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Previous: MAVERICK TUBE CORPORATION, 8-K, 2001-01-10 |
Next: JUNDT ASSOCIATES INC /MN/, 13F-HR, 2001-01-10 |
[LOGO]
MAVERICK TUBE CORPORATION
INVESTOR PRESENTATION
January, 2001
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Forward Looking Statements
These slides accompany an oral presentation by Maverick Tube Corporation and
Prudential Steel Ltd., which, except for the historical information, contain
forward-looking statements representing our expectations or beliefs about future
events and financial performance. Forward-looking statements are subject to
known and unknown risks, uncertainties and assumptions, including:
oil and gas drilling activity;
steel price volatility;
domestic and foreign competitive pressures;
fluctuations in industry-wide inventory levels;
the presence or absence of governmentally imposed trade restrictions;
asserted and unasserted claims; and
those other risks and uncertainties described on Maverick's Proxy
Statement dated August 11, 2000 filed by Maverick in connection with
its business combination with Prudential Steel Ltd.
In light of these risks, uncertainties and assumptions, some or all of the
forward-looking events to be discussed by Maverick and Prudential and included
in the slides might not occur. In addition, actual results could differ
materially from those suggested by the forward-looking statements. Maverick and
Prudential undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
2
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Maverick Overview
1.5 million tons of tubular products capacity
Largest North American welded OCTG producer
Largest Buyer of Hot Rolled Steel in North America
Diverse operations with 10 mills and 5 locations
Highly efficient and low cost operations
Financially strong, positioned for growth
3
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<PAGE>
Combined Company's Expanded
Prime Distribution Capabilities
[Picture Graphic Omitted - Picture of United States with combined
distribution capabilities from Calgary, Canada; Longview, WA;
Beaver Falls, PA; Hickman, AR; Conroe, TX]
[Pie graph omitted - demonstrates 25% industrial products and 75%
energy products]
4
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Historical Sales Volume
[Graph Omitted - Tabular representation for EDGAR filing below]
Short Tons (000)
1994 505
1995 489
1996 629
1997 877
1998 628
1999 595
2000 887
2001* 1,001
Does not include the large diameter mill which will be fully operational in
2001.
* Estimated based on Raymond James research
5
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Strong Combined Balance Sheet
(In millions of US$, except for percentages)
December 31, 2000
-----------------
Consolidated
------------
Working Capital 126.6
Total Assets 416.0
Total Debt 96.4
Shareholders' Equity 282.4
Total Debt/Book Capitalization 25.4
Raymond James Estimates
6
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<PAGE>
Broader Product Lines
Energy Products
- new and reworked wells, transportation of oil and gas,
and other products
- Casing 1 1/2" thru 16"
- Tubing Carbon and alloy grades
- Line Pipe Complete end finishing
- Couplings HIC resistant products for sour gas service
- Premium connections 80 ft Line Pipe
Industrial Products
- construction, agricultural and industrial equipment, and other products
- HSS 1 1/2" - 12"
- Standard Pipe Rounds, squares, rectangles
- Piling Custom products
- Cold drawn tubing High tolerance products
7
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New 16" Mill Expands Market
Opportunities
US Market Expands by 37%
Further opportunities for Market growth in Canada
Full size range will help sales of other products
Already do business with target customers
Capacity spread over 5 product areas throughout North America
New Mill output should rise to generate a revenue rate of
approximately $80 million by late 2001
8
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Potential Merger Benefits
Combined company becomes one of the largest
purchasers of hot rolled steel in North America
Opportunities to expand energy and industrial market
share in US and Canada
- $10/ton reduction in steel costs = $.18/share EPS
Are reducing Canadian Steel Cost by $60/Tons which
reduces overall Steel Cost by $20/Ton
9
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[LOGO]
MAVERICK TUBE CORPORATION
Business Overview
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<PAGE>
U.S. Drilling Activity Has Reached 1997
Cycle Level
Source: Baker Hughes
[Graph Omitted - Tabular representation for EDGAR filing below]
Rigs Running
Gas Rigs Oil Rigs
-------- --------
1Q95 372 324
2Q95 342 316
3Q95 404 321
4Q95 423 329
1Q96 414 287
2Q96 461 291
3Q96 494 296
4Q96 489 353
1Q97 496 358
2Q97 550 383
3Q97 593 396
4Q97 624 369
1Q98 598 363
2Q98 584 276
3Q98 557 235
4Q98 504 188
1Q99 434 119
2Q99 396 128
3Q99 530 118
4Q99 625 148
1Q00 615 156
2Q00 646 199
3Q00 776 204
4Q00 844 231
12/29/00 = 1,114 [Gas, Oil and other Rigs]
11
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Strong Canadian Drilling Levels Expected
in 2000/2001 Drilling Season
[Graph Omitted - Tabular representation for EDGAR filing below]
Canadian Rigs Running
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
FQ1 327 338 395 469 283 469
FQ2 153 145 258 177 102 216
FQ3 222 275 400 205 257 313
FQ4 228 320 443 202 336 380
12/22/00 = 456
Source: Baker Hughes
12
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<PAGE>
US Oil Prices and Oil Drilling
Source: Baker Hughes, Spears & Associates
[Graph Omitted - Tabular representation for EDGAR filing below]
U.S.
US Oil Rigs Oil Prices
(Rigs Drilling) (WT 1 $/BBL)
--------------- -----------
1Q95 352 $18.41
2Q95 324 $19.35
3Q95 316 $17.89
4Q95 321 $18.16
1Q96 329 $19.61
2Q96 287 $21.63
3Q96 291 $21.94
4Q96 296 $24.65
1Q97 353 $23.46
2Q97 358 $19.92
3Q97 383 $19.73
4Q97 396 $20.22
1Q98 369 $16.08
2Q98 363 $14.77
3Q98 276 $14.13
4Q98 235 $13.09
1Q99 188 $13.09
2Q99 119 $17.68
3Q99 128 $21.59
4Q99 118 $24.30
1Q00 148 $28.88
2Q00 156 $29.04
3Q00 199 $30.62
4Q00 204 $32.10
13
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US Gas Prices and Gas Drilling
[Graph Omitted - Tabular representation for EDGAR filing below]
Source: Baker Hughes, Spears & Associates
U.S. U.S.
Gas Rigs Gas Prices
(Rigs Drilled) ($/MCF)
-------------- ----------
1Q95 372 $1.36
2Q95 342 $1.46
3Q95 404 $1.40
4Q95 423 $1.84
1Q96 414 $2.79
2Q96 461 $2.19
3Q96 494 $2.04
4Q96 489 $2.88
1Q97 496 $2.59
2Q97 550 $2.04
3Q97 593 $2.37
4Q97 624 $2.80
1Q98 598 $2.11
2Q98 584 $2.18
3Q98 557 $1.96
4Q98 504 $1.87
1Q99 434 $1.73
2Q99 396 $2.14
3Q99 530 $2.49
4Q99 625 $2.45
1Q00 615 $2.53
2Q00 646 $3.53
3Q00 776 $4.44
4Q00 844 $6.21
14
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<PAGE>
Total Wells
[Graph Omitted - Tabular representation for EDGAR filing below]
Source: Baker Hughes, Spears & Associates
Total Oil Wells - Total Gas Wells -
US and Canada US and Canada
----------------- -----------------
1Q95 2,704 3,225
2Q95 3,159 2,999
3Q95 3,438 2,902
4Q95 3,135 2,798
1Q96 2,917 3,392
2Q96 3,211 3,267
3Q96 4,033 3,530
4Q96 4,327 3,735
1Q97 3,871 3,780
2Q97 4,276 3,442
3Q97 5,252 4,275
4Q97 4,745 4,266
1Q98 4,166 3,873
2Q98 3,103 3,835
3Q98 2,645 3,890
4Q98 1,895 3,535
1Q99 1,360 4,098
2Q99 1,342 3,778
3Q99 1,813 4,483
4Q99 2,412 5,292
1Q00 2,766 4,926
2Q00 2,911 5,451
3Q00 3,330 6,515
4Q00 3,669 6,919
15
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OCTG Consumption per Rig Rising
Sharply
Consumption per Rig up 16% since 1995
Usage higher due to . . .
- Completion percentage up from 76% to 80%
- Developmental drilling strong at current prices
- Faster drilling speeds
- Higher percentage of Gas wells
1995 - 723 Avg. Rigs = 1.5 million Tons of consumption
2000 - 917 Avg. Rigs = 2.2 million Tons of consumption
2001 - 1150 Avg. Rigs = 2.9 million Tons of consumption*
* Per Raymond James estimates
16
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<PAGE>
North American vs.
International Rig Count
[Graph Omitted - Tabular representation for EDGAR filing below]
Source: Baker Hughes
North
America International
(Rigs) (Rigs)
------- -------------
1Q96 1,049 780
2Q96 909 794
3Q96 1,077 801
4Q96 1,146 798
1Q97 1,251 804
2Q97 1,189 812
3Q97 1,389 809
4Q97 1,448 809
1Q98 1,426 811
2Q98 1,039 798
3Q98 999 728
4Q98 890 682
1Q99 842 620
2Q99 628 597
3Q99 894 565
4Q99 1,051 571
1Q00 1,250 576
2Q00 1,051 629
3Q00 1,294 694
4Q00 1,419 714
International drilling expected to rise 20% in 2001.
17
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U.S. OCTG Imports
Source: U.S. Census Bureau, Mgmt. Estimates
[Graph Omitted - Tabular representation for EDGAR filing below]
Import
Import Market
Tons (000) Share
------------ -------
1Q95 52,829 13%
2Q95 63,014 14%
3Q95 28,319 7%
4Q95 36,235 8%
1Q96 40,550 9%
2Q96 50,628 10%
3Q96 64,025 12%
4Q96 58,259 13%
1Q97 97,275 18%
2Q97 94,142 17%
3Q97 110,342 15%
4Q97 107,251 19%
1Q98 115,194 20%
2Q98 93,041 23%
3Q98 86,952 17%
4Q98 47,969 13%
1Q99 26,354 9%
2Q99 25,736 9%
3Q99 34,956 9%
4Q99 83,124 17%
1Q00 136,086 28%
2Q00 178,260 31%
3Q00 196,551 30%
4Q00 193,843 28.6%
18
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<PAGE>
U.S. OCTG Industry Inventory and
Months of Supply
Source: Duane Murphy & Associates, Mgmt. Estimates
OCTG Inventory Months'
(Tons (000)) Supply
------------ -----------
1Q95 728,000 5.4
2Q95 693,697 4.6
3Q95 683,035 4.8
4Q95 698,035 4.6
1Q96 725,035 4.6
2Q96 739,035 4.4
3Q96 763,035 4.2
4Q96 782,034 5.3
1Q97 854,034 4.8
2Q97 1,027,034 5.4
3Q97 1,062,034 4.4
4Q97 1,131,034 6.1
1Q98 1,196,034 6.4
2Q98 1,279,377 9.5
3Q98 1,128,377 6.8
4Q98 975,377 8.1
1Q99 909,377 9.6
2Q99 830,000 8.3
3Q99 758,000 6.0
4Q99 773,000 4.8
1Q00 874,000 5.4
2Q00 994,000 5.1
3Q00 1,075,000 5.0
4Q00 1,112,500 4.9
*4Q includes December estimate
19
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US OTG Market Analysis
Date Shipments Exports Imports Consumption Inventory
1994 1,635,485 228,527 331,869 1,563,816 1,142,844
1995 1,610,850 274,223 180,397 1,498,295 1,131,573
1996 2,030,205 300,659 231,462 1,726,152 1,396,429
1997 2,563,022 294,178 411,826 2,394,120 1,632,979
1998 1,515,720 245,099 343,156 2,123,613 1,173,143
1999 1,197,057 156,349 170,170 1,443,009 941,012
Jan-00 171,473 16,839 27,870 145,392 978,124
Feb-00 155,039 18,989 51,582 144,596 1,021,160
Mar-00 179,040 8,946 56,634 148,498 1,099,390
Apr-00 168,281 9,309 57,944 156,331 1,159,975
May-00 177,970 9,235 60,963 165,004 1,224,669
Jun-00 188,340 9,114 59,353 181,173 1,282,075
Jul-00 187,260 13,156 80,444 196,838 1,339,785
Aug-00 187,335 15,000 75,000 202,335 1,384,785
Sep-00 188,335 12,817 75,334 208,075 1,427,562
Oct-00 178,335 23,364 71,334 220,375 1,433,492
Nov-00 163,335 21,013 65,334 234,000 1,407,148
Dec-00 148,335 22,708 59,334 236,250 1,355,859
2000 2,093,078 180,490 741,126 2,238,867 1,356,959
2001 2,400,020 236,594 1,008,008 2,913,230 1,614,063
2002 2,640,022 287,438 1,108,809 3,193,750 1,714,064
2003 2,904,024 413,910 1,207,238 3,449,250 1,814,064
*Raymond James Estimates
20
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<PAGE>
U.S. Domestic Shipments And
Maverick's Selling Prices
Source: Historical Data, Management Estimates
[Graph Omitted - Tabular representation for EDGAR filing below]
Domestic
Shipments Prices
(Tons (000)) ($/Ton)
---------- --------
1Q96 436 663
2Q96 447 649
3Q96 492 652
4Q96 386 656
1Q97 449 668
2Q97 590 681
3Q97 597 698
4Q97 464 717
1Q98 485 736
2Q98 368 724
3Q98 231 669
4Q98 131 630
1Q99 148 577
2Q99 151 542
3Q99 226 536
4Q99 376 559
1Q00 402 618
2Q00 472 637
3Q00 480 658
4Q00 488 677
21
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Maverick Steel Purchase Costs
[Graph Omitted - Tabular representation for EDGAR filing below]
Source: Historical Data, Management Estimates
Steel Purchase Steel Cost
Costs of Sales
$/Ton $/Ton
-------------- ----------
F1Q95 $340 $351
F2Q95 357 345
F3Q95 345 340
F4Q95 320 319
F1Q96 311 305
F2Q96 314 315
F3Q96 326 320
F4Q96 325 327
F1Q97 336 327
F2Q97 336 331
F3Q97 323 330
F4Q97 324 324
F1Q98 318 311
F2Q98 311 305
F3Q98 308 306
F4Q98 295 285
F1Q99 272 271
F2Q99 258 265
F3Q99 257 261
F4Q99 294 287
F1Q00 297 292
F2Q00 299 299
F3Q00 299 299
F4Q00 253 296
F1Q01* 235 270
F2Q01* 235 250
F4Q00 (Repl. Cost) $235.00
* Estimate
22
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<PAGE>
Conclusions
The Maverick / Prudential combination creates a stronger company with
minimal redundancy
Strong commodity prices and drilling activity expected to provide
near-term earnings growth
Larger market capitalization and broader shareholder base improves
liquidity and capital access
Combined company is well positioned to pursue future growth
opportunities
New Large Mill increases the company's earning power
23
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[LOGO]
MAVERICK TUBE CORPORATION
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