May 24, 2010

Energy - Infrastructure
Please see important disclosures and analyst certification on pages 3 - 5 of this report.
Joseph D. Gibney Industry Note
joseph.gibney@capitalonebank.com
(713) 435-5385
Sales: 1-800-666-9174 Energy Infrastructure: OCTG Snapshot
Trading: 1-800-333-2005
Here is our periodic quick review of pertinent OCTG data (aggregation of COS
estimates, PipeLogix, and BHI US rig count) including: net domestic shipment totals,
imports, inventory on the ground, and spot pricing trends. The data reflect the most
recent PipeLogix update through March for shipments, through April for pricing, and
through 5/21 for BHI rig count.

Recent Trend Summary & Our Take

• Shipments: Total domestic shipments were up 26% to 152,079 tons in March vs
120,758 tons in February (down 15% from the peak of 179,229 tons in June '08).
Import volumes trended up 61% to 145,667 tons in March vs 90,289 tons in February
(down 75% from the peak of 571,376 in November '08). Total March shipments
(domestic plus imports) were up 41% to 297,746 tons vs 211,047 tons in February
(down 59% from the peak of 724,305 tons in November '08).

• Inventories: Monthly industry inventory levels declined for the 12th consecutive
month by 5,001 tons in March vs 80,597 tons in February. Inventory on the ground
[(COS estimated industry inventory level) / (existing BHI rig count x estimated
monthly OCTG usage per rig)] stands at 6.7 months at the end of March vs 7.0
months at the end of February.

• Pricing: Average ERW spot prices trended up 2.3% to $1,541/ton in April vs

$1,506/ton in March. Average seamless spot prices trended up 2.3% to $1,860/ton in
April vs $1,819/ton in March. Total average OCTG spot prices (blended ERW and
seamless) trended up 2.3% to $1,700/ton in April vs $1,662/ton in March (down 47%
from peak of $3,220/ton in September '08).

• Our take: Monthly inventory change on the cusp of turning back into a build trend vs
declines for the prior 12 months is the biggest takeaway. This inventory shift was
already apparent in OIS's OCTG inventory out of 1Q with a seq build of 17% to
$311MM marking a turn in the long unwinding of the past year. Net import levels
remain well below peak but along w/ domestic shipments are also on the rise
commensurate w/ the rig count build. With current US count having averaged 1,479 in
April and May to date at 1,505, as well as assuming domestic shipments and import
levels holding flat from March's levels, we'd estimate current May inventory on the
ground stabilizing ~6 months and likely beginning a slow build pending a continuation
of further domestic shipment acceleration.

CAPITAL ONE SOUTHCOAST, INC - 909 POYDRAS STREET - SUITE 1000 - NEW ORLEANS, LA 70112
 Page 2 of 5
May 24, 2010

Energy - Infrastructure
OCTG Shipments, Pricing and Inventory Trends

OCTG Inventory vs US Rig Count OCTG Shipments (Tons)

2,100 16.0 800,000

2,014 15.0
1,987 1,976 571,376
1,932 1,935 13.9 14.7
1,902 527,678
1,900 1,863 14.0
1,829 700,000
12.8 13.6 472,270
1,782 519,315
477,910
12.3
1,700 12.0 600,000
10.6 11.4
1,553 324,591
10.4 318,205
8.8
1,500 10.0 500,000 264,743
1,419
9.5
1,350 234,503
Rig Count

1,320 8.6 7.8

Months
7.0 191,753
1,300 8.0 400,000 278,708
5.9 1,172 1,267 7.0
1,105 1,107 6.7 259,049
1,100 5.1 1,044 6.0 300,000
995 1,009
4.3 980 121,663
4.0 918 931 117,473
3.7 3.7 3.8 3.9 895 145,667
900 4.0 175,630 179,229176,793 170,380 150,208 57,932
200,000 165,703 152,929
163,402 147,975 46,433
125,644 90,289
105,477 42,710
38,710 40,430 18,342 32,802
67,230
700 2.0 100,000 44,179 46,731 152,079
17,429 31,135 106,207 106,236 120,758
72,276 81,564
50,025 57,822 60,556
500 0.0 -
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-10 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-10 Feb Mar
2009 2009

BHI Rig Count Inventory on the Ground Net Domestic Shipments Net Imports

OCTG Spot Price Trend ($/ton) OCTG Inventory Trend

3,333
3,500 3,221 3,291 400,000 16.0
15.0
3,096 3,120
3,024 3,106 3,049 13.9 14.7
2,885 2,855 2,901 316,483
3,000 12.8
14.0
290,454 287,560 13.6
2,654 2,639 300,000
2,637
2,472 2,485
2,374 245,803 12.3
2,500 2,375 12.0
2,193 2,222 10.6
2,101
2,019 200,000 183,551 11.4
1,959 8.8 10.4
1,918
2,0001,889 1,789 1,842 1,818 1,819 1,860 10.0
1,665 1,783 1,768 1,746 1,739 1,758 1,787 9.5
1,506 1,541 7.0 8.6

Months
1,601 1,437 1,463 90,121 95,126 7.8
Tons

1,521 1,477 1,371 1,392

1,500 1,425 1,382 100,000 73,442 8.0
5.9 54,256 54,954 7.0
5,089 9,554 6.7
5.1
1,000 6.0
- 4.3
Apr May Jun Jul 3.9 Aug 4.0Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-10 Feb Mar
3.7 3.7 3.8
500 2009 (5,001) 4.0
(43,503) (47,103)
(60,492)
(100,000) (80,597)
(91,847)
0 (118,970) 2.0
(117,822)(112,779)
(126,474) (131,593)
(144,856)
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(200,000) 0.0

ERW Seamless Inventory Change Inventory on the Ground

CAPITAL ONE SOUTHCOAST, INC - 909 POYDRAS STREET - SUITE 1000 - NEW ORLEANS, LA 70112
 Page 3 of 5
May 24, 2010

Energy - Infrastructure

Disclosures:
Target Price Justifications and Company-Specific Risks:
BHI
Our target price is based on a 10.4x EV/EBITDA target multiple on our EBITDA estimate for the four quarters ending 2Q11. Risks that may impede
achievement of our price target include: incremental capacity entering the market and the cyclical nature of the oilfield services sector.
OIS
Our target price is based on a 6.5x target multiple on our forward four quarter EBITDA estimate, a 14.0x P/E multiple based on our forward four quarter EPS
estimate, and a five-year DCF forecast. Risks that could impede achievement of our target price include macro economic and commodity price fluctuations,
offshore project delays, and volatility in onshore drilling and completion activity.
Other Disclosures:
CONA, a bank affiliate of Capital One Southcoast, has received compensation for products or sevices other than investment banking services from Oil
States International, Inc. in the past 12 months.
Investors should assume that Capital One Southcoast, Inc, is seeking or will seek investment banking or other business from companies rated in this report.
The research analyst principally responsible for preparation of this research report has received compensation that is based upon (among other factors)
Capital One Southcoast, Inc's, investment banking revenues.
According to Reg AC, I/we, as (a) research analyst(s) of Capital One Southcoast, Inc,, certify that the research opinion(s) expressed in this research
comment/report accurately reflect(s) my/our personal view(s) and that no specific payment was received for this particular research product

Investment Ratings: At the close of business on December 19, 2007, Capital One Southcoast, Inc, changed its investment ratings to STRONG BUY, ADD,
NEUTRAL, and REDUCE from BUY, HOLD, and SELL. These ratings represent a time frame of twelve months.

Strong Buy, representing stocks deemed to have the potential to achieve a minimum 15% upside to the current price in the next twelve months, with more
timely price appreciation due to catalysts and/or compelling valuation.

Add, representing stocks deemed to have the potential to achieve a minimum 15% upside to the current price in the next twelve months or stocks deemed to
have more moderate potential with a low risk level.

Neutral, representing stocks that are deemed to have a greater amount of risk, less timely price appreciation potential, and/or near-term adverse macro
conditions that could keep them from reaching full valuation.

Reduce, representing stocks deemed to have the potential for a negative return.

Distribution of Ratings/IB Services

Capital One Southcoast, Inc

IB Serv./Past 12 Mos.
Rating Count Percent Count Percent
BUY [A/SB] 59 72.90 24 40.68
HOLD [N] 22 27.20 4 18.18
SELL [R] 0 0.00 0 0.00

CAPITAL ONE SOUTHCOAST, INC - 909 POYDRAS STREET - SUITE 1000 - NEW ORLEANS, LA 70112
 Page 4 of 5
May 24, 2010

Energy - Infrastructure

Rating and Price Target History for: Baker Hughes Incorporated (BHI) as of 05-21-2010

07/16/07 10/08/07 01/30/08 04/04/08 05/21/08 07/22/08 10/03/08 10/22/08 11/24/08 12/16/08 01/28/09
B:$101 B:$108 B:$95 H:$84 B:$97 B:$102 B:$93 B:$91 B:$67 B:$56 B:$55

100

80

60

40

20

0
Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2
2008 2009 2010

03/11/09 08/05/09 10/15/09 01/26/10

B:$45 B:$47 B:$58 B:$64

Created by BlueMatrix

Rating and Price Target History for: Oil States International, Inc. (OIS) as of 05-21-2010

01/10/08 02/21/08 05/01/08 05/14/08 06/04/08 06/26/08 08/04/08 09/26/08 10/21/08 10/31/08 11/24/08
I:B:$46 B:$53 B:$55 B:$58 B:$65 B:$68 B:$74 B:$72 B:$41 B:$46 B:$35

75

60

45

30

15

0
Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2
2008 2009 2010

01/21/09 02/20/09 03/31/09 05/08/09 05/19/09 07/30/09 09/23/09 11/04/09 01/12/10 02/22/10 04/16/10
H:$27 H:$24 H:$18 H:$23 B:$26 B:$28 H:$32 H:$37 H:$40 B:$46 B:$49

04/30/10
B:$55

Created by BlueMatrix

General Disclaimers: Our target price(s) with respect to the company(ies) covered by this report are not guarantees of future performance. They represent
forward-looking statements that involve risks, uncertainties, and assumptions. Our target price(s) are based on our beliefs and estimates and on information
currently available to us about the company, including statements by its management concerning their expectations regarding its future results. The actual
future price of the company's stock may differ significantly from our target price(s), because many of the factors that will determine that price are beyond our
ability to predict. Among those factors are future economic conditions in the country as a whole, such as interest rates, inflation, economic growth, and
consumer demand. We caution you that these and other important factors could cause the actual future price of the company's stock to be very different from
or worse than our target price(s). Accordingly, you should not place undue reliance on our target price(s), which are based only on our current expectations.
We undertake no obligation to update any of them in light of new information or future events. Additional factors specific to the company that could affect the
future price of the company's stock are identified in the "Risk Factors" section of periodic reports that are required to be filed by the company with the
Securities and Exchange Commission. You should evaluate our target price(s) in light of the risk factors, among others, identified by the company in those
reports. Prior to the close of business on July 8, 2002, Capital One Southcoast, Inc, did not provide target prices for stocks rated Hold.
The information contained herein is based on sources we consider reliable, but Capital One Southcoast, Inc, assumes no responsibility for the completeness
or accuracy of such information. Neither the information nor any opinion expressed herein constitutes an offer, or an invitation to make an offer, to sell or buy
any securities. Capital One Southcoast, Inc, or its individual employees and their respective affiliates may from time to time have a long or short position in
the security(ies) described above, and before or after your receipt of this report, may make or recommend purchases and/or sales for their own accounts or
for the accounts of other customers of the firm from time to time in the open market or otherwise. Opinions expressed are our present opinions only and are
subject to change without notice. Capital One Southcoast, Inc, may from time to time perform investment banking services for the company(ies) described
herein. This report has been prepared for general institutional client circulation and does not take into account the financial circumstances, investment
objectives, or risk tolerance of any particular investor. Capital One Southcoast, Inc, recommends that investors seek individual financial advice regarding the
appropriateness for their particular portfolios of the securities discussed in this report. Capital One Southcoast, Inc, is a wholly owned non-bank subsidiary of

CAPITAL ONE SOUTHCOAST, INC - 909 POYDRAS STREET - SUITE 1000 - NEW ORLEANS, LA 70112
 Page 5 of 5
May 24, 2010

Energy - Infrastructure
Capital One Financial Corporation. Investments not FDIC-insured. May lose value. No bank guarantee.
Additional information is available upon request by writing to the Equity Research Department; Capital One Southcoast, Inc; 909 Poydras Street;
Suite 1000; New Orleans, LA 70112.

CAPITAL ONE SOUTHCOAST, INC - 909 POYDRAS STREET - SUITE 1000 - NEW ORLEANS, LA 70112