~~$94 million or 10 percent. For the six months ended June 30, 2019, revenue from Completion & Production Solutions was $1,244 million compared to $1,408 million for the six months ending June 30, 2018, a decrease of $164 million or 1216 percent.

Operating loss from Completion & Production Solutions was ~~$1,932~~$1,013 million for the three months ended ~~June 30, 2019~~March 31, 2020 compared to ~~operating profit of $40~~$35 million for the three months ended ~~June 30, 2018,~~March 31, 2019, a decrease of $1,972 million. For the six months ended June 30, 2019, operating loss from Completion and Production Solutions was $1,967 million compared to $56 million for the six months ending June 30, 2018, a decrease of $2023$978 million primarily due to the impairment of certain assets.

The Completion & Productions Solutions segment monitors its capital equipment backlog to plan its business. New orders are added to backlog only when the Company receives a firm written order for major completion and production components or a contract related to a construction project. The capital equipment backlog was ~~$1.22~~$1.19 billion at ~~June 30, 2019,~~March 31, 2020, an increase of ~~$260 million, or 27~~fourteen percent from backlog of ~~$955 million~~$1.04 billion at ~~June 30, 2018.~~March 31, 2019. Numerous factors may affect the timing of revenue out of backlog. Considering these factors, the Company reasonably expects approximately ~~59 percent~~$957 million of revenue out of backlog ~~to become revenue during~~for the remainder of ~~2019~~2020 and ~~41 percent~~approximately $229 million of revenue out of backlog in 2021 and thereafter. At ~~June 30, 2019,~~March 31, 2020, approximately 64 percent of the capital equipment backlog was for offshore products and approximately 8285 percent of the capital equipment backlog was destined for international markets.

Three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018~~2019. Revenue from Rig Technologies was ~~$671~~$557 million for the three months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~$651~~$603 million for the three months ended ~~June 30, 2018, an increase~~March 31, 2019, a decrease of ~~$20~~$46 million or ~~three~~eight percent. ~~For the six months ended June 30, 2019, revenue from Rig Technologies was $1,274 million compared to $1,134 million for the six months ending June 30, 2018, an increase of $140 million.~~

Operating loss from Rig Technologies was ~~$422~~$202 million for the three months ended ~~June 30, 2019~~March 31, 2020 compared to an operating profit of ~~$62~~$31 million for the three months ended ~~June 30, 2018,~~March 31, 2019, a decrease of $484 million. For the six months ended June 30, 2019, operating loss from Rig Technologies was $391 million compared to operating profit of $80 million for the six months ending June 30, 2018, a decrease of $453$233 million primarily due to ~~asset impairments.~~the impairment of certain assets.

The Rig Technologies segment monitors its capital equipment backlog to plan its business. New orders are added to backlog only when the Company receives a firm written order for major drilling rig components or a signed contract related to a construction project. The capital equipment backlog was ~~$3.17~~$2.93 billion at ~~June 30, 2019,~~March 31, 2020, a decrease of ~~$34 million, or 10~~seven percent, from backlog of ~~$3.51~~$3.14 billion at ~~June 30, 2018.~~March 31, 2019. Numerous factors may affect the timing of revenue out of backlog. Considering these factors, the Company reasonably expects approximately ~~16 percent during~~$530 million of revenue out of backlog for the remainder of ~~2019~~2020 and ~~84 percent~~approximately $2.4 billion of revenue out of backlog in 2021 and thereafter. At ~~June 30, 2019,~~March 31, 2020, approximately 3428 percent of the capital equipment backlog was for offshore products and approximately 93 percent of the capital equipment backlog was destined for international markets.

Eliminations and corporate costs were ~~$79 million and $142~~$72 million for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, respectively, compared to ~~$88 million and $135~~$63 million for the three ~~six~~ months ended ~~June 30, 2018.~~March 31, 2019. This change is primarily due to the change in intersegment eliminations. Sales from one segment to another generally are priced at estimated equivalent commercial selling prices; however, segments originating an external sale are credited with the full profit to the company. Eliminations include intercompany transactions conducted between the three reporting segments that are eliminated in consolidation. Intrasegment transactions are eliminated within each segment.

Other income (expense), net were expenses of ~~$26~~$3 million for the three months ended ~~June 30, 2019~~March 31, 2020 compared to expenses of ~~$50~~$18 million for the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. The change in expense was primarily due to the fluctuations in foreign currencies.

The Company discloses Adjusted EBITDA (defined as Operating Profit excluding Depreciation, Amortization and, when applicable, Other Items) in its periodic earnings press releases and other public disclosures to provide investors additional information about the results of ongoing operations. The Company uses Adjusted EBITDA internally to evaluate and manage the business. Adjusted EBITDA is not intended to replace GAAP financial measures, such as Net Income. Other items include impairment charges, ~~for Goodwill, indefinite~~inventory charges, severance accruals, and ~~finite-lived intangible assets, long-lived tangible assets, restructure costs for facility closures, inventory write downs, severance payments and adjustments of certain reserves.~~other restructuring costs.

The following tables set forth the reconciliation of Adjusted EBITDA to its most comparable GAAP financial measure (in millions):

	Three Months Ended									Six Months Ended						Three Months Ended
	June 30,						March 31,			June 30,						March 31,						December 31,
	2019			2018			2019			2019			2018			2020			2019			2019
Operating profit (loss):
Wellbore Technologies	$	(3,295	)	$	38		$	19		$	(3,276	)	$	50		$	(663	)	$	19		$	(317	)
Completion & Production Solutions		(1,932	)		40			(35	)		(1,967	)		56			(1,013	)		(35	)		57
Rig Technologies		(422	)		62			31			(391	)		80			(202	)		31			(23	)
Eliminations and corporate costs		(79	)		(88	)		(63	)		(142	)		(135	)		(72	)		(63	)		(66	)
Total operating profit (loss)	$	(5,728	)	$	52		$	(48	)	$	(5,776	)	$	51		$	(1,950	)	$	(48	)	$	(349	)

Other items:
Wellbore Technologies	$	3,345		$	—		$	(2	)	$	3,343		$	(3	)	$	715		$	(2	)	$	410
Completion & Production Solutions		1,939			—			11			1,950			3			1,054			11			13
Rig Technologies		474			—			2			476			6			238			2			114
Corporate		11			—			—			11			(18	)		16			—			—
Total other items	$	5,769		$	—		$	11		$	5,780		$	(12	)	$	2,023		$	11		$	537

Depreciation & amortization:
Wellbore Technologies	$	84		$	95		$	100		$	184		$	189		$	51		$	100		$	50
Completion & Production Solutions		45			54			52			97			108			30			52			26
Rig Technologies		22			22			23			45			43			20			23			21
Corporate		3			3			2			5			7			4			2			3
Total depreciation & amortization	$	154		$	174		$	177		$	331		$	347		$	105		$	177		$	100

Adjusted EBITDA:
Wellbore Technologies	$	134		$	133		$	117		$	251		$	236		$	103		$	117		$	143
Completion & Production Solutions		52			94			28			80			167			71			28			96
Rig Technologies		74			84			56			130			129			56			56			112
Eliminations and corporate costs		(65	)		(85	)		(61	)		(126	)		(146	)		(52	)		(61	)		(63	)
Total Adjusted EBITDA	$	195		$	226		$	140		$	335		$	386		$	178		$	140		$	288

Reconciliation of Adjusted EBITDA:
GAAP net income (loss) attributable to Company	$	(5,389	)	$	24		$	(77	)	$	(5,466	)	$	(44	)	$	(2,047	)	$	(77	)	$	(385	)
Noncontrolling interests		5			1			2			7			3			(2	)		2			—
Provision (benefit) for income taxes		(373	)		5			(10	)		(383	)		8			(156	)		(10	)		(46	)
Interest expense		25			23			25			50			47			22			25			25
Interest income		(6	)		(5	)		(6	)		(12	)		(12	)		(3	)		(6	)		(4	)
Equity (income) loss in unconsolidated affiliate		2			1			—			2			(1	)		233			—			7
Other (income) expense, net		8			3			18			26			50			3			18			54
Depreciation and amortization		154			174			177			331			347			105			177			100
Other items		5,769			—			11			5,780			(12	)		2,023			11			537
Total Adjusted EBITDA	$	195		$	226		$	140		$	335		$	386		$	178		$	140		$	288

At ~~June 30, 2019,~~March 31, 2020, the Company had cash and cash equivalents of ~~$1,121~~$1,115 million ~~compared to $1,427 million at~~and total debt of $2,002 million. At December 31, ~~2018. Of our current~~2019, cash and cash equivalents ~~balance,~~were $1,171 million and total debt was $1,989 million. As of March 31, 2020, approximately ~~$784~~$744 million of the $1,115 million of cash and cash equivalents was held by our foreign subsidiaries and the earnings associated with this cash ~~were~~could be subject to foreign withholding taxes and incremental U.S. taxation. If opportunities to invest in the U.S. are greater than available cash balances that are not subject to income tax, rather than repatriating cash, wethe Company may choose to borrow against ~~our~~its revolving credit facility or utilize its commercial paper program.

The Company has a $2.0 billion, five-year unsecured revolving credit facility, which expires on October 30, 2024. The Company has the right to increase the commitments under this agreement to an aggregate amount of up to $3.0 billion upon the consent of only those lenders holding any such increase. Interest under the multicurrency facility is based upon LIBOR, NIBOR or CDOR plus 1.125% subject to a ratings-based grid or the U.S. prime rate. The credit facility contains a financial covenant regarding maximum debt-to-capitalization ratio of 60%. As of March 31, 2020, the Company was in compliance with a debt-to-capitalization ratio of 29.2%.

At ~~June 30, 2019,~~March 31, 2020, there were no commercial paper borrowings, and there were no outstanding letters of credit issued under the credit facility, resulting in ~~$3.0~~$2.0 billion of funds available under this credit facility.

The Company also has a $150 million bank line of credit for the construction of a facility in Saudi Arabia. Interest under the bank line of credit is based upon LIBOR plus 1.40%. The bank line of credit contains a financial covenant regarding maximum debt-to-equity ratio of 75%. As of March 31, 2020, the Company was in compliance.

From time to time, we participate in factoring arrangements to sell accounts receivable to third-party financial institutions. Our factoring transactions are recognized as sales, and the proceeds are included as operating cash flows in our Condensed Consolidated Statements of Cash Flows. During the quarter ended March 31, 2020 we sold accounts receivable of $45 million at a cost of approximately $0.2 million.

Our outstanding debt at March 31, 2020 was $2,002 million and ~~lease liabilities at June 30, 2019~~consisted primarily of ~~$3,179 million consisted of $1,395~~$399 million in 2.60% Senior Notes, ~~$1,088~~$1,089 million in 3.95% Senior Notes, $493 million in 3.60% Senior Notes, and lease liabilities of ~~$696~~$646 million. ~~We were~~The Company was in compliance with all covenants at ~~June 30, 2019.~~March 31, 2020.

We had ~~$491~~$524 million of outstanding letters of credit at ~~June 30, 2019,~~March 31, 2020, primarily in the U.S. and Norway, that are under various bilateral letter of credit facilities. Letters of credit are issued as bid bonds, advanced payment bonds and performance bonds.

The following table summarizes our net cash provided by continuing operating activities, continuing investing activities and continuing financing activities for the periods presented (in millions):

	Six Months Ended						Three Months Ended
	June 30,						March 31,
	2019			2018			2020			2019
Net cash provided (used) by operating activities	$	(111	)	$	110
Net cash provided by (used by) operating activities							$	39		$	(38	)
Net cash used in investing activities		(156	)		(360	)		(53	)		(107	)
Net cash used in financing activities		(39	)		(20	)		(43	)		(20	)

Significant sources and uses of cash during the first ~~six~~three months of ~~2019~~2020

Since the oil and gas market downturn began in late 2014 the Company has maintained a continuous process of actively managing its strategy, structure and resources to the changing market conditions and new realities. The Company has closed or realigned hundreds of facilities, reduced headcount, sharply lowered costs, cut capital expenditure budgets and reviewed all product lines for acceptable returns in the evolved market. Additionally, the Company has proactively reduced the balances and extended the maturity profile of its debt. In the fall of 2019, the Company retired $1 billion of notes due 2022 for cash, issued $500 million of notes due 2029 and extended the maturity of its undrawn credit facility to 2024. While aggressively matching size and spend to the market, and protecting its balance sheet, the Company has continued investing in new products and technologies that enable its customers to improve their operational efficiencies.

When the COVID-19 global pandemic and OPEC+ actions further depressed oil prices and industry activity beginning in March of 2020, the Company’s prior prudent actions helped ensure adequate available liquidity resources. Management intends to continue managing the business to the market realities to ensure the Company’s access to capital remains sufficient. – See Item 1A Risk Factors.

The effect of the change in exchange rates on cash flows was ~~a $0~~an increase of $1 million and ~~a decrease of $30~~$8 million for the first ~~six~~three months of ~~2019~~2020 and ~~2018,~~2019, respectively.

We believe that cash on hand, cash generated from operations and amounts available under our credit facilities and from other sources of debt will be sufficient to fund operations, lease payments, working capital needs, capital expenditure requirements, dividends and financing obligations.

We ~~intend to~~may pursue additional acquisition candidates, but the timing, size or success of any acquisition effort and the related potential capital commitments cannot be predicted. We continue to expect to fund future cash acquisitions primarily with cash flow from operations and borrowings, including the unborrowed portion of the revolving credit facility or new debt issuances, but may also issue additional equity either directly or in connection with acquisitions. There can be no assurance that additional financing for acquisitions will be available at terms acceptable to us.

Some of the information in this document contains, or has incorporated by reference, forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements typically are identified by use of terms such as “may,” “expect,” “anticipate,” “estimate,” and similar words, although some forward-looking statements are expressed differently. All statements herein regarding expected merger synergies are forward-looking statements. You should be aware that our actual results could differ materially from results anticipated in the forward-looking statements due to a number of factors, including but not limited to changes in oil and gas prices, customer demand for our products, difficulties encountered in integrating mergers and acquisitions, and worldwide economic activity. You should also consider carefully the statements under “Risk Factors,” as disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements. Given these uncertainties, current or prospective investors are cautioned not to place undue reliance on any such forward-looking statements. We undertake no obligation to update any such factors or forward-looking statements to reflect future events or developments.

We are exposed to changes in foreign currency exchange rates and interest rates. Additional information concerning each of these matters follows:

We have extensive operations in foreign countries. The net assets and liabilities of these operations are exposed to changes in foreign currency exchange rates, although such fluctuations generally do not affect income since their functional currency is typically the local currency. These operations also have net assets and liabilities not denominated in the functional currency, which exposes us to changes in foreign currency exchange rates that impact income. We recorded ano foreign exchange loss in our income statement ~~of approximately $12 million in~~for the first ~~six~~three months of ~~2019,~~2020, compared to approximately ~~$19~~$9 million in the same period of the prior year. The gains and losses are primarily due to exchange rate fluctuations related to monetary asset balances denominated in currencies other than the functional currency and adjustments to our hedged positions as a result of changes in foreign currency exchange rates. Currency exchange rate fluctuations may create losses in future periods to the extent we maintain net monetary assets and liabilities not denominated in the functional currency of the countries using the local currency as their functional currency.

Some of our revenues in foreign countries are denominated in U.S. dollars, and therefore, changes in foreign currency exchange rates impact our earnings to the extent that costs associated with those U.S. dollar revenues are denominated in the local currency. Similarly, some of our revenues are denominated in foreign currencies, but have associated U.S. dollar costs, which also give rise to foreign currency exchange rate exposure. In order to mitigate that risk, we may utilize foreign currency forward contracts to better match the currency of our revenues and associated costs. We do not use foreign currency forward contracts for trading or speculative purposes.

The Company had other financial market risk sensitive instruments denominated in foreign currencies for transactional exposures totaling ~~$82~~$234 million and translation exposures totaling ~~$143~~$79 million as of ~~June 30, 2019~~March 31, 2020 excluding trade receivables and payables, which approximate fair value. These market risk sensitive instruments consisted of cash balances and overdraft facilities. The Company estimates that a hypothetical 10 percent movement of all applicable foreign currency exchange rates on the transactional exposures financial market risk sensitive instruments could affect net income by $7$18 million and the translational exposures financial market risk sensitive instruments could affect the future fair value by ~~$17~~$8 million.

The counterparties to forward contracts are major financial institutions. The credit ratings and concentration of risk of these financial institutions are monitored on a continuing basis. In the event that the counterparties fail to meet the terms of a foreign currency contract, our exposure is limited to the foreign currency rate differential.

At ~~June 30, 2019,~~March 31, 2020, long term borrowings consisted ~~$1,395~~of $399 million in 2.60% Senior Notes, ~~and $1,088~~$1,089 million in 3.95% Senior Notes, $493 million in 3.60% Senior Notes. At ~~June 30, 2019,~~March 31, 2020, there were no commercial paper borrowings and no outstanding letters of credit issued under the credit facility, resulting in ~~$3.0~~$2.0 billion of funds available under this credit facility. Occasionally a portion of borrowings under our credit facility could be denominated in multiple currencies which could expose us to market risk with exchange rate movements. These instruments carry interest at a pre-agreed upon percentage point spread from either LIBOR, NIBOR or CDOR, or at the U.S. prime rate. Under our credit facility, we may, at our option, fix the interest rate for certain borrowings based on a spread over LIBOR, NIBOR or CDOR for 30 days to six months. Our objective is to maintain a portion of our debt in variable rate borrowings for the flexibility obtained regarding early repayment without penalties and lower overall cost as compared with fixed-rate borrowings.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. The Company’s disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures and is recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this report at a reasonable assurance level.

There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

As of the date of this filing, the Company and its operations continue to be subject to the risk factors previously disclosed in Part I, Item 1A “Risk Factors” in our ~~2018~~2019 Annual Report on Form 10-K. The risk factor below updates our risk factors previously discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

The recent COVID-19 pandemic and related economic repercussions have had, and are expected to continue to have, a significant impact on our business, and depending on the duration of the pandemic and its effect on the oil and gas industry, could have a material adverse effect on our business, liquidity, consolidated results of operations and consolidated financial condition.

As a result of the recent COVID-19 pandemic, the Company may be exposed to additional liabilities and risks created by this unprecedented crisis. The COVID-19 pandemic has resulted in unprecedented governmental actions ordering citizens in the United States and countries around the world to “shelter in place,” and issuing “stay at home orders,” which curtail travel and commerce. In the United States alone, over 26 million have filed for unemployment benefits during the sharp decline in economic activity resulting from governmental orders.

Oil demand has significantly deteriorated as a result of the virus outbreak and corresponding preventative measures taken around the world to mitigate the spread of the virus. At the same time, aggressive increases in production of oil by Saudi Arabia and Russia created a significant surplus in the supply of oil. WTI oil spot prices decreased from a high of $63 per barrel in early January 2020 to a low of $14 per barrel in late March 2020. Physical markets have been distressed as spot prices have been negatively impacted by the lack of available storage capacity. While OPEC+ agreed in April to cut production, downward pressure on commodity prices has continued and could continue for the foreseeable future.

The forced shutdown of economic activity, has directly affected our business and has exacerbated the potential negative impact from many of the risks described in our Form 10-K for the year ended December 31, 2019, including those relating to our customers’ capital spending and sharply reduced oil and natural gas prices. Demand for our products and services is declining as our customers continue to revise their capital budgets downwards and swiftly adjust their operations in response to lower commodity prices.

The nature, scale, and scope of the above-described events combined with the uncertain duration and extent of governmental actions prevent us from identifying all potential risks to our business. We believe that the well-known impacts described above and other potential impacts include, but are not limited to, the following:

Information regarding mine safety and other regulatory actions at our mines is included in Exhibit 95 to this Form 10-Q.

We hereby undertake, pursuant to Regulation S-K, Item 601(b), paragraph (4) (iii), to furnish to the U.S. Securities and Exchange Commission, upon request, all constituent instruments defining the rights of holders of our long-term debt not filed herewith.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	NOV	New York Stock Exchange

	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	3	$	7
Operating cash flows from operating leases		28		61
Financing cash flows from finance leases		8		15
Right-of-use assets obtained in exchange for new:
Operating lease liabilities		—		31
Finance lease liabilities	$	5	$	11

Weighted average remaining lease term:
Operating leases			10 years
Finance leases			17 years
Weighted average discount rate:
Operating leases				5.04	%
Finance leases				5.46	%


Period	Total number of shares purchased*		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs		Approximate dollar value of shares that may yet be purchased(2) under the plans or programs*
January 1 through January 31, 2020		—		—		—	$	500,000
February 1 through February 29, 2020		817	$	20.50		—		500,000
March 1 through March 31, 2020		—		—		—		500,000
Total ⁽¹⁾		817	$	20.50		—

3.1		Fifth Amended and Restated Certificate of Incorporation of National Oilwell Varco, Inc. (Exhibit 3.1) (1)

3.2		Amended and Restated By-laws of National Oilwell Varco, Inc. (Exhibit 3.1) (2)

4.1		Description of Securities (12)

10.1		Credit Agreement, dated as of June 27, 2017, among National Oilwell Varco, Inc., the financial institutions signatory thereto, including Wells Fargo Bank, N.A., in its capacity, among others, as Administrative Agent, Co-Lead Arranger and Joint Book Runner (Exhibit 3.1)(2)

10.2		~~National Oilwell Varco, Inc. 2018 Long-Term Incentive Plan,~~Amendment No. 1 to Credit Agreement, dated as ~~amended and restated.~~of October 30, 2019 (4)*

10.3		~~Form of Employee Stock Option Agreement. (Exhibit 10.1)~~National Oilwell Varco, Inc. 2018 Long-Term Incentive Plan, as amended and restated. (5)*

10.4		Form of ~~Non-Employee Director~~Employee Stock Option Agreement. (Exhibit ~~10.2) (5)~~10.1) (6)

10.5		Form of ~~Performance-Based Restricted Stock. (18 Month) Agreement~~Non-Employee Director Stock Option Agreement. (Exhibit ~~10.1)~~10.2) (6)

10.6		Form of Performance-Based Restricted Stock. ~~(36~~(18 Month) Agreement (Exhibit ~~10.2) (6)~~10.1) (7)

10.7		Form of ~~Performance Award~~Performance-Based Restricted Stock. (36 Month) Agreement (Exhibit ~~10.1)~~10.2) (7)

10.8		Form of ~~Executive Employment Agreement.~~Performance Award Agreement (Exhibit 10.1) (8)

10.9		Form of Executive ~~Severance~~Employment Agreement. (Exhibit ~~10.2) (8)~~10.1) (9)

10.10		Form of ~~Employee Nonqualified Stock Option Grant Agreement~~Executive Severance Agreement. (Exhibit 10.2) (9)

10.11		Form of ~~Restricted~~Employee Nonqualified Stock Option Grant Agreement ~~(9)~~(10)

10.12		Form of ~~Performance Award~~Restricted Stock Agreement ~~(9)~~(10)

10.13		Form of ~~Employee Nonqualified Stock Option Grant~~Performance Award Agreement ~~(2019)~~ (10)

10.14		Form ~~on Restricted~~of Employee Nonqualified Stock Option Grant Agreement (2019) ~~(10)~~(11)

10.15		Form on Restricted Stock Agreement (2019) (11)

10.16		Form of Performance Award Agreement (2019) ~~(10)~~(11)

10.17		Form of Performance Award Agreement (2020)

31.1		Certification pursuant to Rule 13a-14a and Rule 15d-14(a) of the Securities and Exchange Act, as amended.

31.2		Certification pursuant to Rule 13a-14a and Rule 15d-14(a) of the Securities and Exchange Act, as amended.

32.1		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

95		Mine Safety Information pursuant to section 1503 of the Dodd-Frank Act.

101.INS		XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)


*		Compensatory plan or arrangement for management or others.

(1)		Filed as an Exhibit to our Quarterly Report on Form 10-Q filed on August 5, 2011.

(2)		Filed as an Exhibit to our Current Report on Form 8-K filed on ~~August 11, 2017.~~November 14, 2019.

(3)		Filed as an Exhibit to our Current Report on Form 8-K filed on June 28, ~~2017~~2017.

(4)		Filed as an Exhibit to our Current Report on Form 8-K filed on November 4, 2019.

(5)		Filed as Appendix I to our Proxy Statement filed on April 15, 2019.

~~(5)~~(6)		Filed as an Exhibit to our Current Report on Form 8-K filed on February 23, 2006.

Large accelerated filer	☑		Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐		Emerging growth company	☐

	Operating			Finance
2019	$	81		$	27
2020		126			45
2021		88			37
2022		69			27
2023		53			19
Thereafter		281			263
Total lease payments		698			418
Less: Interest		(179	)		(125	)
Present value of lease liabilities	$	519		$	293

~~(6)~~(7)		Filed as an Exhibit to our Current Report on Form 8-K filed on March 27, 2007.

~~(7)~~(8)		Filed as an Exhibit to our Current Report on Form 8-K filed on March 27, 2013.

~~(8)~~(9)		Filed as an Exhibit to our Current Report on Form 8-K filed on November 21, 2017.

~~(9)~~(10)		Filed as an Exhibit to our Current Report on Form 8-K filed on February 26, 2016.

~~(10)~~(11)		Filed as an Exhibit to our Quarterly Report on Form 10-Q filed on April 26, 2019.

(12)		Filed as an Exhibit to our Annual Report on Form 10-K filed on February 13, 2020.

Date: ~~July 30, 2019~~April 28, 2020	By:	/s/ Scott K. Duff
	Scott K. Duff
	Vice President, Corporate Controller & Chief Accounting Officer
	(Duly Authorized Officer, Principal Accounting Officer)