Energy equipment maker National Oilwell Varco Inc. NOV announced that it will slash its quarterly dividend in an unfavorable business scenario following the prolonged weakness in oil prices. Management also predicts revenues for the first quarter to fall sequentially. Following the announcement, National Oilwell slipped more than 6% on the NYSE.In details, National Oilwell has declared quarterly dividend of 5 cents per share, almost 89% lower than the prior dividend of 46 cents. Along with this, the company’s first-quarter revenues will likely witness a 20% sequential decline and a 55% year-over-year fall. Management revealed that although the business outlook in the near term might not be favorable, total debt is anticipated to decline more than $500 million in the first quarter. Most importantly, the intention of National Oilwell to slash dividend will likely boost its future cash flows by $615 million every year.Let’s analyze the prime reason that compelled the company to take such a drastic step. Oil prices have been weak since mid Aug 2014 owing to plentiful supply of the commodity. As a result, business has not been profitable for the upstream players that are selling the commodity at unattractive prices. This in turn has considerably lowered demand for equipment and services used in oil and gas drilling and production worldwide. Amid the downturn, the exploration and production players have also lowered their 2016 capital spending reflecting further weakness in near-term demand for equipment and services. As a result, National Oilwell will have fewer orders from explorers that will result in lower earnings going forward. Hence, we believe that in the bearish market it has been a prudent decision by National Oilwell to slash dividend that will save the company’s cash flows and hence strengthen its financials.Houston, TX based National Oilwell is one of the biggest manufacturers of drilling equipment in the world with an impressive business model. The company currently carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.Meanwhile, some better-ranked players in the energy sector include Vanguard Natural Resources, LLC VNR, Antero Resources Corporation AR and PetroChina Co. Ltd. PTR. Each of these stocks sports a Zacks Rank #1 (Strong Buy).Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NATL OILWELL VR (NOV): Free Stock Analysis Report PETROCHINA ADR (PTR): Free Stock Analysis Report VANGUARD NATURL (VNR): Free Stock Analysis Report ANTERO RESOURCE (AR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research