Drilling revenues boost tube-maker profits

Tubular product manufacturers Lone Star Technologies Inc. and NS Group Inc. both released impressive first quarter fiscal results this week. Dallas, Texas-based tube-maker Lone Star Technologies reported first quarter net earnings of $41.3 million, or $1.33 per share, compared to $38.9 million or $1.30 per share for the prior-year quarter. Net revenues for Q1 '06 were $350.9 million, up from $297.8 million for the same quarter the previous year. Analysts attribute the company's year-on-year profit increases to strong oilfield revenues and higher drilling rig counts. Rhys J. Best, Lone Star's Chairman and CEO commented on the results: "Our first quarter performance reflects the continued strength in demand we are experiencing for our premium oilfield products. Given industry projections of continued expansion in unconventional land-based gas drilling as well as expected improvement in Gulf of Mexico activity in the second half of the year, we anticipate that strong customer demand for our key products will continue.” Newport, Kentucky-based tubing producer NS Group Inc. also saw strong first quarter results because of the rise in drilling for oil and natural gas. The company reported Q1 net earnings of $34.5 million, or $1.53 per share, compared with net income of $19.3 million, or $0.86 per share, in first quarter 2005. Net sales rose to $190.5 million, versus $139 million in the year-ago quarter. President and CEO Rene Robichaud noted that the US drill rig count rose about 3 percent in the first quarter of 2006 compared to the previous quarter, which created higher demand for the company's products. "The outlook for 2006 is good in spite of high import levels," Mr. Robichaud said in a news release. "Oil and natural gas prices are at high levels. Drilling for oil and natural gas remains strong both domestically and internationally."