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July 2005 IPAA’s 9th Annual Oil & Gas Investment Symposium London.

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Presentation on theme: "July 2005 IPAA’s 9th Annual Oil & Gas Investment Symposium London."— Presentation transcript:

1 July 2005 IPAA’s 9th Annual Oil & Gas Investment Symposium London

2 2 Presenting Management Neil G. Russell Sr. Vice President Business Development & Sr. Vice President Premium Connections

3 3 Forward Looking Statements To the extent this presentation reflects our expectations about Hydril’s business or performance for any future period, we are relying on the safe harbor protections afforded by federal law. We caution you that Hydril’s business or performance in the future may differ materially from those expectations. Forward-looking statements should be weighed in the context of the many risks, issues, and events that could cause Hydril’s actual performance to be different from that contemplated in this presentation, including, but not limited to, the impact of changes in oil and natural gas prices and worldwide and domestic economic conditions on drilling activity and demand for and pricing of Hydril’s products, the impact of geo-political and other events affecting international markets and trade, Hydril’s ability to remain on the leading edge of technology in its products and maintain and increase its market share, the impact of international and domestic trade laws, the loss of or change to distribution methods of premium connections in the U.S. and Canada, overcapacity in the pressure control industry, high fixed costs that could affect the pricing of Hydril’s products, and the other risk factors discussed in our most recent Quarterly Report on Form 10-Q for the first quarter of 2005 filed with the Securities and Exchange Commission.

4 4 Today’s Presentation Overview Premium Connections Pressure Control Financials Investment Premise

5 5 Hydril Summary Founded 1933 IPO September 2000 Stock price - 52-week range* US$ $64.58 Stock price - 30-day average* US$52.12 Market Cap* US$1.2 billion Float 82.8% NASDAQ Ticker HYDL * As of 6/21/2005

6 6 Leader in our segments –Premium Connections –Pressure Control Deep formation and offshore drilling leverage Technical innovator Global presence Brand name recognition Financial stability Overview

7 7 Business Segments Premium Connection Revenue US$184.8 million * End users: E&P companies Manufacturing service Low working capital International & domestic manufacturing Pressure Control Revenue US$100.6 million * End users: drilling contractors Capital equipment Aftermarket parts Domestic manufacturing * 2004

8 8 Revenue Distribution TTM* *TTM as of 3/31/05 SegmentsGeographic Premium Connections 66% Pressure Control 34% International 68% United States 32%

9 9 Today’s Presentation Overview Premium Connections Pressure Control Financials Investment Premise

10 10 Premium Connections Hydril invention Proprietary designs 30 U.S. patents End users: E&P companies Largest integral casing market share and threading capacity Early / middle cycle

11 11 Deep Formation Leverage US$125,000 US$320,000 US$600,000 10,000’15,000’ 20,000’ Note: potential premium connection revenue per well Premium Connections

12 12 Market Share Premium Connections Note: full length threading only; excludes accessory threading, pipe, etc.; excludes Russia and China Sources: Spears & Associates, and management estimates Others Hunting VAM Grant Prideco Hydril VAM Others Tenaris Kawasaki United StatesEx-United States

13 13 Earnings Growth Opportunities International markets growing U.S. demand is strong –Expanded N. American capacity New products: –GB connections –Big Wedge –Other large diameter connections Premium Connections

14 14 Today’s Presentation Overview Premium Connections Pressure Control Financials Investment Premise

15 15 Pressure Control Hydril invented annular blowout preventer (BOP) 53 U.S. patents End users: drilling contractors “Brand name” drilling equipment franchise Middle / late cycle

16 16 Business Model Capital Equipment Aftermarket Pressure Control

17 17 Market Share Capital EquipmentAftermarket Pressure Control Note: capital equipment served markets only; aftermarket pertains to Hydril aftermarket products only Source: management estimates Hydril Non-OEM Hydril National Oilwell Varco Others Cooper Cameron

18 18 Deepwater Leverage Platform/Jackup Land Deepwater Pressure Control US $0.5 – 1.0 million US $2.0 – 4.0 million US $14.0 – 18.0 million Note: potential capital equipment revenue per rig

19 19 Capital Equipment Backlog Pressure Control (US$ Millions)

20 20 Earnings Growth Opportunities Large installed base drives aftermarket revenue Offshore rig upgrades and newbuilds New technologies and products –Quik-Loq™ - high pressure, ram blowout preventer –New generation of surface MUX controls –Flowguard™ pulsation dampeners Pressure Control

21 21 Today’s Presentation Overview Premium Connections Pressure Control Financials Investment Premise

22 22 Operating Results Consolidated Company

23 23 Financial Summary Q4 Q1 Revenue 2002 $ $ $ $ $78.8 Operating Income Net Income EPS* * 1.89* *Note: excluding one-time tax benefits (US$ Millions, except per share data )

24 24 Today’s Presentation Overview Premium Connections Pressure Control Financials Investment Premise

25 25 Investment Premise Leader in our segments –Premium Connections –Pressure Control Deep formation and offshore drilling leverage Technical innovator Global presence Brand name recognition Financial stability

26 26 P.O. Box Houston, Texas Sue Nutt, Manager Investor Relations & Corporate Communications (281) NASDAQ: HYDL


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