National Oilwell Varco Inc, the largest U.S. oilfield equipment provider, said orders fell by nearly a quarter in the first quarter and it expects demand for new offshore rigs to slow during the second half of the year.
The company's shares fell about 7 percent.
Demand for contract drilling is softening as rigs ordered during boom times are being delivered now. Large oil companies are tightening spending after a decade of double-digit increase in budgets as oil prices stagnate and project costs rise.
National Oilwell said on a conference call on Monday that its day rates had come under pressure with demand slowing.
Rival Diamond Offshore Drilling Inc warned last week that the next two years could be a tough environment for offshore drillers.
National Oilwell booked $2.33 billion in new orders for oilfield equipment in the first quarter, down from $3.04 billion a year earlier.
Barclays had expected capital equipment orders worth $3.5 billion for the company for the first quarter, while JP Morgan Securities had expected $2.59 billion.
National Oilwell's rig technology business, which makes equipment to automate well construction and management, accounts for half of its total revenue.
It also provides drill pipes and bits, pressure pumping gear, as well as procurement, inventory management and logistics services.
National Oilwell, which is spinning off its distribution business to shareholders, said it expects to complete the restructuring in the second quarter.
First-quarter revenue rose 9 percent to $5.78 billion. Analysts on average had expected $5.8 billion, according to Thomson Reuters I/B/E/S.
Adjusted profit of $1.40 per share beat the estimate of $1.38.
The Houston-based company's shares fell to $77.38 on Monday on the New York Stock Exchange. They have risen about 9.5 percent in the last three months to Friday's close.
(Reporting by Sayantani Ghosh and Sneha Banerjee in Bangalore; Editing by Don Sebastian)