investor presentation dec-2011.ppt
TRANSCRIPT
Tenaris 2December, 2011Investor Presentation
Disclaimer
This presentation contains “forward-looking statements.” Forward-looking statements are based on management’s current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These statements include information regarding management strategy, investment plans, development and growth of the steel pipe and oil and gas industries, trends and other prospective data, including trends regarding the development of raw material costs and the levels of investment in oil and gas drilling worldwide and general economic conditions in the countries where Tenaris operates and sells its products and services. We do not undertake to update any forward-looking statement to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events.
Except where otherwise stated, the data presented herein is based on Tenaris analysis and estimates.
Tenaris 3December, 2011Investor Presentation
OCTG demand has recovered
• OCTG demand in 2012 is anticipated to exceed 2008 level
• We expect demand for premium products to grow at a faster pace than for API products
0%
20%
40%
60%
80%
100%
120%
2008 2009 2010 2011 F 2012 F
Premium API
Premium Mix 15% 19% 18% 19% 22%
(2008 = 100)
Tenaris 4December, 2011Investor Presentation
Oil & Gas North America
37%
Oil & Gas South America
18%
Oil & Gas Eastern
Hemisphere23%
Process & Power11%
Industrial & Others
11%
Leading global player with oil and gas focus
Local markets in the Americas
Rest of the world
China and Russia
API 84%
PRM 16%
API 55%
PRM 45%
API 94%
PRM 6%
39% 27% 34%
Worldwide OCTG marketSales breakdown 2010
Tenaris 5December, 2011Investor Presentation
Industry leadership
Global industrial system and execution excellence
Leading innovation through new products development
Global network, direct contact with end users and rig access
Tenaris 6December, 2011Investor Presentation
Global industrial system deployment
• New small diameter rolling mill in Mexico, including heat treatment and
premium threading lines, in time and within budget
• Industrial update in Italy, re-focusing product line and improving efficiency
• New tubing line and expansion of heat treatment capacity in USA
Industrial re-alignment to extend product range, improve efficiency and reduce costs and environmental impact
Tenaris 7December, 2011Investor Presentation
Premium connections for shales and thermal wells
ShalesOperational requirements:
• Bending
• High compression
• Torque
• Fatigue
• TenarisHydril – for all applications supported by global threading and repair shop network, field service engineers and extensive testing and development facilities
Blue® Thermal Liner
Wedge 563™
Thermal wellsOperational requirements:
• High temperatures
• Combined torque,
compression, and cyclical
loading conditions
Wedge 521™ Tenaris XP™ Wedge 625™
Tenaris 8December, 2011Investor Presentation
Tenaris W625™ specially designed for shales
• The Wedge 625™ is the first connection in the new series 600.
• Providing outstanding tensile and compression efficiency, torque resistance and internal and external sealing capacity, TSH 625 is designed for use in high pressure, deep, horizontal and extended reach wells
• Successfully proven in the field:
- Recently run in the Eagle Ford Shale
- The well was drilled horizontally with a total extension of more than 15 Th ft
- 5 ½" P110 TSH 625 production casing run from top to
bottom of the well
Tenaris 9December, 2011Investor Presentation
Premium connections for deepwater and arctic wells
Deep waterOperational requirements:
• Collapse pressures
• Tension
• Maximum sealability
• Dopeless® connections to improve operational efficiency and reduce environmental impact of oil and gas drilling operations
• Sour service and chrome grades for corrosive environments
ArcticOperational requirements:
• Environmental concerns
• Extreme temperatures
Blue® Near Flush HW™
Blue® Dopeless®Wedge 513™
Wedge 523™
Tenaris 10December, 2011Investor Presentation
North America: growth concentrated on crude oil
US Rig Count detail*
* Source: Company analysis based on Baker Hughes rig count.
Crude Oil
672 | 41%
Shale Gas487 | 30%
Liquids Rich267 | 16%
Dry Gas219 | 1%
642 | 39%
Non Shale
1,003 | 61%
Crude Oil
696 | 42%
Shale Gas
484 | 29%
Gas Dry
705
845
980 1,171
0
500
1000
1500
2000
12 Nov 10 11 Nov 11
Non Shale Shale
1,685
2,016
Shale as % 42% 42%
720
1,133
489
467 269
274
197
136
0
500
1000
1500
2000
12 Nov 10 11 Nov 11
Oil Shale gas Wet gas Dry gas Thermal
1,685
2,016
Oil rigs as % 43% 56%
Tenaris 11December, 2011Investor Presentation
North America: offshore deep water activity
• Number of new deep water well permits approved is recovering to pre-Macondo levels.
• Increasing demand for large OD, high end steel grades and premium connections.
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14
Jan-0
9
Mar
-09
May
-09
Jul-09
Sep
-09
Nov-0
9
Jan-1
0
Mar
-10
May
-10
Jul-10
Sep
-10
Nov-1
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Jan-1
1
Mar
-11
May
-11
Jul-11
Sep
-11
New DW well permits approved
Tenaris 12December, 2011Investor Presentation
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1990 1995 2000 2005 2010 2015 2020 2025 2030
North America Latin America Europe Russia/Caspian Africa Far East
Deepwater drilling: strong growth ahead
• Deepwater production is expected to almost triple by 2030
• Higher standards will increase scope for differentiation Source: Exxon
Deepwater outlook: millions of oil equivalent barrels per dayDeepwater: Water depths of 2,500 feet or more
Tenaris 13December, 2011Investor Presentation
Competitive environmentChina OCTG Exports (Mill Tn) China OCTG Exports 1H 2011
• Trade actions constrain Chinese OCTG exports
• Capacity increases worldwide, mainly by producers of standard products
1H08 2H08 1H09 2H09 1H10 2H10 1H 11
US & Canada Others
1.3
2.7
1.0
0.6
0.8 0.8 0.7
SEA22%
Middle East25%
North Africa7%
CIS12%
Canada6%
USA2%
Others25%
Tenaris 14December, 2011Investor Presentation
Operating and financial results
M illions of US$ (except ratios and per ADS amounts) 2007 2008 2009 2010 IH 2011 IIIQ 2011
Net Sales 9,874 11,988 8,149 7,712 4,727 2,495
Tubes 8,433 10,010 6,671 6,676 3,965 2,150
Projects 876 1,271 986 429 387 151
Others 565 707 492 606 374 194
Operating income 2,917 3,126 1,814 1,574 854 485
EBITDA 3,401 4,044 2,318 2,013 1,119 620
EBITDA margin 34% 34% 28% 26% 24% 25%
Net income (to equity holders) 1,924 2,125 1,162 1,127 607 325
Earnings per ADS 3.26 3.60 1.97 1.91 1.03 0.55
Cash flow from operations 2,021 1,465 3,064 871 491 336
Net debt / (cash) 2,970 1,392 (676) (276) (65) (228)
Tenaris 15December, 2011Investor Presentation
Margin of Tubes segment
-
500
1,000
1,500
0
1,000
2,000
3,000
4,000
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
Tubes volumes Cost per ton Price per ton Pipe Logix basket
US$/Ton Thousand Tons
Tenaris 16December, 2011Investor Presentation
Well placed in a changing and competitive world
Financial position
Sales by geographic region (9M 2011)
North America43%
South America26%
Europe12%
Middle East & Africa13%
Far East & Oceania
6%
0.0
0.2
0.4
0.6
0.8
1.0
-1,000
0
1,000
2,000
3,000
4,000
Net debt Net Debt / EBITDA
US$ million
2006 2007 2009 20102008 9M 2011
• Global deployment and industrial excellence
• Highly trained and diverse human resources base
• Leader in supplying solutions for the growing market in complex tubular applications
• Expanding local presence and service in major markets worldwide
• Financial strength: positive net cash position, good cash flow and higher margins than competitors