Vallourec: The Rise, Fall, and Resurrection of the Steel Tube King

Introduction: The Hidden Industrial Champion

Picture the scene: 7,000 meters beneath the Gulf of Mexico, temperatures exceeding 350°C, pressures that would crush a submarine like a soda can. At these depths, the margin for error is zero. A single failed connection, a microscopic crack in a steel tube, and you have an environmental catastrophe—or worse, dead workers.

This is the world where Vallourec operates. Not glamorous. Not the subject of tech conference keynotes or glossy magazine profiles. Yet the premium seamless steel tubes and proprietary connections this French industrial company manufactures are quite literally the arteries of the global energy system.

Vallourec is a global leader in premium tubular solutions for the energy industry and the low-carbon transition. With 13,000 employees in 20 countries, they support Oil & Gas, Geothermal, Hydrogen and Carbon Capture & Storage (CCUS) players with innovative and sustainable solutions.

But this is not just a story of technical excellence. It is one of the most remarkable corporate resurrections in European industrial history—a 130-year-old company that bet massively on the shale revolution, saw its stock collapse 99.7% from peak to trough, stared into the abyss of bankruptcy during the COVID-19 pandemic, and emerged transformed under new ownership and visionary leadership.

The central question: How did a French steel pipe company, once a CAC 40 constituent valued at stratospheric multiples during the oil boom, nearly die—only to engineer one of the most impressive turnarounds in the annals of private equity?

As a strategic capital partner, Apollo played a pivotal role in the design, launch, and implementation of the "New Vallourec" plan in May 2022, which helped to transform the Company's operational design, footprint and capabilities, and drove EBITDA from €258mm in 2020 prior to Apollo Funds' investment to €1,196mm in 2023, reflecting the best results in nearly 15 years.

That's a nearly five-fold increase in EBITDA in just three years. The stuff of business school case studies.

This is a story of industrial cycles, distressed investing, operational transformation, and the hidden world of premium connections—where intellectual property, not just raw material, drives margins. It's also a story about where energy is headed, as Vallourec positions itself for the transition to hydrogen, geothermal, and carbon capture.

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Part I: The Origins — Birth of the Seamless Steel Tube (1890s–1930s)

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The German Breakthrough That Changed Everything

To understand Vallourec, you must first understand the metallurgical revolution of the late 19th century. The origins of Vallourec trace back to the late 19th century, when the Mannesmann brothers patented the rolling process for producing seamless steel tubes in 1886, a breakthrough that enabled the efficient manufacture of high-strength hollow sections without welds.

Before the Mannesmann process, steel tubes were made by welding flat plates together—a technique that created structural weaknesses at the seam. The seamless tube, by contrast, was a single continuous piece of steel, forged under enormous pressure and heat. It could handle far higher pressures without failing. For the emerging petroleum age, this was transformative technology.

This innovation, initially developed in Germany, quickly influenced French steel production as companies sought to capitalize on growing industrial demand for durable tubing in sectors like machinery and infrastructure. In France, the Société Française pour la Fabrication des Tubes de Louvroil was established in 1890 in the Nord department to produce seamless tubes using this method, marking one of the earliest adoptions of the technology on a commercial scale.

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French Roots in Burgundy and the Nord

Tube manufacturers in France began to adopt the seamless tube production method developed in Germany by the Mannesmann brothers. Industrial production sites were created in Burgundy and in the "Nord" Department, birth place of the future Group. The Société française des corps creux, located in Montbard, Burgundy was founded in 1896 and renamed upon listing on the Paris stock exchange in 1899.

The geography matters. Northern France—Valenciennes, Louvroil, Recquignies—was coal and steel country, the French equivalent of Pittsburgh or the Ruhr Valley. Burgundy, meanwhile, brought different capabilities. These weren't just factories; they were centers of metallurgical expertise, populated by engineers who understood the subtle science of alloy composition and heat treatment.

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The Birth of the Name

During the 1920s and 1930s, many French industrial steel tube companies began to concentrate and specialize. In 1931, an industrial and commercial partnership was established between the factories in the cities of Valenciennes, Louvroil and Recquignies, forming a new company: Vallourec (using the first syllable of each city to create its name).

Val-Lou-Rec. A corporate name born from industrial geography, in the way so many great industrial names were coined—pragmatically, descriptively.

The interwar period saw consolidation amid economic challenges, with Vallourec initially formed in 1930 as a management entity overseeing tube mills in Valenciennes, Denain, Louvroil, and Recquignies, integrating operations to produce seamless steel tubes for oil exploration and general industry during the Great Depression. A key merger in 1937 combined the Société Métallurgique de Montbard-Aulnoye with the Société Louvroil et Recquignies, creating Louvroil-Montbard-Aulnoye and enhancing capabilities in hot-rolled tube production, including specialized tubes for the nascent French petroleum sector supplied to Compagnie Française des Pétroles.

This was the period when the institutional DNA of the company took shape: vertical integration, metallurgical expertise, a focus on high-specification applications. These traits would define Vallourec through the next century.

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Part II: Building the French Champion (1950s–1970s)

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Post-War Consolidation and the Paris Listing

The French steel industry emerged from World War II in need of reconstruction and rationalization. Under General Charles de Gaulle's industrial vision, France pursued consolidation of strategic industries.

Vallourec became the second largest steel tube manufacturer in France following the merger of the Société des Tubes de Valenciennes and the Société Louvroil-Montbard-Aulnoye, and was listed on the Paris Stock Exchange in 1957.

The public listing was more than a capital-raising exercise. It signaled that Vallourec had grown from a regional collection of mills into a national champion in a strategically important industry.

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The VAM Joint: The Innovation That Changed Everything

In the annals of Vallourec's history, 1963 stands as a pivotal year. That was when an engineer named Alexandre Madrelle, working in the technical center at Aulnoye-Aymeries, perfected a connection technology that would become the company's crown jewel.

The launch of the VAM® joint (named after Vallourec and Alexandre Madrelle, the engineer in charge of the project) was an innovation which revolutionized the oil sector. As a result of perfect "metal-on-metal" seal tightness, this connector rapidly became the benchmark in the petroleum industry.

Why did this matter so much? In oil and gas drilling, the connections between pipe segments are the weakest link. Under the extreme pressures of deep wells, standard threaded connections can fail catastrophically. The VAM joint's "metal-on-metal" seal provided gas-tight integrity that API-standard connections couldn't match.

The VAM® adventure began in 1965 with the development of a gas field at Lacq in the south west of France that it was thought could not be exploited as it had too high a sulphur content. In response to these unique conditions, Vallourec developed the first gas-tight connection in a highly corrosive context: the first VAM® was born.

This wasn't just a product; it was a platform. Over the subsequent decades, the VAM family would expand to encompass dozens of specialized connections, each designed for specific conditions—high-pressure/high-temperature wells, corrosive environments, deviated drilling, deepwater offshore applications.

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Vertical Integration and Competitor Acquisition

In 1967, Vallourec acquired the tube division of Lorraine-Escaut, its main competitor.

In the late 1970s, Vallourec moved in two directions. It built its own steelworks, in Saint-Saulve, in a move toward vertical integration. That launch of those works enabled Vallourec to supply its own raw steel for its seamless tube production.

The Saint-Saulve steelworks represented a strategic bet on vertical integration—controlling the raw material input rather than depending on external suppliers. This would prove both a strength and a vulnerability in the decades to come, as energy costs and labor costs fluctuated.

By the end of the 1970s, Vallourec had emerged as the undisputed leader in French seamless tubes, with proprietary technology, vertical integration, and a growing international reputation. The foundation for global expansion had been laid.

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Part III: Going Global — The U.S. Push & Mannesmann Alliance (1984–2005)

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The American Market and the Sumitomo Partnership

The 1980s marked Vallourec's decisive push into the world's largest oil and gas market: the United States.

In 2002, the company took a major step forward in that market when it announced the acquisition, through V&M Tubes and in conjunction with long-term partner Sumitomo, of Japan, of the North Star Tubes subsidiary of Cargill. The acquisition, which gave V&M Tubes an 80 percent stake in North Star Tubes, was completed for a price of $380 million, and established V&M Tubes as one of the world's leading manufacturers of seamless tubes for the oil and gas industry. It also completed the shift in Vallourec's revenues, boosting the share of the United States to half of Vallourec's total sales.

The Sumitomo partnership, which had begun in 1984, deserves special attention. Japan's Sumitomo Metal Industries was the third-largest manufacturer of steel tubes worldwide, and the partnership allowed Vallourec to access Asian markets while Sumitomo gained entry to premium connections technology.

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The Mannesmann Mega-Deal

The year 1997 marked a transformation in Vallourec's global position. The company formed an alliance with Mannesmann-Röhrenwerke—literally merging with the heirs of the Mannesmann brothers who had invented seamless tube technology in the first place.

1997 represents a turning point for Vallourec, following an alliance with the German company Mannesmann-Röhrenwerke Vallourec became a world leader in the seamless steel tube market. This jointly owned company was named Vallourec & Mannesmann Tubes (V&M Tubes).

Vallourec & Mannesmann Tubes (V & M Tubes) was a joint-venture between Vallourec (55%) and Mannesmannröhren-Werke (45%). Mannesmann contributed solid sales in China, Mainly in power generation and mechanical engineering, complementing Vallourec's expertise and leadership in premium tubes for the oil and gas sector. V & M Tubes became a world leader in seamless steel tubes.

The strategic logic was compelling. Vallourec brought premium connections technology and strength in oil and gas. Mannesmann brought industrial expertise, German engineering precision, and established positions in power generation and mechanical applications. Together, they created a global champion.

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Full Control and CAC 40 Entry

The Mannesmann Group was taken over and broken up by Vodafone in 2000. A cooperation between the tube works and Vallourec has existed since 1997, when the joint venture Vallourec & Mannesmann Tubes (V&M Tubes) was formed. In 2005, Vallourec acquired the Mannesmann shares.

In June 2005, Vallourec gained full control of V&M Tubes by purchasing Mannesmann-Röhrenwerke's 45% stake in the company. In 2006, following the purchase, the group entered the CAC 40 index, listed on the Paris Stock Exchange. Also, in that same year, following the acquisition of the American company OMSCO in September 2005, Vallourec became the world's second largest manufacturer of drill pipes.

Admission to the CAC 40—the French equivalent of the Dow Jones—represented the pinnacle of Vallourec's standing. The company was now unambiguously a national champion, a global player, positioned for what many expected would be a supercycle in energy investment.

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Part IV: Peak Oil Euphoria — The Shale Bet (2006–2014)

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Riding the Commodity Supercycle

The mid-2000s were heady days for anyone exposed to oil and gas. China's industrialization was driving seemingly insatiable demand for energy. Oil prices surged toward levels that once seemed unimaginable. And Vallourec's stock became a proxy bet on the energy supercycle.

The stock reached stratospheric valuations. While specific historical price data varies by source, the market capitalization expanded massively as investors piled into anything energy-related. For Vallourec, with its premium positioning, proprietary technology, and exposure to global growth markets, the story was compelling.

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The $1 Billion Youngstown Gamble

Then came shale. The combination of horizontal drilling and hydraulic fracturing unlocked vast reserves of oil and gas trapped in shale rock formations across North America. It was a revolution—and Vallourec bet big.

During the last years, Vallourec announced two major investments, in 2010, they announced plans to build a new tubing factory in Youngstown, Ohio for a sum of $650 million, to support the long-term development of alternative gas production (shale gas) in the United States. In 2011, Vallourec & Sumitomo Tubos do Brasil (VSB) was founded through a joint venture between Vallourec (56%) and Sumitomo (44%) featuring a new plant which is located in Jeceaba, Brazil.

With an initial annual production capacity of 350,000 tons of small diameter seamless tubes, the new mill represents an investment of US$1.05 billion and employs 350 people. The mill delivered its first pipe in December 2012 and will ramp-up throughout 2013.

The location choice—Youngstown, Ohio—was laden with symbolism. This was the heart of the American Rust Belt, a city devastated by the collapse of the domestic steel industry in the 1970s and 1980s. Vallourec's campus is situated where Youngstown Sheet & Tube Co. operated its Brier Hill plant. In 2012, Vallourec, a French corporation based near Paris, invested $1 billion to build a new seamless tube mill at the site on land next to an older mill that was once operated by Sheet & Tube.

The shale revolution demanded specific products: small-diameter tubes for the thousands of horizontal wells being drilled across formations like the Marcellus, Utica, Bakken, and Permian. The combination of oil and gas companies being able to drill horizontally and advances in hydraulic fracturing enabled exploration of shale gas to become more economical -- and demand to grow for the type of pipes Vallourec produces.

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The Logic That Made Sense at the Time

With hindsight, it's easy to criticize the billion-dollar bet on shale. But consider the context. Oil prices were high and seemingly destined to stay high. Shale drilling was booming. Vallourec's premium connections were ideally suited to the technical challenges of horizontal drilling—wells that required high-torque connections to handle the extreme stresses of deviated wellbores.

With the new mill coming on stream, Vallourec's Youngstown site now offers the full range of products and services necessary for all hydrocarbon production, and in particular the shale developments. The integrated site includes a steel mill, a mill specializing in medium diameter tubes (from 5- to 10 ¾-inches) and the new mill, which specializes in the manufacture of small diameter tubes (2 3/8- to 7-inches).

The investment wasn't reckless—it was rational given the information available. But commodity markets have a way of punishing consensus bets. The crash was coming.

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Part V: The Crash — Oil Crisis & Near-Death Experience (2014–2020)

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The 2014-2016 Oil Price Collapse

The party ended in 2014. Saudi Arabia, refusing to cede market share to shale producers, kept production high even as demand softened. Oil prices collapsed from over $100 per barrel to under $30. The shale revolution, which had made the United States the world's largest oil producer, was suddenly bleeding cash.

For Vallourec, the impact was devastating. Oil majors slashed capital expenditures. Drilling activity collapsed. The tubes that had been flying off the production line suddenly had no buyers.

In January 2016, Vallourec announced a strategic partnership with Technip, one of the world leaders in project management and engineering for energy. In February 2016, Vallourec announced a 1 billion € capital increase and increased its participation in the Chinese company Tianda Oil Pipe (TOP).

The €1 billion capital increase was a stopgap—a desperate attempt to shore up the balance sheet as losses mounted. But it wasn't enough.

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The Restructuring That Couldn't Save the Company

In recent years Vallourec has reduced the European actives by selling off or closing down the steel works in Saint-Saulve, the rolling mills in Zeithain, Montbard, Déville-lès-Rouen, Düsseldorf-Reisholz, Düsseldorf-Rath and Mülheim-an-der-Ruhr.

The closures represented the dismantling of Vallourec's European industrial base—facilities with histories stretching back to the 19th century. The Düsseldorf-Rath tube works can look back on a long tradition. It was here that the Mannesmann brothers started producing seamless steel tubes as long ago as 1899.

By 2020, the stock had collapsed to levels that defied belief. From a peak valuation that had made it a CAC 40 constituent, Vallourec traded at fractions of book value. The 99.7% decline from peak represented the near-total destruction of shareholder equity.

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The COVID Death Blow

Then came COVID-19. As if the oil crash weren't enough, the pandemic delivered the coup de grâce.

The bonds were quoted above par in February when the company announced a planned €800 million rights issue to repay debt. However, the planned share issue was abandoned due to adverse market conditions linked to COVID-19, as well as oil market instability.

Vallourec said that it is asking its banks for permission to start discussions for a "financial restructuring", with an aim to address its upcoming maturities and to rebalance its financial structure, while taking into account the "consequences of Covid-19 and oil market crises on its activity".

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The Debt Reckoning

Vallourec is looking to cut its €3.5bn debt pile via a 50% debt-to-equity conversion, said the company on Tuesday. The French steel pipe maker, rated CCC+ by S&P, is fast approaching a €1.7bn debt maturity wall in February 2021 and is in discussions with creditors to restructure its debt.

CCC+—deep junk territory. A €1.7 billion maturity wall in months. No prospect of the capital markets opening. This was existential crisis.

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Part VI: The Restructuring — Apollo's Rescue (2020–2021)

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Distressed Investors Circle

Over €100 million of the company's 2022, 2023 and 2024 bonds traded around the mid-40s after the French pipe manufacturer announced on Sept. 1 it was seeking to open financial restructuring talks with all stakeholders and the option to appoint a mandataire ad hoc. Hedge funds including Bybrook, Apollo, SVP and Sculptor have been buying into the bonds.

This is where the story turns from industrial tragedy to financial drama. Distressed debt investors—specialists in extracting value from corporate wreckage—were accumulating positions. Apollo Global Management and Strategic Value Partners (SVP) emerged as key players.

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The Deal Architecture

They led to the conclusion on February 3, 2021 of an agreement in principle between Vallourec S.A. and its main creditors on the terms and conditions of the financial restructuring of the Company. The main objectives that drove discussions between Vallourec and the different stakeholders in the financial restructuring were the following: a major deleveraging of Vallourec S.A., representing more than half of the principal amount of its debt, in particular by way of a debt-to-equity conversion of part of its debt; the reduction of interest expenses to a suitable level.

The Agreement in Principle, to be finalized in H1 2021, is with a group of lenders representing 65.1% of the total amount of the company's financial debt, including commercial banks and investment funds. It involves a EUR1.8 billion ($2.16 billion) debt reduction via a shareholders' rights issue, creditors taking equity stakes and a write-off by commercial banks of EUR169 million in debt. Investment funds Apollo Global Management, Inc., holding between 23.2% and 29.3% of the share capital, and Strategic Value Partners, LLC (SVPGlobal), holding between 9.7% and 12.3% of the share capital, will become Vallourec's two largest shareholders.

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The French Legal Framework

The restructuring utilized French insolvency law's "sauvegarde" procedure—a court-supervised reorganization designed to preserve viable businesses while restructuring debt.

On May 19, 2021, the commercial court of Nanterre, after acknowledging in particular that the necessary regulatory approvals had been obtained, approved the safeguard plan of Vallourec S.A. All creditors of the Company are thus bound by the terms of the safeguard plan.

Boulogne-Billancourt, July 1, 2021 – Vallourec announces today the finalization of its financial restructuring, thanks to the successful completion of the final steps of the safeguard plan approved by the Nanterre Commercial Court on May 19, 2021. Edouard Guinotte, Chairman and Chief Executive Officer, stated: "We successfully completed the final stages of our financial restructuring. Thanks to a sound financial structure and the support of our new reference shareholders, Apollo and SVPGlobal, we are in a position to fully deploy our strategic plan."

The existing shareholders were massively diluted. Apollo and SVP emerged as controlling shareholders. But the company survived—and now had a balance sheet capable of supporting a turnaround.

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Part VII: The Turnaround — "New Vallourec" (2021–2024)

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A Turnaround CEO Arrives

Vallourec's Board of Directors met on 20 March 2022 and appointed Philippe Guillemot for a four-year term, effective immediately. Philippe Guillemot was until recently CEO of Elior Group.

Philippe Guillemot brought a track record of corporate transformation. Before that, I was CEO at Elior Group, one of the world's leading operators in contract catering and support services with strong positions in 5 countries, from 2017 to 2022. I carried out in-depth work to put the Group on a sound financial footing, to provide it with a value-creating strategy and to build a robust organization. From 2013 to 2016, I was Chief Operating Officer at Alcatel-Lucent, where I drew up a business recovery and transformation plan and subsequently oversaw Alcatel-Lucent's integration into Nokia.

Philippe Guillemot, new Chairman and CEO of Vallourec, declared: "I am honoured and proud to serve as Chairman and CEO of Vallourec, an iconic global industrial company, which has a very distinguished engineering culture, to accelerate and extend its transformation and serve the renewed needs of our current and future customers in all our geographies. With the confidence of the Board of Directors and alongside the Vallourec management team, I will be committed to the acceleration of the Company's transformation which will generate significant near-term improvements to profitability and cash flow."

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The "New Vallourec" Plan

When I joined Vallourec as CEO in Spring 2022, its future was uncertain. A company once counted among France's industrial giants was fighting for its survival. One year in, the transformation is far-reaching. Thanks to our New Vallourec plan, we have a clear roadmap: to build a group that is profitable in all market conditions, and which has a promising long-term future. This outcome was far from given. Getting a company back on its feet calls for radical decisions and intense focus. The New Vallourec plan we set out in March last year transforms the business on three fronts: sales, organization and industrial footprint. All are focused on restoring profitability and long-term growth.

The New Vallourec plan, announced in May 2022, remains fully on track. The plan aims to generate €230 million of recurring EBITDA uplift versus 2021 and an approximately €20 million capex reduction with the full impact starting in Q2 2024. These actions will contribute to making the Group cycle-proof and generating positive free cash flow, before the change in working capital, even at the bottom of the cycle.

The strategy was clear: "Value over Volume." Rather than chase market share through aggressive pricing, Vallourec would focus on premium products where its technology and service capabilities commanded better margins.

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The Results Speak for Themselves

Vallourec reports EPS of 2.07 euros for 2023, compared with -1.60 euro the previous year, as well as EBITDA up 67% to nearly 1.2 billion euros, above the upper limit of its previously communicated range. During the year, the seamless tube manufacturer posted sales of 5.11 billion euros, up 5% (+6% at constant exchange rates), a volume effect of -14% having been more than offset by a price/mix effect of +18%.

This resulted in positive FY 2023 net income, Group share, of €496 million, compared to (€366) million in FY 2022. Earnings per diluted share amounted to €2.07, versus a (€1.60) loss in FY 2022.

Consider the trajectory: From €258 million EBITDA in 2020 to €1,196 million in 2023. From massive losses to nearly €500 million net income. From CCC+ credit rating to the brink of investment grade. This is operational transformation of the highest order.

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The ArcelorMittal Entry

ArcelorMittal (the 'Company') today announces that it has signed a Share Purchase Agreement to acquire 65,243,206 shares, representing c.28.4% equity interest in Vallourec, for €14.64 per share from Funds managed by Apollo Global Management, Inc., for a total consideration of approximately €955 million.

In March 2024, Apollo announced its exit, selling its stake to ArcelorMittal—the world's largest steel company. This transaction was made possible by the New Vallourec plan, which was announced in May 2022 a few weeks after Philippe Guillemot assuming the role of Chairman of the Board and CEO in March 2022. The New Vallourec plan has transformed the Group into a focused, streamlined, and resilient company with a promising future. Vallourec's 2023 earnings were the best Group results in nearly 15 years.

I would like to thank Apollo, for its decisive action during Vallourec's financial restructuring and its unfailing support in Vallourec's financial and industrial turnaround that I initiated when I took over the helm of the Company two years ago. With Apollo's help, we have fundamentally changed the operational and financial structure of Vallourec, and are now well-positioned to carry this momentum into the future. ArcelorMittal is a natural shareholder for Vallourec, and we are excited for the contributions it will bring to our Company. We share a passion for the global steel industry and share a common vision of its future. With this transaction, we transition from a world-class financial partner to a world-class industrial partner.

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Investment Grade Restored

As of late November 2025, the transformation has been officially recognized by credit rating agencies.

Meudon (France), November 27, 2025 - Vallourec, a world leader in premium seamless tubular solutions, announces further positive developments in its credit ratings from Moody's and S&P Global, following the upgrade to Investment Grade by Fitch in April 2025. Specifically: Moody's upgraded Vallourec's issuer rating from Ba1 to Baa3, an Investment Grade rating with a stable outlook. S&P Global upgraded Vallourec's long- and short-term issuer credit ratings from BB+/B to BBB-/A-3, Investment Grade ratings, with a stable outlook.

This marks Vallourec's first Investment Grade rating since 2015.

From CCC+ in 2020 to BBB- in 2025. A journey from distressed credit to investment grade in four years.

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Part VIII: The Secret Weapon — VAM® Technology Deep Dive

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Understanding Premium Connections

To appreciate Vallourec's competitive position, you must understand the world of premium connections—arguably the most technically demanding and highest-margin segment of the oil country tubular goods (OCTG) market.

For six decades, VAM® has set the standard for performance in the most demanding wells worldwide – from the North Sea to the Middle East, from HP/HT reservoirs to shale plays. Today, the VAM® ecosystem operates across 35 production sites in more than 20 countries and brings together 135 licensees in 47 countries.

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What Makes VAM Different

The Oil & Gas industry's increased activity in HPHT and deepwater well developments requires high strength and excellent seal integrity to withstand high pressure, high temperature and high combined loads like as external pressure and compression on threaded connections for Oil Country Tubular Goods (OCTG). "VAM®21" is developed as an innovative high-performance premium threaded connection which has high strength and high seal integrity to comply with the severest protocol of ISO13679 CAL IV, within the full pipe body envelope, and excellent handling and running ability on the actual rig site than conventional products.

VAM®21 is the latest generation of T&C premium connection introducing an innovative and revolutionary design. Confidence thanks to ISO 13679-2019 CAL-IV/API 5C5-2017 CAL-IV compliance within the full pipe body envelope extends the opportunities for your well designs.

VAM® 21 represents the most advanced premium connection technology on the Oil & Gas market and has become the benchmark for versatility and reliability. Over 1.5 million joints have been successfully run worldwide.

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The Licensing Model as Competitive Moat

VAM operates on a hybrid model: direct manufacturing combined with extensive licensing to third parties. This creates multiple revenue streams:

1. Direct sales of tubes with VAM connections from Vallourec manufacturing facilities
2. Licensing fees from third-party manufacturers who use VAM technology on their own tubes
3. Threading services at VAM service centers worldwide

The 135 licensees in 47 countries represent a network effect that would take decades for a competitor to replicate. Oil majors have qualified VAM connections for use in their wells; switching to an alternative would require extensive re-qualification testing—a process that can take years.

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Recent Innovation: VAM® XTRA

Continuing its commitment to innovation, Vallourec introduced VAM® XTRA in 2025, a new high-torque premium connection designed for long laterals of shale operations, reinforcing the Group's leadership in advanced connection technology.

The pattern is consistent: anticipate technical challenges in drilling, develop solutions before competitors, and establish those solutions as industry standards.

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Part IX: The Business Model Today

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Segment Overview

In the Oil & Gas industry, Vallourec is a major provider for tubing solutions used in exploration and production (casing and tubing, connections and risers), the transport of hydrocarbons (line pipe and integrated welding solutions), services for the oil industry, and tubes for refineries. Vallourec is specialized in products used in extreme conditions such as deep wells, corrosive environments, deviated wells, and high pressure and high temperature conditions as well. Vallourec works with oil companies, engineering companies, and distributors alike.

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The Brazilian Advantage

Vallourec's Brazilian operations represent a unique competitive advantage—one that becomes increasingly valuable in an era of focus on sustainability.

In Brazil, Vallourec operates a 164,000 acres forest estate: 40% of this area is preserved in its natural state and 60% is used to grow eucalyptus trees for charcoal production. This charcoal, made from biomass, is used as a substitute for coke in the Jeceaba blast furnace in Brazil for steel production.

VSB has adopted a "charcoal blast furnace," which uses charcoal made from eucalyptus trees grown in the contracted plantation, as a reducing material.

Based on 2023 data, Vallourec has reduced its carbon footprint to 1.45 tonnes of CO2 equivalent per tonne of tube produced, compared to 1.79 tonnes of CO2 equivalent per tonne of tube in 2019, representing a 19% reduction over 4 years. Carboval reduces the raw material transformation cycle from 16 days to 16 hours, without methane emissions and utilizing about 95% of the energy contained in the wood. Each Carboval reactor replaces seven masonry kilns and can produce up to 22 tons of charcoal with much higher quality than conventional rectangular kilns.

This charcoal-based steelmaking represents a genuinely differentiated production process. The eucalyptus forests absorb CO2 as they grow, offsetting a substantial portion of the emissions from steel production.

Indeed, of the 60% of steel produced internally, 73% comes from our electric steel mills in Jeceaba, Brazil, and in Youngstown, United States, which use scrap metal made from recycled elements. Another part of the steel is manufactured in Brazil using charcoal produced on 110,000 hectares of eucalyptus forests harvested by Florestal, a subsidiary of Vallourec. The eucalyptus trees absorb CO2, mainly from roots, and form a giant carbon sink.

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The Mine and Forest Segment

Beyond tubes, Vallourec operates an iron ore mine in Brazil—the Pau Branco mine—which supplies raw material for internal production while generating significant external sales.

The Vallourec Pelletizing plant is ISO 50001, ISO 45001, ISO 14001 and ISO 9001 certified. It is also the only one in the world to use biomass charcoal as the main fuel in the pellet-burning process, with lower greenhouse gas emissions.

This vertical integration—from iron ore mine to forest to pelletizing plant to steel mill to tube rolling to connection threading—provides cost advantages and supply chain security that few competitors can match.

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Part X: New Energies and the Energy Transition

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Positioning for the Future

Vallourec is grouping its offers for the energy transition (Hydrogen, CCUS, Geothermal Solar energy) under one name: Vallourec® New Energies. The energy transition is gaining steam around the world with strong commitment from industry players to lower CO2 emissions, produce clean energy and maintain global warming to under 2°C. Vallourec joined the momentum back in 2019 supporting its customers in researching and developing new solutions for their low-carbon activities. Since then, our offer portfolio for Hydrogen, CCUS, Geothermal and Solar energy has grown, with interest coming from new and traditional customers and new orders steadily coming in. Vallourec is grouping its offers for the energy transition under one commercial name, Vallourec® New Energies.

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Geothermal: A Natural Extension

Vallourec has been a part of the geothermal industry for over 30 years, supplying heat-resistant tubulars to extract clean energy from the earth. Our latest VAM® connections are qualified up to 350°C under thermal cycles as per TWCCEP (Thermal Well Casing Connection Evaluation Protocol). In addition, Vallourec's innovative THERMOCASE® Vacuum Insulated Tubing (VIT) is an integral part of closed-loop geothermal systems which produce heat and power with minimal losses.

In 2023, we have won an order for Fervo in the United-States and has started deliveries to its customer Eavor™, a leading Canadian company in geothermal technology, for its European geothermal project located in Geretsried, Bavaria (Germany). Vallourec and Eavor had previously collaborated on the Eavor-Deep™ Demonstration project in New Mexico, for which Vallourec supplied tubular solutions including its flagship VAM® 21 HT connection.

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Hydrogen Storage: The Delphy Solution

During ADIPEC 2025, Vallourec will also showcase Delphy, its unique underground hydrogen storage solution, which leverages VAM® connections and Vallourec's long-standing expertise in advanced materials. This combination ensures exceptional integrity and reliability for hydrogen storage close to the end-user. Recently qualified by DNV, Delphy is now ready for commercialization—marking a major milestone in our commitment to supporting a sustainable energy future.

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CCUS: Enabling Carbon Capture

Carbon capture, utilization and storage (CCUS) technologies are essential to deliver clean industrial growth and to achieve net-zero ambitions. "Carbon capture is an absolutely essential piece of the world's decarbonization goals, especially for heavy industries for which emissions are hard to abate," Joe says. "CCUS enables us not only to store carbon underground, but also to turn it into feedstock for other materials such as sustainable aviation fuels (SAF) or plastics," Heather says. Vallourec supports this sector with a range of specialized products. "We provide both subsurface tubulars as well as onshore and offshore transport lines, along with coatings and bends designed for CCUS operations."

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Part XI: Competitive Positioning and Porter's Five Forces

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The Competitive Landscape

The Major Players Covered in this Report: NOV, Tenaris, Vallourec, TMK, Weatherford, United States Steel, JFE Steel, Nippon Steel, DP-Master, Hilong Group, Hunting Energy Services, Hyundai Steel, TPCO, EnergeticX, Premier Pipe.

Some of the prominent players in the Oil Country Tubular Goods market are Tenaris, US Steel Tubular Products, Nippon Steel and Sumitomo, ArcelorMittal, TMK, Vallourec, TATA Steel, ILJIN Steel Co, TPCO Enterprise, Inc., and JFE Tubic Corporation.

The primary competitor is Tenaris—an Argentine-Italian company with strong positions in the Americas. TMK (Russia), TPCO (China), and Japanese producers like Nippon Steel round out the competitive field.

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Porter's Five Forces Analysis

Threat of New Entrants: LOW

Building a competitive OCTG business requires: - Capital-intensive manufacturing facilities ($1 billion+ for integrated operations) - Decades of metallurgical know-how - Qualification with major oil companies (a multi-year process) - Proprietary connection technology protected by extensive patent portfolios

The VAM ecosystem alone—with its 135 licensees and 35 production sites—would take a new entrant decades to replicate.

Bargaining Power of Suppliers: MODERATE

Vallourec's vertical integration in Brazil (iron ore, forests, steel production) mitigates supplier power for a significant portion of production. However, exposure to energy costs (natural gas, electricity) and scrap steel prices creates some vulnerability.

Bargaining Power of Buyers: MODERATE TO HIGH

Oil majors (Shell, ExxonMobil, Chevron, Saudi Aramco) are sophisticated buyers with strong negotiating leverage. However: - Switching costs are high due to qualification requirements - Premium connections are essential for critical applications where failure is unacceptable - The cost of OCTG is typically 1-2% of total well cost—not a primary target for cost reduction

Threat of Substitutes: LOW

For HP/HT applications, deep wells, corrosive environments, and deviated drilling, there are no viable substitutes for seamless steel tubes with premium connections. Regulatory requirements and engineering specifications favor proven solutions.

Industry Rivalry: HIGH

Competition is intense, particularly in commodity segments. However, the premium segment where Vallourec focuses is more differentiated, with competition based on technology, reliability, and service capability rather than just price.

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Hamilton Helmer's 7 Powers Framework

Applying Hamilton Helmer's framework reveals Vallourec's strategic advantages:

1. Process Power: Charcoal-based steelmaking in Brazil provides a genuinely differentiated, lower-carbon production process that competitors cannot easily replicate.

2. Scale Economies: Vertical integration from iron ore to finished tubes provides cost advantages and supply chain security.

3. Switching Costs: Oil companies that have qualified VAM connections for specific applications face significant costs (time, testing, risk) to switch to alternatives.

4. Network Effects: The VAM licensing network of 135 licensees creates an ecosystem where the standard becomes more valuable as more users adopt it.

5. Brand: In the premium connections segment, VAM has established brand recognition as the quality benchmark over 60 years.

6. Counter-Positioning: The "Value over Volume" strategy positions Vallourec differently from competitors who chase market share through aggressive pricing.

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Part XII: Key Metrics and Investor Considerations

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Critical KPIs to Monitor

For investors tracking Vallourec's ongoing performance, three metrics deserve particular attention:

1. EBITDA per Tonne of Tubes

This metric captures pricing power and operational efficiency better than top-line revenue or aggregate EBITDA. Tubes EBITDA rose from €168 million in Q3 2022 to €193 million due to a 20% increase in the average selling price per tonne. Consequently, EBITDA per tonne improved from €364 per tonne to €563 per tonne.

During the turnaround, this metric improved dramatically—indicating that the "Value over Volume" strategy is working. Monitoring whether this premium pricing is sustainable through industry downturns will be critical.

2. Net Debt (or Net Cash) Position

The company reached a net debt position of zero at year-end 2024, thanks to favorable working capital dynamics and significant divestments, including the sale of the Dusseldorf-Rath site in Germany for €155 million.

From €3.5 billion of debt in 2020 to zero net debt in 2024. Maintaining a fortress balance sheet provides resilience through cyclical downturns—the same downturns that nearly killed the company in 2014-2020.

3. Premium vs. Commodity Mix

The proportion of revenues from premium products (VAM connections, high-specification tubes for HP/HT applications) versus commodity tubes indicates whether Vallourec is successfully executing its differentiation strategy.

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Bull Case

• Investment grade ratings from all three major agencies provide financial flexibility
• Energy transition opportunities (geothermal, hydrogen, CCUS) offer new growth vectors
• ArcelorMittal as anchor shareholder provides industrial synergy potential
• Brazilian charcoal-based production offers sustainability differentiation
• VAM technology leadership creates barriers to entry
• Management has delivered on transformation promises

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Bear Case

• Structural dependence on oil and gas capital expenditure cycles
• Energy transition timeline uncertain; traditional O&G still drives majority of demand
• Competition from Chinese producers in commodity segments
• Potential for overcapacity during industry downturns
• Geographic concentration risk in Brazil and U.S.
• ArcelorMittal stake raises takeover premium expectations that may not materialize

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Myth vs. Reality

Myth: Vallourec is a commodity steel company exposed to commodity pricing.

Reality: Premium connections and specialized applications command significant pricing premiums. The company's "Value over Volume" strategy specifically targets high-margin segments where technology, not just cost, drives purchasing decisions.

Myth: The energy transition will strand oil and gas exposed companies.

Reality: Even aggressive decarbonization scenarios require substantial ongoing investment in oil and gas production for decades. Moreover, Vallourec's products are directly applicable to geothermal, hydrogen, and carbon capture—the New Energies segment represents a credible growth option.

Myth: The turnaround was just about cutting costs.

Reality: While cost rationalization was essential, the transformation also involved exiting unprofitable markets, refocusing the product portfolio, implementing new commercial practices (including dynamic pricing), and investing in new capabilities like Brazil's enhanced threading capacity.

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Regulatory and Accounting Considerations

Investors should monitor:

• Environmental liabilities: The closure of European facilities and ongoing operations in Brazil carry potential environmental remediation obligations
• Working capital cycles: OCTG businesses can have significant working capital swings tied to project timing
• Currency exposure: With operations in Brazil, the U.S., and Europe, currency movements affect reported results
• ArcelorMittal relationship: Potential conflicts of interest given ArcelorMittal's position as both shareholder and potential competitor in some segments

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Conclusion: The Arc of Industrial Resilience

The Vallourec story encapsulates both the peril and the promise of industrial capitalism. A 130-year-old company, born from the metallurgical breakthroughs of the late 19th century, nearly destroyed by the commodity collapse of the 2010s, resurrected through financial engineering and operational transformation, now positioned for the energy system of the 21st century.

"In just three years, the 'New Vallourec plan', initiated and led by Philippe Guillemot, has been instrumental in the company's turnaround. This plan restored a future for the Group. Now debt-free and financially sound, Vallourec is delivering strong, profitable, and sustainable growth across all of its markets."

The premium seamless tube market may not capture headlines or spark retail investor enthusiasm. But buried beneath the surface—literally, in the case of oil wells—this industry forms critical infrastructure for global energy production. The connections that keep high-pressure fluids contained, the tubes that withstand corrosive environments miles underground, the metallurgy that enables energy production in increasingly challenging reservoirs.

Vallourec's journey from near-death to investment-grade credit in four years represents a masterclass in:

• Financial restructuring through French insolvency law
• Active ownership by sophisticated private equity (Apollo)
• Operational transformation under crisis conditions
• Strategic repositioning from "volume" to "value"
• Capital allocation discipline in a cyclical industry

The open questions for the next chapter: Can the premium positioning survive a severe industry downturn? Will the New Energies segment deliver meaningful revenue growth? Does the ArcelorMittal relationship evolve toward full acquisition?

What seems clear is that Vallourec has earned the right to compete for that future. The company that was nearly left for dead in 2020 has emerged leaner, stronger, and better positioned than at any point in recent memory. For an industrial company with origins in the 19th century, that capacity for reinvention may be the most valuable asset of all.