Valve Manufacturers Association // MRC · Transmark Fcx December 2009 Andrew Lane Chairman of the Board Oct 2007 Merger of McJunkin and Red Man 2009 January 2010 Re-branded Company

Valve Manufacturers Association // MRC

Global Supplier of Choice®

Confidential Information for Internal Use Only // Page 2

MRC // Global Supplier of Choice®

®

Our Mission is to be the


MRC is the largest global distributor of pipe,

valves and fittings (PVF) and related

products and services to the energy

industry. We operate over 400 service

locations globally, including key locations

in the most active oil and natural gas

regions of North America. We offer a

wide array of PVF and oilfield supplies.

MRC is diversified, both by geography

and end market.

Our Vision Be the world’s premier distribution

company of PVF products and services

to the energy and industrial markets.

Our Mission Statement We will be the global supplier of choice®

in the markets we serve by building strong

relationships with our customers and suppliers.

We create superior value for our stakeholders by

working as a team to efficiently buy, sell, and

deliver PVF products to the energy and

industrial markets.



®

McJunkin Red Man (MRC) Overview

• MRC distributes a range of products

including carbon steel pipe, valves and

specialty products, carbon fittings,

oilfield supplies, stainless steel pipe and

fittings and gas products with an

inventory of over 250,000 unique items

• PVF products are typically a fraction of

the total cost of a project, thus a

premium is placed on services given the

high cost to customers of maintenance

or project delays

2010 Revenues by Product

• MRC is the largest global distributor

of PVF

2010 Revenues by Geography1

• 90% of MRC’s 2010 revenue was

generated from the energy industry

• Leading full service PVF (pipe, valves &

fittings) distributor

• Products used in extreme, high stress

operating environments leading to the

need for regular replacement cycles

2010 Revenues by End Market

1 Includes MRC Midfield, MRC Transmark and MRC SPF



®


MRC is the Largest Distributor of PVF Products Globally

• Over 400 MRC Global Service Locations • 2010 Sales = $3.96 Billion (Global Sales)

• Approx $850 Million Inventory Value (On the Ground)

• 3,800 Employees

* North America International

Branches +180 +30

Distribution Centers

6 = U.S.

1 = Canada

1 = U.K.

1 = Singapore

1 = Australia

* 13 Valve Automation Centers in North America

* 180+ Pipe Yards in North America

MRC Locations

Australia

Belgium

Canada

China

Finland

France

Germany

Indonesia

Italy

Kazakhstan

Netherlands

New Zealand

Singapore

South Korea

Thailand

United Arab Emirates

United Kingdom

United States

Includes MRC Midfield, MRC Transmark and MRC SPF

+



®

Corporate Timeline

February 1921

McJunkin Corporation

is Founded

1921

1977

March 1977

Red Man Pipe and

Supply Company

Founded

January 1989

McJunkin Merges its

Oil & Gas Division

with Appalachian

Pipe & Supply

1989

June 2005

Red Man Acquires

Midfield Supply in

Canada

2005

2007

January 2007

Goldman Sachs

Capital Partners

Makes Strategic

Investment in

McJunkin

April 2007

McJunkin Acquires

Midway Tristate

July 2008

Purchased

Remaining 49%

interest in Midfield

September 2008

Andrew Lane

Appointed as

President & CEO

October 2008

McJunkin Red Man

acquires LaBarge

2008

February 2009

MRC Opens

Houston

Headquarters October 2009

MRC Acquires

Transmark Fcx

December 2009

Andrew Lane

Chairman of the

Board

Oct 2007

Merger of McJunkin

and Red Man

2009

January 2010

Re-branded

Company Logos

to MRC

May 2010

MRC Acquires

South Texas

Supply

Aug 2010

MRC Acquires

Dresser Oil Tools

& Supply

2010

May 2011

MRC Acquires SPF

2011

VSC

July 2011

MRC Acquires VSC



®

1970s

• Many manufacturers; mostly U.S. manufacturers serving the U.S.

• Many local, some regional distribution

• Some segment of project work was sold direct

1980s

• International sourcing grows, mainly for projects; Europe, Japan primary options

• Traditional manufacturers begin to outsource (Mexico, Korea, India)

• Some initial consolidation of distribution regionally

1990s

• Consolidation of manufacturing grows; migration to China with increasing capacity

• Long-standing brands begin to lose historical identity

• Distribution expands nationally

2000s

• Rapid consolidation of manufacturing, distribution

• Many new brands enter market as business explodes in mid-decade

• Market slide in later years left an oversupplied North American marketplace

• Manufacturers tend to have a regional distribution strategy

The Evolution of Valve Manufacturing & Distribution



®

• Manufacturers expand integration chain; acquire additional

lines, distribution

• International expansion of distribution stretches manufacturer

recognition

• To grow markets & capture large CAPEX projects (especially

international), manufacturers focus on high-end products,

special services with desire to pull through balance

• European “buy direct” model moving to North America; full line

PVF uncommon outside North America

TODAY



®

Today’s Challenges are Similar to Challenges in 2005



®

Supply Chains becoming more complex and influential

• Consolidate spend with smaller group of suppliers

• Expectation to execute on leveraging initiatives

• Global commercial expectations

End Users requiring distribution to align with competing brands

• Dilution thru multiple distribution

• Compromises distributors and manufacturers

Difficult to obtain accurate forecasting information

• Distribution and manufacturers take on financial risk

Today’s Challenges from End Users

//Continued



®

Migration away from industry standard valves and growth of customer specific valves

• Challenge associated with service requirements (commercial and technical)

• Unique inventory means additional costs

• One product-one customer

Price Updates

• Requests for industry indicies to support price changes

• Delay, Delay

Resolution of product quality issues getting far more challenging

• Distribution and manufacturers take on financial risk

Today’s Challenges from End Users



®

IOC and Petrochemical Model for Valves

• Direct agreements with manufacturers for commodity and specialty products

• Distribution supports MRO requirements with service fee

• Service models for project requirements

• Separate agreements for valves and top works creating complications

Shale Play Business

• Complexity of well head skid packages

• Multi-site fabricators involved

• New pipeline projects and integrity initiatives using varying supply models.

Australia LNG Market

• Significant project activity through global EPC’s

• “Shorts” and future MRO requirements need to be supported

Examples



®

Ongoing Challenges for Distribution

Increasing demand for value add

products and services

• QA/Documentation requests increasing

• Elevated requests for inbound

inspection

• Ship and hold

• Extended warranty period

• Opportunity-but also cost creep

Regional Standards

• Variations by country/region

• PED

• TUV

• GOST

• JIS

Continued pressure to provide low cost

“premium” product with “premium”

service model

Low Cost Sourcing will continue to

gain influence of decision makers as

quality differences narrow

Reduction of knowledgeable workforce

• Engineering reductions

• End user maintenance and repair

groups are much smaller organizations

• Replacement of experienced

knowledge base at manufacturer and

distributor level

• Additional responsibility shifting to

distribution



®

What can manufacturers do to help?

View distribution as a partner

• Consider value of distribution as

well as future MRO requirements

when developing position on major

project requirement

• Engage distribution in project

opportunities where appropriate

• Involve distribution in sales

channel

Develop data to support elimination

of inbound inspection

• Look for ways to reduce, not add

cost

• Opportunity to differentiate from

competition

Ship on time

Timely communicate changes in

manufacturer lead times

• Improves customer service

• Better aligns end user demand with

production forecasting

• Minimize safety stock

Challenge end users regarding unique

inventory and standards

Be involved with developing indices

regarding price adjustments

Manufacturer quality products that our

customers expect to receive



®

Thank you

Documents

Valve Manufacturers Association // MRC · Transmark Fcx December 2009 Andrew Lane Chairman of the Board Oct 2007 Merger of McJunkin and Red Man 2009 January 2010 Re-branded Company