TUBOSCOPE INC /DE/, 425, 2000-05-12

TUBOSCOPE INC /DE/
425, 2000-05-12
OIL & GAS FIELD SERVICES, NEC

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Filed by Tuboscope Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934

Subject Company: Tuboscope Inc.
Commission File No. 0-18312

THE FOLLOWING IS A DESCRIPTION OF A SLIDE PRESENTATION THAT IS BEING DISTRIBUTED
TO THIRD PARTIES IN CONNECTION WITH THE MERGER OF TUBOSCOPE INC. AND VARCO
INTERNATIONAL, INC. PURSUANT TO AN AGREEMENT AND PLAN OF MERGER DATED MARCH 22,
2000.

Slide 1:

[VARCO LOGO] [TUBOSCOPE LOGO]

1
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Slide 2:

[VARCO LOGO] [TUBOSCOPE LOGO]

Cautionary Statement Regarding Forward-Looking Statements

The following slides contain projections as to the revenue, EBITDA, cash flow
and debt to book capital ratio of Tuboscope, Varco and the combined company for
the years ending December 31, 2000 and 2001. The projections constitute forward-
looking statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. The projections
have been prepared by management of Tuboscope and Varco using analyst estimates
provided by First Call. The estimates are inherently subject to significant
economic and competitive uncertainties and contingencies, all of which are
difficult to predict and many of which are beyond either Tuboscope's or Varco's
control. Accordingly, there can be no assurance that the projected results would
be realized or that actual results would not be significantly higher or lower
than those set forth in the following slides. In addition, these projections
were not prepared in compliance with the published guidelines of the Securities
and Exchange Commission or the guidelines established by the American Institute
of Certified Public Accountants regarding projections and forecasts. Neither
Tuboscope's nor Varco's independent accountants have examined or applied any
agreed upon procedures to the projections. The risks and uncertainties that
could cause the actual financial results of Tuboscope or Varco to differ
materially from those contained in the projections include, among others, the
cyclical nature of the oilfield products and services industry, risks associated
with the companies' foreign operations, compliance with environmental laws,
risks associated with growth through acquisitions and other factors discussed in
each company's Annual Report on Form 10-K for the year ended December 31, 1999.

2
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Slide 3:

[VARCO LOGO] [TUBOSCOPE LOGO]

. THE MERGER

. FINANCIALS

. COMPANY POSITIONS

3
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Slide 4:

[VARCO LOGO] [TUBOSCOPE LOGO]

. THE MERGER

. FINANCIALS

. COMPANY POSITIONS

4
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Slide 5:

[VARCO LOGO] THE PENDING MERGER [TUBOSCOPE LOGO]

. THE DETAILS

. THE BENEFITS

. THE VISION

5
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Slide 6:

[VARCO LOGO] KEY TERMS [TUBOSCOPE LOGO]

. Ownership 50% Varco & 50% Tuboscope

. Corporate name: Varco International, Inc. (VRC)

. Management Team: George Boyadjieff (V) Chairman & CEO
John Lauletta (T) President & COO
Mike Sutherlin (V) Group President,
Products
Joe Winkler (T) Executive VP & CFO

. Board of Directors: Five members each from Varco and Tuboscope Boards

. Expected Closing: May 2000.

6
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Slide 7:

[VARCO LOGO] HISTORY [TUBOSCOPE LOGO]

. VARCO FOUNDED IN 1908

. TUBOSCOPE FOUNDED IN 1937

7
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Slide 8:

[VARCO LOGO] TECHNOLOGY LEADERSHIP [TUBOSCOPE LOGO]

Varco Tuboscope

Rotary Handling Tools #1 Tubular Inspection #1
Pipe Racking #1 Tubular Coating #1
Iron Roughnecks #1 Solids Control #1
Drilling Controls #1 Coiled Tubing Units #1
Top Drive Systems #1 Coiled Tubing BOP's #1
Motion Compensators #1 Wireline Units #1
Pipe Deck Equipment #1 Mill Systems #1
BOP Controls #1
Riser Tensioners #1

Rotary Tables #2 Pipeline Inspections #2
BOP's #2
Riser #2

8
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Slide 9:

[VARCO LOGO] R&D [TUBOSCOPE LOGO]

1998 R&D SPENDING

[BAR GRAPH. The bottom row of the graph lists the following: SLB, Varco, TBI,
BJS BHI, SII, CAM, HLB, Daniel and WFT. The right side lists percentages which
increase from the bottom to the top as follows: 0%, 1.00%, 2.00%, 3.00%, 4.00%
and 5.00%. The graph shows that SLB is at approximately 5% and Varco just under
5%. TBI, BJS, BHI, SII, CAM and HLB are approximately 2%. Daniel is
approximately 1.5% and WFT is approximately 1%. All the companies are
represented by a light bar, except for Varco which is represented by a dark bar
and TBI is represented by a gray bar.]

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Slide 10:

[VARCO LOGO] PEAK REVENUES - 1998 [TUBOSCOPE LOGO]

[3 PIE CHARTS. The first pie chart represents Tuboscope and includes the
following information: Coiled Tubing: 21%, Pipeline: 10%, Tubular Services: 39%
and Solids Control: 30%. The second pie chart represents Varco and includes the
following information: Rig Equipment: 84%, Instrument: 13% and Solids Control:
3%. The third pie chart represents Tuboscope and Varco combined and includes the
following information: Instrument: 7%, Tubular Services: 17%, Solids Control:
15%, Coiled Tubing: 9%, Pipeline: 4% and Rig Equipment: 48%.]

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Slide 11:

[VARCO LOGO] PROFORMA REVENUE - 2000e [TUBOSCOPE LOGO]

[3 PIE CHARTS. The first pie chart represents Tuboscope and includes the
following information: Coiled Tubing: 19%, Pipeline: 8%, Tubular Services: 41%
and Solids Control: 32%. The second pie chart represents Varco and includes the
following information: Rig Equipment: 78%, Instrument: 17% and Solids Control:
5%. The third pie chart represents Tuboscope and Varco combined and includes the
following information: Instrument: 7%, Tubular Services: 23%, Solids Control:
20%, Coiled Tubing: 11%, Pipeline: 5% and Rig Equipment: 34%.]

11
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Slide 12:

[VARCO LOGO] THE PENDING MERGER [TUBOSCOPE LOGO]

. THE DETAILS

. THE BENEFITS

. THE VISION

12
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Slide 13:

[VARCO LOGO] THE OBVIOUS SYNERGIES [TUBOSCOPE LOGO]

. SOLIDS CONTROL

. COILED TUBING

. SERVICE BUSINESS

13
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Slide 14:

[VARCO LOGO] SOLIDS CONTROL SYNERGIES [TUBOSCOPE LOGO]

TECHNOLOGY + GLOBAL PRESENCE

[PICTURE. The picture depicts the continents with light circles representing
Tuboscope's presence and dark circles representing Varco's presence in the
following countries and/or continents: Canada (TBI), the United States (TBI),
Latin America (TBI), Europe & ME (TBI and VRC), the Far East and the North Sea
(Varco).]

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Slide 15:

[VARCO LOGO] SOLIDS CONTROL MARKET [TUBOSCOPE LOGO]

. PEAK MARKET
$470 MILLION

[PICTURE: Depicts an automated centrifuge]

. 1999 MARKET
340 MILLION

[PIE CHART: Indicates the following percentages of the solids control market:
TBI 34%, Others 62%, VRC 4%. The Source for the information provided in the
chart is Spears and Associates Inc.]

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Slide 16:

[VARCO LOGO] COILED TUBING SYNERGIES [TUBOSCOPE LOGO]

[PICTURE: Depicts an oil rig]

. A NEW PRODUCT FOR RIGS

. UNDERBALANCED DRILLING

. DEEPWATER WORKOVER

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Slide 17:

[VARCO LOGO] COILED TUBING MARKET [TUBOSCOPE LOGO]

[2 BAR GRAPHS. The bar graph on the left side of the slide shows the number of
coiled tubing drilled wells from the years 1991-1998 (Source: World Oil). The
numbers along the left hand side of the graph increase in increments of 100
to 700. The graph indicates that in 1991-1994 there were less then 100 coiled
tubing drilled wells, in 1994 approximately 120, in 1995 slightly over 300, in
1996 approximately 400, in 1997 approximately 600 and in 1998 just over 600. The
graph on the right hand side depicts underbalanced wells from the years 1994-
2004 (Source: Hart's E&P). The numbers along the left hand side of the graph
increase in increments of 2,000, to 12,000. The graph indicates that in 1994 and
1995 there were approximately 2,000 underbalanced wells, in 1996 there were
approximately 3,000, from 1997-1998 the were approximately 4,000, in 1999 there
were slightly less then 6,000. The graph predicts that in 2000 there will be
more than 6,000 underbalanced wells, in 2001 slightly less than 7,000, in 2002
approximately 8,000, in 2003 approximately 9,000, in 2004 approximately 11,000
and in 2005 approximately 12,000.]

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Slide 18:

[VARCO LOGO] DEEPWATER WORKOVER [TUBOSCOPE LOGO]

[PICTURE and BAR GRAPH: The picture on the left depicts an oil rig. The bar
graph on the right indicates the number of deepwater discoveries per year for US
wells. The numbers on the left side of the graph increase in increments of 0.5
from 0 to 4.5. The graph indicates that in 1990, 1991, 1992 and 1993 US wells
had approximately 0.5, 0.7, 0.1 and 0.3, respectively, deepwater discoveries per
year. In 1994 that number went up to approximately 1.8, in 1995 it dropped to
approximately 0.2, and since then it has increased so that in 1996, 1997, 1998
and 1999 there were approximately 3, 3, 3.3 and 4 discoveries, respectively, per
year.]

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Slide 19:

[VARCO LOGO] PRODUCT SYNERGIES [TUBOSCOPE LOGO]

[PICTURE that denotes the continents and Tuboscope's locations throughout the
world]

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Slide 20:

[VARCO LOGO] LAND TOP DRIVES [TUBOSCOPE LOGO]

[PICTURE, PIE CHART and BAR GRAPH: The picture on the left hand side is a close
up of a land top drive. The pie chart on the upper right indicates the
percentage of land top drives as follows : Varco 8%, Tesco 86% and Other 6%. The
bar graph on the bottom left indicates the number of top drive rentals per year
for 1995-1999. The graph indicates that in 1995 there were slightly under 10, in
1996 there were approximately 25, in 1997 there were slightly over 40, in 1998
there were slightly over 60 and in 1999 there were approximately 45. The
information provided in the pie chart and bar graph is based on estimates from
Varco.]

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Slide 21:

[VARCO LOGO] ROTATING PREVENTERS [TUBOSCOPE LOGO]

[PICTURE and BAR GRAPH: Picture on the left hand side is a close up of a
rotating preventer. The graph on the right indicates the number of
underbalanced US wells in the years 1994-2005. The numbers on the left side of
the graph increase in increments of two thousand up to 12,000. The graph
indicates that in 1994 and 1995 there were approximately 2,000 wells, in 1996
there were approximately 3,000, in 1997 and 1998 there were approximately
4,000, and in 1999 there were slightly under 6,000. For the years 2000-2005
the graph predicts a steady increase of approximately 1,000-2,000 a year so
that in 2005, the final year represented, the graph shows that the
underbalanced wells should be at 12,000. The source for the information
provided in the graph is Hart's E&P.]

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Slide 22:

[VARCO LOGO] OTHER SYNERGIES [TUBOSCOPE LOGO]

. MERGER OF OUTSTANDING ORGANIZATIONS

. CREATION OF POWERFUL GROWTH PLATFORM

. EXPAND VRC AFTER-MARKET

. REDUNDANT COST ELIMINATION

. CONSOLIDATED INSTRUMENTATION BUSINESS

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Slide 23:

[VARCO LOGO] VARCO AFTER MARKET [TUBOSCOPE LOGO]

. GROWING INSTALLED BASE

. VARCO HAS ONLY 19 WORLD WIDE
SERVICE FACILITIES

. TUBOSCOPE HAS OVER 140 WORLD
WIDE SERVICE FACILITIES

[BAR GRAPH: The graph indicates the dollar amounts, in millions of after market
sales for the years 1994-1999. The dollar amounts on the left hand side of the
graph increase in increments of 10 million up to 70 million. The graph shows
that in 1994 after market sales were approximately $20 million, in 1995 slightly
over $20 million, in 1996 approximately $35 million, in 1997 approximately $54
million, in 1998 approximately $58 million and in 1999 approximately $45
million.]

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Slide 24:

[VARCO LOGO] THE PENDING MERGER [TUBOSCOPE LOGO]

. THE DETAILS

. THE BENEFITS

. THE VISION

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Slide 25:

[VARCO LOGO] THE OPPORTUNITY [TUBOSCOPE LOGO]

WE CAN DRAMATICALLY CHANGE
THE WAY THE INDUSTRY DRILLS
USING TECHNOLOGY AND THE INTERNET

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Slide 26:

[VARCO LOGO] OUR VISION [TUBOSCOPE LOGO]

[PICTURE of a truck with the title "e-drilling" in the background.]

26
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Slide 27:

[VARCO LOGO] OUR BUILDING BLOCKS [TUBOSCOPE LOGO]

. TECHNOLOGY LEADERSHIP

. MANUFACTURING EXPERTISE

. GLOBAL SERVICE OPERATIONS

. PRODUCTS/SERVICE INTEGRATION

. DRILLING PROCESS KNOWLEDGE

. VISIONARY MANAGEMENT

[E-DRILL LOGO]

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Slide 28:

[VARCO LOGO] OUR CONCEPT [TUBOSCOPE LOGO]

[PICTURES. 3 pictures arranged in a circle with "The Internet" in the center of
the circle. Two pictures depict equipment and the third a person at a computer.
The words "Smart Equipment" and "Smart People" appear between the pictures and
arrows point in reciprocal directions between all the pictures.]

[E-DRILL LOGO]

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Slide 29:

[VARCO LOGO] THE BENEFITS [TUBOSCOPE LOGO]

. SUPERIOR SERVICE AT LOWER COST

. REAL-TIME KNOWLEDGE OF OUR CUSTOMERS' NEEDS

. BROADER COVERAGE

. EXPANDED PRODUCT OPPORTUNITIES

. HIGHER RETURNS

[E-DRILL LOGO]

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Slide 30:

[VARCO LOGO] OUR PILOT OPERATION [TUBOSCOPE LOGO]

[PICTURE. Overlaid against a background picture of the continents are two
pictures of the pilot operations, one showing the outside of the facility and
one showing the machinery inside the facility.]

[E-DRILL LOGO]

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Slide 31:

[VARCO LOGO] FUTURE STRUCTURE [TUBOSCOPE LOGO]

[PICTURE. A picture of a globe over which there are oil rigs depicted
in Latin America, the United States, Europe, the Middle East and the Far East.]

[E-DRILL LOGO]

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Slide 32:

[VARCO LOGO] NEXT STEPS [TUBOSCOPE LOGO]

. PRS-8 PIPE HANDLING SYSTEM

. NEXT GENERATION VICIS

. PARTNERSHIP DEVELOPMENT

. INTEGRATION OF VARCO & TUBOSCOPE

. OTHER PRODUCTS & SERVICES

. FURTHER ACQUISITIONS

[E-DRILL LOGO]

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Slide 33:

[VARCO LOGO] [TUBOSCOPE LOGO]

. THE MERGER

. FINANCIALS

. COMPANY POSITIONS

33
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Slide 34:

PRO FORMA REVENUE
[VARCO LOGO] 1995 - 2001 [TUBOSCOPE LOGO]

[BAR GRAPH. The left hand side of the graph represents the pro forma revenue in
$ millions, the amounts increase in increments of $100 million, starting at
$0.00 and ending at $800 million. The row along the bottom of the graph
represents the years in which the revenue was earned and increases in increments
of one year or 6 months, starting at 1995 and ending in 2001. For each year
there are two bars, with the light bar representing Tuboscope and the dark bar
representing Varco. The graph shows that Tuboscope had the following dollar
amounts of revenue for the years depicted: approximately $315 million for 1995,
approximately $377 million for 1996, approximately $525 million for 1997,
approximately $597 million for TTM 6/1998, approximately $568 million for 1998,
approximately $452 million for TTM 6/1999, approximately $385 million for 1999,
and projects approximately $457 million for 2000 and approximately $535 million
for 2001. The graph shows that Varco had the following dollar amounts of revenue
for the years depicted: approximately $272 million for 1995, approximately $367
million for 1996, approximately $545 million for 1997, approximately $661
million for TTM 6/1998, approximately $735 for 1998, approximately $702 million
for TTM 6/1999, approximately $590 million for 1999, and projects approximately
$350 million for 2000 and approximately $442 million for 2001.]

Tuboscope data for 1995 and 1996 is pro forma for Drexel and Tuboscope.

Projections based on street estimates as of mid-April 2000. These estimates are
subject to significant risks and economic and competitive uncertainties and
contingencies, all of which are difficult to predict and many of which are
beyond either Tuboscope's or Varco's control. Please review the preceding slide
entitled "Cautionary Statements Regarding Forward-Looking Statements."

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Slide 35:

PRO FORMA REVENUE
[VARCO LOGO] 1995 - 2001 [TUBOSCOPE LOGO]

[BAR GRAPH. The left hand side of the graph represents the pro forma revenue in
$ millions, the amounts increase in increments of $300 million, starting at
$0.00 and ending at $1500 million. The row along the bottom of the graph
represents the years in which the revenue was earned and increases in increments
of one year or 6 months, starting at 1995 and ending in 2001. For each year
there is one bar which combines the pro forma revenue of Tuboscope and Varco.
The graph shows that dollar amounts of pro forma revenue for both Tuboscope and
Varco for the years depicted are as follows: $587.4 million for 1995, $744.0
million for 1996, $1070.1 million for 1997, $1258.5 million for TTM 6/1998,
$1302.6 million for 1998, $1153.5 million for TTM 6/1999, $975.2 million for
1999, and projects approximately $807 million for 2000 and approximately $977
million for 2001.]

Tuboscope data for 1995 and 1996 is pro forma for Drexel and Tuboscope.

Projections based on street estimates as of mid April 2000. These estimates are
subject to significant risks and economic and competitive uncertainties and
contingencies, all of which are difficult to predict and many of which are
beyond either Tuboscope's or Varco's control. Please review the preceding slide
entitled "Cautionary Statements Regarding Forward-Looking Statements."

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Slide 36:

PRO FORMA EBITDA
[VARCO LOGO] 1995 - 2001 [TUBOSCOPE LOGO]

[BAR GRAPH. The left hand side of the graph represents the pro forma EBITDA in $
millions, the amounts increase in increments of $20 million, starting at $0.00
and ending at $160 million. The row along the bottom of the graph represents the
years in which the pro forma EBITDA was earned and increases in increments of
one year or 6 months, starting at 1995 and ending in 2001. For each year there
are two bars, with the light bar representing Tuboscope and the dark bar
representing Varco. The graph shows that Tuboscope had the following dollar
amounts of EBITDA for the years depicted: approximately $61 million for 1995,
approximately $78 million for 1996, approximately $126 million for 1997,
approximately $142 million for TTM 6/1998, approximately $116 million for 1998,
approximately $71 million for TTM 6/1999, approximately $52 million for 1999,
and projects approximately $80 million for 2000 and approximately $108 million
for 2001. The graph shows that Varco had the following dollar amounts of EBITDA
for the years depicted: approximately $37 million for 1995, approximately $54
million for 1996, approximately $97 million for 1997, approximately $122 million
for TTM 6/1998, approximately $114 million for 1998, approximately $92 million
for TTM 6/1999, approximately $79 million for 1999, and projects approximately
$55 million for 2000 and approximately $75 million for 2001.]

Tuboscope data for 1995 and 1996 is pro forma for Drexel and Tuboscope.

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Slide 37:

PRO FORMA EBITDA
[VARCO LOGO] 1995 - 2001 [TUBOSCOPE LOGO]

[BAR GRAPH. The left hand side of the graph represents the pro forma EBITDA in $
millions, the amounts increase in increments of $50 million starting at $0.00
and ending at $300 million. The row along the bottom of the graph represents the
years in which the revenue was earned and increases in increments of one year or
6 months, starting at 1995 and ending in 2001. For each year there is one bar
which combines the pro forma EBITDA of Tuboscope and Varco. The graph shows that
dollar amounts of pro forma EBITDA for both Tuboscope and Varco for the years
depicted are as follows: $98.0 million for 1995, $131.9 million for 1996, $222.1
million for 1997, $264.3 million for TTM 6/1998, $230.2 million for 1998, $162.8
million for TTM 6/1999, $131.6 million for 1999, and projects approximately $135
million for 2000 and approximately $182.4 million for 2001.]

Tuboscope data for 1995 and 1996 is pro forma for Drexel and Tuboscope.

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Slide 38:

PRO FORMA EBITDA
[VARCO LOGO] 1995 - 2001 [TUBOSCOPE LOGO]

[BAR GRAPH. This graph is the same as the graph on the previous slide, Slide
Number 37, only it adds a right hand column representing the percentage of
EBITDA and a line connects the bars on top. The graph shows an increase in the
percentage of EBITDA until TTM 6/1998, a decrease until 1999 and then projects
an increase for 2000 and 2001.]

Tuboscope data for 1995 and 1996 is pro forma for Drexel and Tuboscope.

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Slide 39:

Pro Forma Cash Flow
[VARCO LOGO] (PAT + DD & A) [TUBOSCOPE LOGO]

[BAR GRAPH. The left hand side of the graph represents the pro forma cash flow
earnings in $ millions, the amounts increase in increments of $10 million,
starting at $0.00 and ending at $100 million. The row along the bottom of the
graph represents the years in which the Pro Forma Cash flow was earned and
increases in increments of one year or 6 months, starting at 1995 and ending in
2001. For each year there are two bars, with the light bar representing
Tuboscope and the dark bar representing Varco. The graph shows that Tuboscope
had the following dollar amounts of cash flow for the years depicted:
approximately $38 million for 1995, approximately $46 million for 1996,
approximately $79 million for 1997, approximately $90 million for TTM 6/1998,
approximately $73 million for 1998, approximately $45 million for TTM 6/1999,
approximately $32 million for 1999, and projects approximately $50 million for
2000 and approximately $66 million for 2001. The graph shows that Varco had the
following dollar amounts of cash flow for the years depicted: approximately $27
million for 1995, approximately $38 million for 1996, approximately $67 million
for 1997, approximately $80 million for TTM 6/1998, approximately $82 million
for 1998, approximately $72 million for TTM 6/1999, approximately $60 million
for 1999, and projects approximately $48 million for 2000 and approximately $59
million for 2001.]

Tuboscope data for 1995 and 1996 is pro forma for Drexel and Tuboscope.

Projections based on street estimates of mid-April 2000. These estimates are
subject to significant risks and economic and competitive uncertainties and
contingencies, all of which are difficult to predict and many of which are
beyond either Tuboscope's or Varco's control. Please review the preceding slide
entitled "Cautionary Statements Regarding Forward-Looking Statements."

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Slide 40:

Pro Forma Cash Flow
[VARCO LOGO] (PAT + DD&A) [TUBOSCOPE LOGO]

[BAR GRAPH. The left hand side of the graph represents the pro forma cash flow
in $ millions, the amounts increase in increments of $20 million starting at
$0.00 and ending at $200 million. The row along the bottom of the graph
represents the years in which the revenue was earned and increases in increments
of one year or six months, starting at 1995 and ending in 2001. For each year
there is one bar which combines the pro forma cash flow of Tuboscope and Varco.
The graph shows that dollar amounts of pro forma cash flow for both Tuboscope
and Varco for the years depicted are as follows: $65.2 million for 1995, $84.3
million for 1996, $146 million for 1997, $175.7 million for TTM 6/1998, $155.3
million for 1998, $116.9 million for TTM 6/1999, $92.1 million for 1999, and
projects approximately $97.6 million for 2000 and approximately $125.4 million
for 2001.]

Tuboscope data for 1995 and 1996 is pro forma for Drexel and Tuboscope.

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Slide 41:

Cumulative Cash Flow
[VARCO LOGO] (1995-2001) [TUBOSCOPE LOGO]

[LINE GRAPH. The left hand side of the graph represents the cash flow earnings
in $ millions, the amounts increase in increments of $50 million starting at
$0.00 and ending at $450 million. The row along the bottom of the graph
represents the years in which the cash flow was earned and increases in
increments of one year, starting at 1995 and ending in 2001. The graph has two
lines, one which represents the cumulative cash flow of TBI and the other which
represents the cumulative cash flow of VRC. Both lines steadily increase,
beginning at approximately $27 million (VRC) and $38 million (TBI) in 1995 and
ending at approximately $381 million (VRC) and $385 million (TBI) for 2001.

Tuboscope data for 1995 and 1996 is pro forma for Drexel and Tuboscope.

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Slide 42:

Pro Forma
[VARCO LOGO] Debt to Book Capital [TUBOSCOPE LOGO]

[BAR GRAPH. The left hand side of the graph represents the debt to book capital
balance in $ millions, the amounts increase in increments of $100 million
starting at $0.00 and ending at $1000. The row along the bottom of the graph
represents the years of the debt to book capital balance and increases in
increments of one year, starting at 1997 and ending in 2000. The bottom portion
of each bar represents the pro form equity balance for each year, and the top
portion represents the pro forma debt. The bars for the four years depict the
following: for 1997 an equity balance of $658 million and debt of $231 million;
for 1999, an equity balance of $666 million and debt of $183 million; and
projected for 2000, an equity balance of $699 million and debt of $100 million.
A line which represents the percentage of debt to book capital links the four
bars and shows a decrease of percentage of debt to book capital from 1997 to
2000.]

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Slide 43:

PRO FORMA EPS AND CASH
[VARCO LOGO] FLOW PER SHARE IMPACT [TUBOSCOPE LOGO]
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------
2000 2001
- -------------------------------------------------------------------------------------------
EPS CFPS EPS CFPS
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tuboscope $0.36 $1.11 $0.72 $1.4
- -------------------------------------------------------------------------------------------
Transaction Impact 0.09 (0.03) 0.04 (0.07)
- -------------------------------------------------------------------------------------------
Synergy Estimates 0.07 0.07 0.11 0.1
- -------------------------------------------------------------------------------------------
Pro Forma $0.52 $1.15 $0.87 $1.4
- -------------------------------------------------------------------------------------------
Accretion $0.16 $0.04 $0.15 $0.00
</TABLE>

Projections based on current street estimates. These estimates are subject to
significant risks and economic and competitive uncertainties and contingencies,
all of which are difficult to predict and many of which are beyond either
Tuboscope's or Varco's control. Please review the preceding slide entitled
"Cautionary Statements Regarding Forward-Looking Statements."

Cash Flow Per Share (CFPS) = PAT + DD+A

Management of Tuboscope and Varco estimate that synergies will result in pre-tax
savings of $10.0 million in 2000 and $15.0 million in 2001. These estimates are
subject to considerable uncertainties and contingencies, which may result in
such estimates being materially inaccurate.

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Slide 44:

[VARCO LOGO] Q1 2000 RESULTS [TUBOSCOPE LOGO]
<TABLE>
<CAPTION>

Tuboscope

Revenue EBITDA %
<S> <C> <C> <C>
Q1 2000 $108.7 $19.0 17.4%
Q4 1999 101.6 $15.0 14.8%
Change/Leverage $7.1 $ 3.9 55.3%

</TABLE>

<TABLE>
<CAPTION>
Varco

Revenue EBITDA %
<S> <C> <C> <C>
Q1 2000 $96.3 $14.0 14.5%
Q4 1999 144.3 $16.8 11.6%
Change/Leverage $(48.0) $(2.8) (5.8)%

</TABLE>

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Slide 45:

[VARCO LOGO] SUMMARY [TUBOSCOPE LOGO]

. ESTABLISH A MAJOR MIDCAP

. SUPERIOR GROWTH THROUGH COMBINED STRENGTH

. UTILIZE SERVICE INFRASTRUCTURE

. LARGER, MORE DIVERSIFIED PLATFORM FOR GROWTH

. TECHNOLOGY INTEGRATION & ENHANCEMENT

. FULL CYCLE OPPORTUNITY

[SHAREHOLDER VALUE LOGO]

45
<PAGE>

Slide 46:

[VARCO LOGO] [TUBOSCOPE LOGO]

Cautionary Statement Regarding Forward-Looking Statements

46
<PAGE>

Slide 47:

[VARCO LOGO] [TUBOSCOPE LOGO]

[TUBOSCOPE LOGO]

47
<PAGE>

Slide 48:

TUBOSCOPE
[VARCO LOGO] FUNDAMENTALS [TUBOSCOPE LOGO]

. MARKET LEADER

. TECHNOLOGY LEADER

. GLOBAL INFRASTRUCTURE

. DIVERSE PRODUCTS AND SERVICES

. CUSTOMER FOCUS

. STRONG CASH FLOW

. POSITIONED FOR RECOVERY

48
<PAGE>

Slide 49:

[VARCO LOGO] MARKET POSITIONS [TUBOSCOPE LOGO]

TUBULAR INSPECTION #1

TUBULAR COATING #1

SOLIDS CONTROL #1

COILED TUBING UNITS #1

CT PRESSURE CONTROL #1

WIRELINE UNITS #1

MILL SYSTEMS #1

PIPELINE INSPECTION #2

49
<PAGE>

Slide 50:

GEOGRAPHIC
[VARCO LOGO] DIVERSITY [TUBOSCOPE LOGO]

[PICTURE of the continents indicating Tuboscope's percentage of revenues from
U.S. (36%), Latin America (17%), Canada (11%), Europe and the Middle East (26%)
and the Far East (10%).]

50
<PAGE>

Slide 51:

WORLDWIDE
[VARCO LOGO] INFRASTRUCTURE [TUBOSCOPE LOGO]

[PICTURE of the continents indicating Tuboscope's
operations in 183 locations and in 49 countries]

51
<PAGE>

Slide 52:

[VARCO LOGO] PRODUCT LINES [TUBOSCOPE LOGO]

[PIE CHART illustrating Tuboscope's revenue percentages from its different
product lines: Tubular Services (42%), Solids Control (30%), CT/Wireline (19%)
and Pipeline and Other (9%)]

52
<PAGE>

Slide 53:

[VARCO LOGO] SOLIDS CONTROL [TUBOSCOPE LOGO]

[PICTURE of solids control machinery]

53
<PAGE>

Slide 54:

[VARCO LOGO] SOLIDS CONTROL [TUBOSCOPE LOGO]

. SOLIDS CONTROL SERVICE PROVIDER AND EQUIPMENT MANUFACTURER

. SERVICES INCLUDE FLOWLINE TO DISPOSAL

. VACUUM TRANSFER SYSTEMS

. CUTTINGS REINJECTION

. THERMAL DESORPTION

. TECHNOLOGY AND MARKET LEADER

54
<PAGE>

Slide 55:

[VARCO LOGO] FLOWLINE TO DISPOSAL [TUBOSCOPE LOGO]

[FLOW CHART. The flow chart illustrates the flowline to disposal, including the
following: Flow Lines, Mud Tanks, Cuttings Reinjection, Solids, Land Treatment,
Transportation, Thermal Desorption, Recycle, Water, Solids, Land Treatment and
Cuttings Injection.]

55
<PAGE>

Slide 56:

COILED TUBING
[VARCO LOGO] & WIRELINE EQUIPMENT [TUBOSCOPE LOGO]

[3 PICTURES of coiled tubing and wireline equipment]

56
<PAGE>

Slide 57:

COILED TUBING &
[VARCO LOGO] WIRELINE EQUIPMENT [TUBOSCOPE LOGO]

. LARGEST INDEPENDENT PROVIDER OF COILED TUBING & WIRELINE UNITS

. EXPANDED PRODUCT OFFERING THROUGH ACQUISITIONS AND INTERNAL GROWTH

. CEMENTING UNITS

. WIRELINE UNITS

. PERFORATING GUNS

. PIONEERED CT DRILLING TECHNOLOGY

. TECHNOLOGY AND WORLD MARKET LEADER

57
<PAGE>

Slide 58:

[VARCO LOGO] TUBULAR SERVICES [TUBOSCOPE LOGO]

[2 PICTURES relating to tubular services]

58
<PAGE>

Slide 59:

[VARCO LOGO] TUBULAR SERVICES [TUBOSCOPE LOGO]

. INSPECTION FRANCHISE

. INTERNAL COATING

. INTERACTIVE INVENTORY MANAGEMENT

. TECHNOLOGY FOCUS

. TRUSCOPE IS NEW STANDARD FOR INSPECTION

. INTRODUCTION OF WELLCHEK II

. TECHNOLOGY AND WORLD MARKET LEADER

59
<PAGE>

Slide 60:

[VARCO LOGO] PIPELINE SERVICES [TUBOSCOPE LOGO]

[2 PICTURES relating to pipeline services]

[TUBOSCOPE VETCO PIPELINE SERVICES LOGO]

60
<PAGE>

Slide 61:

[VARCO LOGO] PIPELINE SERVICES [TUBOSCOPE LOGO]

. FOUNDED PIPELINE INSPECTION INDUSTRY

. MARKET DRIVERS

. SAFETY AWARENESS

. ENVIRONMENTAL CONCERNS

. NEW PIPELINE CONSTRUCTION

. EXPANDED RANGE OF PRODUCTS AND SERVICES

. GPS MAPPING

. DATA MANAGEMENT SOFTWARE

. DEFORMATION TOOL DETECTS MECHANICAL DAMAGE

. NORTH AMERICAN MARKET LEADER

61
<PAGE>

Slide 62:

[VARCO LOGO] [TUBOSCOPE LOGO]

[VARCO LOGO]

62
<PAGE>

Slide 63:

[VARCO LOGO] MARKET POSITION [TUBOSCOPE LOGO]

No. 1 in Market No. 2 in Market
Rotary Handling Tools - 98% Rotary Tables - 37%
Pipe Racking - 76% BOP's - 33%
Iron Roughnecks - 71% Riser - 25%
Drilling Controls - 65%
Top Drive Systems - 63%
Motion Compensators - 45%
Pipe Deck Equipment - 41%
BOP Controls - 40%
Risers Tensioners - 38%

63
<PAGE>

Slide 64:

[VARCO LOGO] VARCO PRODUCT LINES [TUBOSCOPE LOGO]

[PIE CHART showing the following percentages: Instrument & Controls: 12%, Oil
Tools 11%, Pipe Handling 34%, Solids Control 3% and Pressure Control 40%.]

64
<PAGE>

Slide 65:

[VARCO LOGO] COMPUTER CONTROLS [TUBOSCOPE LOGO]

[2 PICTURES. The pictures depict the new way computer controls operate on the H
& P Ursa Platform Rig.]

65
<PAGE>

Slide 66:

[VARCO LOGO] AUTOMATED PIPE HANDLING [TUBOSCOPE LOGO]

[PICTURE. The picture depicts automated pipe handling on the Transocean
Discoverer Enterprise.]

66
<PAGE>

Slide 67:

[VARCO LOGO] OIL TOOLS [TUBOSCOPE LOGO]

[VARCO BJ LOGO]

[2 PICTURES: One picture depicts the old way oil tools were operated and the
second picturedepicts the new way oil tools are operated]

67
<PAGE>

Slide 68:

[VARCO LOGO] PRESSURE CONTROL [TUBOSCOPE LOGO]

[SHAFFER LOGO]

[PICTURE: The picture depicts the pressure control system. ]

68
<PAGE>

Slide 69:

[VARCO LOGO] SOLIDS CONTROL [TUBOSCOPE LOGO]

[RIGTECH LOGO]

AUTOMATED CENTRIFUGE

[PICTURE: The picture depicts an automated centrifuge with the Rigtech logo.]

69
<PAGE>

Slide 70:

[VARCO LOGO] R&D RESULTS [TUBOSCOPE LOGO]

[2 PIE CHARTS: The pie chart for 1999 revenues lists the following percentages
of revenues: 58% from existing products and 42% from products introduced in the
latest 3 years; whereas the pie chart for 1998 revenues lists the following
percentages of revenues: 75% from existing products and 25% from products
introduced in the latest 3 years.]

70
<PAGE>

Slide 71:

SALES POTENTIAL
[VARCO LOGO] PER NEW DRILLING RIG [TUBOSCOPE LOGO]

[2 BAR GRAPHS. The bar graph on the left hand side shows the Harsh Environment
Jackup sales potential whereas the bar graph on the right shows the sales
potential for the Deep Water Floater. For both of these graphs the numbers on
the left hand side represent the sales by dollar amount and increase in
increments of $10 million, beginning at 0 and ending at $60 million. The numbers
on bottom row of these graphs represent the years and increase in five (or four)
year increments, beginning at 1980 and ending at 1999. The Harsh Environment
graph shows $1.2 million dollars in sales in 1980, in $2.7 million in 1985, $5.0
million in 1990, $17.7 million in 1995 and $20.8 million in 1999. The Deep Water
Floater graph shows $1.2 million of sales in 1980, $2.7 million in 1985, $5.0
million in 1990, $30 million in 1995 and $54.2 in 1999.]

71
<PAGE>

Slide 72:

[VARCO LOGO] VARCO ORDER RECEIPTS [TUBOSCOPE LOGO]

[BAR GRAPH. The right hand side of the graph represents the millions of dollars
in quarterly order receipts and increases in increments of $50 million,
beginning at $0 and ending at $200 million. The bottom row of the graph
represents the quarters for 1998 and 1999. Numbers at the top of each bar
indicate the quarterly order receipts for that quarter. The graph shows that the
first quarter 1998 had $194 million in order receipts, the second quarter of
1998 $147 million, the third quarter of 1998 $116 million, and the fourth
quarter of 1998 $72 million. The graph shows that the first quarter of 1999 had
$63 million in order receipts, the second quarter of 1999 $82 million, and the
third quarter of 1999 $89 million and the fourth quarter of 1999 $98 million.
The bars for each quarter differentiate between orders and canceled orders, with
the actual orders represented in dark print and the canceled orders represented
in light print. Cancellations were significant in Q2, Q3 and Q4 of 1998. The
numbers at the top of the graph include canceled orders.]

72
<PAGE>

The foregoing communication contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The forward-looking statements are those that
do not state historical facts and are inherently subject to risks and
uncertainties. The forward-looking statements contained herein are based on
current expectations and entail various risks and uncertainties that could cause
actual results to differ materially from those projected in the forward-looking
statements. Such risks and uncertainties include, among others, the cyclical
nature of the oilfield services industry, risks associated with the company's
significant foreign operations, compliance with environmental laws, risks
associated with growth through acquisitions and other factors discussed in each
company's Annual Report on Form 10-K.

Investors and security holders of both Tuboscope Inc. and Varco International,
Inc. are urged to read the joint proxy statement/prospectus regarding the
business combination transaction referred to in the foregoing information,
because it contains important information. The joint proxy statement/prospectus
was filed with the Securities and Exchange Commission (the "Commission") by
Tuboscope and Varco on April 25, 2000. Investors and security holders may
obtain a free copy of the joint proxy statement/prospectus (when it is
available) and other documents filed by Tuboscope and Varco with the Commission
at the Commission's Web site at www.sec.gov. The joint prospectus/prospectus
-----------
and these other documents may also be obtained free of charge from Tuboscope by
directing a request to Tuboscope Inc., 2835 Holmes Road, Houston, Texas 77051,
Attention: James F. Maroney, III, Vice President, Secretary and General
Counsel, telephone: (713) 799-5100; or from Varco International, Inc., 743
North Eckhoff Street, Orange, CA 92868, Attention: Donald L. Stichler,
Vice-President, Controller-Treasurer and Secretary, telephone: (714) 978-1900;
e-mail: [email protected].
----------------------------

Tuboscope and its officers and directors may be deemed to be participants in the
solicitation of proxies from Tuboscope's stockholders with respect to the
proposed merger and related transactions. Information regarding such officers
and directors is included in Tuboscope's Schedule 13D relating to its beneficial
ownership of Varco common stock filed with the Commission on April 3, 2000.
This document is available free of charge at the Commission's Web site at
www.sec.gov and from the Tuboscope contact referred to above.
- -----------

Varco and its officers and directors may be deemed to be participants in the
solicitation of proxies from Varco's shareholders with respect to the proposed
merger and related transactions. Information regarding such officers and
directors is included in Varco's Schedule 13D relating to its beneficial
ownership of Tuboscope common stock filed with the Commission on April 3, 2000.
This document is available free of charge at the Commission's Web site at
www.sec.gov and from the Varco contact referred to above.
- -----------