Varco Reports More Red Ink; Posts $17.8 Million Loss for ’84

Continuing to suffer from a lengthy, industry-wide slump in the oil services business, Varco International Inc. Monday ended its 10th consecutive quarter in the red with a 1984 fourth-quarter loss of $1.85 million.

The Orange-based company, which makes oil drilling equipment, also reported a net loss of $17.8 million for the fiscal year ended Dec. 31, compared with the $11.7 million loss reported in 1983.

Varco’s fourth-quarter loss was an improvement over the $4.8-million loss reported in the like period in 1983. Quarterly revenues remained virtually flat, increasing to $15.6 million from $15 million in the year-ago quarter. Varco’s annual revenues rose slightly to $59.3 million from $56.1 million in 1983.

On the bright side, Varco recently signed a new $20-million revolving credit agreement with its banks. The credit line, secured by inventory, property, plant and equipment, will mature in June, 1987. As of Feb. 22, the company had borrowed $13.5 million of the total.

In August, the ailing company began negotiating an agreement to restructure its debt with a group of banks, including Crocker National Bank, Citibank, Bank of the Southwest, Lloyds Bank California and Security Pacific National Bank.

Meanwhile, Varco achieved a positive cash flow in the fourth quarter, allowing the company to reduce its total debt by $7.5 million. “Although 1984 was another difficult year for our industry, we made very substantial progress in a number of areas which have positive implications for our future,” said Walter (Benny) Reinhold, Varco’s chairman, in a prepared statement.

Reinhold said there has been continued interest and demand for Varco’s Top Drive Drilling System, a top-of-the-line, $500,000 rig that the company says can reduce drilling time by 20%. Even with strong interest in the Top Drive, which has been sold and installed in nearly every major offshore drilling area of the world, Reinhold said the company does “not expect any immediate improvement in our market.”

In early 1984, Varco folded its three subsidiaries into the parent corporation and pared its staff to about 400, down from a peak of 1,640 that Varco employed at the height of the domestic drilling boom in 1981.