Customer/Supplier Appreciation Day October 20, 2008 Play Like a - PowerPoint PPT Presentation

Customer/Supplier Appreciation Day October 20, 2008

Play Like a Champion

2008 Energy Market Status

$100.00 $120.00 $140.00 $20.00 $40.00 $60.00 $80.00 $0.00 $9.88 J an -99 $9.30 $12.05 Ma r -9 9 $14.61 $15.18 Ma y -99 $15.33 $23.54 Average Jan 99 – Dec 03 $17.47 J ul -99 $18.56 $20.94 Se p-99 $20.00 $22.27 Nov -99 $23.26 $25.98 J an -00 $26.54 $27.44 Ma r -0 0 $22.99 $26.06 Ma y -00 $28.58 West Texas Intermediate Oil Posted Price $27.17 J ul -00 $28.27 $30.88 Se p-00 $29.97 $31.45 Nov -00 $25.39 $26.41 J an -01 $26.73 $24.19 Ma r -0 1 $24.44 $25.52 Ma y -01 $24.43 $23.35 J ul -01 $24.10 $23.31 Se p-01 $18.97 $16.46 Nov -01 $16.23 $16.45 J an -02 $17.54 Average $22.91 $21.23 Ma r -0 2 $22.87 $23.73 Ma y -02 $23.33 $23.70 J ul -02 $24.86 $26.41 Se p-02 $25.60 $23.01 Nov -02 $26.19 $29.50 J an -03 $32.35 Average $27.80 $29.96 +21% Ma r -0 3 $25.00 $24.85 Ma y -03 $27.21 $27.48 J ul -03 $28.38 $25.08 Se p-03 $27.17 $27.68 Nov -03 $28.96 $30.82 J an -04 Average $31.21 $38.64 +40% $33.48 Ma r -0 4 $33.33 $36.79 Ma y -04 $38.13 $37.41 J ul -04 $41.68 $45.71 Se p-04 $49.80 $45.31 Nov -04 $40.02 $43.48 J an -05 $44.82 Average $51.40 $53.00 Ma r -0 5 +37% $50.02 $46.50 Ma y -05 $53.14 $55.65 J ul -05 $61.65 $59.63 Se p-05 $58.94 $54.92 Nov -05 $55.90 $61.92 J an -06 $58.61 Average $62.81 $59.45 +19% Ma r -0 6 $66.71 $67.41 Ma y -06 $67.64 $71.05 J ul -06 $69.70 $60.88 Se p-06 $55.81 $55.73 Nov -06 $58.82 $51.28 J an -07 Average $56.08 $68.87 +10% $57.38 Ma r -0 7 $59.00 $60.18 Ma y -07 $64.00 $70.70 J ul -07 $69.98 $75.69 Se p-07 $82.31 $91.67 Nov -07 $88.21 Average $109.97 $89.45 +60% J an -08 $91.39 $101.62 Ma r -0 8 $109.06 $122.15 Ma y -08 $131.07 $130.91 J ul -08 $113.21 $100.88 Se p-08

Price Per MCF 11 13 15 1 3 5 7 9 1.83 J an -99 1.76 1.80 Ma r -9 9 $3.91 Average Jan 99 – Dec 03 2.15 2.28 Ma y -99 2.35 2.29 J ul -99 2.80 2.64 Se p-99 2.88 2.51 Nov -99 2.44 2.63 J an -00 2.62 2.82 Ma r -0 0 NYMEX - HENRY HUB NATURAL GAS PRICE 3.043.64 4.30 Ma y -00 4.05 J ul -00 4.46 5.10 Se p-00 5.06 5.81 Nov -00 8.67 7.98 J an -01 5.74 5.19 Ma r -0 1 5.19 4.24 Ma y -01 3.79 3.16 J ul -01 2.95 2.28 Se p-01 2.61 2.82 Nov -01 2.72 2.20 J an -02 2.26 Average 3.01 Ma r -0 2 $3.36 3.38 3.57 Ma y -02 3.26 2.96 J ul -02 3.09 3.57 Se p-02 4.08 4.06 Nov -02 4.86 5.37 J an -03 6.45 Average 5.91 + 64% Ma r -0 3 $5.50 5.385.92 Ma y -03 5.91 5.04 J ul -03 4.97 4.66 Se p-03 5.01 4.81 Nov -03 6.52 6.25 Average J an -04 5.37 + 12% $6.18 5.53 Ma r -0 4 5.76 6.36 Ma y -04 6.33 6.06 J ul -04 5.48 5.13 Se p-04 7.41 7.62 Nov -04 6.83 6.20 Average J an -05 6.19 + 45% $8.97 7.03 Ma r -0 5 7.17 6.48 7.21 Ma y -05 7.56 J ul -05 9.39 11.96 Se p-05 13.39 11.65 Nov -05 13.35 9.23 J an -06 7.52 6.97 Ma r -0 6 Average 7.21 - 22% $6.99 6.32 Ma y -06 6.43 6.23 J ul -06 7.02 5.27 Se p-06 6.60 7.95 Nov -06 7.18 6.74 Average J an -07 7.57 $7.14 + 2% 7.217.81 Ma r -0 7 7.83 Ma y -07 7.52 6.43 J ul -07 6.20 6.12 Se p-07 7.19 7.83 Nov -07 7.18 Average 7.98 8.59 J an -08 $10.01 + 40% 9.59 10.26 Ma r -0 8 11.39 Ma y -08 12.77 11.20 J ul -08 8.30 7.49 Se p-08

Co.1 Co. 2 Co. 3 Co. 4 Co. 5 C0. 6 Co. 7 Co. 8 Co.9 Co. 10 Loe (including Transportation DD&A G&A Net Interest

U.S. Oil Companies Revenues/Earnings + 70% $1,400,000 10.50% 10.20% $1,224,999 $1,200,000 $1,136,254 10.00% $1,000,000 $916,662 9.50% 9.30% $800,000 9.20% $722,516 Millions 9.00% + 82% 8.70% $600,000 8.50% $400,000 8.00% $200,000 $115,782 $113,889 $84,980 $62,504 $0 7.50% 2004 2005 2006 2007 Revenue Net Income % Profit

U.S. Drilling Activity Drilling and Completion Spending + 129% $160.0 + 16% + 7% $140.0 + 54% $120.0 $143.5 + 20% $100.0 $124.0 $115.7 $80.0 $60.0 $75.1 $62.7 $40.0 $20.0 $0.0 2004 2005 2006 2007 2008 Dollars in Billions

WORKING RIGS 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 2100 2200 2300 2400 2500 2600 2700 2800 2900 3000 3100 3200 3300 3400 3500 3600 3700 3800 3900 4000 4100 4200 100 200 300 400 500 600 700 800 900 0 1660 1975 1658 1976 2002 1977 2259 1978 2177 1979 2909 1980 1981 3969 3117 1982 2232 1983 2428 1984 UNITED STATES AVERAGE RIG COUNT 1980 1985 964 1986 937 1987 937 1988 870 1989 1008 1990 1991 864 721 1992 754 1993 774 1994 723 1995 779 1996 944 1997 829 1998 622 1999 919 2000 1156 2001 830 2002 + 24% 1032 2003 + 15% 1190 2004 + 16% 1382 2005 + 19% 1648 + 7% 2006 1767 AVERAGE # WORKING RIGS 2007 1749 Jan-08 1766 Feb-08 1797 Mar-08 1829 Apr-08 1863 May-08 1902 Jun-08 1932 Jul-08 1987 Aug-08 +6% 2014 Sep-08

BCF 1,000 1,250 1,500 1,750 2,000 2,250 2,500 2,750 3,000 3,250 3,500 3,750 250 500 750 0 J an -00 F eb-00 1021 Ma r -0 0 A pr -0 0 Ma y -00 J un -00 J ul -00 A ug-0 0 Se p-00 2648 Oct -00 Nov -00 De c-00 J an -01 F eb-01 676 Ma r -0 1 A pr -0 1 Ma y -01 J un -01 J ul -01 A ug-0 1 Se p-01 Oct -01 3144 Nov -01 NATURAL GAS PRICE WITH GAS STORAGE De c-01 J an -02 F eb-02 Ma r -0 2 A pr -0 2 1489 Ma y -02 J un -02 J ul -02 A ug-0 2 Se p-02 Oct -02 3132 Nov -02 De c-02 J an -03 F eb-03 Gas Storage Ma r -0 3 A pr -0 3 643 Ma y -03 J un -03 J ul -03 A ug-0 3 Se p-03 Oct -03 Nov -03 3154 De c-03 J an -04 1032 F eb-04 Ma r -0 4 A pr -0 4 Ma y -04 J un -04 J ul -04 A ug-0 4 Se p-04 Oct -04 Nov -04 De c-04 3299 J an -05 F eb-05 1229 Ma r -0 5 A pr -0 5 Ma y -05 Henry Hub Natural Gas J un -05 J ul -05 A ug-0 5 Se p-05 Oct -05 Nov -05 De c-05 J an -06 F eb-06 Ma r -0 6 3225 A pr -0 6 Ma y -06 J un -06 1705 J ul -06 A ug-0 6 Se p-06 Oct -06 Nov -06 De c-06 J an -07 F eb-07 Ma r -0 7 3461 A pr -0 7 Ma y -07 J un -07 J ul -07 1511 A ug-0 7 Se p-07 1619 Oct -07 Nov -07 De c-07 3540 J an -08 F eb-08 1228 Ma r -0 8 A pr -0 8 Ma y -08 J un -08 J ul -08 A ug-0 8 Se p-08 $0 $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 $11 $12 $13 $14 $15 $16 $17 $18 $19 $20 $21 $22 $23 $24 $25

1000 1500 2000 2500 500 0 Jan-98 Mar-98 May-98 Rig Count Permits Jul-98 Sep-98 Nov-98 Jan-99 Mar-99 May-99 Jul-99 Sep-99 U.S. RIG COUNT and 4 WEEK AVERAGE PERMITS Nov-99 Jan-00 Mar-00 May-00 Jul-00 Sep-00 Nov-00 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 Jul-02 Permits Sep-02 Nov-02 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Rig Count Mar-04 May-04 Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 2014 Sep-08 1829

Raw Materials & Currency

PIG IRON 800 750 700 700 650 620 600 550 DOLLARS PER TON 477 500 450 400 354 350 290 273 300 244 250 200 150 2008 Q3 Est 2004 2005 2006 2007 2008 Q1 2008 Q2

COKING COAL 350 300 250 200 DOLLARS PER TON 150 100 50 0 2004 2005 2006 2007 2008 YTD •Price Up 210% YTD •Australia Weather and Port Capacity Limited Availability

DOLLARS PER TON $100.00 $150.00 $200.00 $250.00 $300.00 $350.00 $400.00 $450.00 $500.00 $550.00 $50.00 Jul-00 Sep-00 Nov-00 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 Jul-02 Sep-02 NO. 1 HEAVY MELT SCRAP Nov-02 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04 May-04 Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 $533 $289

FUEL SURCHARGES + 65% 80.00% 68.80% 68.75% 63.20% 70.00% 61.00% 56.50% 56.25% 53.25% 60.00% 43.25% 41.75% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08

OCTG Manufacturing Cost Drivers OCTG Manufacturing Cost Drivers 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Cost Driver* *Cost Drivers = Sum of top 3 prematerial cost (Scrap + Alloy elements + Energy cost)

Product Mix