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

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Customer/Supplier Appreciation Day October 20, 2008

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Play Like a Champion

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2008 Energy Market Status

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West Texas Intermediate Oil Posted Price

$9.88 $9.30 $12.05 $14.61 $15.18 $15.33 $17.47 $18.56 $20.94 $20.00 $22.27 $23.26 $25.98 $26.54 $27.44 $22.99 $26.06 $28.58 $27.17 $28.27 $30.88 $29.97 $31.45 $25.39 $26.41 $26.73 $24.19 $24.44 $25.52 $24.43 $23.35 $24.10 $23.31 $18.97 $16.46 $16.23 $16.45 $17.54 $21.23 $22.87 $23.73 $23.33 $23.70 $24.86 $26.41 $25.60 $23.01 $26.19 $29.50 $32.35 $29.96 $25.00 $24.85 $27.21 $27.48 $28.38 $25.08 $27.17 $27.68 $28.96 $30.82 $31.21 $33.48 $33.33 $36.79 $38.13 $37.41 $41.68 $45.71 $49.80 $45.31 $40.02 $43.48 $44.82 $51.40 $50.02 $46.50 $53.14 $55.65 $61.65 $59.63 $58.94 $54.92 $55.90 $61.92 $58.61 $59.45 $66.71 $67.41 $67.64 $71.05 $60.88 $55.81 $55.73 $58.82 $51.28 $56.08 $57.38 $59.00 $60.18 $64.00 $70.70 $69.98 $75.69 $82.31 $91.67 $88.21 $89.45 $91.39 $101.62 $109.06 $131.07 $130.91 $113.21 $100.88 $69.70 $122.15

$0.00 $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00

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$23.54 Average Jan 99 – Dec 03 Average $22.91 Average $27.80 +21% Average $38.64 +40% Average $53.00 +37% Average $62.81 +19% Average $68.87 +10%

Average $109.97 +60%

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NYMEX - HENRY HUB NATURAL GAS PRICE

1.83 1.76 1.80 2.15 2.28 2.35 2.29 2.80 2.64 2.88 2.51 2.44 2.63 2.62 2.82 3.043.64 4.30 4.05 4.46 5.10 5.06 5.81 8.67 7.98 5.74 5.19 5.19 4.24 3.79 3.16 2.95 2.28 2.61 2.82 2.72 2.20 2.26 3.38 3.57 3.26 2.96 3.09 3.57 4.08 4.06 4.86 5.37 5.91 5.385.92 5.91 5.04 4.97 4.66 5.01 4.81 6.52 6.25 5.37 5.53 5.76 6.36 6.33 6.06 5.48 5.13 7.41 7.62 6.83 6.20 6.19 7.03 7.17 6.48 7.21 7.56 9.39 11.96 13.39 11.65 13.35 9.23 7.52 6.97 7.21 6.32 6.43 6.23 5.27 6.60 7.95 7.18 6.74 7.57 7.217.81 7.83 7.52 6.43 6.20 6.12 7.19 7.83 7.18 7.98 8.59 9.59 10.26 11.39 12.77 11.20 8.30 7.49 3.01 6.45 7.02

1 3 5 7 9 11 13 15

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Price Per MCF

$3.91 Average Jan 99 – Dec 03 Average $3.36 Average $5.50 + 64% Average $6.18 + 12% Average $8.97 + 45% Average $6.99

22%

Average $7.14 + 2%

Average $10.01 + 40%

SLIDE 6

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

SLIDE 7

U.S. Oil Companies Revenues/Earnings

$916,662 $1,224,999 $1,136,254 $722,516 $113,889 $115,782 $84,980 $62,504

9.30% 9.20% 8.70% 10.20%

$0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 2004 2005 2006 2007

Millions

7.50% 8.00% 8.50% 9.00% 9.50% 10.00% 10.50% Revenue Net Income % Profit

+ 82% + 70%

SLIDE 8

U.S. Drilling Activity Drilling and Completion Spending

$62.7 $75.1 $115.7 $124.0 $143.5 $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0 2004 2005 2006 2007 2008 Dollars in Billions

+ 20% + 54% + 7% + 16%

+ 129%

SLIDE 9

UNITED STATES AVERAGE RIG COUNT

2002 2177 2909 3117 2428 1980 964 937 937 1008 721 754 774 723 779 944 829 622 919 1156 1767 1766 1797 1829 1863 1902 1932 1987 2014 1660 1658 2259 3969 2232 870 864 830 1032 1190 1382 1648 1749

100 200 300 400 500 600 700 800 900 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 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08

WORKING RIGS

AVERAGE # WORKING RIGS

+ 24% + 15% + 16% + 19% + 7% +6%

SLIDE 10

NATURAL GAS PRICE WITH GAS STORAGE

250 500 750 1,000 1,250 1,500 1,750 2,000 2,250 2,500 2,750 3,000 3,250 3,500 3,750

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BCF

$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

Gas Storage Henry Hub Natural Gas

643 1229 1511 1705 1228 3540 3461 3225 3299 3154 1032 1619 1489 676 1021 3132 3144 2648

SLIDE 11

U.S. RIG COUNT and 4 WEEK AVERAGE PERMITS

500 1000 1500 2000 2500 Jan-98 Mar-98 May-98 Jul-98 Sep-98 Nov-98 Jan-99 Mar-99 May-99 Jul-99 Sep-99 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 Sep-02 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

Permits Rig Count

2014 1829 Rig Count Permits

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Raw Materials & Currency

SLIDE 13

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PIG IRON

620 700 477 354 273 244 290

150 200 250 300 350 400 450 500 550 600 650 700 750 800

2004 2005 2006 2007 2008 Q1 2008 Q2 2008 Q3 Est

DOLLARS PER TON

SLIDE 15

COKING COAL

50 100 150 200 250 300 350

2004 2005 2006 2007 2008 YTD

DOLLARS PER TON

Price Up 210% YTD
Australia Weather and Port Capacity Limited Availability

SLIDE 16

NO. 1 HEAVY MELT SCRAP

$50.00 $100.00 $150.00 $200.00 $250.00 $300.00 $350.00 $400.00 $450.00 $500.00 $550.00

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 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

DOLLARS PER TON

$533 $289

SLIDE 17

41.75% 43.25% 53.25% 56.25% 63.20% 68.75% 68.80% 61.00% 56.50%

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00%

Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08

FUEL SURCHARGES

+ 65%

SLIDE 18

OCTG Manufacturing Cost Drivers

0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 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)

OCTG Manufacturing Cost Drivers

SLIDE 19

Product Mix

SLIDE 20

US OCTG Demand 2007

100 200 300 400 500 600 700 800 900 1000

2 3/8" 2 7/8" 3 1/2" 4" 4 1/2" 5" 5 1/2" 6 5/8" 7" 7 5/8" 7 3/4" 8 5/8" 9 5/8" 9 7/8" 10 3/4" 11 3/4" 13 3/8" 16" 18 5/8" 20"

Size 000 Metric Tons

Alloy Carbon

Carbon 337 165 33 2 534 427 1 129 16 212 228 46 5 66 23 3 11 Alloy 145 68 29 4 342 28 377 2 263 154 12 2 234 22 29 62 8 1 2 3/8" 2 7/8" 3 1/2" 4" 4 1/2" 5" 5 1/2" 6 5/8" 7" 7 5/8" 7 3/4" 8 5/8" 9 5/8" 9 7/8" 10 3/4" 11 3/4" 13 3/8" 16" 18 5/8" 20" Source: Preston Data, (API Grade Definition - Carbon = H-40, J-55, K-55 & M-65 Alloy = N-80, L-80, S-95, P110 & above)

4 ½” and 5 ½” are the largest segments in the OCTG market. 4 ½” and 5 ½” represented 40% of tonnage demand in 2007

SLIDE 21

Inventory

SLIDE 22

$600 $1,100 $1,600 $2,100 $2,600 $3,100

Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08

Price per Ton 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 Months Supply Market Average 7" P-110, 7-5/8" P-110 & 9-5/8" P-110 Months Supply

OCTG PRICING TREND VS INVENTORY SUPPLY

Trend line average consists of Pipe Logix 7" 29# HCP LT&C & 9-5/8" 53.50# HCP LT&C, OCTG Situation Report 7" 29# S/P LT&C & 7-5/8' 29.70# S/P LT&C, and 9-5/8" 53.50# P-1 1 0 LT&C.

Months Supply Alloy Spot Pricing

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Mill Consolidation

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200 400 600 800 1000 1200 1400 1 9 8 5 1 9 8 6 1 9 8 7 1 9 8 8 1 9 8 9 1 9 9 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 2 1 2 2 2 3 2 4 2 5 2 6 2 7 40 60 80 100 120 140 160 180 200 220

Production Capacty Surplus Capacity

Full Effective Capacity Utilization in 2004

Supply / demand balance

Global Steel

SLIDE 25

1973 Major Hot Rolled Coil Producers 1973 Major Hot Rolled Coil Producers

1. Armco Steel
2. Bethlehem Steel
3. Inland Steel
4. Jones and Laughlin Steel
5. National Steel
6. Republic Steel
7. US Steel
8. Weirton Steel
9. Wheeling Pittsburg

10.Youngstown Sheet and Tube

SLIDE 26

2008 Survivors 2008 Survivors

1. Armco Steel
2. Bethlehem Steel
3. Inland Steel
4. Jones and Laughlin Steel
5. National Steel
6. Republic Steel
7. US Steel
8. Weirton Steel
9. Wheeling Pittsburg

10.Youngstown Sheet and Tube

SLIDE 27

DOMESTIC HOT ROLLED COILS

$310 $289 $277 $261 $263 $264 $267 $271 $282 $289 $294 $326 $346 $418 $571 $574 $596 $641 $755 $780 $825 $715 $615 $632 $627 $625 $605 $592 $515 $475 $432 $496 $522 $542 $540 $543 $539 $546 $546 $574 $599 $612 $634 $624 $606 $578 $552 $524 $532 $547 $563 $552 $553 $527 $519 $531 $532 $533 $545 $598 $621 $712 $784 $1,154 $1,166 $1,187 $1,203 $1,159

$200 $250 $300 $350 $400 $450 $500 $550 $600 $650 $700 $750 $800 $850 $900 $950 $1,000 $1,050 $1,100 $1,150 $1,200 $1,250 $1,300

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

DOLLARS PER TON (Preston Pipe)

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North American OCTG Mill Consolidation

Prudential (MVK)

SLIDE 29

Active M&A in US Tubular Industry 2006-2008

 USS Purchase of LSS (Lone Star Steel)

39% premium
Total purchase price of $2.1 billion (10.2 x EBITDA)

 SSAB Purchase of IPSCO

7.7% premium
Total Purchase price of $8.2 billion (7.1 x EBITDA)

 Tenaris Purchase of Maverick

42% premium
Total purchase price of $3.2 billion (9.0 x EBITDA)

 Tenaris Purchase of Hydril

17% premium
Total Purchase price of $2.2 billion (14.8 x EBITDA)

 V&M Purchased Grant Prideco

Total Purchase price of $800 million (12 x EBITDA)

SLIDE 30

OCTG Supply and Consumption Year Over Year Comparison

Estimates updated 8/28/2008.

2007 2008 Estimated Supply (Tons) Domestic 2,610,151 2,850,000 Imports 1,943,969 3,200,000 Total 4,554,120 6,050,000 Consumption (Tons)

(2007 = 210 Tons/Rig/Mo @ 1767 Avg Rigs) (2008 = 230 Tons/Rig/Mo @ 1900 Avg EST)

374,358 400,000 4,827,198 5,689,000 (273,078) 361,000

January 1 Inventory 1,725,000 2008 Addition (Reduction) 361,000 2008 Ending Inventory 2,086,000 December 2008 Estimated Consumption (1,950 Rigs) 452,400 December 2008 Months of Inventory 4.6

4,452,840 5,289,600 Exports Consumption + Export Inventory Build or (Reduction)

SLIDE 31

Strategy to Employ to Win the Game

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68 70 72 74 76 78 80 82 84 86 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

World Oil Demand (mmbpd)

SLIDE 34

Global Oil Demand Will Dictate 2009 Oil Prices

$60 $70 $80 $90 $100 $110 $120 $130 $140 Slowdown? Recession? Depression? 2009 Est. Oil Prices

1.50%
1.00%
0.50%

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 2009 Est. Global Oil Demand Growth % Oil Prices Oil Demand Growth %

$85

SLIDE 35

Share of Total Chinese Population

10 20 30 40 50 60 70 80 90 100 50 55 60 65 70 75 80 85 90 95 5 10 15 20 % Share

Rural Population Urban Population

Open Door Policy Source: CEIC Data and AllianceBernstein

SLIDE 36

Workforce Set to Swell over Next 10 Years

China India Russia Europe North America Developed World World 2000 867 632 103 494 209 805 3,583 2005 929 704 102 499 223 823 4,192 2010 974 780 102 500 235 834 4,518 2015 998 854 97 490 242 827 4,796 2020 992 918 92 476 246 815 5,023 Net Change 2015 vs. 2005 69 90

6
9

18 4 603 2020 vs. 2015

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21.00 21.50 22.00 22.50 23.00 23.50 24.00 24.50 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

U.S. Gas Demand (TCF)

Source: EIA.Spears

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17 18 19 20 21 22 23 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

U.S. Gas Production (TCF)

Source: EIA.Spears

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U. S. Gas Market

Annual Gas Production by Type of Well

Low Volume Producers 22% High Volume Producers 78%

Source: Spears

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Premier Customer & Supplier Appreciation

October 2008

SLIDE 42

Our forecast for steel demand growth in the next

decade is 4.ish% / yr…..6+% in China and 3% in the balance of the world

This is a growth of approx 675 million tons of raw steel,

requiring additional 800 MT of pig iron, scrap and SSS/ HMS.

Can this growth be met?

– Scrap will be tight – In 2007 pig iron supply was 1.1MT, growth needed 950MT to cover demand through 2017

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Steel buyers have lost the buying power

– Consolidation, commodity shortages, demand growth, supply constraint – Auto demand, service center inventory – World wide producer concentration

HRB Pricing

– Oct $850 – Nov $800 - $825 (likely the bottom) – Q 1 2009 $900

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OCTG is the largest segment of the U.S. pipe

and tube market - energy driven products > 50% of total P & T market

At recent activity levels supply and demand are

relatively well balanced, but….

Import trends have been up and activity level

cooling

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Demand up in ‘08 by > 25%
Benefited from increased rig count and

improved consumption per rig

Activity cooling due to natural gas supply and

economic conditions

Forecast 2009 down 6.2%

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Supply in 2008 up > 35% largely on recent

import levels

Imports, driven by Chinese product, up > 65%
Recent activity levels have had domestic

OCTG producers near capacity

Forecast 2009 down 20%, primarily due to

lower import order levels

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No current OCTG trade cases in force
Trade case climate

– Line pipe, Standard pipe

Import supply
Volumes
Pricing

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Current producers near capacity
Economic review of market would suggest

new market entry…Tight supply, High prices

Publicly announced capacity additions
f about 500k tons…Others? (see second point

above)

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Economic pause
E & P budgets
Seasonal trends
Imports
Raw materials
Inventory

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Mills
Distributors/Importers
End Users

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Calendar 2008 Forecast 2009 West Texas Intermediate Crude $106.00/bbl $85.00 /bbl Natural Gas Henry Hub $8.66/mmbtu $7.50/mmbtu USA Rigs 1,900 1,754 GOM Rigs 63 67 Supply 6.0 million tons 4.9 million tons Consumption 5.3 million tons 4.9 million tons OCTG Inventory 2.1 million tons 1.9 million tons Mill Utilization 85% 79%

2009 FORECAST

SLIDE 53