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July 2005
IPAA’s 9th Annual Oil & Gas Investment Symposium
London
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Presenting Management
Neil G. RussellSr. Vice President Business Development &
Sr. Vice President Premium Connections
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Forward Looking Statements
To the extent this presentation reflects our expectations about Hydril’s business or performance for any future period, we are relying on the safe harbor protections afforded by federal law. We caution you that Hydril’s business or performance in the future may differ materially from those expectations. Forward-looking statements should be weighed in the context of the many risks, issues, and events that could cause Hydril’s actual performance to be different from that contemplated in this presentation, including, but not limited to, the impact of changes in oil and natural gas prices and worldwide and domestic economic conditions on drilling activity and demand for and pricing of Hydril’s products, the impact of geo-political and other events affecting international markets and trade, Hydril’s ability to remain on the leading edge of technology in its products and maintain and increase its market share, the impact of international and domestic trade laws, the loss of or change to distribution methods of premium connections in the U.S. and Canada, overcapacity in the pressure control industry, high fixed costs that could affect the pricing of Hydril’s products, and the other risk factors discussed in our most recent Quarterly Report on Form 10-Q for the first quarter of 2005 filed with the Securities and Exchange Commission.
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Today’s Presentation
• Overview• Premium Connections• Pressure Control• Financials• Investment Premise
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Hydril Summary
Founded 1933
IPO September 2000
Stock price - 52-week range* US$28.50 - $64.58
Stock price - 30-day average* US$52.12
Market Cap* US$1.2 billion
Float 82.8%
NASDAQ Ticker HYDL
* As of 6/21/2005
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• Leader in our segments
– Premium Connections
– Pressure Control
• Deep formation and offshore drilling leverage
• Technical innovator
• Global presence
• Brand name recognition
• Financial stability
Overview
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Business Segments
Premium Connection
• Revenue US$184.8 million*
• End users: E&P companies
• Manufacturing service
• Low working capital
• International & domestic manufacturing
Pressure Control
• Revenue US$100.6 million*
• End users: drilling contractors
• Capital equipment
• Aftermarket parts
• Domestic manufacturing
* 2004
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Revenue Distribution
TTM*
*TTM as of 3/31/05
Segments Geographic
Premium Connections 66%
Pressure Control 34%
International 68%
United States 32%
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Today’s Presentation
• Overview• Premium Connections• Pressure Control• Financials• Investment Premise
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Premium Connections
• Hydril invention
• Proprietary designs
• 30 U.S. patents
• End users: E&P companies
• Largest integral casing market share and threading capacity
• Early / middle cycle
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Deep Formation Leverage
US$125,000
US$320,000
US$600,000
10,000’ 15,000’ 20,000’
Note: potential premium connection revenue per well
Premium Connections
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Market Share
Premium Connections
Note: full length threading only; excludes accessory threading, pipe, etc.; excludes Russia and China Sources: Spears & Associates, and management estimates
OthersHunting
VAM
Grant Prideco
Hydril
Hydril
VAM
Others
Tenaris
Kawasaki
United States Ex-United States
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Earnings Growth Opportunities
• International markets growing• U.S. demand is strong
– Expanded N. American capacity • New products:
– GB connections– Big Wedge– Other large diameter connections
Premium Connections
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Today’s Presentation
• Overview• Premium Connections• Pressure Control• Financials• Investment Premise
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Pressure Control
• Hydril invented annular blowout preventer (BOP)
• 53 U.S. patents• End users: drilling
contractors• “Brand name” drilling
equipment franchise• Middle / late cycle
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Business Model
Capital Equipment Aftermarket
Pressure Control
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Market Share
Capital Equipment Aftermarket
Pressure Control
Note: capital equipment served markets only; aftermarket pertains to Hydril aftermarket products onlySource: management estimates
HydrilNon-OEM
Hydril
National Oilwell Varco
Others
Cooper Cameron
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Deepwater Leverage
Platform/Jackup
Land
DeepwaterPressure Control
US$0.5 – 1.0 million US$2.0 – 4.0 million US$14.0 – 18.0 million
Note: potential capital equipment revenue per rig
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Capital Equipment Backlog
Pressure Control(US$ Millions)
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Earnings Growth Opportunities
• Large installed base drives aftermarket revenue
• Offshore rig upgrades and newbuilds
• New technologies and products
– Quik-Loq™ - high pressure, ram blowout preventer
– New generation of surface MUX controls
– Flowguard™ pulsation dampeners
Pressure Control
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Today’s Presentation
• Overview• Premium Connections• Pressure Control• Financials• Investment Premise
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Operating Results Consolidated Company
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Financial Summary
Q4 Q1
Revenue 2002
$241.5 2003
$212.0 2004
$285.4 2004
$86.5 2005
$78.8
OperatingIncome
Net Income
44.3
26.5
34.2
25.6
66.4
46.5
22.8
15.2
22.1
15.0EPS* 1.16 0.96* 1.89* 0.64 0.63
*Note: excluding one-time tax benefits
(US$ Millions, except per share data )
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Today’s Presentation
• Overview• Premium Connections• Pressure Control• Financials• Investment Premise
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Investment Premise
• Leader in our segments
– Premium Connections
– Pressure Control
• Deep formation and offshore drilling leverage
• Technical innovator
• Global presence
• Brand name recognition
• Financial stability
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P.O. Box 60458 Houston, Texas 77205-0458 Sue Nutt, Manager Investor Relations & Corporate Communications (281) 985-3532
www.hydril.com
NASDAQ: HYDL