#1TMK TMK Investor Presentation May 2013#2Disclaimer TMK 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. 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#3Presentation Outline ➤ Company Overview and Investment Highlights ➤ Industry Overview ➤ Financial Overview 4 15 23 ➤ Appendix - Summary Financial Accounts 32 ➤ Appendix - TMK Products 36 ➤ Appendix - TMK Synergies 38 ➤ Contacts 40 TMK 3#4Company Overview and Investment Highlights TMK 4#5TMK Investment Highlights Global Market Leader Leading Position in Russia and the U.S. • One of the largest tubular capacity High exposure to the oil & gas industry: approximately 75% of 2012 shipments went to the oil & gas sector Leading producer of value-added steel pipes for the oil & gas industry 10% global seamless OCTG(1) Russia: 52% seamless pipe market, 62% seamless OCTG market, 16% LD pipe market in 2012 Strategic partnerships and long-term contracts with Russian oil & gas majors One of the leading supplier to shale oil & gas in the U.S. Strong industry fundamentals driven by robust demand for oil & gas ☐ Stable demand from Russian oil industry little affected by fluctuations in oil prices Consolidated industry with significant barriers to entry Favorable Industry Fundamentals Vertically Integrated Low Cost Producer Growth Potential and Deleveraging Demand for seamless OCTG expected to experience significant growth driven by increasing complexity of drilling Oil & gas plays are to be more resilient to possible economic recession due to limited supply from traditional deposits and geopolitical risks Structural cost advantages over major international competitors Fully vertically integrated seamless pipe production (upstream and downstream operations) in all 3 divisions Long-term proven ability to pass cost increase to customers Strategic Investment Programme (2004-14) aimed at 48% capacity increase is nearly completed Ability to efficiently integrate acquired businesses and realise synergies The effect from the recent investment projects to be realized in 2012-2015 which will facilitate deleveraging Key Performance Figures (1) OCTG - Oil Country Tubular Goods 2008 2009 2010 2011 2012 1Q2013 LTM Revenue, U.S.$ mln 5,690 3,461 5,578 6,754 6,688 6,754 EBITDA, U.S.$ mln ROE, % 1,047 328 942 1,050 1,040 1,007 9.4% neg 6.9% 22.4% 14.4% 12.5% LO 5#6TMK- Global Supplier of Full Range of Pipes for Oil and Gas industry Steel Tubular Industry Leader TMK TMK's strategic positioning made it the steel tubular industry leader, with over 4 million tonnes sold in 2012. Truboplast Pipe Maintenance Department ●Sinarsky Seversky❤ Moscow OROSNITI *Central Pipe Yard •Orsky OEdmonton •Calgary Cologne • Astana Zurich Resita Volzhsky❤ Tagmet Kaztrubprom Lecco Artrom Baku Camanche Brookfield •Ashgabat Geneva⚫ Wilder Koppel Tulsa ●Ambridge Odessa❤ ●Blytheville Baytown Dubai Houston Abu Dhabi Sohar Management Production O Oil & Gas Services O Scientific and Technical Center Sales and Marketing Beijing ⚫Singapore Capacity (tons) Steelmaking North America Europe Russia and CIS Total 450,000 450,000 2,450,000 3,350,000 •Cape Town Seamless Pipes 300,000 220,000 2,486,000 3,006,000 Welded Pipes 1,000,000 2,120,000 3,120,000 Heat Treat 441,000 * 1,500,000 1,941,000 Threading 980,000* 1,560,000 2,540,000 Note: *Including ULTRA Premium connections of 240,000 tons Source: TMK data 6#7Leading Global Supplier of Pipes for Oil and Gas Industry Key Considerations since 2010 World Leading Tubular Producer for the Last 3 Years Sales Volumes (thousand tonnes) " A world leading tube producer by sales volumes in 2012. 4,185 4,238 High exposure to the oil and gas industry: approximately 75% of sales volumes went to the oil and gas sector in 2012. 3,962 1,844 1,743 1,843 The leading producer of value-added seamless pipes for the oil and gas industry in Russia and one of the three largest seamless pipe producers globally. 2,119 2,342 2,494 According to the Company's estimates, TMK has a 25% market share for steel pipes, 52% market share for seamless pipes and 62% market share for seamless OCTG in Russia by sales volume in 2012. Leading Global Supplier of Seamless OCTG 2012 World OCTG Market Share by Sales Volumes (%) Other 90% Source: TMK estimates TMK 10% 2010 2011 2012 ■ Seamless pipes Welded pipes Source: TMK data Focus on Oil & Gas Industry 2012 Sales Volumes by Industry (%) Other (Machine Building, Constructing & Public Utilities etc.) 25% Source: TMK data Oil & Gas 75% TMK 7#8Strong Pipe Industry Fundamentals Key Considerations Strong industry fundamentals driven by robust demand for oil and gas. Significant expected capital expenditure by oil and gas industry driven by strong outlook for oil prices. Increasing drilling complexity (horizontal drilling and deeper wells) drives demand for high value added pipes and, as a result, potential for margin expansion. Global drilling activity dominated by geographical markets where TMK is a local producer: Russian wells drilled expected CAGR of 7% (2012-2018); US wells drilled expected CAGR of 4% (2012-2018). Source: Spears & Associates Significant Capex Spend by Oil and Gas Industry Drilling Capex (US$bn) and Wells Drilled Oil Prices Remain High (US$/bbl) 150 125 100 75 50 60 Historical and forward Brent Oil price (US$/barrel) TMK 25 Jul-04 Oct-06 12-month Brent strip Jan-09 May-11 Brent forward curve Aug-13 Broker consensus Dec-15 Source: Bloomberg, brokers US and Russia Leading Global Demand 2012 Global Drilling Activity by Geography (Number of Wells Drilled) Capex (US$bn) 600 500 400 300 200 100 0 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E US Russia Other Wells drilled Note: Excluding China and Central Asia. Onshore and offshore drilling Source: Spears & Associates 100 60 Wells drilled (thousand) 40 20 0 Africa Europe Far East 2% 1% 3% South America 8% Canada 13% Middle East 3% Russia 10% US 60% Note: Excluding China and Central Asia. Onshore and offshore drilling Source: Spears & Associates US + Russia + Middle East: 73% 8#9Utilisation 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 (41% of total sales volumes in 2012); Line pipe - used for short distance transportation of crude oil, oil products and natural gas (24% of total sales volumes in 2012); LDP - large diameter pipe used for construction of trunk pipeline systems for long distance transportation of natural gas, crude oil and petroleum products (10% in total sales volumes in 2012). 9#10Diversified Business Model Key Considerations " " " High degree of diversification enabling earnings resilience. Geographical diversification seeking to mitigate swings in geographical demand (Russian division 55% and American division 30% of 2012 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 26% of sales volumes in 2012). Long-term relationships with Russian oil and gas majors (Rosneft, Surgutneftgas, Lukoil, TNK-BP and Gazprom). Diversified Geographical Reach TMK Revenues by Country (2012 Central Asia & Caspain Region 5% Middle East & Gulf Region 3% Other 1% Diversified Product Portfolio and Customer Base Sales Volumes by Product (2012) Welded OCTG Welded LD 9% 10% Welded Line Pipe 10% Source: TMK data Welded Industrial 13% Seamless OCTG 32% Seamless Line Pipe Seamless 14% Industrial 13% Significant Exposure to Less Cyclical Russian Drilling Industry Adjusted EBITDA (a) Margin - Russia vs. Americas Source: TMK data Europe 7% Americas 30% Russia 55% EBITDA margin (%) 35% 28% 21% 14% 7% 0% 2008 2009 2010 2011 2012 -7% Russia Americas TMK (a) Adjusted EBITDA is calculated as profit before tax plus finance costs minus finance income plus depreciation and amortization adjusted for non-operating non recurrent items Source: TMK IFRS accounts 10#11Focus on High Value Added Products Key Considerations 62% of revenues was higher margin seamless pipes in 2012. 26% gross margin for seamless pipe vs. 15% for welded pipes in 2012. Full range of connections to address different drilling environments. R&D facilities in Russia and US working closely with customers to address their needs. Strong Growth in Premium Products Premium Products Sales Volumes (thousand tonnes) Thousand tonnes Increasing Focus on Higher Margin Seamless Products 30% 26% 28% 26% 70% 25% 65% Gross margin 20% 20% 14% 15% 15% 60% 10% 62% 55% 58% 5% 53% 0% 50% 2010 2011 2012 Share of seamless tubes in revenues Seamless tubes gross margin Welded tubes gross margin Source: TMK data Connections to Address Different Drilling Environment Premium Connections TMK Share of seamless product in revenues (%) 300 Semi ΑΡΙ 285 Premium Connections ULTRA DQX™ ULTRA FXTM ULTRA FJTM Premium Connections ULTRA SF™M ULTRA CX™ ULTRA TM 250 208 145 200 139 100 150 41 100 Threaded 140 50 97 108 & Coupled Threaded & Coupled Slim-line Integral Joint Integral Joint Upset Tubing 100% 100% 70% 90% Slim-line Threaded & Coupled 100% Threaded & Coupled 100% 0 2010 2011 2012 Strength in Tension and Compression compared to Pipe ■ Russia US Source: TMK data Source: TMK data 11#12Low 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. Vertical Integration in Seamless Business Raw Materials Costs can Generally be Passed Through to Customers Cost of Sales Structure (2012) Repairs and Other maintenance Energy and utilities 8% Staff costs 14% 3% Note: Excluding depreciation and amortisation Source: TMK IFRS accounts 7% Raw materials and consumables 68% TMK Source: TMK ⚫ Preparation scrap 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 + Preparation of deoxidizers, materials and ferroalloys Charging of steel making furnance 6. Cooling and marking of billets 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, 17. Coupling screw-on 18. Hydrostatic Testing thread inspection and drifting 19. Protectors screw-on and coating application 20. Storage 12#13Proven Track Record of Sustainable Growth Key Considerations Resilient pipe sales throughout the crisis. More than US$2.5bn capex spent since 2004. Sales Volumes Evolution Sales Volumes (thousand tonnes) 4,185 4,238 3,962 3,227 Strategic Investment Programme (2004-14) aimed at substantial capacity increase is nearly completed. 2,769 1,844 1,743 1,843 1,247 1,120 The effect of the recent investment projects expected to be realised in 2013-2015 and should facilitate deleveraging. 1,979 2,119 2,342 2,494 1,649 Ability to efficiently integrate acquired businesses and realise synergies. CAPEX for 2013 is US$387m includes approximately US$100m of maintenance capex. Decreasing TMK Capex 840 Capex (US$ mln)(a) 445 395 402 387 314 2008 2009 2010 2011 2012 2013E Source: TMK (a) Purchase of PP&E investing cash flows 2008 2009 2010 ■Seamless pipes 2011 Welded pipes 2012 Source: TMK data Main Investment Projects Russia Construction of EAF at Tagmet Project Launch: 2013 Total capacity: 1,000 thousand tonnes Capacity Increase: 600 thousand tonnes Construction of FQM Mill at Seversky Pipe Plant Project Launch: 2014 Total capacity: 600 thousand tonnes Capacity increase: 250 thousand tonnes USA Source: TMK data TMK Threading Period: 2012-2017 Additional Capacity: 230kt Heat Treatment Period: 2012-2017 Additional Capacity: 280kt 13#14Strategy Focused on Profitable Growth TMK ■ TMK is committed to maintaining its global leadership position in the main product segments and core markets, improving production efficiencies and seeking to enhance its margins in line with industry peers. Strategic Investment Programme (2004-14) aimed at substantial capacity increase is nearly completed. No major investments expected. Capacity Expansion Target Markets Product Offering Development Market Positioning Russia and Europe Increase seamless pipe capacity to 600,000 tonnes, incremental 250,000 tonnes (FQM mill at Seversky expected to be commissioned in 2014) ■ Increase steelmaking capacity to 1,000,000 tonnes, incremental 600,000 tonnes (EAF facility to be launched at Tagmet in 2013) Sustain position of primary supplier to unconventional Russian oilfields (the Caspian, Eastern Siberia, Arctic offshore) Enhance TMK presence the Middle East markets (leveraging acquisition in Oman) and sells of premium connections Expand in Sub-Saharan Africa and South-East Asia Focus on higher value-added pipe products (premium connectors, proprietary grades, specialised tubes) Expand offshore certification for its tubular products Create value through developing services and new tubular solutions Continue to be the supplier of choice for Russian O&G companies Provide high quality products at a low cost Grow recognition among international O&G majors Americas Roll out ULTRA threading facilities throughout the US and globally Increase threading capacity Enhance R&D activity in Houston, Texas Increase heat treatment capacity by 50% Enhance export program of seamless pipes between Russian and American divisions Supply to unconventional hydrocarbons production in the US (Gulf, shale oil and shale gas), Canada (oil sands) and South America Globalise ULTRA premium connections Develop new generations of premium threads, special grades, alloyed tubulars etc Grow and expand well engineering support and related field services Maintain a leading position on the US shale gas and shale oil market Sustain our position in Top-3 global suppliers of premium connections Exploit synergies between well established US operations and strong Russian production base Develop direct supply relationships with customers 14#15Industry Overview TMK 15#16Increasing Complexity of Russian Drilling Increasing Greenfield Oil Production in Eastern Regions 11,300 Russian Oil Production Falling Oil Wells Productivity in Russia Thousand barrels per day 10,300 9,300 8,300 Prirazlomnoye Yamal fields**** 1,000 Northern Timan Pechora fields*** TNK-Uvat Vankor, Talakan, Verkhnechonsk Gazprom, SE, NOVATEK, Rospan condensate Caspian** 800 600 PSA Other East Siberia bpd Brownfield 400 200 7,300 2007 2011 *sum of YT, Kuyumba, SLS and Taas Yuryakh *sum of Yu Korchagina and Filanovsky 2015E ***sum of Naryanmarneftegaz, Trebs and Titov, Labaganskoye and Naulskoye **** sum of Novoportovskoye, Pyakyakhinskoye, Suzunskoye, Tagulskoye, Russkoye and Messoyakhskoye Source: Sberbank CIB Unconventional Tax Stimulus 2019E 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 9m12 Rosneft - YNG Russia avg. Source: CDU TEK, UBS equity research Lukoil - WS Oil Companies' Upstream Capex is Expected to Increase Greenfields Approved Reduced export duty = Unconventional Oil Approved Offshore Reduced export duty for 45%* (Urals - high viscous oil (over 10,000 U.S.$365/tonne) until project mPas), full exemption from reaches 16.3% IRR Under Duma consideration Extension of MET tax holidays for Eastern Siberia for production volumes up to 25 mln tonnes Source: VTB Capital MET Draft Bill 20-24% of MET for fields with permeability up to 2 md depending on reservoire thickness (<10m, >10m) Zero MET for Bazhenov, Khadumov, Abalak and Domanikov suites Proposal Royalty of 5-30% depending on project compaxity Exemption from export duty, property tax and VAT U.S.$ mln 50,000 40,000 30,000 20,000 10,000 0 2009 ■Rosneft 2010 2011 2012 2013E 2014E 2015E 2016E Lukoil ■ TBH ■Surgut ■GPN Tatneft Bashneft Source: Companies data, UBS equity research 16 TMK#17Russian Market Overview Key Considerations Demand driven by production shift to unconventional regions (Eastern Siberia, Sakhalin and Arctic offshore) and development of greenfield projects Growing Drilling Market in Russia 25,000 7,000 6,000 20,000 5,000 Increasing complexity of oil and gas production in Russia driven by shift to horizontal drilling and deeper wells expected to increase demand for higher value-added products 2004-2012 CAGR: 10% 15,000 4,000 3,000 10,000 2,000 Share of horizontal drilling increased from 11% in 2007 to 14% in 2012. 5,000 1,000 0 0 Horizontal Drilling is Expected to Increase Horizontal Drilling in Russia (km) 4,400 2005-2015 CAGR: 14% 4,000 3,600 3,000 2,235 1,475 1,549 1,649 1,795 1,387 1,184 2004 2005 2006 2007 2008 2009 2010 2011 2012 Annual development drilling volume Total new wells drilled (rhs) Source: CDU TEK, UBS equity research Increasing Depth of Russian Wells Average depth of wells in Russia (m) 2001-2011 CAGR: 4% 2,610 2,650 2,730 2,850 2,930 2,690 2,380 2,380 2,410 2,140 2,010 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E Source: REnergyCO 2012 2001 Source: REnergyCO 2012 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 17 Units TMK#18Strong Russian LDP Demand Key Considerations Russian LDP demand is expected to be driven by new CIS pipeline projects TMK is currently a supplier for major pipeline projects South Stream Zapolyarye-Purpe Sibur Tyumen Gas Central Asia China, Kazakhstan Russian Pipeline Projects Shtokman Murmansk Murmansk- Volkhov Nord Stream Russian LDP Demand Driven by New Pipeline Projects Forecast LDP Demand by Project min tonnes 3.5 2.88 2.8 2.8 2.8 2.8 2.7 2.7 2.68 2.8 1.7 1.4 0.7 0.0 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E ■Nord Stream ■South Stream ■ Eastern route to China Maintenance Source: VTB Capital ■Yamal-Europe Other TMK Bovanenkovo Bovanenkovo- Ukhta Novy Urengoy Ukhta- Torzhok Vyborg Ukhta SRTO- Torzhok Zapolyarye Purpe Altai Volkhov Purpe- Project Gryazovets Samotlor BTS-2XTorzhok Pochinki- Gryazovets Yamal-Europe Tengiz- Pre-Caspian South Stream Novorossiysk Pipeline Stavropol Blue Stream Ankara Completed Gas Pipeline Current Gas Pipeline Project Expected Gas Pipeline Project Completed Oil Pipeline Current Oil Pipeline Project Expected Oil Pipeline Project Source: TMK, Industry sources ESPO-1 Far East pipeline Sakhalin- Khabarovsk- Vladivostok ESPO-2 Sakhalin Khabarovsk Vladivostok 18#19Months of Supply US Market Overview Key Considerations In 1Q 2013, US total rig count amounted on average to 1,758 rigs, down 3% QoQ and 12% YoY. Gas rig count remained almost flat QoQ but fell by more than 40% YoY. Amount of oil rigs decreased slightly QoQ but rose by more than 5% YoY. ■ OCTG inventory level appears to be fractionally up to around 5.3 months while buyers keep close tabs on what they are buying due to the the rise of total pipe shipments. ■ Seamless shipments were down 3% QoQ while welded shipments were up 8% QoQ. Imports share stayed at 46%; seamless imports were down 9% while welded imports were up by 16% QoQ. Source: Baker Hughes, OCTG Situation Report 1Q 2013 US OCTG Inventory Level Slightly Increased Growing Oil Drilling Activity Supported by High Crude Oil Prices US Rig Count 2,100 1,800 1,500 1,200 900 600 300 US Oil and Gas Rig Count TMK Gas - 20% Oil - 80% 0+ Mar-09 Sep-09 Feb-10 Aug-10 Jan-11 Jul-11 Dec-11 Jun-12 Nov-12 May-13 Source: Baker Hughes Premium Tubular Content Increasing with Unconventional Drilling Activity US Oil and Gas Rigs by Type of Drilling 16 14 12 642 O Months of Supply -US Rig Count 2,500 2,100 2,000 1,800 1,500 80 CO + 1,000 US Rig Count Vertical - 26% 1,500 500 US Rig Count 1,200 Horizontal - 62% 900 600 2 0 0 Jan-08 Oct-08 Jul-09 Apr-10 Jan-11 Oct-11 Jul-12 Apr-13 300 Directional - 12% 0+ Jan-09 Aug-09 Mar-10 Oct-10 Jun-11 Jan-12 Aug-12 Mar-13 Source: Baker Hughes, Preston Pipe & Tube Report Source: Baker Hughes 19#20Shift to Unconventional Drilling Drives Demand for Seamless and Premium Products Conventional (Vertical) Drilling Unconventional (Horizontal) Drilling (Hydraulic Fracturing) Vertical Horizontal Shale Shale TMK Drilling with casing TMK CWB 0000 Seamless / Welded Tubing Premium Connections 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 Seamless / Welded Casing Drilling 20 20#21Shale Gas Revolution Led to an Increase in Natural Gas Consumption Key Considerations ■ The shale gas revolution led to a 48% surge in natural gas output in the US in the seven years to late 2012. Natural gas prices started falling significantly and now stand at only a quarter of the prevailing level back then. Drop in natural gas prices led to an increase in gas consumption in the US, especially by power generation industry. As gas prices fall significantly power plants switched to using natural gas for base load generation rather than coal and as a result significantly more gas-fueled power capacity was added in the US. Source: Sberbank CIB TMK With Gas Prices Falling Gas-Fueled Power Capacity Extended US Electricity Generation by Fuel, 1991-2015E (mln kW/h per year) 4,500 Million kW/h per year 3,600 1993 2,700 14% 53% 1,800 I 19% 900 11% !13% 0 1991 1994 Drop in Gas Prices Led to an Increase in Gas Consumption US Gas Consumption Breakdown (bcm) ■Natural Gas 1997 2000 2003 2006 Renewables* Nuclear Coal *hydroelectric, biomass, geothermal, solar/PV, wind Source: US Department of Energy US power generation fuel costs, $/MWh 2012 1% 138% I 19% 13% 30% 2009 2012 2015E ■Oil and other liquids bcm 750 700 650 600 550 647 500 450 400 64 713 US gas consumption, Decline in residential 2007 and Growth in Growth in US gas industrial and electric power consumption, other consumption 2012 commercial consumption consumption Source: US Department of Energy, Sberbank CIB U.S.$/MWh 80 60 40 228 22 120 100 Parity for gas is achieved at $3/mmBtu (about $24/MWh). " 0 2007 2008 2009 2010 2011 2012 Coal Natural gas Source: US Department of Energy, Sberbank CIB 21 224#22TMK Canadian Oil Sands Three Major Oil Sands Deposits Peace River Deposit Athabasca Deposit Calgary Cold Lake Deposit Canadian Oil Sands - Fast Facts ■ Around 170 billion of Oil Sands reserves Potential for over 100 years of production Mining - less than 200 feet deep: 20% of reserves Drilling more than 200 feet deep: 80% of reserves Canada: 21% of U.S. oil imports in 2009, 37% - in 2035F. About half of the Canadian Crude Oil imports come from Oil Sands. By 2025, production from Canadian Oil Sands is expected to rise from about 1.4 million barrels per day to about 3.5 million barrels per day 0 Most new oil sands projects are thought to be profitable at oil prices U.S.$65 U.S.$75 per barrel Source: Canadian Association of Petroleum Producers, EIA, CERA Drilling - Steam Assisted Gravity Drainage (SAGD) SAGD PROCESS Steam Chamber Steam Injection Oil Production Steam Injection Oil Production Reservoir Source: Canadian Association of Petroleum Producers, World Energy Outlook 2010 Source: Canadian Centre for Energy Information 22 22#23Financial Overview TMK 23 23#24Key Consolidated Financial Highlights TMK (US$min)(a) 2008 2009 2010 2011 2012 Revenue 5,690 3,461 5,579 6,754 6,688 Adjusted EBITDA (b) 1,047 328 942 1,050 1,040 Adjusted EBITDA Margin (%) 18% 9% 17% 16% 16% Profit (Loss) 198 (324) 104 385 282 Net Profit Margin (%) 3% NM 2% 6% 4% Pipe Sales ('000 tonnes) 3,227 2,769 3,962 4,185 4,238 Average Net Sales/tonne (US$) (c) 1,763 1,250 1,408 1,614 1,578 Cash Cost per tonne (US$)(d) 1,263 979 1,027 1,207 1,168 Cash Flow from Operating Activities 740 852 386 787 929 Capital Expenditure(e) 840 395 314 402 445 Total Debt(f) 3,211 3,752 3,872 3,787 3,885 Net Debt(f) 3,063 3,504 3,711 3,552 3,656 Short-term Debt/Total Debt 70% 41% 18% 16% 27% Net Debt/Adjusted EBITDA 2.9x 10.7x 3.9x 3.4x 3.5x Adjusted EBITDA/Finance Costs 3.8x 0.7x 2.2x 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 (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 24#251Q 2013 Summary Financial Highlights Sales were down QoQ due to weaker demand for welded industrial pipe, but increased YoY driven by higher consumption of LDP seamless line and OCTG pipe -2% QoQ 1,200 +5% YoY TMK Revenue was up QoQ on higher volumes and improved product mix of seamless pipe. YoY growth was due to increased LDP and welded line pipe sales in the Russian division 1,800 +6% QoQ +4% YoY Thousand tonnes 900 600 1,082 1,060 1,005 1,060 300 4Q2012 1Q2013 1Q2012 1Q2013 U.S.$ mln 1,500 1,200 900 1,631 1,725 1,659 1,725 600 300 0 4Q2012 1Q2013 1Q2012 1Q2013 Adjusted EBITDA increased QoQ driven by an improved product mix of seamless pipe, but fell YoY on lower sales and weaker pricing in the American division in 1Q2013 +24% QoQ Net income increased QoQ on higher revenue and lower operational expenses, but was down YoY due to weaker operational results in 1Q 2013 -19% YoY -7% YoY 300 20% 18% 250 16% 16% 16% U.S.$ mln 200 13% 12% 150 295 273 273 8% 100 219 EBITDA Margin,% 4% 50 0 0% 4Q2012 1Q2013 1Q2012 1Q2013 Source: TMK data U.S.$ mln +170% QoQ 105 90 75 60 45 30 15 OGO 32 32 105 85 85 4Q2012 1Q2013 1Q2012 1Q2013 25#26U.S.$ mln 1Q 2013 Revenue by Division 1Q 2013 Revenue 1,400 +5% 1,200 1,000 800 1,277 600 1,212 +5% 400 200 1Q 2013 Revenue per Tonne* +16% -3% U.S.$/tonne 1,800 +11% 1,500 1,200 900 1,624 1,670 1,618 1,720 1,468 1,480 600 +19% 300 352 369 67 79 0 Russia ■ 4Q2012 Americas ■1Q2013 Europe 0 Russia Americas Europe** Revenue for the Russian division increased by 5% mainly as a result of higher volumes and improved product mix of seamless pipe as well as the positive effect from currency translation. Revenue for the American division increased by 5% primarily due to higher volumes of welded OCTG pipe offset by lower prices for welded pipe. Revenue for the European division increased by 19% mainly as a result of growth in steel billets sales and the positive effect of currency translation. Source: Consolidated IFRS Financial Statements, TMK data NNote: ■ 4Q2012 ■ 1Q2013 * Revenue per tonne for all three divisions includes other revenue Revenue for the European Division includes revenue from steel billets sales Russian division revenue per tonne increased mainly due to improved product mix of seamless pipe and the positive effect of currency translation. ■ American division revenue per tonne declined primarily due to weaker pricing for welded pipe. European division revenue per tonne of pipe declined QoQ. However, division's revenue per tonne of seamless pipe increased QoQ due to higher sales of steel billets. CCertain monetary amounts percentages and other figures included in this press release are subject to rounding adjustments. Totals therefore do not always add up to exact arithmetic sums. 26 TMK#271Q 2013 Adjusted EBITDA by Division 1Q 2013 Adjusted EBITDA 1Q 2013 Adjusted EBITDA Margin U.S.$ mln 250 200 150 100 +31% 188 247 20% 16% 15% 19% 13% 10% 7% 7% 5% 5% 50 50 -13% -30% 23 8 20 6 0% 0 Russia Americas Europe Russia Americas Europe ■ 4Q2012 ■ 1Q2013 ■ 4Q2012 ■1Q2013 TMK Russian division Adjusted EBITDA increased on the back of favorable product mix in seamless pipe and lower operating expenses. American division Adjusted EBITDA declined largely due to weaker pricing for welded pipe not fully offset by lower raw materials prices. European division Adjusted EBITDA decreased due to lower pricing across all product lines while scrap prices remained almost flat. Source: TMK Consolidated IFRS Financial Statements, TMK data NNote: Russian division Adjusted EBITDA margin improved compared to 4Q2013 as a result of a better product mix for seamless pipe. ■ American division Adjusted EBITDA margin decreased mainly due to weaker operational performance of welded pipe. European division Adjusted EBITDA margin decreased due to lower pricing across all product lines. CCertain monetary amounts percentages and other figures included in this press release are subject to rounding adjustments. Totals therefore do not always add up to exact arithmetic sums. 27#28WELDED SEAMLESS Seamless Core to Profitability - U.S.$ mln QoQ, YoY, 1Q 2013 (unless stated otherwise) % % Volumes- Pipes, kt 627 +1% +3% Net Sales 1,084 +9% +2% Gross Profit 306 +24% no change Margin, % 28% Avg Net Sales / Tonne (U.S.$) 1,730 +7% -1% Avg Gross Profit / Tonne (U.S.$) 489 +23% -3% Volumes- Pipes, kt 433 -6% +9% Net Sales 563 -1% +7% Gross Profit 59 -18% -37% Margin, % 10% Avg Net Sales / Tonne (U.S.$) 1,301 +6% -2% Avg Gross Profit / Tonne (U.S.$) 136 -12% -43% Source: Consolidated IFRS Financial Statements, TMK data NNote: Sales of seamless pipe generated 63% of total Revenue in 1Q 2013 compared to 61% in 4Q 2012 and 64% in 1Q 2012. Gross Profit from seamless pipe sales represented 83% of 1Q 2013 total Gross Profit compared to 74% in 4Q 2012 and 75% for 1Q 2012. ■ 28% Gross Profit Margin from seamless pipes sales in 1Q 2013 compared to 25% in 4Q 2012 and 29% in 1Q 2012. Even with almost flat QoQ volumes in seamless pipe it continues to be core of the Company's profitability. CCertain monetary amounts percentages and other figures included in this press release are subject to rounding adjustments. Totals therefore do not always add up to exact arithmetic sums. 28 TMK#29Working Capital Position Inventories (Days) Accounts Payable (Days) TMK 140 132 120 107 120 97 100 91 90 86 98 80 100 80 60 75 60 8640 73 - 64 64 40 40 20 20 20 0 0 2009 2010 2011 2012 3m 2013 2009 2010 2011 2012 3m 2013 Accounts Receivable (Days) 100 94 Cash Conversion Cycle (days) 120 119 80 60 100 60 56 60 50 56 60 56 60 80 72 70 80 76 60 22 82 60 40 40 40 20 20 20 0 0 2009 2010 2011 2012 3m 2013 2009 2010 2011 2012 3m 2013 Source: TMK data 29 29#30Debt Maturity Profile as of March 31, 2013 1,200 1,000 1,051 413 800 776 TMK ■ As of March 31, 2013, total financial debt amounted to U.S.$3,849 mln ■ 73% of total financial debt is long-term Weighted average nominal interest rate totalled 7.02% U.S.$ mln 600 501 22 22 658 11 500 161 400 754 627 658 300 23 500 200 317 300 0 2013 2014 ■Bank Loans 2015 2016 ■Investment Loans As of March 31, 2013, borrowings with a floating interest rate represented U.S.$662 million, or 17%, borrowings with a fixed interest rate - U.S.$3,136 million, or 83% ■ Credit Ratings: 2017 2018 - ■ Bonds * Convertible bond with a conversion price of $22.308/GDR and a put option due on 11 February 2013. In IFRS accounts convertible bond liability was included in long-term loans and borrowings as of March 31, 2013 as no bondholders have executed their rights to request redemption of the bonds in February 2013. Note: TMK management accounts. Figures above are based on non-IFRS measures, estimates from TMK management S&P: B+, Stable; Moody's B1, Stable. In April 2013, TMK completed a placement of $500 million Eurobonds maturing in 2020 with a coupon of 6.75% p.a., payable semi-annually. New bond issuance extended TMK's maturity profile that will be reflected in 2Q 2013. 30 50#31Debt Profile as of 31 March 2013 Debt Breakdown by Source of Borrowings TMK Around U.S.$1 bn of Undrawn Committed Credit Lines to Cover Short-term Debt ■ Utilized Credit Facilities Investment Bonds 28% Loans 2% Bank Loans 70% U.S.$ mln 1,200 1,000 800 600 400 200 ■Unutilized Credit Facilities 0 2013 2014 2015 2016 Note: TMK management accounts. Figures above are based on non-IFRS measures, estimates from TMK management. Debt Structure by Currency Matches Company's Cash Flow Just 14% of Debt is Secured with Assets and Mortgages Source: TMK data RUB; 47% EUR; 4% USD; 49% Unsecured 86% Secured 14% Note: TMK management accounts. Figures above are based on non-IFRS measures, estimates from TMK management. 31#32Appendix Summary Financial Accounts - 32 32 TMK#33Income Statement TMK U.S.$ min Revenue 2012 2011 2010 2009 2008 6,688 6,754 5,579 3,461 5,690 Cost of Sales (5,204) (5,307) (4,285) (2,905) (4,252) Gross Profit 1,483 1,446 1,293 556 1,438 Selling and Distribution Expenses (433) (411) (403) (313) (344) General and Administrative Expenses (293) (283) (232) (204) (268) Advertising and Promotion Expenses (11) (9) (11) (5) (10) Research and Development Expenses (17) (19) (13) (10) (15) Other Operating Expenses, Net (57) (40) (34) (17) (45) Foreign Exchange Gain / (Loss), Net 23 (1) 10 14 (100) Finance Costs, Net (275) (271) (412) (404) (263) Other (16) 132 (12) (46) (85) Income / (Loss) before Tax 405 544 185 (427) 308 Income Tax (Expense) / Benefit (123) (159) (81) 103 (110) Net Income (Loss) 282 385 104 (324) 198 Source: Consolidated IFRS Financial Statements NNote: CCertain monetary amountsppercentages and other figures included in this presentation ares subject to rounding adjustments. On occasion therefore amounts shown in tablesaand clcharts may not be the arithmetic accumulation of the figures that precede themaandi figures expressed as percentages in the text and instables may not total 100% 33 33#34Statement of Financial Position TMK U.S.$ mln 31-Dec-12 31-Dec-11 31-Dec-10 31-Dec-09 31-Dec-08 ASSETS Cash and Bank Deposits 225 231 158 244 143 Accounts Receivable 914 772 720 580 758 Inventories 1,346 1,418 1,208 926 1,176 Prepayments 180 200 172 223 213 Other Financial Assets 4 4 4 4 4 Total Current Assets 2,670 2,625 2,262 1,977 2,294 Assets Classified as Held for Sale 8 Total Non-current Assets 4,930 4,507 4,592 4,704 4,774 Total Assets 7,600 7,132 6,862 6,681 7,068 LIABILITIES AND EQUITY Accounts Payable ST Debt 1,132 1,053 878 1,057 808 1,068 599 702 1,537 2,216 Dividends Other Liabilities 74 53 94 28 716 Total Current Liabilities 2,275 1,705 1,674 2,622 3,740 LT Debt 2,817 3,188 3,170 2,214 994 Deffered Tax Liability 302 305 300 272 371 Other Liabilities 124 110 110 83 52 Total Non-current Liabilities 3,243 3,602 3,580 2,569 1,417 Equity 2,082 1,825 1,607 1,490 1,910 Including Non-Controlling Interest 96 92 95 74 97 Total Liabilities and Equity 7,600 Net Debt 3,656 7,132 3,552 6,862 6,681 7,068 3,710 3,503 3,063 Source: Consolidated IFRS Financial Statements NNote: CCertain monetary amounts percentages and other figures included in this presentation are subject to rounding adjustments. On occasion therefore, amounts shown in tables and clcharts may not be the arithmetic accumulation of the figures that precede themaand figures expressed as percentages in the text and in tables may not total 100% 34#35Cash Flow TMK 326 275 U.S.$ mln 2012 2011 2010 2009 2008 Profit/ (Loss) before Income Tax 405 544 185 (427) 308 Adjustments for: Depreciation and Amortisation Net Interest Expense 336 301 313 248 271 412 406 263 Others Working Capital Changes 34 (101) 44 36 228 (34) (156) (527) 558 (81) Cash Generated from Operations 1,006 894 415 886 966 Income Tax Paid (77) (107) (29) (33) (227) Net Cash from Operating Activities 929 787 386 852 740 Capex (445) (402) (314) (395) (840) Acquisitions (33) (510) (1,185) Others 23 25 43 14 1 Net Cash Used in Investing Activities (455) (377) (271) (891) (2,024) Net Change in Borrowings Others (148) 4 103 582 1,780 (341) (339) (289) (447) (443) Net Cash Used in Financing Activities (489) (335) (186) 135 1,337 Net Foreign Exchange Difference 10 (2) (15) 4 2 Cash and Cash Equivalents at January 1 231 158 244 143 89 Cash and Cash Equivalents at YE 225 231 158 244 143 Source: Consolidated IFRS Financial Statements NNote: CCertain monetary amountsppercentages and other figures included in this presentation are subject to rounding adjustments. On occasion therefore, amounts shown in tablesaand ccharts may not be the arithmetic accumulation of the figures that precede themaand figures expressed as percentages in the text and in tables may not total 100% 55 35#36Appendix - TMK Products TMK 36#37TMK Product Portfolio Seamless Threaded pipes for the oil and gas industry including drill pipe, casing and tubing OCTG OCTG Line pipe is used for the short-distance transportation of crude oil, oil products and natural gas Line Pipe Line Pipe Industrial These pipes are used in the automotive, machine building, and power generation sectors Large- Diameter TMK Welded Threaded pipes for the oil and gas industry including drill pipe, casing and tubing Threading Premium connections are gas tight, proprietary value- added products used to connect OCTG pipes and are used in sour, deep well, low temperature, and high-pressure applications Line pipe is used for the short-distance transportation of crude oil, oil products and natural gas Premium Connections Large-diameter pipe is used in the construction of trunk pipeline systems for the long distance transportation of natural gas, crude oil and petroleum products These pipes are used in a wide array of applications and industries, including Eutilities and agriculture Industrial 37#38Appendix - TMK Synergies 38 38 TMK#39Russian and North American Synergies TMK Both Russia and North America have benefitted during the past three years since the acquisition of IPSCO Benefits for Russia Best business practices - Russia is implementing practices such as Six Sigma; first Russian-American Black Belt class graduated in late October Leverage premium product - Made TMK Premium a TMK Group initiative; cross-licensing and cross-selling Premium connections 0000 Benefits for North America Technology - Building relationships between U.S. plants and Russian research community and technical universities to create innovative solutions to address current and future challenges Complementary product mix - Broaden product offering of seamless pipe, and to a lesser extent welded pipe, to service the North American market and drive incremental sales TMK TMK IPSCO The Acquisition Has Combined Two Strong Regional Companies into an Even More Capable Global Organization Cooperation - A combined commitment to develop advanced products that support our customers rapidly changing drilling technologies: as evidenced by our new research center and global portfolio of premium connections Global Scope - Functioning as a worldwide organization has increased global focus and is accelerating development outside of our dominant regions 39#40Thank You TMK TMK Investor Relations 40/2a, Pokrovka Street, Moscow, 105062, Russia +7 (495) 775-7600 [email protected] 40 40