Investor Presentation Sep-2012.ppt

Investor Presentation

Tenaris 2September, 2012Investor 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.


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 2012 F

Premium API

Premium Mix 15% 19% 18% 19% 21%

(2008 = 100)


Leading global player with oil and gas focus

Worldwide OCTG marketSales breakdown 2011

PRM, 17%

PRM, 41%

PRM, 6%

API, 83%

API, 59%

API, 94%

45% 23% 32%

Local markets in the Americas

Rest of the world

Chinaand Russia

Sales breakdown 2011

US$10.0 billion

Oil & Gas North

America35%

Oil & Gas South

America19%

Oil & Gas Eastern

Hemisphere19%

Process & Power

13%

Industrial & Others

14%


Industry leadership

Global industrial system and execution excellence

Leading innovation through new products development

Global network, direct contact with end users and rig access


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


New seamless pipe mill and logistics center in the USA

• Shales and deepwater developments are transforming the US and global

energy landscapes

• The new seamless mill will support the long term growth prospects for the

North American market and position us closer to our customers and technology

developments

• The investment will strengthen our competitive position in North America

Main product: seamless OCTG

Annual production capacity: 650 th tons

Time frame: expected to begin operations in 2016

Estimated investment: ~US$ 1.5 billion


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 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:

- Currently used in the Eagle Ford Shale for ongoing drilling program

- The wells are drilled horizontally with a total extension of

more than 16 Th ft

- 5 ½" P110 TSH 625 production casing run from top to bottom of the well


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™


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

1.085 1.159

809 782

0

500

1000

1500

2000

Jul- 2011 Jul-2012

Non Shale Shale

1,8941,941

Shale as % 43% 40%

1014

1.419

473

296 290

158 11768

0

500

1000

1500

2000

Jul-2011 Jul-2012

Oil Shale gas Wet gas Dry gas

1,8941,941

Oil rigs as % 54% 73%


North America: offshore deep water activity

• Number of new deep water well permits approved is recovering

• Increasing demand for large OD, high end steel grades and premium connections

0

5

10

15

20

25

Jan-

09

Mar

-09

May

-09

Jul-0

9

Sep-

09

Nov

-09

Jan-

10

Mar

-10

May

-10

Jul-1

0

Sep-

10

Nov

-10

Jan-

11

Mar

-11

May

-11

Jul-1

1

Sep-

11

Nov

-11

Jan-

12

Mar

-12

May

-12

Jul-1

2

New DW well permits …


0

2

4

6

8

10

12

14

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


Competitive environmentChina OCTG Exports (Mill Tn) China OCTG Exports IH 2012

• Trade actions have constrained Chinese OCTG exports

• Capacity increases worldwide, mainly by producers of standard products

1H08 2H08 1H09 2H09 1H10 2H10 1H 11 2H 11 IH 12

US & Canada Others

1.3

2.7

1.0

0.60.8 0.8 0.7

1.1 1.0

SEA24%

Middle East31%North

Africa9%

CIS10%

Canada4%

USA1%

Others21%


Operating and financial results

M illions of US$ (except rat ios and per ADS amounts) 2008 2009 2010 2011 IH 2012

Net Sales 11.988 8.149 7.712 9.972 5.419

Tubes 10.010 6.671 6.676 8.481 4.706

Projects 1.271 986 429 724 328

Others 707 492 606 767 385

Operating income 3.126 1.814 1.574 1.895 1.187

EBITDA 4.044 2.318 2.013 2.449 1.463

EBITDA margin 34% 28% 26% 25% 27%

Net income (to equity holders) 2.125 1.162 1.127 1.331 905

Earnings per ADS 3,60 1,97 1,91 2,26 1,53

Cash flow from operations 1.465 3.064 871 1.283 1.019

Net debt / (cash) 1.392 (676) (276) (324) 540

Net debt / EBITDA 0,34 - - - 0,18


Margin of Tubes segment

-

500

1.000

1.500

0

1.000

2.000

3.000

4.000

1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12

Tubes volumes Cost per ton Price per ton Pipe Logix basket

US$/Ton Thousand Tons


-1000

-500

0

500

1000

1500

2008 2009 2010 2011 IH 2012

US$ Million

Well placed in a changing and competitive world

Net Debt evolution

Sales by geographic region (IH 2012)

North America50%

South America23%

Europe10%

Middle East& Africa12%

Far East & Oceania5%

• Global deployment, industrial excellence and execution capabilities

• Leader in supplying solutions for the growing market in complex tubular applications

• Expanding local presence and service in major markets worldwide

• Highly trained and diverse human resources base

• Financial strength: good cash flow and higher margins than competitors


Documents

Investor Presentation Sep-2012.ppt