Deon Daugherty, editor-in-chief, Oil and Gas Investor: Integrating purposeful innovation, product creation and service delivery is what drives NOV to power the oil and gas industry. In this exclusive interview with Hart Energy, CEO Clay Williams shares his secrets for success and innovation in changing times. I'm Deon Daugherty, editor-in-chief of Oil and Gas Investor, and this is the OG interview. So Clay, NOV has been around in one way or another since 1862. It's as old as the oil and gas industry itself.

Clay Williams, CEO, NOV Inc.:That's correct, yep.

DD: And you've seen, of course, different iterations and different cycles.

CC: Yes. Pretty much all of them.

DD: Yeah, all of them, right. So tell me about one that's coming up, the energy transition.

CC: That's a great question. We actually started as a distribution company just a few miles down the road from where Colonel Drake drilled the first well. So I'd like to remind our team here, that we've actually remade ourselves successfully through many cycles in the industry. And so the next up cycle will look different than the last one, and our goal here is to really make NOV better for the next one.

DD: And do you suppose this just another cycle, or is the energy transition a bigger challenge?

CW: Yeah. I think when we look at the future of this industry, we're going to have to figure out how to make it less environmentally impactful. So one of the things we've been very focused on over the past several years is how do we reduce the greenhouse gas emissions of conventional oil and gas operations? How do we help our customers become less environmentally impactful, one, and two, look, the energy transition is the business plan of the 21st century.

And when we surveyed the skill sets that we have here, the experience base that we have here at NOV and in material sciences, in lifting and handling systems, in industrial processes that we put to work in the oil field, large projects that we execute at scale, we have a lot to bring to the energy transition. And so we're really trying to figure out, all right, what kind of role can NOV play in helping the world move away from fossil fuels towards less environmentally impactful, lower carbon sources of energy? And I think it's a very key role. I'm pretty excited about a lot of the technologies that we're working on here, but I think it's going to be a twofold approach, because oil and gas is not going to go away soon.

DD: And as we were talking earlier, you mentioned that much of the technology you're applying to, for example, the wind turbines, and the manufacturer is actually born from the oil and gas industry technology that you've all put together.

CC: Oh yeah. If you fly into the airport at Amsterdam, you'll see a lot of offshore wind turbines that are producing electricity in the North Sea, just a little bit off the coast of the Netherlands and Denmark and other places around the North Sea. Those were put in with oil field technology, with lift boats that utilize jacking systems. It's the same jacking systems that we put on an offshore jack of rig handling and lifting equipment cranes, hull designs that we brought from the oil field. In fact, most of those turbines were put in utilizing NOV technology. There's 15 new vessels that are being built around the world right now to install fixed offshore wind turbines and the towers that are required. And they get successively taller, they get heavier. And so they require new vessels that have more capability. And of the 15 vessels being constructed today, 12 are utilizing NOV designs.

DD: So when you look at that sort of technology, the energy transition technology that you all are providing and how it fits into the ESG dynamic, for example. Where do your shareholders come down on that? Do they recognize what you're doing and the value it puts into the ESG?

CW: I think so. What's interesting to me is, it is this two-pronged approach. What can we do in energy transition, wind, geothermal, solar, carbon capture and sequestration, nuclear? We have initiatives going on in all those areas, but we're also trying to decarbonize conventional oil and gas operations. It's one of the statistics that we mentioned in our last sustainability report was that products and technologies that we developed through the downturn, if those were adopted across oil and gas industry, it would offset NOV's global greenhouse gas footprint by more than 20 fold. So there's a lot of leverage in what we are doing. We're able to offset our own CO2 emissions, greenhouse gas emissions footprint by more than 20 fold through these technologies, the power of our technology is obviously pretty impactful.

DD: So what has to happen for that to be put into place?

CW: We need more purchase orders. And I will say to our customer's credit, there's a lot more interest amongst drilling contractors and their customers, oil and gas producers, about reducing their carbon emissions. In hydraulic fracturing operations, for instance, a lot of interest in electric frack fleets and we're selling technologies into that trend. Offshore, we've come out with a product called a power blade that dramatically reduces not just the greenhouse gas footprint, but the cost. Diesel offshore, when you're having to haul diesel out to rigs in diesel powered vessels, a high environmental impact, but also a pretty expensive diesel and a high cost level that our customers are discovering they can reduce both. It's better for the environment, it's better for their economics. And so we are seeing a lot of interest in these technologies from oil and gas companies and oil field service companies.

DD: And as you've noted, there's been at least eight years worth of underinvestment in the sector as a whole. So what has to happen to get that investment boosted to where these technologies are possible?

CW: Well, we started to see that last year in 2022 with the hostilities in the Ukraine, that really taught the world the importance of energy security again. And so we began to see better commodity prices and more reinvestment in the industry, the rig count here in the U.S. really starting to grow pretty dramatically in 2022. And we're pleased to see it happen. Now here since in 2023, with sort of the collapse in natural gas prices in the United States, rig count has backed off and we've seen some softening in oil prices.

But I think this will always be a volatile industry. It's always going to be subjected to geopolitical disruptions. But energy security is critical. This is the most important industry in the world. This is the industry that powers all other industries, and so oil and gas is necessary. But if history's a guide, it teaches us that from time to time, we kind of forget that. And we learn the hard way that under-investment has a price and this industry doesn't turn on a dime. And so I think we're going to continue to see volatility in the future. We're going to see the effect of underinvestment come to the fore and through higher commodity prices, which will prompt higher levels of activity across the industry.

DD: All right. Interesting, fascinating perspective. Thank you so much, Clay.

CW: My pleasure. Thanks for spending time.