The information in this press release includes statements regarding future events. These statements are based on the current views and assumptions of the Company's management regarding known and unknown risks and uncertainties.
Q2 2019 shipments are preliminary and may be adjusted.
Pipe Metallurgical Company (TMK), one of the world's largest producers of pipes for the oil and gas industry, announces operating results for the second quarter and first half of 2019.
Results for Q2 and H1 2019
2nd Q1 2019 vs. Q1 2019
Total pipe shipments increased 6% Q1 2019, mainly driven by growth shipments of welded pipes (by 17% compared to Q1 2019) due to an increase in shipments of large diameter pipes in the Russian division (by 54% compared to Q1 2019), as well as an increase in shipments of welded х pipes for industrial use due to the start of the construction season in Russia.
This fully offset the decrease in the volume of shipments of pipe products in the American division compared to 1Q 2019, which arose due to the continuing slowdown in activity in the North American market amid oil price volatility, continued rig reductions and high pipe stocks.
- OCTG pipe shipments declined 3% QoQ ., mainly due to a decrease in shipments in the American division, while shipments of OCTG pipes in the Russian division remained at the level of the previous quarter amid continued demand for OCTG pipes and an increase in demand for high-tech products.
H1 2019 vs H1 2018
- Total pipe shipments decreased 3% yoy and from left 1 989 thousand tons. This was due to a decrease in shipments of seamless and welded pipes (by 3% and 4% compared to the first half of 2018, respectively), which was mainly due to a decrease in shipments in the American division due to the continuing slowdown in the North American market. li>
This was partially offset by an increase in pipe shipments in the Russian division, mainly due to an increase in shipments of large diameter pipes (up 48% compared to the first half of 2018) and OCTG pipes.
- The volume of OCTG pipes shipped amounted to 948 thousand tons, practically unchanged compared to the first half of 2018. Shipments of seamless OCTG pipes in the Russian division grew by 9% y-o-y, driven by increased complexity of hydrocarbon production projects in Russia and an increase in the share of horizontal drilling.
- Total shipments of premium threaded connections increased by 4% compared to the same period last year and amounted to 201 thousand tons, while shipments in the Russian division increased by 17%.
Comment of TMK CEO Igor Korytko:
“In Q2 2019, total pipe shipments increased by 6% compared to with the previous quarter, mainly due to an increase in shipments in the Russian division. The 1H 2019 results were impacted by the continued slowdown in the North American market. However, we achieved a significant increase in shipments in the Russian division due to high demand from oil and gas companies for OCTG pipes - TMK's main products - by 9% compared to the same period last year.
We continue to increase sales high-tech and high-margin pipe products, including unique premium connections. TMK is one of the market leaders in terms of scientific and technical potential, which allows us to continue to develop innovative pipe solutions for our large clients in the oil and gas industry, implementing increasingly complex projects in the field of exploration and production.
In June 2019 TMK and NOVATEK signed an Agreement on Strategic Partnership and Cooperation for the supply of premium casing and tubing manufactured by TMK, valid until the end of 2023. We are already supplying pipes with premium threaded connections for many projects of this gas company and we believe that this agreement will further develop our partnership. ”
Forecast until the end of 2019
TMK expects pipe consumption by fuel and energy companies in Russia to remain at a high level in 2019. The increasing complexity of hydrocarbon production projects in Russia is expected to further increase demand for high-tech