Tenaris S.a. · MIL:TEN
Tenaris — Investor Presentation (October 2014)
17 slides from Tenaris's investor presentation, Oct 16, 2014
Slide 1: Investor Presentation
Investor Presentation New York, October 16, 2014
Slide 2: Disclaimer
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 th
Slide 3: Market environment
Market environment Oil prices Gas prices [US$/bbl] [US$/MMbtu] 140 25 120 Brent Spot LNG NE Asia 20 100 $85.7 WTI $81.8 80 15 $14.6 $69.3 WCS NBP ICE UK 60 10 $8.7 40 HH 5 $3.8 20 0 0 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Crude Oil approx H
Slide 4: OCTG demand
OCTG demand OCTG demand evolution Premium OCTG consumption by application (2013) Others Oil Deep water [Mill Tn] 26% 16% 16.6 17.1 17.0 15.2 3.1 3.3 3.6 13.4 2.7 0.3 0.7 0.9 2.4 0.1 Shallow water 22% 13.2 13.1 Others Gas 12.4 12.7 11.0 18% Shales gas Shales oil 6% 12% 2010 2011 2012 2013 2014F API S
Slide 5: Transforming Tenaris
Transforming Tenaris Product mix 2012 2017E • Premium company Heat Treated / Tubes Sales (%) 67% 85% • Differentiation through industrial PRM + Semi-PRM / OCTG Sales (%) 55% 70% excellence, safety, product Shales / OCTG Sales (%) 22% 35% development and customer service • Expansion in North America
Slide 6: North America – market context
North America – market context [Mill Tn] USA OCTG consumption [Mill Tn] USA OCTG imports 7 7 6 6 5 34% 5 4 4 13% 3 63% 3 1.5 2 2 1.5 1.4 53% 1 31% 1 1.8 1.5 1.4 0 6% 0 2010 2011 2012 2013 2014F 2012 2013 9M 2014 Shale / Tight Oil Shale Gas Others Others Subject to AD [US$/Mt ton] 2,200 • Full produc
Slide 7: North America – changing market dynamics
North America – changing market dynamics Hickman Fayetteville Woodford Barnett Permian Haynesville Tuscaloosa Marine Houston Conroe / McCarty Westwego 500 mile Freeport radius 3.1 Mill tn Bay City 350 mile Mexico Eagle Ford radius Tamsa Investor presentation Tenaris October 16, 2014 7
Slide 8: Mexico – decline in energy production
Mexico – decline in energy production [MMbd] [MMcfd] 4,000 10,000 Gas Consumption 3,500 8,000 3,000 Gas Production Oil Production 2,500 6,000 2,000 1,500 4,000 Gas Imports 1,000 2,000 500 Oil Net Exports 0 0 2000 2002 2004 2006 2008 2010 2012 2000 2002 2004 2006 2008 2010 2012 Investor presentation
Slide 9: Energy Reform
Energy Reform Round Zero Reserves Prospective (2P) Resources • Fiscal reform savings for Pemex Max.~US$7 Bn / year • Migration of service contracts ~US$35 Bn (~10 years) • Round Zero (Farm Outs) ~US$16.4 Bn (~4 years) • Round One Contracts ~US$34.1 Bn (~4 years) 83% Pemex 21% Pemex Pemex Pemex Pemex
Slide 10: Argentina – energy crossroads
Argentina – energy crossroads Gas Consumption Energy exports and imports [MMm3/d] [US$ Million] 180 12,000 LNG Liquid imports 160 LNG Bolivia Bolivia Liquids imports 10,000 140 Domestic Domestic GasGas 120 8,000 100 6,000 80 60 4,000 40 2,000 20 0 0 2001 2003 2005 2007 2009 2011 2013 2001 2003 2005
Slide 11: Argentina - Vaca Muerta
Argentina - Vaca Muerta Argentina drilling activity 1,800 [# Wells drilled] 1,600 1,400 1,200 1,000 Shales 800 Others 600 400 200 0 2010 2011 2012 2013 2014F Plays properties Vaca Muerta Eagle Ford Wells drilled in 2013 # 150 4,400 Surface km2 30,000 50,000 Thickness mts 30-450 30-100 TOC % 3-10 3-5
Slide 12: EH – serving premium markets
EH – serving premium markets Manufacturing Centers R&D Centers Service Centers Commercial Offices Investor presentation Tenaris October 16, 2014 12
Slide 13: Middle East – premium consumption growing
Middle East – premium consumption growing Middle East OCTG Consumption Saudi Arabia: [Th Tn] net OCTG inventory variations 51% 1,600 52% 250 PJ [Th Tn] 1,400 48% 200 43% 150 1,200 44% 100 1,000 40% 50 800 36% 0 600 32% 2011 2012 2013 2014 2015 -50 400 28% -100 200 24% -150 0 20% -200 2011 2012 2013
Slide 14: EH – offshore market
EH – offshore market [# Rigs] EH contracted deepwater rigs • New products under more stringent 160 testing standards 140 120 • Dopeless® technology and pipe 100 management 80 • Technical services 60 40 20 0 2011 2012 2013 2014 [55% of global OCTG deepwater consumption] Investor presentation Tenaris
Slide 15: European operations repositioned
European operations repositioned Dalmine product mix 100% 80% 54% 71% 60% 40% • Product line repositioning 20% 0% • Productivity gains 2009 2014F • R&D specialization Low End High End Dalmine productivity [US$ Million] [US$ Thousand/ employee] 120 800 700 100 600 80 500 60 400 300 40 200 20 100 0 0
Slide 16: Sustainable financial performance
Sustainable financial performance Free Cash Flow EBITDA margin and FCF/earnings [US$ Million] 1,800 120% [LTM FCF/Earnings %] TS 1,600 100% 1,400 HAL 1,200 80% BHI SLB 1,000 60% 800 600 40% 400 VK 200 20% 0 [LTM EBITDA %] 0% 2010 2011 2012 2013 2014 IH 0% 5% 10% 15% 20% 25% 30% [US$ Million] Net cas
Slide 17: Investor presentation Tenaris October 16, 2014
Investor presentation Tenaris October 16, 2014 17