Paolo Rocca

Thank you, Giovanni, and good morning to all of you. Our results for the quarter came in below where we were expecting due to some invoicing and cost affect, which we did not anticipate. However, the market outlook remains good and we look forward to better results in the second half.

First, let me turn to North America, where we had seasonable impact from Canada this quarter. Sales in the US market have increased and we are successfully introducing our new premium connection and sour service product developed for shale application. We are also seeing sourcing activity for the Gulf of Mexico deepwater starting to pick up. In Canada, activity is also stronger this year, and the increase in thermal oil projects is driving a higher demand for our premium product. This somewhat mitigated that the seasonal effect. But sales in Canada still fell 38% compared with previous quarter.

In Mexico, our invoicing was temporarily impacted by some changes that were implemented in our contract with Pemex. We now invoice when the pipe has been run in the well, and this is introducing some delay in our shipment.

Additionally, tropical storm Arlene affected our operation and delayed some export shipments. Mexican drilling activity in the second half will be higher, as Pemex is increasing its investment.

In the Eastern hemisphere, we will see the impact of higher activity in Saudi Arabia and Middle East in general with a rich mix of premium and sour product. This will flow into our results in the second half. In that region North Africa accepted, we’re seeing a gradual increase in sales and order, reflecting higher exploration activity in general and in deepwater and European shale plays in particular. This bodes well for demand in the medium term, particularly for more complex products as and when projects progress from the exploration to the development phase.

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