Summary of 2009 Second Quarter Results

(Comparison with first quarter of 2009 and second quarter of 2008)

                                  Q2 2009       Q1 2009          Q2 2008                                  -------       -------          ------- Net sales (US$ million)          2,096.3   2,434.3   (14%)  3,110.1   (33%) Operating income (US$ million)     436.8     685.6   (36%)    816.0   (46%) Net income (US$ million)           336.4     393.1   (14%)  1,030.0   (67%) Shareholders' net income (US$  million)                          343.3     366.0    (6%)    987.5   (65%) Earnings per ADS (US$)              0.58      0.62    (6%)     1.67   (65%) Earnings per share (US$)            0.29      0.31    (6%)     0.84   (65%) EBITDA (US$ million)               563.1     807.4   (30%)    948.3   (41%) EBITDA margin (% of net sales)        27%       33%              30% 

Our results in the second quarter reflect significantly lower demand for our products and services in the light of the evolving global economic crisis and its impact on the activities of our customers. Shipments of tubular products fell 47% year on year and 19% sequentially, with the US and European markets being particularly affected. Our operating margins, particularly in our North American welded pipe operations, are being affected by very low production levels and our decision to maintain our industrial system and human resources prepared for the future recovery in demand. Our net income decreased 67% compared to the second quarter of 2008, however a significant part of this decrease is related to one-off gains recorded on the sale of subsidiaries in the second quarter of last year. Our net income for continuing operations, declined 44% compared to the second quarter of 2008. However, our cash flow from operations was strong as we reduced our investment in working capital by US$787.5 million. Consequently our net financial debt (total financial debt less cash and other current investments) decreased by US$659.8 million to US$121.9 million during the quarter after paying a dividend of US$354.2 million in June.

During the quarter, we re-presented the results of our Venezuelan operations that are in the process of being nationalized as discontinued operations.

Market Background and Outlook

Following their collapse in the second half of 2008 to a low of around US$30 per barrel at the end of the year, global oil prices have risen during the first half of 2009 and have reached the level of US$60-70 per barrel. This reflects increased optimism for a recovery in global economic growth led by China together with an expected decline in non-OPEC production and ongoing OPEC actions to cut production. North American gas prices, however, have fallen during the first half of 2009 to current levels of around US$3.50 per million BTU as the carry over of 2008 US production increases combined with reduced demand has resulted in high levels of gas in storage.

The international count of active drilling rigs, as published by Baker Hughes, continued to decline during the second quarter. It averaged 982 during the second quarter of 2009, 4% lower than the first quarter of 2009 and 9% lower than the same quarter of the previous year. The corresponding rig count in USA, which is more sensitive to North American gas prices, fell sharply in the first half and is now down 56% from its high in September 2008 but has shown signs of stabilizing in recent weeks. It averaged 936 during the second quarter, 29% lower than the first quarter of 2009 and 50% lower than the second quarter of 2008. In Canada, the corresponding rig count, which is affected by seasonal drilling patterns, averaged 90 during the quarter, a decrease of 47% compared to second quarter of 2008 and its lowest level since 1993.

Demand for our pipes from the global energy industry has been affected by the decline in oil and gas drilling activity and the actions taken by customers to adjust to reduced cash flows and a less favorable market outlook, including procurement delays and cancellations and the postponement of new project activity. Demand in the US and Canada has been further affected by extraordinarily high levels of OCTG inventories. Demand for pipes from the industrial and power generation segments remain at low levels.

We expect shipments for our large-diameter pipes for pipeline projects in South America, in the second half of the year, to remain close to the levels shown during the first half, however the order backlog continues to decline as new projects are postponed.

Steel and steelmaking raw material costs have stabilized and in recent weeks have shown some increase. However our costs, particularly at our North American welded pipe operations, will continue to be adversely affected by low production levels and the high cost of raw material inventories procured under different market conditions, partially offset by the actions taken to reduce our structural costs.

With low levels of demand likely to persist until the end of the year and prices adjusting downwards we expect that our sales and operating income will be lower in the second half of the year than the first. We expect that there will be a recovery in our shipments going into 2010 but that our revenues may not recover to the same extent considering the lagged effect of price declines in our results.

Analysis of 2009 Second Quarter Results

 Sales volume (metric tons)        Q2 2009    Q2 2008    Increase/(Decrease) -------------------------         -------   ---------   ------------------ Tubes - Seamless                  497,000     771,000         (36%) Tubes - Welded                     65,000     270,000         (76%) Tubes - Total                     562,000   1,041,000         (46%) Projects - Welded                  90,000     170,000         (47%) Total                             652,000   1,211,000         (46%) Tubes                             Q2 2009     Q2 2008   Increase/(Decrease) -----                             -------     -------   ------------------ (Net sales - $ million) North America                       661.0       986.5         (33%) South America                       244.9       304.1         (19%) Europe                              222.3       480.8         (54%) Middle East & Africa                452.7       565.6         (20%) Far East & Oceania                  137.8       187.1         (26%) Total net sales ($ million)       1,718.7     2,524.1         (32%) Cost of sales (% of sales)             57%         56% Operating income ($ million)        385.0       706.2         (45%) Operating income (% of sales)          22%         28% 

Net sales of tubular products and services decreased 32% to US$1,718.7 million in the second quarter of 2009, compared to US$2,524.1 million in the second quarter of 2008, as a 46% decrease in volumes was partially offset by higher average selling prices. In North America, although demand remained firm in Mexico, it declined precipitously in the USA as it was affected by the decline in drilling activity and by the extraordinary high level of OCTG inventories following the previous surge in imports from China. Sales in South America were affected by lower demand in Venezuela and Argentina. In Europe, sales were affected by lower demand from the industrial sector, lower demand from distributors serving the process plant sector and lower sales of OCTG in Romania. Sales in the Middle East and Africa were affected by lower sales of OCTG products in North Africa and the Caspian region. Sales in the Far East & Oceania were lower throughout the region.

 Projects                            Q2 2009   Q2 2008   Increase/(Decrease) --------                            -------   -------   ------------------ Net sales ($ million)                 254.4     368.1         (31%) Cost of sales (% of sales)               75%       71% Operating income ($ million)           45.5      77.6         (41%) Operating income (% of sales)            18%       21% 

Net sales of pipes for pipeline projects decreased 31% to US$254.4 million in the second quarter of 2009, compared to US$368.1 million in the second quarter of 2008, reflecting a decrease in shipments to gas and other pipeline projects in Brazil and Argentina, partially offset by higher average selling prices.

 Others                              Q2 2009   Q2 2008   Increase/(Decrease) ------                              -------   -------   ------------------ Net sales ($ million)                 123.2     218.0         (43%) Cost of sales (% of sales)               78%       72% Operating income ($ million)            6.3      32.5         (81%) Operating income (% of sales)             5%       15% 

Net sales of other products and services decreased 43% to US$123.2 million in the second quarter of 2009, compared to US$218.0 million in the second quarter of 2008. Although demand for our Brazilian industrial equipment business remained firm, demand for our U.S. electric conduit business was substantially lower and sales of sucker rods were affected by lower activity. Our Venezuelan HBI operation was re-presented as discontinued operation.

Selling, general and administrative expenses, or SG&A, increased as a percentage of net sales to 18.9% in the quarter ended June 30, 2009, compared to 15.1% in the corresponding quarter of 2008, mainly due to the effect of fixed and semi-fixed expenses over lower revenues.