investor presentation sep-2012.ppt
TRANSCRIPT
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.
Tenaris 3September, 2012Investor 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 2012 F
Premium API
Premium Mix 15% 19% 18% 19% 21%
(2008 = 100)
Tenaris 4September, 2012Investor presentation
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$10.0 billion
Oil & Gas North
America35%
Oil & Gas South
America19%
Oil & Gas Eastern
Hemisphere19%
Process & Power
13%
Industrial & Others
14%
Tenaris 5September, 2012Investor presentation
Industry leadership
Global industrial system and execution excellence
Leading innovation through new products development
Global network, direct contact with end users and rig access
Tenaris 6September, 2012Investor presentation
Global industrial system deployment
• New small diameter rolling mill in Mexico, including heat treatment and
premium threading lines, in time and within budget
• Industrial update in Italy, re-focusing product line and improving efficiency
• New tubing line and expansion of heat treatment capacity in USA
Industrial re-alignment to extend product range, improve efficiency and reduce costs and environmental impact
Tenaris 7September, 2012Investor presentation
New seamless pipe mill and logistics center in the USA
• Shales and deepwater developments are transforming the US and global
energy landscapes
• The new seamless mill will support the long term growth prospects for the
North American market and position us closer to our customers and technology
developments
• The investment will strengthen our competitive position in North America
Main product: seamless OCTG
Annual production capacity: 650 th tons
Time frame: expected to begin operations in 2016
Estimated investment: ~US$ 1.5 billion
Tenaris 8September, 2012Investor 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 9September, 2012Investor 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:
- 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
Tenaris 10September, 2012Investor 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 11September, 2012Investor 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
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%
Tenaris 12September, 2012Investor presentation
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
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New DW well permits …
Tenaris 13September, 2012Investor 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 14September, 2012Investor presentation
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%
Tenaris 15September, 2012Investor presentation
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
Tenaris 16September, 2012Investor presentation
Margin of Tubes segment
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500
1.000
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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$/Ton Thousand Tons
Tenaris 17September, 2012Investor presentation
-1000
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2008 2009 2010 2011 IH 2012
US$ 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
Tenaris 18September, 2012Investor presentation