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Document and Company Information - USD ($) $ in Billions	9 Months Ended
Document and Company Information - USD ($) $ in Billions	Sep. 30, 2009	Nov. 02, 2009	Jun. 30, 2008
Document and Company Information [Abstract]
Entity Registrant Name	NATIONAL OILWELL VARCO INC
Entity Central Index Key	0001021860
Document Type	10-Q
Document Period End Date	Sep. 30, 2009
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	Yes
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 37.0
Entity Common Stock, Shares Outstanding		418,336,718

Consolidated Balance Sheets - USD ($) $ in Millions	9 Months Ended	12 Months Ended
Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2009	Dec. 31, 2008
Current assets:
Cash and cash equivalents	$ 3,192.0	$ 1,543.0
Receivables, net	2,204.0	3,136.0
Inventories, net	3,767.0	3,806.0
Costs in excess of billings	612.0	618.0
Deferred income taxes	227.0	271.0
Prepaid and other current assets	405.0	283.0
Total current assets	10,407.0	9,657.0
Property, plant and equipment, net	1,753.0	1,677.0
Deferred income taxes	189.0	126.0
Goodwill	5,405.0	5,225.0
Intangibles, net	4,103.0	4,300.0
Investment in unconsolidated affiliate	389.0	421.0
Other assets	116.0	73.0
Total assets	22,362.0	21,479.0
Current liabilities:
Accounts payable	510.0	852.0
Accrued liabilities	2,454.0	2,376.0
Billings in excess of costs	1,615.0	2,161.0
Current portion of long-term debt and short-term borrowings	9.0	4.0
Accrued income taxes	401.0	230.0
Total current liabilities	4,989.0	5,623.0
Long-term debt	875.0	870.0
Deferred income taxes	2,098.0	2,134.0
Other liabilities	121.0	128.0
Total liabilities	$ 8,083.0	$ 8,755.0
Commitments and contingencies
Stockholders' equity:
Common stock - par value $.01; 418,281,455 and 417,350,924 shares issued and outstanding at September 30, 2009 and December 31, 2008	$ 4.0	$ 4.0
Additional paid-in capital	8,203.0	7,989.0
Accumulated other comprehensive income (loss)	92.0	(161.0)
Retained earnings	5,871.0	4,796.0
Total Company stockholders' equity	14,170.0	12,628.0
Noncontrolling interests	109.0	96.0
Total stockholders' equity	14,279.0	12,724.0
Total liabilities and stockholders' equity	$ 22,362.0	$ 21,479.0

Consolidated Statements of Income - USD ($) shares in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2009	Sep. 30, 2008	Sep. 30, 2009	Sep. 30, 2008
Statement [Line Items]
Revenue	$ 3,087,000,000	$ 3,611,000,000	$ 9,578,000,000	$ 9,621,000,000
Cost of revenue	2,196,000,000	2,511,000,000	6,773,000,000	6,743,000,000
Gross profit	891,000,000	1,100,000,000	2,805,000,000	2,878,000,000
Selling, general and administrative	279,000,000	310,000,000	932,000,000	812,000,000
Intangible asset impairment	0	0	147,000,000	0
Transaction and restructuring costs	11,000,000	0	19,000,000	16,000,000
Operating profit	601,000,000	790,000,000	1,707,000,000	2,050,000,000
Interest and financial costs	(14,000,000)	(19,000,000)	(40,000,000)	(53,000,000)
Interest income	4,000,000	11,000,000	8,000,000	37,000,000
Equity income in unconsolidated affiliate	1,000,000	20,000,000	45,000,000	37,000,000
Other income (expense), net	(13,000,000)	15,000,000	(87,000,000)	14,000,000
Income before income taxes	579,000,000	817,000,000	1,633,000,000	2,085,000,000
Provision for income taxes	192,000,000	264,000,000	551,000,000	707,000,000
Net income	387,000,000	553,000,000	1,082,000,000	1,378,000,000
Net income attributable to noncontrolling interests	2,000,000	5,000,000	7,000,000	11,000,000
Net income attributable to Company	$ 385,000,000	$ 548,000,000	1,075,000,000	1,367,000,000
Net income attributable to Company per share:
Basic	$ 0.93	$ 1.32	2.58	3.49
Diluted	$ 0.92	$ 1.31	$ 2.58	$ 3.48
Weighted average shares outstanding:
Basic	416.0	416.0	416.0	391.0
Diluted	418.0	418.0	417.0	393.0

Consolidated Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2009	Sep. 30, 2008
Cash flows from operating activities:
Net income	$ 1,082.0	$ 1,378.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	364.0	284.0
Excess tax benefit from exercise of stock options	0.0	(37.0)
Equity income in unconsolidated affiliate	(45.0)	(37.0)
Dividend from unconsolidated affiliate	86.0	0.0
Intangible asset impairment	147.0	0.0
Other	(53.0)	36.0
Change in operating assets and liabilities, net of acquisitions:
Receivables	979.0	(596.0)
Inventories	103.0	(450.0)
Costs in excess of billings	7.0	(10.0)
Prepaid and other current assets	(122.0)	69.0
Accounts payable	(384.0)	201.0
Billings in excess of costs	(545.0)	749.0
Other assets/liabilities, net	350.0	119.0
Net cash provided by operating activities	1,969.0	1,706.0
Cash flows from investing activities:
Purchases of property, plant and equipment	(186.0)	(264.0)
Business acquisitions, net of cash acquired	(392.0)	(2,988.0)
Business divestitures, net of cash disposed	251.0	801.0
Dividend from unconsolidated affiliate	8.0	113.0
Other, net	0.0	(1.0)
Net cash used in investing activities	(319.0)	(2,339.0)
Cash flows from financing activities:
Borrowings against lines of credit and other debt	7.0	2,728.0
Payments against lines of credit and other debt	(35.0)	(2,281.0)
Proceeds from exercise of stock options	3.0	84.0
Excess tax benefit from exercise of stock options	0.0	37.0
Net cash provided by (used in) financing activities	(25.0)	568.0
Effect of exchange rates on cash	24.0	(12.0)
Increase (decrease) in cash equivalents	1,649.0	(77.0)
Cash and cash equivalents, beginning of period	1,543.0	1,842.0
Cash and cash equivalents, end of period	3,192.0	1,765.0
Cash payments during the period for:
Interest	37.0	52.0
Income taxes	$ 603.0	$ 921.0

Grant Prideco Merger and Other Acquisitions

9 Months Ended

Sep. 30, 2009

Grant Prideco Merger and Other Acquisitions [Abstract]

Grant Prideco Merger and Other Acquisitions

2. Grant Prideco Merger and Other Acquisitions

The Grant Prideco merger was accounted for as a purchase business combination. Assets acquired and liabilities assumed were recorded at their fair values as of April 21, 2008. The total purchase price is $7,199 million, including Grant Prideco stock options assumed and acquisition related transaction costs and is comprised of (in millions):


Consideration given to acquire the outstanding common stock of Grant Prideco:
Shares issued totaled approximately 56.9 million shares at $72.74 per share	$	4,135
Cash paid at $23.20 per share		2,932
Grant Prideco stock options assumed		55
Merger related transaction costs		77

Total purchase price	$	7,199

Purchase Price Allocation

The following table, set forth below, displays the total purchase price allocated to Grant Prideco’s net tangible and identifiable intangible assets based on their fair values as of April 21, 2008 (in millions):


Cash and cash equivalents	$	171
Receivables		420
Assets held for sale, net		784
Inventories		611
Prepaid and other current assets		210
Property, plant and equipment		392
Goodwill		2,772
Intangibles		3,696
Investment in unconsolidated affiliate		512
Other assets		98
Accounts payable and accrued liabilities		(316	)
Accrued income taxes		(624	)
Long-term debt		(176	)
Deferred income taxes		(1,305	)
Minority interest		(25	)
Other liabilities		(21	)

Total purchase price	$	7,199

Unaudited Pro Forma Financial Information

The unaudited financial information in the table below summarizes the combined results of operations of National Oilwell Varco and Grant Prideco, on a pro forma basis, as though the companies had been combined as of the beginning of 2008. The pro forma financial information is presented for informational purposes only and may not be indicative of the results of operations that would have been achieved if the merger had taken place at the beginning of 2008. The pro forma financial information for the three and nine months ended September 30, 2008 includes the business combination accounting effect on historical Grant Prideco revenues, adjustments to depreciation on acquired property, amortization charges from acquired intangible assets, financing costs on new debt in connection with the merger and related tax effects. (in millions, except per share data):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2009		2008		2009		2008
Total revenues	$	3,087	$	3,611	$	9,578	$	10,225

Net income attributable to Company	$	385	$	568	$	1,075	$	1,495

Basic net income attributable to Company per share	$	0.93	$	1.37	$	2.58	$	3.61

Diluted net income attributable to Company per share	$	0.92	$	1.36	$	2.58	$	3.59

Other Acquisitions

In the nine months ended September 30, 2009, the Company completed five acquisitions for an aggregate purchase price of $392 million, net of cash acquired. These acquisitions included:

	•		The shares of ASEP Group Holding B.V., a Netherlands-based manufacturer of well service equipment.

	•		The shares of ANS (1001) Ltd. (“Anson”), a U.K.-based manufacturer of pumps and fluid expendibles.

	•		The business and assets of Spirit Drilling Fluids Ltd., a U.S.-based company that provides drilling fluids and related well-site services to exploration and production companies.

	•		The business and assets of Spirit Minerals L.P., a U.S.-based company that mines, processes and distributes barite to the oil and gas drilling fluid industry.

From the dates of acquisition, the results of operations from ASEP are included in the Rig Technology segment and the results of operations from Anson, Spirit Drilling Fluids, and Spirit Minerals are included in the Petroleum Services & Supplies segment. The impact of these acquisitions was not material to the consolidated financial statements.

Asset Impairment	9 Months Ended
Asset Impairment	Sep. 30, 2009
Asset Impairment [Abstract]
Asset Impairment	4. Asset Impairment Generally accepted accounting principles require the Company to test goodwill and other indefinite-lived intangible assets for impairment at least annually or more frequently whenever events or circumstances occur indicating that such assets might be impaired. During the second quarter of 2009, the worldwide average rig count was 2,009 rigs, down 41% from the fourth quarter 2008 average of 3,395 and down 25% from the first quarter 2009 average of 2,681. The second quarter 2009 average rig count represented the lowest quarterly average in the past six years. In addition, the Company’s updated forecast was behind the Company’s previous forecast completed at the beginning of 2009. While operating profit for the first quarter of 2009 was in line with the Company’s first quarter 2009 operating profit forecast, the Company’s consolidated operating profit for the second quarter of 2009 was below its second quarter 2009 forecast. As a result of the substantial decline in the worldwide rig count, and the decline in actual/forecasted results compared to the original 2009 forecast, the Company concluded that events or circumstances had occurred indicating that goodwill and other indefinite-lived intangible assets might be impaired as described under SFAS 142, which was primarily codified into ASC Topic 350, “Intangibles — Goodwill and Other” (“ASC Topic 350”). Therefore, the Company performed its interim impairment test of goodwill for all its reporting units at the end of the second quarter of 2009. The implied fair value of goodwill is determined by deducting the fair value of a reporting unit’s identifiable assets and liabilities from the fair value of that reporting unit as a whole. Fair value of the reporting units is determined in accordance with SFAS 157, which was primarily codified into ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”), using significant unobservable inputs, or level 3 in the fair value hierarchy. These inputs are based on internal management estimates, forecasts and judgments, using a combination of three methods: discounted cash flow, comparable companies, and representative transactions. While the Company primarily uses the discounted cash flow method to assess fair value, the Company uses the comparable companies and representative transaction methods to validate the discounted cash flow analysis and further support management’s expectations, where possible. The discounted cash flow is based on management’s short-term and long-term forecast of operating performance for each reporting unit. The two main assumptions used in measuring goodwill impairment, which bear the risk of change and could impact the Company’s goodwill impairment analysis, include the cash flow from operations from each of the Company’s individual business units and the weighted average cost of capital. The starting point for each of the reporting unit’s cash flow from operations is the detailed annual plan or updated forecast. The detailed planning and forecasting process takes into consideration a multitude of factors including worldwide rig activity, inflationary forces, pricing strategies, customer analysis, operational issues, competitor analysis, capital spending requirements, working capital needs, customer needs to replace aging equipment, increased complexity of drilling, new technology, and existing backlog among other items which impact the individual reporting unit projections. Cash flows beyond the specific operating plans were estimated using a terminal value calculation, which incorporated historical and forecasted financial cyclical trends for each reporting unit and considered long-term earnings growth rates. The financial and credit market volatility directly impacts our fair value measurement through our weighted average cost of capital that we use to determine our discount rate. During times of volatility, significant judgment must be applied to determine whether credit changes are a short-term or long-term trend. Projections for the remainder of 2009 also reflected declines compared to the original 2009 annual forecast. The Company updated its 2009 operating forecast, long-term forecast, and discounted cash flows based on this information. The goodwill impairment analysis that we performed during the second quarter of 2009 did not result in goodwill impairment as of June 30, 2009. Other indefinite-lived intangible assets, representing trade names management intends to use indefinitely, were valued using significant unobservable inputs (level 3) and are tested for impairment using the Relief from Royalty Method, a form of the Income Approach. An impairment is measured and recognized based on the amount the book value of the indefinite-lived intangible assets exceeds its estimated fair value as of the date of the impairment test. Included in the impairment test are assumptions, for each trade name, regarding the related revenue streams attributable to the trade names which are determined consistent with the forecasting process described above, the royalty rate, and the discount rate applied. Based on the Company’s indefinite-lived intangible asset impairment analysis performed during the second quarter of 2009, the Company incurred an impairment charge of $147 million in the Petroleum Services & Supplies segment related to a partial impairment of the Company’s Grant Prideco trade name. The impairment charge was primarily the result of the substantial decline in worldwide rig counts through June 2009, declines in current forecasts in rig activity for the remainder of 2009, 2010, and 2011 compared to rig count forecast at the beginning of 2009, and a current decline in the revenue forecast for the drill pipe business unit for the remainder of 2009, 2010, and 2011.

Business Segments

9 Months Ended

Sep. 30, 2009

Business Segments [Abstract]

Business Segments

9. Business Segments

Operating results by segment are as follows (in millions). The 2008 actual results include Grant Prideco operations from the acquisition date of April 21, 2008:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
Revenue:
Rig Technology	$	2,000		$	1,926		$	6,116		$	5,440
Petroleum Services & Supplies		882			1,310			2,809			3,264
Distribution Services		306			498			1,019			1,289
Elimination		(101	)		(123	)		(366	)		(372	)

Total Revenue	$	3,087		$	3,611		$	9,578		$	9,621


Operating Profit:
Rig Technology (a)	$	577		$	501		$	1,717		$	1,413
Petroleum Services & Supplies (b) (c)		82			302			195			718
Distribution Services		7			43			42			87
Unallocated expenses and eliminations (d)		(54	)		(56	)		(228	)		(152	)
Transaction and restructuring costs		(11	)		—			(19	)		(16	)

Total Operating Profit	$	601		$	790		$	1,707		$	2,050


Operating Profit %:
Rig Technology (a)		28.9	%		26.0	%		28.1	%		26.0	%
Petroleum Services & Supplies (b) (c)		9.3	%		23.0	%		6.9	%		22.0	%
Distribution Services		2.3	%		8.8	%		4.1	%		6.8	%
Total Operating Profit %		19.5	%		21.9	%		17.8	%		21.3	%


(a)		Under purchase accounting related to 2009 acquisitions, a fair value step up adjustment of $4 million was made to inventory and is being charged to “Cost of revenue” as the applicable inventory is sold. Cost of revenue includes $2 million and $4 million of these inventory charges for the three and nine months ended September 30, 2009, respectively.

(b)		The Company recorded a $147 million impairment charge to other indefinite-lived intangible assets during the nine months ended September 30, 2009.

		Under purchase accounting related to 2009 acquisitions, a fair value step up adjustment of $4 million was made to inventory and is being charged to “Cost of revenue” as the applicable inventory is sold. Cost of revenue includes $4 million of these inventory charges for both the three and nine months ended September 30, 2009.

(c)		Under purchase accounting related to the 2008 Grant Prideco acquisition, a fair value step up adjustment of $89 million was made to inventory and is being charged to “Cost of revenue” as the applicable inventory is sold. Cost of revenue includes $28 million and $74 million of these inventory charges for the three and nine months ended September 30, 2008.

(d)		Included in the nine months ended September 30, 2009 is a $46 million charge, recorded in the second quarter of 2009, related to its Voluntary Early Retirement Program.

The Company had revenues of 16.7% of total revenue from one of its customers for the nine months ended September 30, 2009. This customer is a shipyard acting as a general contractor for its customers, who are drillship owners and drilling contractors. This shipyard’s customers have specified that the Company’s drilling equipment be installed on their drillships and have required the shipyard to issue contracts to the Company.

Debt

9 Months Ended

Sep. 30, 2009

Debt [Abstract]

Debt

10. Debt

Debt consists of (in millions):


	September 30,		December 31,
	2009		2008
Senior Notes, interest at 6.5% payable semiannually, principal due on March 15, 2011	$	150	$	150

Senior Notes, interest at 7.25% payable semiannually, principal due on May 1, 2011		206		208

Senior Notes, interest at 5.65% payable semiannually, principal due on November 15, 2012		200		200

Senior Notes, interest at 5.5% payable semiannually, principal due on November 19, 2012		151		151

Senior Notes, interest at 6.125% payable semiannually, principal due on August 15, 2015		151		151

Other		26		14

Total debt		884		874
Less current portion		9		4

Long-term debt	$	875	$	870

Senior Notes

In connection with the merger of Grant Prideco, the Company completed an exchange offer relative to the $175 million of 6.125% Senior Notes due 2015 previously issued by Grant Prideco. On April 21, 2008, $151 million of Grant Prideco Senior Notes were exchanged for National Oilwell Varco Senior Notes. The National Oilwell Varco Senior Notes have the same interest rate, interest payment dates, redemption terms and maturity as the Grant Prideco Senior Notes. In November 2008, the Company repurchased $23 million of the unexchanged Grant Prideco Senior Notes.

Revolving Credit Facilities

On April 21, 2008, the Company replaced its existing $500 million unsecured revolving credit facility with an aggregate of $3 billion of unsecured credit facilities and borrowed $2 billion to finance the cash portion of the Grant Prideco acquisition. These facilities consisted of a $2 billion, five-year revolving credit facility and a $1 billion, 364-day revolving credit facility. At September 30, 2009, there were no borrowings against these facilities, and there were $589 million in outstanding letters of credit issued under these facilities, resulting in $1,411 million of funds available under this revolving credit facility. Interest under this multicurrency facility is based upon LIBOR, NIBOR or EURIBOR plus 0.26% subject to a ratings-based grid, or the prime rate. In early February 2009, we terminated early the $1 billion, 364-day revolving credit facility, which matured April 20, 2009.

The Company also had $2,234 million of additional outstanding letters of credit at September 30, 2009, primarily in Norway, that are essentially under various bilateral committed letter of credit facilities. Other letters of credit are issued as bid bonds and performance bonds. The Senior Notes contain reporting covenants and the credit facility contains a financial covenant regarding maximum debt to capitalization. We were in compliance with all covenants at September 30, 2009.

Other

Other debt includes approximately $4 million in promissory notes due to former owners of businesses acquired who remain employed by the Company.

Tax

9 Months Ended

Sep. 30, 2009

Tax [Abstract]

Tax

11. Tax

The effective tax rate for the three and nine months ended September 30, 2009 was 33.2% and 33.7%, respectively, compared to 32.3% and 33.9% for the same periods in 2008. The nine months 2009 tax rate includes $21 million of additional tax provision recognized in the second quarter 2009 on prior year income in Norway. These additional taxes resulted from foreign currency gains on dollar-denominated accounts that were realized for Norwegian tax purposes.

The difference between the effective tax rate reflected in the provision for income taxes and the U.S. federal statutory rate of 35% was as follows (in millions):


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
Federal income tax at U.S. federal statutory rate	$	203		$	286		$	572		$	730

Foreign income tax rate differential		(23	)		(29	)		(81	)		(72	)
State income tax, net of federal benefit		4			9			12			26
Foreign dividends, net of foreign tax credits		3			(1	)		10			33
Benefit of U.S. Manufacturing Deduction		(6	)		(7	)		(13	)		(13	)
Prior year tax on revaluation gains in Norway		—			—			21			—
Other		11			6			30			3

Provision for income taxes	$	192		$	264		$	551		$	707

The Company accounts for uncertainty in income taxes in accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB No. 109” (“FIN 48”) , which was primarily codified into ASC Topic 740, “Income Taxes”. (“ASC Topic 740”) FIN 48/ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes”, which was primarily codified into ASC Topic 740, and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a return. Under FIN 48/ASC Topic 740, the impact of an uncertain income tax position, in management’s opinion, on the income tax return must be recognized at the largest amount that is more-likely-than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has a less than 50% likelihood of being sustained.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):


Balance at January 1, 2009	$	61


Additions based on tax positions related to the current year		5
Additions for tax positions of prior years		6
Reductions for lapse of applicable statutes of limitations		(2	)
Settlements		(11	)


Balance at September 30, 2009	$	59

The Company is subject to taxation in the U.S., various states and foreign jurisdictions. The Company has significant operations in the U.S., Canada, the U. K., the Netherlands and Norway. Tax years that remain subject to examination by major tax jurisdiction vary by legal entity, but are generally open in the U.S. for the tax years after 2005 and outside the U.S. for tax years ending after 2002.

To the extent penalties and interest would be assessed on any underpayment of income tax, such accrued amounts have been classified as a component of income tax expense in the financial statements.

Stock Based Compensation	9 Months Ended
Stock Based Compensation	Sep. 30, 2009
Stock Based Compensation [Abstract]
Stock-Based Compensation	12. Stock-Based Compensation The Company has a stock-based compensation plan known as the National Oilwell Varco, Inc. Long-Term Incentive Plan (the “Plan”). The Plan provides for the granting of stock options, performance-based share awards, restricted stock, phantom shares, stock payments and stock appreciation rights. During the second quarter of 2009, the Company with approval from shareholders increased the number of shares authorized under the Plan from 15 million to 26 million. As of September 30, 2009, 11,890,826 shares remain available for future grants under the Plan, all of which are available for grants of stock options, performance-based share awards, restricted stock awards, phantom shares, stock payments and stock appreciation rights. Total stock-based compensation for all share-based compensation arrangements under the Plan was $15 million and $46 million for the three and nine months ended September 30, 2009, respectively, and $23 million and $52 million for the three and nine months ended September 30, 2008, respectively. The total income tax benefit recognized in the Consolidated Statements of Income for all stock-based compensation arrangements under the Plan was $5 million and $17 million for the three and nine months ended September 30, 2009, respectively, and $5 million and $16 million for the three and nine months ended September 30, 2008, respectively. During the nine months ended September 30, 2009, the Company granted 3,234,400 stock options and 762,692 restricted stock awards, which includes 309,000 performance-based restricted stock awards. Out of the total number of stock options granted, 3,206,400 were granted on February 20, 2009 with an exercise price of $25.96. These options generally vest over a three-year period from the grant date. The remaining 28,000 options were granted May 13, 2009 to the non-employee members of the Board of Directors at an exercise price of $33.57. These options generally vest over a three-year period from the grant date. Out of the total number of restricted stock awards granted, 434,400 were granted on February 20, 2009 and vest on the third anniversary of the date of grant. On May 13, 2009, 19,292 restricted stock awards were granted to the non-employee members of the Board of Directors. These restricted stock awards vest in equal thirds over three years on the anniversary of the grant date. The performance-based restricted stock awards of 309,000 were granted on February 20, 2009. The performance-based restricted stock awards granted will be 100% vested 36 months from the date of grant, subject to the performance condition of the Company’s average operating income growth, measured on a percentage basis, from January 1, 2009 through December 31, 2011 exceeding the median operating income level growth of a designated peer group over the same period.

Derivative Financial Instruments

9 Months Ended

Sep. 30, 2009

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

13. Derivative Financial Instruments

The Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended (“SFAS 133”), which was primarily codified into ASC Topic 815, “Derivatives and Hedging”. (“ASC Topic 815”) This Standard requires companies to recognize all of its derivative instruments as either assets or liabilities in the statement of financial position at fair value. The accounting changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation.

The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by using derivative instruments are foreign currency exchange rate risk, and interest rate risk. Forward contracts against various foreign currencies are entered into to manage the foreign currency exchange rate risk on forecasted revenue and expenses denominated in currencies other than the functional currency of the operating unit (cash flow hedge). Other forward exchange contracts against various foreign currencies are entered into to manage the foreign currency exchange rate risk associated with certain firm commitments denominated in currencies other than the functional currency of the operating unit (fair value hedge). In addition the Company will enter into non-designated forward contracts against various foreign currencies to manage the foreign currency exchange rate risk on recognized nonfunctional currency monetary accounts (non-designated hedge). Interest rate swaps are entered into to manage interest rate risk associated with the Company’s fixed and floating-rate borrowings.

The Company records all derivative financial instruments at their fair value in our consolidated balance sheet. Except for certain non-designated hedges discussed below, all derivative financial instruments we hold are designated as either cash flow or fair value hedges and are highly effective in offsetting movements in the underlying risks. Such arrangements typically have terms between two and 24 months, but may have longer terms depending on the underlying cash flows being hedged, typically related to the projects in our backlog. We may also use interest rate contracts to mitigate our exposure to changes in interest rates on anticipated long-term debt issuances.

At September 30, 2009, the Company has determined that its financial assets of $150 million and liabilities of $64 million (primarily currency related derivatives) are level 2 in the fair value hierarchy. At September 30, 2009, the fair value of the Company’s foreign currency forward contracts totaled $86 million.

As of September 30, 2009, the Company did not have any interest rate swaps and our financial instruments do not contain any credit-risk-related or other contingent features that could cause accelerated payments when our financial instruments are in net liability positions. We do not use derivative financial instruments for trading or speculative purposes.

Cash Flow Hedging Strategy

For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is subject to a particular currency risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income 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 remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any (i.e., the ineffective portion) or hedge components excluded from the assessment of effectiveness, are recognized in the Consolidated Statements of Income during the current period.

To protect against the volatility of forecasted foreign currency cash flows resulting from forecasted sales and expenses, the Company has instituted a cash flow hedging program. The Company hedges portions of its forecasted revenues and expenses denominated in nonfunctional currencies with forward contracts. When the U.S. dollar strengthens against the foreign currencies, the decrease in present value of future foreign currency revenue and costs is offset by gains in the fair value of the forward contracts designated as hedges. Conversely, when the U.S. dollar weakens, the increase in the present value of future foreign currency cash flows is offset by losses in the fair value of the forward contracts.

As of September 30, 2009, the Company had the following outstanding foreign currency forward contracts that were entered into to hedge nonfunctional currency cash flows from forecasted revenues and costs:


	Currency
Foreign Currency	Denomination
	(in millions)
British Pound Sterling		£	40
Danish Krone		DKK	201
Euro		€	220
Norwegian Krone		NOK	6,896
U.S. Dollar		$	137
Korean Won		KRW	5,170

Fair Value Hedging Strategy

For derivative instruments that are designated and qualify as a fair value hedge (i.e., hedging the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is subject to a particular risk), the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in the same line item associated with the hedged item in current earnings (e.g., in “revenue” when the hedged item is a contracted sale).

The Company enters into forward exchange contracts to hedge certain firm commitments of revenue and costs that are denominated in currencies other than the functional currency of the operating unit. The purpose of the Company’s foreign currency hedging activities is to protect the Company from risk that the eventual U.S. dollar-equivalent cash flows from the sale of products to customers will be adversely affected by changes in the exchange rates.

As of September 30, 2009, the Company had the following outstanding foreign currency forward contracts that were entered into to hedge nonfunctional currency fair values of firm commitments of revenues and costs:


	Currency
Foreign Currency	Denomination
	(in millions)
U.S. Dollar	$	42

Non-designated Hedging Strategy

For derivative instruments that are non-designated, the gain or loss on the derivative instrument subject to the hedged risk (i.e. nonfunctional currency monetary accounts) are recognized in the same line item associated with the hedged item in current earnings.

The Company enters into forward exchange contracts to hedge certain nonfunctional currency monetary accounts. The purpose of the Company’s foreign currency hedging activities is to protect the Company from risk that the eventual U.S. dollar-equivalent cash flows from the nonfunctional currency monetary accounts will be adversely affected by changes in the exchange rates.

As of September 30, 2009, the Company had the following outstanding foreign currency forward contracts that hedge the fair value of nonfunctional currency monetary accounts:


	Currency
Foreign Currency	Denomination
	(in millions)
British Pound Sterling		£	7
Danish Krone		DKK	180
Euro		€	121
Norwegian Krone		NOK	4,590
Swedish Krone		SEK	5
U.S. Dollar		$	571
Korean Won		KRW	496

As of September 30, 2009, the Company has the following fair values of its derivative instruments and their balance sheet classifications (in millions):

NATIONAL OILWELL VARCO, INC.
Fair Values of Derivative Instruments
(In millions)


	September 30, 2009
	Asset Derivatives			Liability Derivatives
	Balance Sheet	Fair		Balance Sheet	Fair
	Location	Value		Location	Value
Derivatives designated as hedging instruments under ASC Topic 815

Foreign exchange contracts	Prepaid and other current assets	$	73	Accrued liabilities	$	22
Foreign exchange contracts	Other Assets		30	Other Liabilities		2


Total derivatives designated as hedging instruments under ASC Topic 815		$	103		$	24


Derivatives not designated as hedging instruments under ASC Topic 815

Foreign exchange contracts	Prepaid and other current assets	$	43	Accrued liabilities	$	39
Foreign exchange contracts	Other Assets		4	Other Liabilities		1


Total derivatives not designated as hedging instruments under ASC Topic 815		$	47		$	40


Total derivatives		$	150		$	64

The Effect of Derivative Instruments on the Consolidated Statement of Income
Periods Ended September 30, 2009
($ in millions)

Location of Gain (Loss)

Recognized in Income on

Amount of Gain (Loss)

Location of Gain (Loss)

Derivative (Ineffective

Recognized in Income on

Reclassified from

Amount of Gain (Loss)

Portion and Amount

Derivative (Ineffective

Derivatives in ASC Topic 815

Amount of Gain (Loss)

Accumulated OCI into

Reclassified from

Excluded from

Portion and Amount

Cash Flow Hedging

Recognized in OCI on

Income

Accumulated OCI into

Effectiveness

Excluded from

Relationships

Derivative (Effective Portion) (a)

(Effective Portion)

Income (Effective Portion)

Testing)

Effectiveness Testing) (b)

September 30, 2009

Three Months

Nine Months

Three Months

Nine Months

Three Months

Nine Months

Ended

Revenue

Foreign exchange contracts

162

Cost of revenue

)

(51

)

Other income(expense), net

)

(27

)

Total

162

(33

)

(27

)

Derivatives in ASC Topic 815

Location of Gain (Loss)

Amount of Gain (Loss)

ASC Topic 815

Location of Gain (Loss)

Recognized in Income on

Fair Value

Recognized in Income

Recognized in Income on

Fair Value Hedge

Recognized in Income on

Related Hedged

Hedging Relationships

on Derivative

Derivative

Relationships

Related Hedged Item

Items

September 30, 2009

Three Months

Nine Months

Three Months

Nine Months

Ended

Foreign exchange contracts

Revenue

)

Firm commitments

Revenue

Foreign exchange contracts

Cost of revenue

Firm commitments

Cost of revenue

)

Total

)

Derivatives Not Designated as

Location of Gain (Loss)

Amount of Gain (Loss)

Hedging Instruments under

Recognized in Income

Recognized in Income on

ASC Topic 815

on Derivative

Derivative (a)

Foreign exchange contracts

Other income (expense), net

(14

)

Total

(14

)


(a)		The Company expects that $(34) 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.

(b)		The amount of gain (loss) recognized in income represents $(3) million and $(27) million related to the ineffective portion of the hedging relationships for the three and nine months ended September 30, 2009, respectively, and $(1) million and $2 million related to the amount excluded from the assessment of the hedge effectiveness for the three and nine months ended September 30, 2009.

We assess the functional currencies of our operating units to ensure that the appropriate currencies are utilized in accordance with the guidance of SFAS No. 52, Foreign Currency Translation, which was primarily codified into ASC Topic 830. Effective January 1, 2008, we changed the functional currency of our Rig Technology unit in Norway from the Norwegian krone to the U.S. dollar to more appropriately reflect the primary economic environment in which they operate. This change was precipitated by significant changes in the economic facts and circumstances, including the increased order rate for large drilling platforms and components technology, the use of our Norway unit as our preferred project manager of these projects, increasing revenue and cost base in U.S. dollars, and the implementation of an international cash pool denominated in U.S. dollars. As a Norwegian krone functional unit, Norway was subject to increasing foreign currency exchange risk as a result of these changes in its economic environment and was dependent upon significant hedging transactions to offset its non-functional currency positions.

At December 31, 2007, our Norway operations had foreign currency forward contracts with notional amounts aggregating $2,551 million with a fair value of $91 million to mitigate foreign currency exchange risk against the U.S. dollar, our reporting currency. Effective with the change in the functional currency, the Company terminated these hedges. The related net gain position of $109 million associated with the terminated hedges was deferred and is being recognized into earnings in the future period(s) the forecasted transactions affect earnings, of which $15 million remains to be recognized into earnings at September 30, 2009. The Company has, subsequent to January 1, 2008, entered into new hedges to cover the exposures as a result of the change to U.S. dollar functional. At September 30, 2009, our Norway operations had derivatives with $2,431 million in notional value with a fair value asset of $82 million.

Recently Issued Accounting Standards	9 Months Ended
Recently Issued Accounting Standards	Sep. 30, 2009
Recently Issued Accounting Standards [Abstract]
Recently Issued Accounting Standards	15. Recently Issued Accounting Standards In February 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) SFAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”), which defers the effective date of SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), as it related to non-financial assets and non-financial liabilities, to fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. Both standards mentioned above were primarily codified into ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”). The Company, as of January 1, 2009, adopted the provisions of this statement and included the appropriate disclosures surrounding non-financial assets and liabilities, as applicable. In December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (“SFAS 141R”), which was primarily codified into ASC Topic 850, “Business Combinations” (“ASC Topic 850”). ASC Topic 850 provides revised guidance on how acquirers recognize and measure the consideration transferred, identifiable assets acquired, liabilities assumed, noncontrolling interests, and goodwill acquired in a business combination. ASC Topic 850 also expands required disclosures surrounding the nature and financial effects of business combinations. ASC Topic 850 is effective, on a prospective basis, for fiscal years beginning after December 15, 2008. On January 1, 2009, the Company adopted ASC Topic 850. The Company expects that this new standard will impact certain aspects of its accounting for business combinations on a prospective basis, including the determination of fair values assigned to certain purchased assets and liabilities. In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS 160’), which was primarily codified into ASC Topic 810, “Consolidations” (“ASC Topic 810”). ASC Topic 810 establishes requirements for ownership interests in subsidiaries held by parties other than the Company (previously called minority interests) be clearly identified, presented, and disclosed in the consolidated statement of financial position within equity, but separate from the parent’s equity. All changes in the parent’s ownership interests are required to be accounted for consistently as equity transactions and any noncontrolling equity investments in deconsolidated subsidiaries must be measured initially at fair value. ASC Topic 810 is effective, on a prospective basis, for fiscal years beginning after December 15, 2008. However, presentation and disclosure requirements must be retrospectively applied to comparative financial statements. On January 1, 2009, the Company adopted ASC Topic 810, and reclassified noncontrolling interests in the amounts of $109 million and $96 million from the mezzanine section to equity in the September 30, 2009 and December 31, 2008 balance sheets, respectively. In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133” (“SFAS 161’), which was primarily codified into ASC Topic 815, “Derivatives and Hedging” (“ASC Topic 815”). ASC Topic 815 amends and expands the disclosure requirements for derivative instruments and hedging activities, with the intent to provide users of financial statements with an enhanced understanding of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for, and how derivative instruments and related hedged items affect an entity’s financial statements. ASC Topic 815 is effective for fiscal years and interim periods beginning after November 15, 2008. On January 1, 2009, the Company adopted ASC Topic 815. See Note 11. “Derivative Financial Instruments”, in the notes to the consolidated financial statements. In April 2008, the FASB issued FASB Staff Position (“FSP”) SFAS 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP SFAS 142-3’), which was primarily codified into ASC Topic 350, “Intangibles — Goodwill and Other” (“ASC Topic 350”). ASC Topic 350 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets”. The objective of this ASC is to improve the consistency between the useful life of a recognized intangible asset under Statement No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R and other U.S. GAAP principles. ASC Topic 350 is effective for fiscal years beginning after December 15, 2008. On January 1, 2009, the Company adopted ASC Topic 350. There was no significant impact to the Company’s consolidated financial statements from the adoption of ASC Topic 350. In April 2009 the FASB issued FSP 141R-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies” (“FSP 141R-1”), which was primarily codified into ASC Topic 850, “Business Combinations” (“ASC Topic 850”). ASC Topic 850 amends the provisions in SFAS 141R for the initial recognition and measurement, subsequent measurement and accounting, and disclosures for assets and liabilities arising from contingencies in business combinations. The ASC eliminates the distinction between contractual and non-contractual contingencies, including the initial recognition and measurement criteria in SFAS 141R and instead carries forward most of the provisions in SFAS 141 for acquired contingencies. ASC Topic 850 is effective for contingent assets and contingent liabilities acquired in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company expects ASC Topic 850 will have a future impact on its consolidated financial statements, but the nature and magnitude of the specific effects will depend upon the nature, term and size of the acquired contingencies. In April 2009, the FASB issued FSP SFAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (“FSP SFAS 107-1”), which was primarily codified into ASC Topic 825, “Financial Instruments” (“ASC Topic 825”). ASC Topic 825 extends the disclosure requirements regarding the fair value of financial instruments under SFAS No. 107, “Disclosures about Fair Value of Financial Instruments” (“SFAS No. 107”), to interim financial statements of publicly traded companies. ASC Topic 825 is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. Early adoption of this ASC is permitted only if the entity also elects to early adopt FSP SFAS 157-4 and FSP SFAS 115-2. On June 1, 2009, the Company adopted ASC Topic 825. There was no significant impact to the Company’s consolidated financial statements from the adoption of ASC Topic 825. In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”), which was primarily codified into ASC Topic 855, “Subsequent Events” (“ASC Topic 855”). ASC Topic 855 requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. ASC Topic 855 is effective for fiscal years and interim periods ending after June 15, 2009. On June 1, 2009, the Company adopted ASC Topic 855. There was no significant impact to the Company’s consolidated financial statements from the adoption of ASC Topic 855. In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles” (SFAS 168”), which amends SFAS 162, “The Hierarchy of Generally Accepted Accounting Principles.” Both of these standards were primarily codified into ASC Topic 105, “Generally Accepted Accounting Standards” (“ASC Topic 105”). The ASC will become the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date, ASC Topic 105 will supersede all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the ASC will become non-authoritative. ASC Topic 105 is effective for financial statements issued for interim and annual periods ending after September 15, 2009.

Basis of Presentation	9 Months Ended
Basis of Presentation	Sep. 30, 2009
Basis of Presentation [Abstract]
Basis of Presentation	1. Basis of Presentation 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. (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 our 2008 Annual Report on Form 10-K. In our opinion, the consolidated financial statements include all adjustments, all of which are of a normal, recurring nature, necessary for a fair presentation of the results for the interim periods. The results of operations for the three and nine months ended September 30, 2009 are not necessarily indicative of the results to be expected for the full year. The Company has evaluated subsequent events for potential recognition or disclosure in the consolidated financial statements included through November 5, 2009. Fair Value of Financial Instruments The carrying amounts of financial instruments including cash and cash equivalents, receivables, and payables approximated fair value because of the relatively short maturity of these instruments. Cash equivalents include only those investments having a maturity date of three months or less at the time of purchase. The carrying values of other financial instruments approximate their respective fair values.

IntelliServ Joint Venture	9 Months Ended
IntelliServ Joint Venture	Sep. 30, 2009
IntelliServ Joint Venture [Abstract]
IntelliServ Joint Venture	3. IntelliServ Joint Venture In September 2009, the Company sold 45 percent of certain of its IntelliServ operations and created the IntelliServ Joint Venture (“IntelliServ”). IntelliServ provides drilling technology that enables downhole drilling conditions to be measured, evaluated and monitored.

Consolidated Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2009	Dec. 31, 2008
Stockholders' equity:
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares issued	418,281,455	417,350,924
Common stock, shares outstanding	418,281,455	417,350,924