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NOV's president and CEO Clay Williams. Image courtesy of NOV.

Houston-based National Oilwell Varco (NOV) announced Tuesday that it plans to spend $3 billion on stock buybacks during the next three years.

The share repurchases may be made on the open market at prevailing market prices, through privately negotiated transactions or by other means as determined by the company’s management.

The announcement comes after a five-fold increase in operations revenues last year.

In July, NOV said it was investigating ways to domestically invest about $3.5 billion in cash generated overseas.

“This authorization comes after several months of careful consideration and reflects the company’s strong financial condition, and the confidence that we have in our future business outlook,” NOV’s president and CEO Clay Williams said.

NOV said the buyback is expected to last about 36 months but could be extended, increased, suspended or discontinued without prior notice.

The company did not specify when the buyback will begin.

NOV’s shares, listed on the New York Stock Exchange, dipped 2.56 percent to $76.10 per share on the news.

Analyst Rob Desai, who works for Missouri-based financial services firm Edward Jones, told Bloomberg that the buyback may have unnerved investors who see the program as a sign that NOV is facing fewer growth or acquisition opportunities than anticipated.

Desi called Tuesday’s price drop “kind of an overreaction.”

“We are pleased that the continued execution of a solid business model has resulted in strong operating cash flow that enables us to continue to invest in strategic growth opportunities, while simultaneously returning capital to shareholders through both a healthy dividend and a share repurchase programme,” Williams said.

National Oilwell Varco designs, manufactures and sells major mechanical components for land and offshore drilling rigs as well as complete land drilling and well servicing rigs.