Houston, Texas based National-Oilwell Varco, Inc. (NOV) reported strong third-quarter 2008 results, driven by continued robust demand for its drilling equipment, particularly for international offshore rigs.

Revenue for the quarter was up 9% sequentially and 40% year-over-year to $3.61 billion. Despite the credit crisis, new orders of $2.4 billion during the quarter brought the total backlog to a record $11.8 billion, highlighting a very high level of earnings visibility going forward.

Approximately 90% of the total backlog pertains to international markets, while about 85% of the total relates to offshore equipment. The improving outlook for the domestic onshore market further adds to the company's favorable prospects. The merger with Grant Prideco has transformed the company into an oilfield machinery powerhouse enjoying a very strong cyclical leverage.

We remain bullish on National-Oilwell Varco shares in particular and the group as whole despite the recent commodity-price induced weakness. We believe that the demand outlook for oilfield services remains very strong, particularly in the international markets, and is not significantly affected by the current crude oil weakness.