Transcript TMK - National Association of Steel Pipe Distributors

PROPRIETARY & CONFIDENTIAL
An Example of Globalization in the Pipe & Tube Industry
PROPRIETARY & CONFIDENTIAL
Highlights
 11% of global and 61% of Russian seamless OCTG(1) market in 2007
 About 70% of 2007 revenues were generated by sales to the oil & gas sector
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Present in Russia, Central Asia, Eastern Europe and USA
 Fully vertically integrated (upstream and downstream operations)
 Strategic Investment Programme (2004-12) aimed at 48% capacity increase
 Ability to efficiently integrate acquired businesses and realise synergies
2005
2006
2007
2008
CAGR
(2005-2008)
Revenue, US$ mln
2,953
3,402
4,179
5.832
25%
EBITDA, US$ mln
548
800
932
1.012
23%
EBITDA margin
19%
24%
22%
17%
(1) OCTG – Oil Country Tubular Goods
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PROPRIETARY & CONFIDENTIAL
TMK Asset Structure
TMK
Pipe Production
Russia
International
Oilfield
Services
R&D
Sales and
Marketing
ТMK – Premium
Service
Orsky Machine
Building Plant
RosNITI
Trade House TMK
(100%)
(100%)
(97,36%)
(100%)
Premium
Connections
TMK Global
Volzhsky Pipe Plant
(100%)
Truboplast
ТМК - IPSCO
100%
ТМК Europe
(100%)
ULTRA
Seversky Tube Works
(93,30%)
Sinarsky Pipe Plant
TMK-ARTROM
(80,6%)
(92,70%)
Taganrog
Metallurgical Works
(100%)
(100%)
TMK Pipe
Maintenance Dept.
TMK Italia
(100%)
(100%)
TMK Central
Pipe Yard
TMK
Middle East
(100%)
(100%)
TMK-Resita
TMK
North America
(99,5%)
(100%)
(95,94%)
TMK-Kazakhstan
(100%)
TMK-CPW
(51%)
TMK-Kaztrubprom
(100%)
TMK Warehouse
Complex
(100%)
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PROPRIETARY & CONFIDENTIAL
Global Operational and Sales Footprint
Twenty one production sites in Russia, Eastern Europe and the United States supported by an
extensive wholly-owned sales and marketing network covering all key markets
TMK Premium Service
SinTZ
STZ
TMK IPSCO
Houston
TMK Oilfield Services
VTZ
Astana
Tagmet
TMK Kaztrubprom
Baku
Beijing
Ashgabat
Cologne
Zurich
TMK-Artrom
TMK-Resita
Dubai
Singapore
Marketing subsidiaries and rep. offices
Source: TMK accounts
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PROPRIETARY & CONFIDENTIAL
Global Market Leader
TMK holds leading positions in the industry’s most attractive segments
Pre- and post-acquisition market position
(pipe capacity, ‘000 tonnes)
TMK market position by product in 2007
Russia
World
7000
6,400
6,150
Total
No. 1 (24%)
6000
Top 3
Steel Pipes
5,100
5000
Seamless
No 1 (45%)
No. 3
OCTG
No. 1 (61%)
No. 3
Line Pipe
No. 1 (54%)
No. 2
Industrial
No. 1 (26%)
Top 5
4000
2,838
3000
1,895 1,800
1,750 1,650 1,630
2000
1,300
1000
Welded
No. 2 (14%)
Top 15
Source: TMK estimates
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IPSCO
OMK
Tianjin
Sumitomo
Top 20
JFE
No. 1 (14%)
ChTPZ
Industrial
Vallourec
Top 12
TMK
No. 3 (12%)
Tenaris
Large Diameter
TMK + IPSCO
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PROPRIETARY & CONFIDENTIAL
TMK Production capacities
TMK production capacities are located in key global regions of pipe consumption
Europe
North America
Russia
Steelmaking
~ 0.5 mln tonnes
Steelmaking
~ 0.45 mln tonnes
Steelmaking
~ 2.7 mln tonnes
Seamless pipes
~ 0.3 mln tonnes
Seamless pipes
~ 0.25 mln tonnes
Seamless pipes
~ 2.5 mln tonnes
Welded pipes
~ 1.0 mln tonnes
Welded pipes
~ 2.4 mln tonnes
Heat Treatment
~ 0.45 mln tonnes
Heat Treatment
~ 1.5 mln tonnes
Threading
~ 0.75 mln tonnes
Threading
~ 1.3 mln tonnes
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PROPRIETARY & CONFIDENTIAL
2005-2008 Key Strategic Capex Implementations
Key Projects
Plant
Seamless Rolling
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Heat Treatment
and Finishing
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Large O.D. Welded
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Upgrade welded pipes coating technology
Longitudinal seam large OD plant
Volzhsky
Volzhsky
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EAF and caster upgrades
Installation of a new EAF and caster
Installation of a new caster
Completion of installation of a new caster
Volzhsky
Seversky
TAGMET
Resita
Testing and Control
Facilities
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New hydro press, UT facilities (Assel mill)
New UT facilities
New hydro press, new and upgraded UST and NDT facilities
Replacement of hydro press, new UT and MPI systems
New laboratory
Volzhsky
Seversky
Sinarsky
Tagmet
Baytown
Environmental

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EAF gas cleaning system
EAF gas cleaning system installation
Water treatment facilities
Volzhsky
Resita
Sinarsky
Steel-making
Installation of a piercing mill
Installation of a reducing mill
Installation of CPE mill
P.Q.F. mill
Seamless mill upgrades
Seversky
Sinarsky
TMK-Artrom
TAGMET
Ambridge
Sinarsky, TAGMET
TAGMET
Sinarsky
Baytown
Blytheville
Camanche
Two upsetting presses
Threading line for Premium connections
New heat treatment facilities
New heat treatment facilities
New heat treatment facilities
New finishing facilities
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PROPRIETARY & CONFIDENTIAL
Organic Growth
60% (US$1.7 bn) of capex programme to be completed by the end of 2008
Investment Summary
Estimated Production Capacity (mln tonnes)
 Focus on increasing production efficiency and
+48% capacity
increase
0.39
0.65
0.31
0.11
0.1
5.09
5.81
expanding seamless capacity
0.33
 Over US$975 mln to increase seamless pipe
1.23
production capacity (from 2.0 to 3.4 mln tonnes)
and improve consumption efficiency
1,23
3.92
1.32
 Over US$214 mln to install longitudinal large
0.58
diameter welded pipes capacity of 0.65 mln
tonnes
1.32
1.22
1.66
 Key initiatives include:
1.27
1.16
0.96
2006
─ US$817 mln for steel-making capacity for
1.27
seamless pipes (from 2.4 to 3.4 mln tonnes)
1.60
─ Over US$490 mln for heat treatment and
2008E
finishing of pipe to focus on value-added
products
2012E
LD Welded
Industrial Welded
Line Pipe and Industrial Seamless
OCTG
 maintenance capex is in addition to TMK
investment program
Source: TMK estimates
Note: (1) Includes 100 kt capacity of welded OCTG and Line pipes at Seversky mill (TMK-CPW)
(2) The capacities for production of line pipes and industrial seamless pipes are interchangeable
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PROPRIETARY & CONFIDENTIAL
Integration Track Record
Kaztrubprom
JV with Corinth Pipeworks
 100k tonnes of welded
OCTG and line pipes
capacity
 Further product
diversification
+ new technologies
 80% of the Russian market
for tool joints used in drilling
 Moving up the value chain
1Q2007
TNK-BP Service Assets
 Pipe storage, maintenance and
repair, and facilities in Western
Siberia
 Integration into supply chain
of oil and gas companies
Orsky Machine Building
Plant
2006
 60k tonnes of OCTG pipes (finishing
services) capacity
 Access to promising Kazakh market
2Q2007
4Q2007
3Q2007
TMK-Artrom, TMK-Resita
 450k tonnes of steelmaking
capacity
 250k tonnes of seamless pipes
capacity
IPSCO Tubulars
 Remaining 49% of NSG
1H2008
1Q2009
IPSCO Tubulars
Truboplast
 Coating capacity 50k tonnes p.a.
 New value-added products
 Latest technologies in pipe coating
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 100% of ITI
 51% of NSG
 US-based leading producer
of seamless and welded pipes
 Access to the world’s
biggest market for OCTG
and line pipes
 Value-added finishing services
PROPRIETARY & CONFIDENTIAL
2008 Key Strategic Investment Projects
Volzhsky Large-Diameter Longitudinal Welded Pipe Mill
 Additional 650k tonnes of longitudinal welded pipe capacity
 State-of-the-art mill increasing reliability of Russian and CIS pipeline networks
 Large-Diameter pipe production in accordance with the requirements of largest oil
and gas pipeline projects
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PROPRIETARY & CONFIDENTIAL
2008 Key Strategic Investment Projects (2)
Premium Quality Finishing (PQF) continuous mill at Tagmet
 Additional 600k tonnes of high-performance casing, tubing, drill, and line pipe
production capacity in accordance with international standards.
 Billet consumption rate improved by 140 kg/tonne
 4% reduction in cost of production
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PROPRIETARY & CONFIDENTIAL
2008 Key Strategic Investment Projects (3)
New electric arc furnace (EAF) at Seversky
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41,5% lower atmospheric emissions
50% reduction of nitrogen and carbon oxide emissions
100% reduction of sulphur emissions
92% recycling water supply
Additional 950k tonnes of steel billet capacity
Lower energy and gas consumption
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PROPRIETARY & CONFIDENTIAL
TMK IPSCO Assets
TMK IPSCO product offerings include both welded and seamless carbon and alloy grade pipes, as well as
various value-added services
Camanche, IA
Capacity (tons)
Product
ERW OCTG line
pipe, standard pipe
Threading
Koppel, PA
275,000
Product
320,000
Heat Treating
Billets
Capacity (tons)
80,000
480,000
Geneva, NE
Capacity (tons)
Product
ERW HSS
120,000
Camanche, IA
Catoosa, OK
Koppel, PA
Ambridge, PA
Capacity (tons)
Product
Heat Treating
Threading
100,000
130,000
Wilder, KY
Geneva, NE
Catoosa, OK
Blytheville, AR
Capacity (tons)
Product
ERW OCTG, line pipe,
standard pipe
Heat Treating
Threading
300,000
Ambridge, PA
Blytheville, AR
Capacity (tons)
Product
100,000
200,000
Seamless OCTG, line
pipe
326,000
Odessa, TX
Odessa, TX
Capacity (tons)
Product
Premium connections
Houston, TX
120,000
Baytown, TX
Steel
Welded
Houston, TX
Product
Premium connections
Capacity (tons)
120,000
Baytown, TX
Product
Heat Treating
Threading
Wilder, KY
Capacity (tons)
Product
125,000
167,000
ERW OCTG,
standard pipe
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Seamless
Capacity (tons)
570,000
Finishing Mills
PROPRIETARY & CONFIDENTIAL
TMK IPSCO
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Over 1.3 million tonnes capacity
Over 10% of US OCTG pipe production
Strong focus on oil and gas pipes
Over 50 years of expertise in pipe manufacturing
Widely recognised brand with strong customer loyalty and superior distribution platform
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PROPRIETARY & CONFIDENTIAL
TMK Oilfield Services
TMK Oilfield Services
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•
Supplier of high-performance products and services to the oil and gas industry.
•
OAO Orsky Machine Building Plant
•
OOO Truboplast
•
ZAO TMK Pipe Maintenance Department
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OOO TMK Central Pipe Yard
Support and streamline our customers’ production activities.
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Specialises in the repair of tubing pipes, piston rods and pipe coatings, as well as in the
manufacturing of pipe column sections and other downhole equipment. TMK Oilfield
Services provides transportation and running services in the Urals-Volga and WesternSiberian oil and gas regions
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PROPRIETARY & CONFIDENTIAL
TMK Premium Service

TMK Premium Service offers a range of patented connections developed by TMK
R&D specialists and designed for onshore and offshore exploration, appraisal, and
production drilling in challenging environments.
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TMK Premium connections: suitable
for sour, deep well, low temperature,
and high-pressure applications.
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Current drilling conditions call for a
special class of products. TMK
Premium connections are above API
grade products that meet today’s
drilling requirements and challenges.
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PROPRIETARY & CONFIDENTIAL
TMK Premium Connections
ТМК GF
Casing connection designed
for horizontal and directional
wells in oil, gas and gascondensate fields
ТМК FMC
TMK ULTRA Connections
ТМК FМТ
Tubing connection for
use in vertical and
directional oil and gas
wells in fields
ULTRA FJ flush joint
ULTRA SF semi flush joint
ULTRA FX upset tubing connection
ТМК 1
Designed for
casing liners
and well repair
ULTRA FX lined upset tubing
ULTRA CX slim hole
ULTRA CT traditional
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PROPRIETARY & CONFIDENTIAL
Growth and Profitability
Favourable price dynamics and improving efficiency are key drivers for revenue and EBITDA growth
Volumes (‘000 tonnes)
Revenues (US$ mln)
EBITDA (US$ mln)
~1,000
~3,250
2,940
2,997
432
502
637
544
3,088
418
~5,800
4,179
631
3,402
594
655
388
415
946
824
1,119
240
253
913
472
800
2007
2006
2007
Line Pipe
Industrial Seamless
Industrial Welded
2008E
2005
2008E
OCTG
300
1,250
500
2006
548
2,849
2,213
1,787
919
932
949
2005
2005
211
2,935
648
Other Operations
Welded Pipes
Seamless Pipes
LD Welded
Note: (1) Other operations include steel billets and energy sales
2008 estimates include the U.S, IPSCO tubular assets consolidated from June 12, 2008
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2006
2007
2008E
(1)
TMK - IPSCO
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