#1TMK OOO TMK Investor Presentation September 2014#2Disclaimer No representation or warranty (express or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein and, accordingly, none of the Company, or any of its shareholders or subsidiaries or any of such person's officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this presentation. TMK This presentation contains certain forward-looking statements that involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. OAO TMK does not undertake any responsibility to update these forward-looking statements, whether as a result of new information, future events or otherwise. This presentation contains statistics and other data on OAO TMK's industry, including market share information, that have been derived from both third party sources and from internal sources. Market statistics and industry data are subject to uncertainty and are not necessarily reflective of market conditions. Market statistics and industry data that are derived from third party sources have not been independently verified by OAO TMK. Market statistics and industry data that have been derived in whole or in part from internal sources have not been verified by third party sources and OAO TMK cannot guarantee that a third party would obtain or generate the same results. 2#3TMK- Global Supplier of Full Range of Pipes for Oil and Gas Industry TMK Edmonton (Canada) TMK IPSCO Sales office (Canada) Camanche Geneva Tulsa Odessa Brookfield Koppel Ambridge Wilder Blytheville Baytown TMK IPSCO (USA) R&D Center (USA) OFS International Houston Truboplast Seversky Tube Works, TMK-CPW TMK NGS-Buzuluk TMK (Russia) TMK Europe (Germany) TMK Global (Switzerland) Volzhsky Pipe Plant Taganrog Metallurgical Works TMK-Artrom (Romania) TMK-Resita (Romania) TMK Italia TMK Trade House (Azerbaijan) TMK NGS-Nizhnevartovsk RoSNITI Sinarsky Pipe Plant, TMK-INOX TMK-Kazakhstan Orsky Machine Building plant TMK-Kaztrubprom (Kazakhstan) TMK Trade House (Turkmenistan) TMK Trade House (China) TMK Trade House (Uzbekistan) Threading and Mechanical Key Premium (UAE) TMK Middle East (UAE) TMK GIPI (Oman) TMK Trade House (Singapore) Capacity (tons) North America Russia Europe Total and CIS Steelmaking 540,000 450,000 Seamless Pipes 350,000 220,000 2,700,000 2,412,000 3,690,000 2,982,000 Welded Pipes 1,040,000 2,423,000 Heat Treat 550,000 1,540,000 3,463,000 2,090,000 TMK Trade House (South Africa) Threading 1,560,000* 1,560,000 3,120,000 Note: *Including ULTRA Premium connections of 250,000 tons and OFSi capacity of 310,000 tonnes Source: TMK data 3#4Leading Global Supplier of Pipes for Oil and Gas Industry A world leading tube producer by sales volumes in 2013 and last 4 years Sales Volumes (thousand tonnes) 4,186 4,237 4,287 TMK Source: TMK data 3,962 1,844 1,743 1,866 1,843 ■Seamless pipes Welded pipes 2,119 2,342 2,494 2,422 2010 2011 2012 2013 ☐ Local producer in countries which account for 86% of global drilling activity High exposure to the oil and gas industry: approximately 76% of sales went to the oil and gas sector in 2013 2013 Global Drilling Activity by Geography (Number of Wells Drilled) Focus on Oil & Gas Industry Far East Africa 4% 2% Europe 1% Middle East 4% South America 7% Russia 10% Canada 12% US + Russia + Middle East + Canada: 86% US 60% Note: Excluding China and Central Asia. Onshore and offshore drilling Source: Spears & Associates 4 Other (Machine Building, Constructing & Public Utilities etc.) 24% Source: TMK data 2013 Sales by Industry (%) Oil & Gas 76%#5Diversified Business Model Diversified Product Portfolio and Customer Base Sales Volumes by Product (1H 2014) Welded Line Pipe 9% Welded OCTG 11% Source: TMK data Welded Welded LD 8% Seamless OCTG 36% Industrial 11% Seamless Industrial 12% Seamless Line Pipe 13% Diversified Geographical Reach TMK Revenues by Country (2013) Cent.Asia & Asia & Far Middle East & Caspian East Region 3% Gulf Region 1% 3% Europe 7% Key Considerations High degree of diversification enabling earnings resilience. TMK Geographical diversification seeking to mitigate swings in geographical demand (Russian division 57% and American division 29% of 2013 revenues). Diversified product portfolio, including full range of seamless and welded pipes. Focus on higher value added products, including seamless pipes and OCTG. Diversified customer base covering end users in oil and gas and industrial sectors (top 5 customers represented 30% of sales volumes in 1H 2014). Long-term relationships with Russian oil and gas majors (Rosneft, Surgutneftgas, Lukoil, TNK-BP and Gazprom). Source: TMK data Russia 57% Americas 29% 5#6Group Wide Confidence Based on Solid Industry Fundamentals ■ Complex unconventional drilling in both US and Russia forecast to grow, Russian horizontal drilling forecast to grow by CAGR 14% in 2012-15 Share of Horizontal Drilling is Growing 29% 29% TMK 30% 25% 20% 14% 15% 12% 11% 10% 10% 5% 0% 2009 2010 Source: Citi equity research, TMK data 21% 18% 2011 2012 2013 2Q 2013 1Q 2014 2Q 2014 TMK's premium products sales in the US grew significantly and are now larger than in Russia Thousand tonnes 400 ■Russia US 300 361 285 192 208 145 200 139 100 41 100 169 140 97 108 0 2010 2011 2012 2013 Source: TMK estimates 6#7Russian Market Overview Our goals is to extract even more value from our market leading position TMK enjoys market leading position in the Russian market of Seamless OCTG TMK's focus on seamless pipes is reflected in its market shares in Russia TMK's market shares in the Russian market (%) for 1H 2014 70% 60% 50% 40% 30% 63% 60% 20% 28% 24% 10% 16% 11% 0% Seamless Line Seamless OCTG Pipe Pipe Seamless Industrial Pipe Welded Line Pipe Large Diameter Welded Industrial Pipe Pipe Source: TMK estimates Russian oil majors forecast to increase upstream capex circa 25% in 2014 39.4 40 34.7 33.1 30.8 31.1 30 27.0 25.7 U.S.$ bn 21.3 20 20 18.9 10 10 0 2008 2009 2010 2011 2012 Gazprom Neft 2013E SurgutNG ■ TNK-BP 2014E 2015E 2016E ■ Tatneft ■ Bashneft ■LUKoil ■Rosneft Source: Citi equity research 7 TMK#8TMK Russian Market Overview And Continued investment in technology solutions, R&D and oil field services enhancing our position Demand is growing particularly for solutions in complex, unconventional drilling where our product suite provides clear market advantages Russian oil production 11,300 10,300 Thousand barrels per day 9,300 8,300 7,300 2007 Source: Sberbank CIB 2011 Northern Timan Pechora fields*** TNK-Uvat Vankor, Talakan, Verkhnechonsk PSA Brownfield 2015E Prirazlomnoye Yamal fields Gazprom, SE, NOVATEK, Rospan condensate Caspian Other East Siberia Russian oil taxation 2019E 100% In addition 80% Taxation for greenfield, tight and offshore projects will cause boost of drilling growth 60% By 2020, approximately 25% of the Russian oil production will come from new areas compared to 12% currently according to BAML analysts estimates 40% 20% 0% Brownfield Greenfield Tight oil (Bazhenov) Offshore (Kara Sea) Margin ■ MET ■ Export Duty 8 Source: Bank of America Merrill Lynch Research#9Gazprom's Eastern Program Creates Additional Demands On May 21, 2014 Gazprom and CNPC signed the contract for the Russian pipeline gas supply to China. The 30-year contract stipulates gas supplies in the amount of 38 billion cubic meters of gas per year TMK In 2015, Gazprom will start pre-developing the gas deposit of the Chayandinskoye field and constructing the first string of the Power of Siberia gas transmission system In late 2018, it is planned to launch gas production from the Chayandinskoye field Power of Siberia project details: length - around 4,000 kilometers, diameter - 1,420 millimeters, working pressure – 9,8 Mpa, annual throughput – 61 billion cubic meters, first stage in 2017 URENGOY R U S SK I NIZHNEVARTOVSK Yurubcheno-Tokhomskoye Sobinsko-Paiginskoye OTOMSK KRASNOYARSK NOVOSIBIRSK OBOGUCHANY NIZHNAYA (2) Kovyktinskoye POYMA PROSKOKOVO BARNAUL NOVOKUZNETSK OABAKAN BALAGANSK IRKUTSKO AN BIYSK O GORNO-ALTAISK CHINA Source: Gazprom ULAN-BATOR MONGOLIA Chayandinskoye (3 Sakhalin I-II OKHAO KOMSOMOLSK-ON-AMUR SKOVORODINO Malositinskoye UGS Facility KHABAROVSK CHITA TO CHINA 9 LAGOVESHCHENSK BIROBIDZHAN DALNERECHENSK KORSAKOV Operating gas pipelines ***** Projected gas pipelines Power of Siberia- gas trunkline system from Yakutia and the Irkutsk Region to Vladivostok Gas production centers වමට 1 Krasnoyarsk Irkutsk Yakutia Sakhalin Projected gas processing plants and gas chemical facilities Fields CHINA O VLADIVOSTOK Vladivostok-LNG JAPAN NORTH KOREA TOKYO#10Changing Approach to Product Mix ☐ Traditional approach: supplying conventional product at market prices Focus now on supplying higher value, higher margin product In 2Q 2014 Seamless OCTG sales accounted for 39% of Russian sales Gross margin, % 28% 27% 28% 26% 26% 70% 24% 24% 24% 65% 20% 16% 60% 12% 67% 64% 8% 62% 62% 55% 58% 4% 53% 0% 2010 2011 2012 2013 Share of seamless tubes in revenues 1Q 2014 Seamless tubes gross margin 50% 2Q 2014 Source: TMK data 10 Share of seamless product in revenues (%) TMK#11Low Cost Vertically Integrated Producer Key Considerations ■ Structural cost advantages over major international competitors: Russia is one of the lowest cost regions for steel production. Fully vertically integrated seamless pipe production (upstream and downstream operations) in all divisions. Almost self-sufficient in steel billets. Both Russia and North American businesses have benefitted from significant synergies and complementarily during the past three years since the acquisition of IPSCO. Ability to generally pass cost of steel increase to customers albeit with some time lag. In 2Q 2014, TMK started implementing cost cutting program mostly based on SG&A and raw materials cost control. Vertical Integration in Seamless Business ⚫ Preparation scrap + Preparation of deoxidizers, materials and ferroalloys Charging of steel making furnance Raw Materials Costs can Generally be Passed Through to Customers Cost of Sales Structure (1H 2014) Repairs and maintenance Energy and utilities 9% Staff costs 16% 3% Note: Excluding depreciation and amortisation Source: TMK IFRS accounts Other 6% 1. Melting 2. Treatment of steel in ladle furnance 3. Vacuum degassing (applicable for high grades of steel) 4. Continuous steel casting. Production of billets 5. Cutting of billets 6. Cooling and marking of billets TMK Raw materials and consumables 66% Source: TMK 7. Billet heating 8. Cross-rolling piercing 9. Hydrodescaling 10. Elongating 11. Stretch. reducing mill 12. Cooling 13. Batch sawing in circular furnance 14. Heat treatment 15. Quality control 16. Threading, thread inspection 17. Coupling screw-on and drifting 18. Hydrostatic Testing 19. Protectors screw-on 20. Storage and coating application 11#12TMK Our Take on the US Market Power generation, fuel and feedstock and LNG exports main drivers behind long-term growth in Natural Gas demand Gas/coal switching for electricity generation already happening with additional catalysts from improving air standards (MATS) and CO2 emission reductions (US EPA) We are forecasting rig count to remain stable in 2015, with growth in demand coming from longer laterals and better rig efficiencies (i.e. more wells per rig). ■ Longer laterals are key demand driver for higher steel-grade OCTG and premium connections Our OCTG products are key - Best premium connections - Best gas-tightness in the industry - key for gas - TMK products carry premium pricing advantage US Electricity Generation from Natural Gas and Coal, 1991 – 2018E Million kW per year 5,000 4,000 1993 3,000 2013 i 1% 40% 4% 2,000 53% 19% 13% 19% 1,000 11% 27% i 13% 0 1991 1994 1997 2000 2003 2006 Natural Gas ■Renewables* ■Nuclear 2009 ■ Coal 2012 2015E 2018E ■Oil and other liquids Source: EIA Annual Energy Outlook 2014 Early Release 12#13US Market Environment TMK US Distributor Welded and Seamless OCTG Prices Quarterly Average 2,375 2,250 2,125 US$/Metric Tonne 2,000 1,875 1,750 1,625 1,500 US Average Raw Material Costs Quarterly Average 300 800 700 600 500 gggg US$/Metric Tonne 400 655 737 730 494 499 447 200 1,375 1,250 Jan-12 100 0 Jul-12 Dec-12 Jun-13 Dec-13 Jun-14 Q2 2013 Q1 2014 Q2 2014 Seamless OCTG Prices ■ NYMEX HRC Midwest Spot Price ■Raw Material Scrap for Smls Welded OCTG Prices Source: PipeLogix Average distributor welded OCTG prices decreased 1.4% YoY but increased 0.5% QoQ, while seamless OCTG prices declined by 1.7% YoY but went up by 1.5% QoQ Spread between welded and seamless prices increased from 16% to 17.2% QoQ There is further indication that prices have bottomed-out American division expects prices to gradually increase during 2H 2014 as inventories of low priced imports are consumed Source: AMM Average HRC prices increased 12.4% YoY and 2.8% QoQ, while average scrap prices for seamless rose by 11.4% YoY and 0.5% QoQ HRC supply disruptions during 1H 2014 put upward pressure on HRC prices (up 8.6% compared to 1H 2013) Steady demand, planned domestic outages and tight inventories at service centers suggest there will be no relief in market prices during 2H 2014 13#14US Rig Count US Market Demand Recent increase in rig count combined with better rig efficiencies suggest greater demand for OCTG Favorable commodity prices support increased drilling Premium Tubular Content increasing with Horizontal Drilling activity Total Footage Drilled (by Well Orientation) 416 2,100 420 2,500 ■ Horizontal 383 369 ■ Gas 1,800 ■ Oil ■Directional 360 104 ■ Vertical 326 Gas - 17% 2,000 118 1,500 1,200 900 Oil -83% 600 Million Feet Drilled 300 136 260 42 130 1,500 240 217 40 75 32 180 31 30 105 1,000 270 120 226 27 201 156 165 500 300 60 86 0+ Jan-09 0 0 Dec-09 Nov-10 Oct-11 Sep-12 Aug-13 Aug-14 2009 2010 2011 2012 2013 2014E Source: Baker Hughes Source: Spears & Associates Despite decrease in rig count, 2013 Total Footage Drilled increased due to better rig efficiencies More horizontal drilling means greater demand for premium and semi-premium connections Trade case final decision should boost demand for domestic OCTG Gas poised for a comeback; leading to further demand for premium connections 14 Rig Count TMK#15Increasing Complexity of Wells Fuelling Demand for Premium Pipes Footage Drilled per Well TMK The "Octopus" Structure 1 pad, 50 wells - a whole lot of pipe 14,000 ■ Oil 11,949 12,000 11,354 ■Gas CRO CD2 Average Footage per Well 10,563 10,000 9,536 8,652 8,117 8,252 7,769 8,000 7,195 7,081 6,204 6,000 5,577 4,000 2,000 0 2009 2010 2011 2012 2013 YTD 2014 Taken from Brian Hicks article "The Strangest Looking Octopus You'll ever see" December 13th 2012 Energy and Capital As average length of both oil and gas wells continues grow, so does demand for higher steel- grades, heavier OCTG pipes and premium connections Some oil producers have started switching from semi-premium to full-premium connections 15#16US OCTG Trade Case Update Import Share of Trade-Case-Subject Countries as a Percentage of Apparent 2013 U.S. OCTG Consumption 30% 1.2% 27.1% 1.9% 2.3% 25% 2.4% 2.6% 20% 16.6% 15% Country Average Dumping (AD) Margin Average Subsidy (CVD) Rate Korea 12.8% 0.0% India 5.9% 12.0% Vietnam 67.8% 0.0% 10% Turkey 23.9% 9.0% Taiwan 1.7% 0.0% 5% Ukraine 6.7% 0.0% 0% Source: U.S.A. Department of Commerce International Trade Administration Fact Sheet Korea India Vietnam Turkey Taiwan Ukraine Total % of Demand Source: Preston Pipe & Tube Report TMK U.S. Department of Commerce and International Trade Commission's final determinations: DOC announced a Suspension Agreement with Ukraine ITC announced a positive determination on all countries except Saudi Arabia, Philippines and Thailand Appeals are expected from both sides. Consensus is that imports are unlikely to drop dramatically, but will slow. Korea will react; welded OCTG pricing will not get big boost but marginal increase after inventory adjusts Trade-case-subject countries may "shift" production of OCTG to other products (i.e. line pipe) 16#17Canadian Market Growing Premium tubular content increasing with Natural Gas and SAGD drilling activity Yearly Footage Drilled by Rig Type Average Quarterly Rig Count by Well Class Million Feet 90 80 70 10 60 60 50 40 30 20- 10- 0+ 2009 Number of Rigs 600 500 400 300 200 91 100 202 187 172 166 154 TMK 0 2010 2011 2012 2013 2014E Q2 2009 Q2 2010 Oil Gas Dry ■ Service Q2 2011 Q2 2012 Q2 2013 ■Oil Gas Q2 2014 Source: Baker Hughes ■ Source: Spears & Associates, Inc. Ignoring the QoQ seasonal decrease, YoY total rig count increased 31%, including a 6% increase in oil rig count and a 70% increase in natural gas rig count Canada represents circa 10% of TMK IPSCO sales volumes This points towards greater OCTG demand and a favourable environment for the Premium Connections market segment 17#18Premium Solutions: TMK UP ULTRA-SF 2003 ULTRA-FJ 2003 ULTRA-FX 2003 ULTRA CX ULTRA QX ULTRA DQX 2008 2009 2011 Cal IV Cal IV Cal II пикал Cal IV Cal II TMK Ultra Premium Connections TMK Global Supplies & Services Unique range of Premium products Onshore/offshore Sour gas Thermal Arctic Horizontal and extended reach Drilling with casing TMK Steam-Assisted Gravity Drainage (SAGD) Connections are available with «Greenwell»> environment friendly technology TMK 1 2004 2005 TMK FMC TMK CS TMK TTL 01 2005 2005 TMK GF 2005 TMK PF 2007 TMK FMT 2008 TMK PF ET 2008 TMK TDS TMK CWB 2010 2011 TMK PF Tubing 2012 Greenwell 2013 Cal II Cal IV Cal II Cal IV Implementation of new technologies and services according to regional conditions US expertise gives significant growth opportunities in Russia 18 CaMV#19Capex Programme Total $1.1bn capex programme for three years which translates to $300-400 mln per year with a $100 mln annual maintenance capex US$mln TMK 840 2008 445 395 402 397 314 320 2009 2010 2011 2012 2013 2014E For 2014, CAPEX was cut by around 20% compared to previously planned US$400 mln Source: TMK data Focus of capex programme has been seamless pipes and facility modernisation in Russia and US Key Production Facilities min tonnes 4.0 3.70 3.5 3.46 2.98 • 5 EAFS • 7 Continuous Casters 3.0 2.50 • 11 Hot-Rolled Seamless Mills 2.37 2.5 2.03 2.09 • 76 Cold-Rolled Seamless Mills 2.0 1.78 • 29 Welded Rolling Mills 1.5 • 1.0 0.73 0.77 . • 0.5 0.0 Steelmaking Seamless Welded Pipe Pipe ■ 2004 Source: TMK data Heat Treatment Threading ■2014 pro-forma 37 Heat-Treatment Lines 48 Threading Lines 10 Coating Lines R&D Centres Ten manufacturing plants are ISO 14001:2004 certified and are audited annually All plants are certified with OHSAS 18001:2007 (Occupational Safety and Health Management System) 19#202Q 2014 vs 1Q 2014 Summary Financial Highlights Sales increased QoQ mainly due to higher sales in Russia across all types of welded pipe, and especially LDP volumes Revenue grew QoQ mainly as a result of higher welded pipe sales in the Russian division Thousand tonnes 1,200 900 +5% QoQ 600 1,026 1,075 300 0 1Q2014 2Q2014 U.S.$ mln 1,600 1,200 +3% QoQ 800 1,466 1,516 400 0 1Q2014 2Q2014 Adjusted EBITDA went up QoQ mainly due to favorable product mix in the American division +3% QoQ Net profit was $60 million as compared to net loss of $16 million for the first quarter of 2014 U.S.$ mln 200 13% 150 16% 13% 12% 190 184 100 8% 50 4% 0 0% 1Q2014 2Q2014 Source: TMK data EBITDA Margin, % 20 20 U.S.$ mln 70 60 50 40 30 60 60 20 10 0 -10 -16 -20 1Q2014 2Q2014 TMK#212Q 2014 vs 1Q 2014 Sales by Division and Group of Product Sales by Division Thousand tonnes 8% 840 720 600 480 -3% 787 360 727 240 120 0 -5% 251 242 48 46 Russia America Europe ■1Q2014 ■ 2Q2014 Sales by Group of Product Thousand tonnes -1% 700 600 14% 500 400 640 300 634 200 442 386 100 0 Seamless Welded ■1Q2014 ■ 2Q2014 Source: TMK data 21 TMK Russian division sales increased QoQ mainly due to higher LDP and welded industrial pipe volumes. ■ American division sales fell QoQ due to lower welded OCTG and seamless and welded industrial pipe volumes. European division sales decreased QoQ due to lower seamless industrial pipe.volumes. Seamless pipe sales decreased QoQ as a result of lower seamless industrial pipe sales. Welded pipe sales increased QoQ mostly due to stronger consumption of LDP in Russia. Total OCTG sales rose by 1% QoQ due to higher volumes of seamless OCTG in the Russian division.#22U.S.$ mln 2Q 2014 vs 1Q 2014 Revenue by Division Revenue 1,200 5% 1,000 800 600 -1% 981 1,030 400 200 U.S.$/tonne Revenue per Tonne* 3% 1,800 -3% 1,500 12% 1,200 900 1,665 1,713 1,565 1,350 1,308 1,401 600 7% 418 415 300 67 71 0 Russia America Europe ■ 1Q2014 ■ 2Q2014 0 Russia America Europe ■ 1Q2014 ■ 2Q2014 Revenue for the Russian division increased mainly as a result of the growth in welded pipe volumes and especially in LDP sales. Revenue for the American division decreased primarily due to lower seamless and welded pipe sales, which was partially compensated by higher pricing and favorable sales mix. Revenue for the European division increased as a result of higher steel billet sales. Source: Consolidated IFRS Financial Statements, TMK data NNote: * Revenue /tonne for the Russian and American divisions is calculated as total revenue divided by pipe sales. Revenue for the European division is calculated as total revenue divided by (pipe+billet sales) Russian division revenue per tonne decreased QoQ due to unfavorable mix of welded pipe. ■ American division revenue per tonne increased QoQ due to more favorable sales mix in seamless and welded pipe. European division revenue per tonne increased QoQ due to favorable sales mix and positive effect of currency translation. CCertain monetary amountsppercentages and other figures included in this presentation are subject to rounding adjustments. Totals therefore do not always add up to exact arithmetic sums. 22 TMK#232Q 2014 vs 1Q 2014 Adjusted EBITDA by Division Adjusted EBITDA Adjusted EBITDA Margin U.S.$ mln -3% 160 120 80 60 153 147 39% 40 40 0 Russia 21% 18% 12% 16% 14% 8% 6% 6% 12% 11% 34 24 7 9 0% America Europe Russia America Europe ■ 1Q2014 ■ 2Q2014 ■ 1Q2014 ■ 2Q2014 TMK Russian division Adjusted EBITDA declined due to unfavorable sales mix in welded pipe and a growth in other operational expenses. American division Adjusted EBITDA grew mostly due to improved sales mix of both seamless and welded pipe and a decline of SG&A expenses. European division Adjusted EBITDA increased largely due growth in gross profit. Russian division Adjusted EBITDA margin decreased QoQ mainly due to unfavorable welded pipe product mix. American division Adjusted EBITDA margin grew as a result of favorable product mix. European division Adjusted EBITDA margin went up due to improved sales mix. Source: TMK Consolidated IFRS Financial Statements, TMK data NNote: CCertain monetary amountsppercentages and other figures included in this presentation are subject to rounding adjustments. Totals therefore do not always add up to exact arithmetic sums. 23#24Debt Maturity Profile ☐ Maintenance capex anticipated to be lower than depreciation post 2013 Benefits of capex programme reflected in growing confidence for future years EBITDA growth ☐ Dividend distribution set at minimum 25% of net income U.S.$ mln Debt Maturity Profile as of June 30, 2014 1,000 965 800 600 527 515 494 500 965 399 400 328 276 494 500 399 500 200 276 199 15 0 2014 2015 2016 2017 2018 2019 2020 ■Bank Loans ■ Bonds Source: TMK Management Accounts, figures based on non-IFRS measures, estimates from TMK management 89% of debt is unsecured Around $1 bn of undrawn committed credit lines facilities 24 TMK#25Improving Debt Structure 80% of total financial debt is long-term Net Debt and Short-term Debt Share Net Debt, US$ mln 4,000 3,711 3,656 30% 3,552 3,600 3,526 3,631 3,500 27% 3,000 18% 2,500 16% 2,000 1,500 1,000 500 0 HN 31 Dec 2010 31 Dec 2011 31 Dec 2012 31 Dec 2013 31 Mar 2014 30 June 2014 Net Debt, US$ mln Share of Short-term Debt, % 25% 20% 20% 15% 11% 12% 10% 5% 0% Source: TMK data Over US$1.3 bln committed credit lines maturing up to 2019 Committed credit lines as of July 30, 2014 U.S.$ mln 800 700 ■ Utilized Credit Facilities 600 500 ■ Unutilized Credit Facilities 400 300 200 100 0 2014 2015 2016 2019 Unlimited Source: TMK Management Accounts, figures based on non-IFRS measures, estimates from TMK management 25 Share of ST Debt, % TMK#26Strategy for Future Growth Leverage our new capacity to sell more high margin seamless pipes into our existing markets Improve our product mix through our technology advancements TMK Improve the financial performance by focusing on profitable work rather than just low margin high volume pipe Capex investment in enhancing facilities mainly completed with free cash flow reducing debt Continue to develop and sell more premium products for challenging, harsh environments such as the Arctic and Caspian sea. Expand our Oil Field Services to a more "one-stop-shop" approach to greater fulfill customers' needs 26#27Conclusion Strong fundamentals underpin Russian market growth ☐ Leveraging relationships with Gazprom and Rosneft Importing our shale expertise to Russia from US ■ US market outlook improving for TMK as a result of robust drilling activity, a favourable trade case outcome and greater demand for higher value added products - Longer term US outlook more favourable – key KPI to watch is gas price and demand 27 TMK#28Appendix Summary Financial Accounts - 28 TMK#29TMK Key Consolidated Financial Highlights (US$mln)(a) Revenue Adjusted EBITDA (b) Adjusted EBITDA Margin (%) Profit (Loss) Net Profit Margin (%) 2013 2012 2011 6,432 6,688 6,754 952 1,028 1,047 15% 15% 15% 215 278 385 3% 4% 6% Pipe Sales ('000 tonnes) 4,287 4,238 4,185 Average Net Sales/tonne (US$)(c) 1,500 1,578 1,614 Cash Cost per tonne (US$) (d) 1,207 1,108 1,152 Cash Flow from Operating Activities 787 703 929 Capital Expenditure(e) 402 397 445 Total Debt(f) 3,787 3,694 3,885 Net Debt(f) 3,552 3,600 3,656 Short-term Debt/Total Debt 16% 11% 27% Net Debt/Adjusted EBITDA 3.4x 3.8x 3.6x Adjusted EBITDA/Finance Costs 3.8x 3.5x 3.5x (a) IFRS financials figures were rounded for the presentation's purposes. Minor differences with FS may arise due to rounding (b) Adjusted EBITDA is calculated as profit before tax plus finance costs minus finance income plus depreciation and amortisation adjusted for non-operating and non-recurrent items. In 1Q 2013 management amended its definition of Adjusted EBITDA to include accruals of bonuses to management and employees into the calculation of Adjusted EBITDA instead of actual cash payments. Management believes such an approach better reflects the Group's quarterly performance and eliminates fluctuations during the year. The comparative information in this presentation was adjusted accordingly. (c) Sales include other operations and is calculated as Revenue divided by sales volumes tonnes (d) Cash Cost per Tonne is calculated as Cost of Sales less Depreciation & Amortisation divided by sales volumes (e) Purchase of PP&E investing cash flows (f) Total debt represents interest bearing loans and borrowings plus liability under finance lease; Net debt represents Total debt less cash and cash equivalents and short-term financial investments Source: TMK Consolidated IFRS Financial Statements 29#30Income Statement TMK US$ mln 2013 2012 2011 2010 2009 Revenue Cost of Sales 6,432 6,688 6,754 5,579 3,461 (5,074) (5,209) (5,307) (4,285) (2,905) Gross Profit 1,358 1,479 1,446 1,293 556 Selling and Distribution Expenses (379) (433) (411) (403) (313) General and Administrative Expenses (317) (293) (283) (232) (204) Advertising and Promotion Expenses (12) (11) (9) (11) (5) Research and Development Expenses (13) (17) (19) (13) (10) Other Operating Expenses, Net (34) (57) (40) (34) (17) Foreign Exchange Gain / (Loss), Net (49) 23 (1) 10 14 Finance Costs, Net (245) (275) (271) (412) (404) Other 5 (16) 132 (12) (46) Income (Loss) before Tax 312 400 544 185 (427) Income Tax (Expense) / Benefit (98) (123) (159) (81) 103 Net Income/(Loss) 215 278 385 104 (324) Source: Consolidated IFRS Financial Statements NNote: CCertain monetary amountsp percentages and other figures included in this presentation are subject to rounding adjustments. Totals therefore do not always add up to exact arithmetic sums. 30#31Statement of Financial Position TMK US$ mln 2013 2012 2011 2010 2009 ASSETS Cash and Bank Deposits 93 225 231 158 244 Accounts Receivable 995 914 772 720 580 Inventories 1,324 1,346 1,418 1,208 926 Prepayments 148 180 200 172 223 Other Financial Assets 0 4 4 4 4 Total Current Assets 2,561 2,670 2,625 2,262 1,977 Assets Classified as Held for Sale 8 Total Non-current Assets 4,857 4,934 4,507 4,592 4,704 Total Assets 7,419 7,603 7,132 6,862 6,681 LIABILITIES AND EQUITY Accounts Payable 1,105 1,132 1,053 878 1,057 ST Debt 398 1,068 599 702 1,537 Dividends 6 Other Liabilities 62 74 53 94 27 Total Current Liabilities 1,571 2,275 1,705 1,674 2,622 LT Debt 3,296 2,817 3,188 3,170 2,214 Deferred Tax Liability 298 302 305 300 272 Other Liabilities 125 125 111 111 85 Total Non-current Liabilities 3,718 3,244 3,603 3,581 2,571 Equity 2,130 2,084 1,823 1,606 1,488 Including Non-Controlling Interest 96 99 92 94 74 Total Liabilities and Equity 7,419 Net Debt 3,600 7,603 3,656 7,132 6,862 6,681 3,552 3,710 3,503 Source: Consolidated IFRS Financial Statements NNote: CCertain monetary amounts percentages and other figures included in this presentation are subject to rounding adjustments. Totals therefore do not always add up to exact arithmetic sums. 31#32Cash Flow TMK US$ min 2013 2012 2011 2010 2009 Profit/ (Loss) before Income Tax 312 400 544 185 (427) Adjustments for: Depreciation and Amortisation 326 326 336 301 313 Net Interest Expense 245 275 271 412 406 Others 61 39 (101) 45 36 Working Capital Changes (159) (34) (156) (527) 558 Cash Generated from Operations 786 1,006 894 415 886 Income Tax Paid (82) (77) (107) (29) (33) Net Cash from Operating Activities 703 929 787 386 852 Capex (397) (445) (402) (314) (395) Acquisitions (38) (33) (510) Others 12 23 25 43 14 Net Cash Used in Investing Activities Net Change in Borrowings Others (423) (455) (377) (271) (891) (93) (148) 4 103 582 (313) (341) (339) (289) (447) Net Cash Used in Financing Activities (407) (489) (335) (186) 135 Net Foreign Exchange Difference (5) 10 (2) (15) 4 Cash and Cash Equivalents at January 1 225 231 158 244 143 Cash and Cash Equivalents at YE 93 225 231 158 244 Source: Consolidated IFRS Financial Statements NNote: CCertain monetary amounts percentages and other figures included in this presentation are subject to rounding adjustments. Totals therefore do not always add up to exact arithmetic sums. 32#33NNote: WELDED SEAMLESS Seamless - Core to Profitability U.S.$ mln QoQ, YoY, 2Q 2014 Gross Profit Breakdown 2Q 2014 1H 2014 (unless stated otherwise) % % Volumes- Pipes, kt 634 -1% 1,273 0% Welded 15% Other operations 2% Revenue 970 -1% 1,948 -8% Gross Profit 236 0% 473 -20% Margin, % 24% 24% Avg Revenue/Tonne (U.S.$) 1,532 0% 1,530 -8% Avg Gross Profit / Tonne Seamless 83% 373 1% 371 -20% (U.S.$) Volumes- Pipes, kt 442 14% 828 -9% Sales of seamless pipe generated 64% of total Revenue in 2Q 2014 and 65% in 1H 2014. Revenue 468 10% 892 -20% Gross Profit 42 9% 81 -32% Margin, % 9% 9% Gross Profit from seamless pipe sales represented 83% of 2Q 2014 total Gross Profit and 84% of 1H 2014 total Gross Profit. Avg Revenue / Tonne (U.S.$) 1,060 -4% 1,078 -13% Avg Gross Profit / Tonne (U.S.$) 96 -4% 98 -26% Gross Profit Margin from seamless pipe sales amounted to 24% both in 2Q 2014 and 1H 2014. Source: Consolidated IFRS Financial Statements, TMK data CCertain monetary amountsppercentages and other figures included in this presentation are subject to grounding adjustments. Totals therefore do not always add up to exact arithmetic sums. 33 TMK#34Appendix - Capital Structure and Corporate Governance 34 TMK#35TMK Capital Structure and Dividend Policy Key Considerations TMK's securities are listed on the London Stock Exchange, the OTCQX International Premier trading platform in the U.S. and on Russia's major stock exchange - MICEX-RTS. As of 31 December 2013, 20.58% of TMK shares were in free float, with approximately 90% of them traded in the form of GDRs on the London Stock Exchange. As of 31 December 2013, the share capital of TMK was comprised of 937,586,094 fully paid ordinary shares or equivalent of 234,396,524 GDRs. One GDR represents four ordinary shares. TMK shares and GDRs are included into several major Russia indices: MSCI Russia, MICEX M&M, MICEX MC. Source: TMK Capital Structure as at December 31, 2013 Free Float Rockarrow Investments 0.11% TMK Bonds** S.A. 7.63% TMK Subsidiaries 0.01% 20.58% TMK Steel* (incl. affiliated companies) 71.68% Dividend Policy U.S.$ At least 25% of annual IFRS net profits is paid out as dividends. Starting 2007, dividends are usually paid semi-annually. TMK resumed dividend payments in 2010 as in 2009 the Company posted a net loss for the year due to global industry crisis. 1.8 30% 28% 1.6 25% 25% 25% 24% 25% 1.4 1.2 20% 1 15% 0.8 0.6 10% 0.4 5% 0.2 Net Loss for FY 2009 0 0% 2008 2009 Earnings per GDR 2010 ■Dividend per GDR 2011 2012 2013 Payout Ratio Source: TMK *The main beneficiary is Dmitry Pumpyanskiy, Chairman of the Board of Directors of TMK. **TMK Bonds S.A. owns 17,876,489 GDRs of TMK, representing 71,505,956 TMK shares, or 7.63% of the share capital, securing obligations to convert into GDR US$ 412.5 million bonds issued by TMK Bonds S.A. in February 2010 and maturing in 2015. The bonds may be converted at USD 22.308 per GDR. Source: TMK 35#36Corporate Governance Key Considerations The corporate governance practices of the Company in 2013 were in full compliance with the Corporate Governance Code. Starting 2011, TMK began publishing quarterly consolidated IFRS reports. The Board of Directors is comprised of 11 members, including 5 independent directors, 4 non-executive directors and 2 executive directors. As of 31 December 2013, members of the Board of Directors held no interests in affiliated companies. The Board of Directors has 3 standing committees, chairman of each committee is an independent director: Audit Committee; Nomination Committee; and Remuneration Strategy Committee. TMK's day-to-day operations are managed by the CEO and the Management Board consists of eight members. Throughout 2013 and to date, the Company has had an operational system of internal control which provides reasonable assurance as regards the efficiency of operations covering all controls. TMK ranks No 6 in S&P rating of corporate governance among Russian companies. Source: TMK DMITRY PUMPYANSKIY, Chairman of the Board of Directors, non-executive director. TMK Born in 1964. Graduated from the Sergey Kirov Urals Polytechnic Institute in 1986. PhD in Technical Sciences, Doctor of Economics. Founder and beneficial owner of TMK Relevant experience: Chairman of the Supervisory Board of Russian Agricultural Bank, Member of the Board of Directors at Rosagroleasing and SKB-Bank, President and Chairman of the Board of Directors of Sinara Group,, member of the Management Board of the Russian Union of Industrialists and Entrepreneurs, CEO at TMK, CEO at Sinara Group, Board member at various industrial and financial companies MIKHAIL ALEKSEEV, Independent director, Chairman of the Nomination and Remuneration Committee Born in 1964. Graduated from the Moscow Finance Institute in 1986. Doctor of Economics. Relevant experience: Chairman of the Management Board of UniCredit Bank, Chairman of the Board and President of "Rossiysky Promyishlenny Bank" (Rosprombank), Senior Vice President and Deputy Chairman of the Management Board of Rosbank, Deputy Chairman of the Management Board of ONEXIM Bank, Deputy Head of the General Directorate of the Ministry of Finance of the USSR. PETER O'BRIEN, Independent director, Chairman of the Audit Committee. Born in 1969. Graduated from Duke University (USA) in 1991 and obtained an MBA from Columbia University Business School in 2000. Took a course in AMP at Harvard Business School in 2011. Relevant experience: Member of the Management Board, Vice President, Head of the Group of Financial Advisors to the President of Rosneft, Co-Head of Investment Banking, Executive Director of Morgan Stanley in Russia, Vice President at Troika Dialog Investment Company, Press Officer at the US Treasury. ALEKSANDER SHOKHIN, Independent director, Chairman of the Strategy Committee. Born in 1951. Graduated from the Lomonosov Moscow State University in 1974. PhD, Doctor of Science, Professor. Relevant experience: President of the Russian Union of Industrialists and Entrepreneurs, President of the Higher School of Economics State University, Board member at Lukoil, Russian Railways, member of the Public Chamber of the Russian Federation, member of the State Duma, Minister of Labour and Employment and Minister of Economic Affairs, Head of the Russian Agency for International Cooperation and Development, twice appointed as Deputy Head of the Russian Government, Russia's representative to IMF and World Bank. OLEG SCHEGOLEV, Independent director, member of the Strategy Committee. Born in 1962. Graduated from the Moscow Finance Institute in 1984. Relevant experience: First Vice President at Russneft, First Deputy Chairman of the Management Board and First Deputy CEO at Itera, Executive Director at Slavneft, Deputy Head of the Department for Longterm Planning of the Fuel and Energy Complex at the Ministry of Energy of the Russian Federation, chief officer, deputy director, department head at Sibneft. ROBERT MARK FORESMAN, Independent director, member of the Board of Directors since 2012. Born in 1968. Graduated from Bucknell University (USA) in 1990 and Harvard University Graduate School of Arts & Sciences in 1993. Obtained a certificate from the Moscow Power Engineering Institute in 1989. Relevant experience: Head of Barclays Capital in Russia, Deputy Chairman of the Management Board at Renaissance Capital, Chairman of the Management Committee for Russia and CIS at Dresdner Kleinwort Wasserstein, Head of Investment Banking for Russia and CIS at ING Barings. 36#37Appendix - TMK Products 37 TMK#38Wide Range of Products, Focus on Oil and Gas Seamless Threaded pipes for the oil and gas industry including drill pipe, casing and tubing. Welded OCTG Line Pipe Industrial The short-distance transportation of crude oil, oil products and natural gas. Automotive, machine building, and power generation sectors. Premium TMK OCTG Line Pipe Large- Diameter Threaded pipes for the oil and gas industry including drill pipe, casing and tubing. The short-distance transportation of crude oil, oil products and natural gas. Construction of trunk pipeline systems for the long distance transportation of natural gas, crude oil and petroleum products. Premium Connections (TMK UP) Premium connections are proprietary value-added products used to connect OCTG pipes and are used in sour, deep well, off- shore, low temperature and other high-pressure applications. Oilfield Services Well equipment precision manufacturing, tools' rental, supervising, inventory management, threading and coating services. Industrial Wide array of applications and industries, including utilities and agriculture. 38 B#39Utilisation of TMK Pipe Products in Oil and Gas Industry Sea platform Tubing Drill pipe Casing Oil field development Large diameter pipe TMK Premium connections Oil settling tank Line pipe Petroleum refinery Oil storage Consumers F OCTG - Oil Country Tubular Goods (drilling, casing, tubing) used for oil & gas exploration, well fixing and oil & gas production (47% of total sales volumes in 1H 2014); Line pipe - used for short distance transportation of crude oil, oil products and natural gas (22% of total sales volumes in 1H 2014); LDP - large diameter pipe used for construction of trunk pipeline systems for long distance transportation of natural gas, crude oil and petroleum products (8% in total sales volumes in 1H 2014). 39#40Shift to Unconventional Drilling Drives Demand for Seamless and Premium Products Conventional (Vertical) Drilling Unconventional (Horizontal) Drilling (Hydraulic Fracturing) Vertical Horizontal Shale Shale Length, km Up to 5 Up to 10 I % Seamless 35% 60% Fracturing % Premium <5% 30% Connections OCTG Tons 45 190 per Well % Small OD 25% 65% <7" Source: J.P. Morgan, Industry Sources 40 Seamless / Welded Tubing Premium Connections TMK Drilling with casing TMK CWB 0000 Seamless / Welded Casing Drilling#41Thank You TMK Investor Relations 40/2a, Pokrovka Street, Moscow, 105062, Russia +7 (495) 775-7600 [email protected] 41 TMK