Vallourecin 2014

NEWS 2014 Page 2

WHERE HISTORY IS BEING WRITTEN

Page 16

THE PURSUIT OF EXCELLENCE AND DIFFERENCE

Page 24

THE ENERGY OF YOUR CHALLENGES

Page 34ACTIVITY REPORT

2 NEWS 2014

8 VAM® CELEBRATES 50 YEARS OF SUCCESS!

10 OUTLOOK

12 VISION Interview with Philippe Crouzet, Chairman of the Management Board Message from Vivienne Cox, Chairman of the Supervisory Board

THE WORLD OF VALLOUREC

16 WHERE HISTORY IS BEING WRITTEN Our three major markets Closer to our customers Focus Africa tomorrow

THE VALLOUREC LABEL

24 THE PURSUIT OF EXCELLENCE AND DIFFERENCE Industrial excellence: premium across-the-board Commercial excellence: creating more value for our customers Corporate Social Responsibility: Vallourec’s commitments Focus Innovation every day

THE VALLOUREC TEAM

34 THE ENERGY OF YOUR CHALLENGES Expert and proud to be part of Vallourec Safety: priority for one and all Focus Vallourec women

42 FINANCIALS Our governance Closer to our shareholders Financial results and responsible performance targets

Zero lost-time accidents in 4 years: Vallourec Mexico

wins the 2014 Vallourec Safety Award.

4 suppliers were recognized with 2014 Vallourec Supplier's Awards for their performance

in the categories: “Competitiveness,” “Quality and deadlines,” “Innovation” and “CSR.” Vallourec places a high priority on working

with a network of responsible suppliers.

Vallourec qualified to equip the new Chinese ACP1000 standard reactor,

confirming its reputation for technical excellence in the

Chinese market, which represents half of the global

nuclear market.

Vallourec Drilling Products develops its activities in Argentina

40 years of expertise serving the nuclear industry

Inventory adjustments by major partnersIn mid-2014, Petrobras, a major customer of the Group in Brazil, decided to significantly reduce its tube inventories. Large EAMEA zone operators also adjusted inventories and deferred tenders on premium

products. These events significantly impacted Vallourec’s order book and performance in 2014, but without diminishing confidence in the long-term attractiveness of these two markets.

New Award for CSR commitmentsVallourec was again recognized for its good practices in Corporate Social

Responsibility by Agefi at the 2014 Corporate Governance Awards.

Six unconventional drilling assemblies were allocated to Vallourec Drilling Products, establishing the company’s position in the developing market. The Argentine government is

seeking to make the country energy independent by 2030. This should drive the development of shale gas resources in Argentina, which ranks third in the world behind the U.S. and China.

Vallourec has been a partner of the French nuclear industry since its beginning and is the only company able to supply all of the tubes needed by a nuclear plant, in all sizes and all steel grades. Since 1974, subsidiary

Valinox Nucléaire has produced over 40,000 kilometers of tubes, the equivalent of the Earth’s circumference. Today, 80% of nuclear power plants worldwide are equipped with Vallourec tubes.

NEWS 2014 NEWS 2014

Iconic chrome of motorcycle manufacturer Harley Davidson supplied by Vallourec

The Youngstown (Ohio) plant has set up a state-of-the-art water treatment facility that meets all recommendations of the Steel

Manufacturers Association, earning the 2014 Environmental Management and Recycling Award.

Vallourec Star recycles 99% of its water

Inauguration of Vallourec Saudi Arabia

Vallourec’s first premium finishing plant for oil and gas tubes in the Middle East, the Dammam plant brings Vallourec closer to its customer, the Kingdom’s national oil company, Saudi Aramco, and positions

the Group at the heart of the world’s leading oil-producing country. The unit is dedicated to heat treatment of tubes and threading of the VAM® line of premium connections and has an annual capacity of 100,000 metric tons.

Vallourec Tubos do Brasil will supply 552 metric tons of seamless cold drawn tubes exclusively for Harley Davidson. No less than

338,000 meters of tubes will be used to mass produce engine and rear protection bars, as well as spare parts for fans of the legendary brand.

Up to 5,000

metersthe depth at which the

reservoirs of the Kaombo project are operated offshore from Angola using Vallourec’s

tubular solutions.

Vallourec in 2014

2

Activity report

3

NEWS 2014

Mobile and adaptable in height, jack-up rigs enable exploration

and drilling of deposits in shallow waters (up to 200 meters). Between 1,300 and 2,500 metric tons of tubes are

required to equip this type of platform. With demand growing worldwide,

Vallourec quality is making the difference in an intensely competitive market.

In 18 months, the Group booked 50,000 metric tons of orders.

Its Oceanfit® steel grade is designed for extreme temperatures

of -50 °C / -60 °C and Arctic waters, opening new possibilities.

NEWS 2014 NEWS 2014

Test and certify excellence: that’s Vallourec’s commitment and the key to its reputation. The Group has the resources to offer increasingly sophisticated connections to meet the most stringent regulations and new customer requirements. A tour of the world of Vallourec.

The Group has three full-scale VAM® connections test centers in France (Aulnoye-Aymeries), the U.S. (Houston) and Indonesia (Batam), with a fourth center being built in Brazil (Belo Horizonte).Capacity was doubled to 8,400 m2 at the Houston center in 2012, which is specifically designed to test tubes for shale hydrocarbons and offshore projects in the Gulf of Mexico. The VAM® connections are subject to the most extreme full-scale testing to demonstrate sealing qualities.

A new ultramodern testing station at the Aulnoye-Aymeries center doubles testing capacities. Here too, the tests performed involve make-up and break-out operations, simulation of combined loads (tension or compression, interior and exterior pressure), deformation, resistance to high temperatures and fatigue.The new center being built in Brazil will also conduct full-scale testing of proprietary connections, enabling qualification to the highest industry standards and the specific requirements of the Brazilian market.All of these investments illustrate Vallourec’s commitment to excellence and its ability to push the frontiers of technological innovation for the benefit of its customers.

Vallourec strengthens its VAM®

connections testing capacities worldwide

2,000 bar250° Celsius

The pressure and temperature levels to which connections are regularly tested.

200technicians and

engineers dedicated to testing VAM®

connections.

Vallourec in 2014

4

THE MAIN CONSTRAINTS TO WHICH CONNECTIONS ARE SUBJECTED IN A PRE-SALT FIELD

Water

Rocks

Rocks

Oil

Salt

Marine currentsFatigue

Riser

Casing tubes

Weight of the columnTension

Layers of salt Exterior pressure

Rising of the fluidInterior pressure

Increase in temperature of the cemented tubes Compression

Production tubes (tubing)

Vallourec demonstrated its ability to support highly complex offshore projects in winning

the contract for the Kaombo project, operated by Total E&P Angola: 27,000 metric tons of tubes

and premium connections, designed for particularly difficult drilling conditions.

NEWS 2014

All Vallourec! The deployment of the One Vallourec project is complete.

Today, all sites worldwide, all safety equipment and all media proudly carry the Vallourec

brand, colors and values.

Vallourec in 2014

6

In taking the pedestrian bridge that runs to Mont Saint-Michel,

one can appreciate the insularity and unspoiled beauty of the World Heritage Site.

The 760-meter bridge is supported by 124 columns that are both thin and strong…

and are tubes produced by Vallourec.

NEWS 2014 NEWS 2014

NEWS 2014

400 metric tons of high-performance steel tubes form the 124 columns that support the bridge. The seamless tubes, with a maximum length of 9.5 meters, are ideally proportioned: 24.45 centimeters in diameter, 4 centimeters thick at the ends of the structure and 6 centimeters in the central section for supporting the passage of 2.5 million visitors a year. They are resistant to wind, the constant motion of the sea and salt water through a special anti-corrosion coating.

Tube24.45 centimeters in diameter

Maximum length9.50 meters

Tube thickness Central section: 6 centimeters

Ends of the bridge: 4 centimeters

Deck

Vallourec in 2014

8

NEWS 2014 NEWS 2014

VAM® CELEBRATES 50 YEARS OF SUCCESS!In 1965, the Vallourec team led by Alexandre Madrelle launched a revolutionary connection. Since then, VAM® premium connections have linked more than tubes: they connect people, projects and countries. They have become the benchmark reference and a symbol of Vallourec’s values.

INNOVATION

Our R&D teams continuously design and develop premium

solutions that are both innovative and competitive, to meet the

requirements of our customers.

PROXIMITY

On all projects and onshore and offshore platforms throughout

the world, 24/7, a VAM® expert is always at your side.

First VAM® patent Vallourec responds to the metal-metal sealing challenge.

New VAM®

18 years later, Vallourec launches the second generation of VAM® connections.

VAM® Field ServiceVallourec offers on-site solutions for oil and gas projects - VAM® solutions are born.

Partnership with Sumitomo MetalVallourec signs a 10-year research and development agreement on VAM® connections with Japan’s Sumitomo Metal, renewed in 1995 and again in 2005.

VAM TOP®

Vallourec launches VAM TOP®, the world’s best-selling premium connection to date.

CLEANWELL®

Vallourec sells its first dope-free coating solution.

2000

1990

1965

1983

1985

Activity report

9

NEWS 2014

PERFORMANCE

We implement reliable VAM® solutions for all types of

applications, including the most complex, and offer fully

integrated services.

NETWORK

Throughout the world, we work hand in hand with

our partners to ensure the highest level of quality and compliance with the most stringent safety

standards.

CONFIDENCE

For more than 50 years, we have been working to build

cooperative and long-term relations with our stakeholders,

based on trust and mutual respect.

VAM® DrillingVallourec acquires SMFI, GIAT’s workshops in Tarbes, OMSCO and creates VAM® Drilling, which becomes Vallourec Drilling Products, a leader in its market.

Accessories offer launchedVallourec acquires Tube Alloy, expanding its line of OCTG accessories.

VAM® 21™The world’s only connection offering the same sealing performance as the tube, VAM® 21™ is the culmination of years of research and innovation and confirms Vallourec’s leadership.

Houston: capacity doubled The VAM® connections test center in Houston expands, opening the way to the Aulnoye-Aymeries center, which also extends its capacities in 2014.

New test center in BrazilVallourec is building its fourth VAM® connections test center in Belo Horizonte.

Innovation, proximity, network, performance and confidence: these are the values through which Vallourec has built the history of VAM® connections for 50 years. It is these assets that it engages in continuing to develop breakthrough premium connections and fully-integrated solutions that will create value for the next 50 years.

And tomorrow

2008

2005-

2006

2012

2015

Vallourec in 2014

10

OUTLOOK

A more agile organization structured around four regions (Europe, North America, South America, Eastern Hemisphere), with centralized control of industrial resources.Objectives: bring Vallourec even closer to its customers and markets, accelerate decision-making and improve industrial operational efficiency.

2015-2016 : focus on competitiveness The “Valens” competitiveness plan involves a substantial reduction of costs and the optimized use of cash over two years. Vallourec has also introduced a new capital allocation policy to ensure value creation for all stakeholders.

Three key measures:€350 million reduction of the cost base

over the period 2015-2016 (vs. 2014), or 10% of costs, excluding raw materials.All types of costs, all divisions and all countries are included in the plan which comprises over 500 cost reduction initiatives identified by internal working groups and is based on a global project management organization with dedicated resources.

Optimization of capital expenditures at €350 million per year (compared to €450 million previously announced), a level that enables the Group to maintain and grow the business.

VALENS, VALLOUREC’S COMPETITIVENESS

PLANVallourec operates in an environment impacted by the significant drop in oil prices

and the sharp reduction in oil exploration and production investment. The Group has leveraged all sources of flexibility to cope with falling volumes.

In addition to these economic measures, it is implementing a two-year competitiveness plan called "Valens."

1

3

2

2-YEAR COST REDUCTION TARGETS(1)

(1) Full year effect in 2017, assuming same volumes & cost base as in 2014.(2) SG&A: sales, general and administrative costs.

350

Total Raw materials

Manu- facturing

and direct costs on sales

SG&A(2)

30240

80

Activity report

11

Striving for excellenceat all sites and in all that it does, starting with safety and quality: this is the commitment of Vallourec for its customers and employees.

3 key fields of action

1 SafetyDeployment of the plan to prevent fatal accidents and strengthen the safety culture.

2 QualitySystematic elimination of causes of non-compliance, in-depth treatment of all claims and deployment of Six Sigma methods.

3 Operational efficiencyLean management implementation, reduction of maintenance costs and inventory.

Vallourec's competitiveness plan is part of an overall five-year performance plan that goes beyond the objectives of

competitiveness and will strengthen the Group's fundamentals to earn the total confidence of its customers.

Making a differenceAt equal competitiveness, what creates the Vallourec preference? Its innovative strength, unique customer experience and exemplary responsibility.

3 key fields of action

1 InnovationPromoting creativity, reducing time-to-market and streamlining the R&D portfolio.

2 Commercial excellenceA commercial approach focused on customer satisfaction, value proposition and reinforcement of the Vallourec brand’s position as a genuine premium label.

3 Corporate social responsibilityImproving energy efficiency and reducing the environmental footprint, developing employee skills and expertise.

Vallourec in 2014

12

VISIONVISION

VISION

Following the power generation and industrial markets, it is the turn of the oil and gas market to encounter difficulties. Why and to what extent? P. C. — Oil and gas companies are experiencing a profound change in their business. The high price of oil for four or five years prompted them to increase exploration investment, which failed to generate sufficient returns due to a disappointing discovery rate. The resulting low financial return, exacerbated by the sharp fall in oil prices, requires a rethinking of the sector's economic model. These are structural changes. The world is changing and Vallourec is adapting to these changes.

What are the levers you have activated? P. C. — There are two approaches to improve competitiveness: reduce costs or differentiate through higher-end products and services offered. I have chosen to activate both of these levers. We are also strongly accelerating our safety, quality and operational excellence programs as well as committing to an ambitious cost reduction plan, covering production as well as fixed costs.Specifically, the harmonization of equipment and production standards in all of our plants allows us to optimize industrial resource allocation by order at a global level. Vallourec’s reorganization into regional hubs and centralized direction of the Group's industrial policy enable us to fully implement this approach. We will also standardize our offer, in close collaboration with our customers, to capitalize on the best existing products and focus research on breakthrough innovations. Customers need to perceive that Vallourec solutions improve their return on investment.

How is Vallourec adapting? Will you be updating the strategy? P. C. — This adaptation had already begun some time ago. Originally, our business model was very European. We exported from Europe, which exposed us to foreign currency risk and strained our competitiveness. Our strategy has been to move toward more premium products to support our customers in the most challenging exploration areas; toward more local supply to optimize the supply chain, to be closer to our customers and to generate more local value, which is required by a growing number of countries; and toward greater competitiveness, through continuous investment in R&D, sustained efforts toward operational excellence and development of our presence in Brazil, the Middle East and the U.S. We must now build on what we have in place and focus our efforts on our competitiveness. Valens, the ambitious two-year competitiveness plan that we announced in February reflects this determination.

Interview with Philippe Crouzet, Chairman of the Management Board

-

“The world is changing and Vallourec is adapting to these changes.”

VISION

Activity report

13

VISION VISION

How are Vallourec's employees reacting to these changes? P. C. — The sales force and plant teams know that our markets are cyclical and that each cycle requires measures of adaptation. They see the drop in orders, are aware of the new customer requirements and can feel the particularly strong intensity of this cycle. Social partners know that we are committed to transparency regarding our business and we provide them with all the information to understand the situation. This results in a high level of maturity at Vallourec. Our competitiveness plan was built together with the teams. All programs have been developed in the field, with potential savings and optimization identified by working groups that have involved nearly 250 managers. The ideas generated have led to 500 key initiatives already being implemented by those who proposed them. Each Vallourec employee can contribute to strengthening the company. The new Vallourec we are building reflects a shared global ambition.

What is the outlook for 2015? P. C. — This is a year of great challenge for Vallourec. We must simultaneously manage a major adaptation to the economic situation and implement the necessary measures to reinforce our business model, making it more flexible, responsive and competitive. We are committed to changes that go well beyond responding to the crisis. These changes are irreversible and sustaining. Yes, 2015 will be difficult for our company, as it will be for our customers and suppliers. But, we were prepared for it and I am convinced that Vallourec will emerge stronger from this crisis.

Beyond that, how do you see the market evolving? P. C. — Energy consumption is continuing to increase worldwide. Population growth is accelerating and four-fifths of the planet has significant needs for energy to support development. Energy resources are not overabundant and new ones must be found, extracted and exploited each year under competitive conditions without compromising safety. The slow growth of alternative energy sources in the energy mix of major companies and countries underlines that oil and gas will be part of the future. Vallourec too. In our industry, long-term strategies are winning strategies. This is our choice for Vallourec.

-

“We are committed to changes that go well beyond responding to the crisis.”

Vallourec in 2014

14

Activity report

15

VISION VISION

-

Confidence

Vallourec is operating in a difficult environment which is undergoing profound changes and is compounded by a cycle of unprecedented turbulence. Absorbing these shocks requires a radical transformation. This is what the Group is in the process of doing, with rigor and determination. And, this is what gives me confidence.

I have confidence in the men and women of Vallourec. This is not the first time they have experienced such a cycle and they know they need to respond. When I talk with employees in plants, in Houston or in Belo Horizonte, in France or in the Middle East, I find people willing to do whatever it takes for Vallourec to respond and to come out of this cycle stronger. They have done it before.

I have confidence in the management team. All are committed to the implementation of a proactive action plan. They know that providing a sustainable future for Vallourec requires strategic, sometimes difficult choices. Their vision is strong and their commitment will be essential in enhancing Vallourec’s value long-term. I have confidence in the new organization of regional hubs, which brings Vallourec closer to its customers while ensuring its competitiveness globally.

I have always been confident in the relevance of Vallourec’s positioning and the future of its products. The world will always need high-end tubes, rich in advanced technology, expertise and quality because people will always need energy and the exploration and production of energy will become more complex. It is critical that we continue to innovate and deliver the high-quality tubular solutions for which we are known and recognized. This is Vallourec’s strength and signature.

I have said and I remain convinced that Vallourec has a bright, long-term future. Through its actions, the Group will emerge stronger from this difficult period.

Message from Vivienne Cox, Chairman of the Supervisory Board

Vallourec in 2014

16

Where history is being written

Vallourec in 2014

16

THE WORLD OF VALLOUREC

Wherever tubular solutions of high technology,

quality and expertise are needed.

Activity report

17

THE WORLD OF VALLOUREC

OIL AND GAS(INCLUDING PETROCHEMICALS)

72%

POWER GENERATION

11%INDUSTRY

17%

Vallourec in 2014

18

THE WORLD OF VALLOUREC

The historical leader in the oil and gas market, Vallourec offers oil and gas industry customers a range of premium tubular solutions to meet the highest demands and covers the entire chain, from exploration to production to transportation of hydrocarbons.

Vallourec’s seamless threaded OCTG (Oil Country Tubular Goods) tubes are used to equip a large number of oil and gas wells throughout the world, in casing and tubing. Vallourec offers all equipment required for drilling: drill pipe, bottom-hole tools and accessories for drill strings. The connection of seamless tubes is made using VAM® premium threaded connections, a Vallourec trademark celebrating its 50th anniversary in 2015. From the wells to processing units, hydrocarbons are routed offshore and onshore via Vallourec tubes and accessories. Its super duplex welded stainless steel tubes for umbilicals connect seabed-installed equipment to the surface control station.

“Vallourec Global Solutions” services provide customized support to customers, sharing Vallourec’s expertise throughout the well’s life cycle.

OUR THREE MAJOR MARKETS

Based on the strengths of its premium solutions and the expertise of its teams, Vallourec confirms its leadership position in its three major markets,

in an environment affected in particular by increased competition and lower oil prices.

OIL AND GAS

71.7% of Group sales, of which 66.6% is from Oil & Gas and

5.1% is from the Petrochemicals

activity.

of sales, including €288 million from the

Petrochemicals activity.

€4,084 million

Vallourec.com

World leader in premium

connections with the VAM® line of

connections.

Activity report

19

THE WORLD OF VALLOUREC

Vallourec offers the world’s broadest tubes portfolio for the power generation market. Whether for conventional thermal power plants, new “ultra supercritical” coal-generation plants or nuclear plants, Vallourec responds to all of the needs of power generators. Its specialized subsidiaries, Valinox Nucléaire and Vallourec Heat Exchanger Tubes, are special partners in the renovation of France’s nuclear plants.

Seamless tubes for boilers and steam generators, welded tubes for heat exchangers in all sizes and all grades, carbon steel to high-alloy steels, including titanium, stainless steel and nickel alloys… Vallourec products meet the challenges of power generators and its services support their performance, from logistics to risk analysis and customized training.

Vallourec’s premium tubular solutions are used in the construction of numerous public infrastructure facilities: bridges, stadiums, vast airports and others that are among the boldest architectural projects. The PREON® Box innovation enables architects to optimize metallic structures used in the construction sector. The engineering industry uses Vallourec tubes and rings to manufacture cranes, agricultural machinery and all types of work site machinery. Car manufacturers equip light and heavy vehicles with the Group’s tubular solutions. The energy sector also relies on Vallourec to build its offshore jack-up rigs. Finally, the patented PREON® marine innovation will reduce the environmental impact of installing offshore wind turbines.

With tubes, hollow bars and hollow sections of all sizes and steel grades, Vallourec’s offer responds to the most varied and demanding industrial applications with proprietary steel grades recognized for their weight and corrosion resistance, elasticity and outstanding hardening qualities.

POWER GENERATION

INDUSTRY

Vallourec.com

Vallourec.com

17.6% of Group sales.

of sales.

€1,007million

European leader in seamless tubes

for mechanical applications.

10.7% of Group sales.

of sales.

€610 million

World leader in tubes for the power generation market, offering the world’s broadest portfolio of tube sizes and

steel grades.

Vallourec in 2014

20

THE WORLD OF VALLOUREC

NORTH AMERICA

SOUTH AMERICA

31 % of Group Sales

3,200 employees(1)

70% Projected share of shale oil in the net growth of U.S. oil production between 2014 and 2020(4). 60 years

of partnership with Petrobras, Brazil’s national oil company.

37% growth in oil production expected in Brazil by 2020(3).

CLOSER TO OUR CUSTOMERS

Vallourec‘s plants and research centers are located close to customers to better share their goals, meet their needs and create value with them

locally. Today, the Group has more than 50 locations in 20 countries, with a global

workforce of over 23,000 employees.

16% of Group Sales

8,400 employees(1)

Activity report

21

THE WORLD OF VALLOUREC

EUROPE AFRICA

117 employees(2)

1,400 GW of new capacity from coal-fired power plants to be installed worldwide by 2020(3).60% of these new capacities are expected to be installed in India and China(3).

China

95% of China's nuclear power plants are equipped with Vallourec tubes.

Steel millsTube mills

Finishing unitsResearch & development

Plantation and mineSales and services offices Vallourec.com

19% of Group Sales

9,800 employees(1)

ASIA AND THE MIDDLE EAST

25% of Group Sales

2,300 employees(1)

Middle EastVallourec supports Saudi Aramco, the Saudi national oil company.

814 billion barrels, the amount of the Middle East’s proven oil reserves, nearly 48% of the world’s total(3).

(1) Employees as of December 31, 2014 (permanent and temporary contracts).(2) Employees as of December 31, 2014, including all types of contracts (permanent, temporary, interim).(3) AIE – World Energy Outlook 2014.(4) AIE – Medium-Term Oil Market Report 2015.

1974 Vallourec has been the special partner of the French nuclear industry since the beginning.

40% of oil production in sub-Saharan Africa comes from deep and ultra-deep offshore fields(3).

Vallourec in 2014

22

65 million(1)

barrels of proven reserves

117employees

With

3/4 in Nigeria

and Angola

AFRICA TOMORROW

Vallourec entered Africa in 2007 through a service company in Angola. Today, the Luanda-based team has 13 employees. In Nigeria, the Group has established a sales office in Lagos and a premium threading facility in Onne, employing 100 people of which 98% are Nigerians. At the beginning of 2015, Vallourec opened an office in Johannesburg, South Africa, that is responsible for deploying OCTG offers, as well as drilling products and line pipe with major oil and gas operators located in the region. The Group also has teams in Gabon and Egypt.

More premium, local and competitive

In Africa, the Group applies its premium positioning, its proximity that ensures effective relationships and the competitiveness of its solutions to meet its customers’ economic challenges. Vallourec also seeks to create value for the host country, investing in industrial assets, giving priority to local sourcing and subcontracting throughout the production chain, while recruiting and training its teams on site.

Proven reserves of oil in sub-Saharan Africa account for 5% of the world reserves(1) and everything in the region is just beginning. Vallourec tubular solutions used to equip the exploration and production projects of major oil and gas producers on the continent are meeting with significant success. Discoveries in West African pre-salt, geological formations similar to those encountered offshore of Brazil and operated by Petrobras using Vallourec equipment reinforce the development prospects. Africa is the future and Vallourec is there.

VALLOUREC IN AFRICA

Egypt

South Africa

Angola

Gabon

NigeriaGhana

THE WORLD OF VALLOUREC

Activity report

23

Vallourec in 2014

22

Kaombo project27,000 metric tons of the most advanced tubular solutions, including VAM® 21™, VAM® SLIJ-II™ and VAM® BOLT™ connections for this offshore project operated by Total, with 59 wells drilled in very complex geological conditions.

Egina project Supply of 24,000 metric tons of premium threaded tubes manufactured in the Onne factory in Nigeria for this complex project at 1,600 meters depth, operated by Total with training for young Nigerian engineers.

CLOV project Providing a wide range of premium offshore solutions for this field of 34 subsea wells operated by Total, including 200 kilometers of seamless line pipe, application of 150 kilometers of anticorrosive coating and 5,500 welds on sensitive lines.

TEN project 15,000 metric tons of premium offshore line pipe and welding services provided to Subsea 7 for oil and gas fields located in deep waters off the Ghanaian coast and operated by Tullow Oil Plc.

Accra

Ghana

Luanda

Angola

Abuja

Nigeria

Vallourec did not wait until local content had become a contractual requirement. Sharing is part of its philosophy. In Nigeria, Vallourec supported the renovation of two buildings that allow the communities of Onne and Ikpokiri to come together to celebrate weddings and traditional holidays. “Vallourec put smiles on our faces,” said representatives from the communities.

SHARING ITS SUCCESS

THE WORLD OF VALLOUREC

(1) International Energy Agency, World Energy Outlook 2014.

CONTRACT REVIEW

The pursuit of excellence

and difference

Vallourec in 2014

24

THE VALLOUREC LABEL

To make Vallourec the preferred partner

of its customers and stakeholders.

Activity report

25

THE VALLOUREC LABEL

Our ambition is to be a world leader. By providing

total confidence to our customers in

delivering the benchmark solutions for the energy

industry and other selected demanding applications.

By committing to the success of our customers,

our employees and our shareholders.

Vallourec in 2014

26

THE VALLOUREC LABEL

INDUSTRIAL EXCELLENCE:PREMIUM ACROSS-THE-BOARDOffer the best product at the best price, delivered on time, conforming to all customer expectations: industrial excellence is more than ever at the forefront at Vallourec.

The objective for all production teams at all sites is to improve quality to improve customer satisfaction. It is also about reducing the cost of obtaining quality. To achieve excellence, Vallourec relies on customer feedback and survey results to detect defects, as well as on its competitiveness plan and, especially, its lean management dimension.

No such thing as a minor claimThe first means for customer feedback are claims, which are treated systematically and comprehensively. Whatever their nature, all are treated the same way. Vallourec is organized to ensure that the defect, real or perceived, will never happen again. The objective: halve the number of customer claims by the end of 2015 and target zero defect.

This commitment to excellence mobilizes production teams, managers and commercial teams in careful monitoring and extends to the Chairman of the Management Board, who is informed of each claim by e-mail. An impact at the highest level that energizes the organization and drives it forward. The initial results are encouraging with the number of claims showing a significant decrease in early 2015. On-time delivery, another driver of excellence, is also subject to heightened monitoring. The Group is intensifying the connections between its production, sales and decision-making centers to accelerate the process from order to delivery. Finally, make-to-order stimulates excellence in planning in Vallourec plants.

The determination to be competitive

Valens, the 2015-2016 competitiveness plan launched by Vallourec, enhances the excellence initiative. To significantly reduce costs, beginning with industrial costs, the Group relies on hundreds of initiatives from field teams, including optimizing maintenance and reducing the time required for a series change.The new organization, with four regional centers – Europe,

North America, South America and Eastern Hemisphere – puts Vallourec closer to its customers and improves the Group’s overall industrial performance. An entity responsible for orchestrating industrial policy will optimize the allocation of resources in localizing production where it will be the most economically appropriate.

Activity report

27

THE VALLOUREC LABEL

What the surveys sayThe second channel for customer feedback, surveys are part of the process for continuously improving quality and customer satisfaction. Among the areas for progress they have helped identify: the quality of information provided to customers. This includes administrative and customs documents as well as premium packaging: from the information on the tube, such as coding colors or the mode of pallet loading, to the aesthetics of polish and the quality of protective coatings. Working groups are also improving the quality of test certificates to better respond to customer expectations. Some issues are brought back to the level of Vallourec's research centers and can lead to product changes.

Lean powerTo reduce defects and costs, Vallourec is working on four performance categories: equipment efficiency, productivity, inventory reduction and reduced turnaround time from order to delivery. One of the most notable projects is rethinking the involvement of production workers by giving them the means to measure their performance and take direct action to respond to problems. The Group empowers them and gives them the means to review the way they do their job and to improve it or to identify the problem and communicate on it.

Produce differentlyTomorrow, Vallourec's solutions will accelerate return on investment for its customers, who will be able to perceive and measure it. The Group is working

÷ 2the number of customer claims by the end of 2015 is the objective

to streamline its product portfolio, diversify product lines to meet small, specific orders and simplify the process for achieving this flexibility. Adjusting its model to meet the needs of each major customer worldwide, this is the new challenge for Vallourec and the future of its industrial excellence.

Vallourec in 2014

28

THE VALLOUREC LABEL

COMMERCIAL EXCELLENCE: CREATING MORE VALUE FOR OUR CUSTOMERSVallourec puts its organization at the service of its customers to better understand their strategic challenges and work with them to create unique value propositions.

The world is changing. Economic constraints are causing Vallourec customers to reconsider the economic viability of their projects. Meanwhile, competition is intensifying, with new, particularly aggressive entrants. The recognized excellence of Vallourec products is a key differentiator but the Group needs to go further in identifying ways to create additional value for its customers and making value propositions that respond to their needs. Competitiveness is also being strengthened through a reinforced commercial approach based on a program of global excellence and governance that, step by step, involves each level of the company.

Start with the customerIn all of Vallourec’s three major markets, customers faced with new challenges are increasing their requirements. Oil and gas operators expect safety, a significant reduction in the total cost of their projects and innovation in technologies and business models. Major power generators are seeking to reduce costs of production per kWh and minimize their environmental footprint, without compromising safety. Industrial customers are working to increase the competitiveness of their product lines and operations through innovation, engineering and optimization of the production chain and procurement.Better understanding customer value creation issues that go beyond a lower commodity purchase price, through direct and strategic dialogue, is a fundamental step in Vallourec’s commercial excellence program.

Building value propositionsVallourec’s thorough understanding of the new challenges of its customers enables it to identify and quantify value creation drivers, allowing the creation of customized and high-impact value propositions. For example, Vallourec is integrating OCTG tube logistics and maintenance from its plants to offshore platforms for oil operators in the North Sea and South America, optimizing operational costs for its customers. By generating tangible added value for its customers, these value propositions distinguish Vallourec offerings from traditional and low-cost competitors on many criteria beyond price.Central to the Group's business strategy, value creation directs all its actions, in particular its pricing strategy and its portfolio of innovative projects, products and services.

Activity report

29

THE VALLOUREC LABEL

The broad deployment of this approach has required changing the sales organization and increasing synergies with plants and, therefore, reviewing methods of innovating, selling, producing and delivering projects.

Strengthening the sales forceVallourec is undertaking the certification of its key account teams. The cross-organizational teams include sales, technical sales, marketing and innovation specialists as well as plant managers and project and services managers. They work to develop relationships with relevant levels of customer organizations to understand their issues and contribute to creating differentiating and profitable value propositions.A program to strengthen the management of the sales force is also being deployed in all divisions and regions.This is an ambitious program that Vallourec is implementing with all necessary means: effective professionals, innovative methods from best marketing and value creation practices, appropriate certified training, advanced information systems and relevant measurement indicators. The Group is also revitalizing its sales and distribution channels.

Thinking differently Customer satisfaction is the responsibility of all Vallourec employees. At each meeting of Vallourec senior executives, a customer is invited to speak. Creating value and differentiation are central to Quality Day and Innovation Day, two major Group meetings. A customer culture is driving the new Vallourec.

Major high value-added projects

Major projects are subject to a specific approach to enable Vallourec to participate upstream in engineering tubular solutions. This approach has been implemented successfully in the TEN project located in the deep waters off the Ghanaian coast. The Group identified and quantified value creation drivers before offering a comprehensive solution integrating its unique expertise: the supply of subsea, non-standard size line pipe, an anti-corrosion coating,

logistics, double joint welding operations for "pipe-in-pipe" production and the gas export pipe. Through this additional value created for the customer, Vallourec was able to make a difference and was chosen for this project in partnership with the engineering, procurement and construction (EPC) company.

Vallourec in 2014

30

THE VALLOUREC LABEL

CORPORATE SOCIAL RESPONSIBILITY:VALLOUREC’S COMMITMENTS Vallourec has always been committed to conducting its business responsibly. It has built a five-year plan to accelerate its approach, a means for shared and sustainable competitiveness, focusing on the involvement of its teams and linking to its business model.

Vallourec signed the United Nations Global Compact five years ago and promotes its principles at all sites. Its Sustainable Development Charter sets out its social, societal and environmental commitments and sets performance goals tracked each year. As a market leader positioned to deliver premium products and services, Vallourec seeks to go further in extending its commitment in all areas and to set a high standard. It is a commitment of excellence that also contributes to creating a Vallourec preference.

For the world's climate36% of total energy consumed by the Group is renewable. This results mainly from the use of eucalyptus wood charcoal produced by Vallourec Florestal on its 237,000-hectare plantation, to supply the Brazilian blast furnaces.Through its GreenHouse project,

deployed since 2009, Vallourec is taking action to reduce its gas and electricity consumption 20% by 2020 (compared with 2008). At the end of 2014, energy performance improvement had reached 15%, taking into account the volume of activity and the "product mix". Although Vallourec emissions from its activity are low compared to similarly sized companies in its industry, the GreenHouse project also seeks to reduce carbon emissions, of which almost 60% is produced by gas furnace consumption. The electric steel mills at Saint-Saulve, Youngstown and Jeceaba contribute significantly to this performance, helping Vallourec to earn a B ranking from the Carbon Disclosure Project in 2014 and a score of 91 out of 100 for information transparency.

Water: resource #1An essential and valuable resource, water is used as a coolant throughout Vallourec’s production processes, representing 60% of total raw materials consumed. To preserve the resource, Vallourec works to reduce intakes through recirculation systems and to improve the water quality of its discharges. In 2014, following works conducted on the Deville site, Group water consumption decreased by over 15%, despite the ramp-up of new sites. Vallourec’s four integrated steel mill and pipe mill sites have an average internal recycling rate of 98.1%, demonstrating the performance of workflow systems. This recycling reduces the volume of water discharged into public networks or the environment from the plant’s water treatment sites. Illustrating the attention paid to water quality, the new Youngstown plant earned the 2014 Vallourec Star Award for Environmental Management and Recycling awarded by the Steel Manufacturers Association. Its ultra-modern treatment plant has a recirculation rate of over 99% and produces potable quality water. In parallel, Vallourec works to make its management of water more economical.

Activity report

31

THE VALLOUREC LABEL

Pushing the limits of recyclingIn 2014, the Group generated 670,000 tons of waste, but the impact is much more limited than it appears because Vallourec considers these wastes to be a resource: 83% are recycled into secondary raw materials, 10% are burned to produce energy and only 7% is landfilled. At the same time, net processing costs decreased as did the proportion of hazardous waste, which is 6%. It is a means of reducing both the impact on the environment and the cost of materials. In 2015, Vallourec increased its target for using “by-products” to 94.5% across the entire company. In addition, 55% of the steel used in plants, whether produced or purchased, comes from recycled scrap.

Lead suppliersPurchases by the Group reached 4.2 billion euros in 2014. It is therefore essential for Vallourec to ensure that the criteria for social and environmental responsibility - including respect for ethical principles and the priority on safety - are taken into account by its suppliers. In one year, Vallourec conducted over 650 audits of supplier risks on its sites. A service provider specializing in social and environmental responsibility also assessed 576 suppliers, representing

more than a quarter of Vallourec’s purchasing. Supplier's Day 2014, the second edition of this event, was an opportunity to remind the Group's 100 largest suppliers of Vallourec’s requirements and to recognize the best performers.

Supporting local communitiesVallourec places a high priority on the impact of its activities on local populations. Local purchases, which accounted for 45% of mass purchases in 2014, reinforce local industrial development. In addition to this direct economic impact, the Group undertakes actions to promote education, health and development. In Brazil, more than 5,000 young people benefited between 2011 and 2014 from programs promoting long-term learning and job placement and the cultural center funded by the Group, Cine Theatro Brasil, welcomed more than 160,000 visitors in 2014. Vallourec’s Indonesian subsidiary is engaged in providing assistance for education and health programs, financing facilities and acting to restore the environment. All of these efforts mobilized nearly €6.6 million in 2014.

3.4 m3of water to produce

one metric ton of tubes

45%portion of Vallourec purchases

made locally

Green model in Brazil

Vallourec Florestal operates its own eucalyptus plantations to produce charcoal to feed its steel mill. Each year, about one-seventh of the forest is harvested and immediately reforested. Sludge recovered from cleaning gas blast furnaces is used to fertilize

the eucalyptus plantations. Over the years, Vallourec has improved its charcoal manufacturing process and consumes less eucalyptus to produce a tube. The goal is now to produce surplus biomass for use elsewhere.

Vallourec uses biomass from its 237,000 hectares of eucalyptus plantations as a source of energy for its Brazilian blast furnaces.

Vallourec in 2014

32

THE VALLOUREC LABEL

New steel grade for drill pipe

As operators seek hydrocarbons in ever more extreme conditions, Vallourec is there to support them. Its new “VM-105 DP SS+” steel grade allows drilling of wells containing hydrogen sulfide. Hydrogen sulfide (H2S) is highly corrosive and can cause cracking of drill pipe, a major risk in such operations. However, many wells in Russia, the Middle East, China and North America are exposed to the gas. This new steel grade guarantees an unmatched level of resistance to corrosion for welds, which are the most sensitive points. Vallourec thus enters a technological “new frontier.”

New generation service contracts in Brazil

The 60-year partnership with Petrobras has set a new standard. Two five-year contracts cover a value added services portfolio on an unprecedented scale. The objective: to help the Brazilian oil company meet the challenges of ultra-deep offshore applications, particularly in logistics. Brazilian transportation and logistics subsidiary Vallourec Transporte e Serviços coordinates equipment supply with the drilling program, organizes the supply chain in all ports through which the tubes pass on their way to the offshore platforms, manages traceability, prepares drilling operations, inspects and repairs tubes, rents special accessories and provides engineering. An innovative service offering that makes Vallourec the benchmark reference in providing solutions for its customers.

Essential to differentiation and growth, innovation is at the heart of Vallourec's strategy. Responding to the needs of its customers and anticipating their technological challenges of tomorrow: that is the challenge for the Group.

INNOVATION EVERY DAY

Unmatched connection

for wells with long horizontal sections

Designed for highly deviated wells with long horizontal sections, the VAM® HTTC™ (High Torque Threaded and Coupled) premium connection for casing and tubing resists extreme torque and compression during column installation and ensures perfect sealing during production phases. A high-value product that enables and secures the most complex horizontal drilling.The VAM® HTTC™ connection was jointly developed in the R&D centers in Houston (US) and Aulnoye-Aymeries (France), and involved experts and commercial teams in the Middle East, the US and Europe. Successfully qualified at the end of 2014 by a major operator in the Middle East, it is now available in different sizes.

Internal seal

Self-locking threading

Activity report

33

THE VALLOUREC LABEL

HOUSTON – UNITED STATES

The Vallourec Competence Center USA develops customized VAM® connections for the US market and conducts testing.

DÜSSELDORF – GERMANY

The Vallourec Research Center Germany develops steel tubes for power plants and oil and gas line pipe. It houses a welding laboratory.

AULNOYE-AYMERIES – FRANCE

The Group’s historical research center, the Vallourec Research Center France focuses particularly on metallurgy, especially for OCTG applications and mechanics.

6 research centersLocated close to the markets, they are dedicated to developing new products and improving existing products as well as manufacturing technologies and processes.

3 test stations

around the world are testing full-scale VAM® connections under the most extreme conditions.

A collaborative approachGroup R&D teams work closely with customers, academic laboratories and historical partners such as Nippon Steel & Sumitomo Metal Corporation and Tubacex.

BELO HORIZONTE – BRAZIL

The Vallourec Research Center Brazil adapts Group solutions to the needs of Brazilian customers, particularly for operating pre-salt fields, as well as producing new designs. It is reinforced by the Vallourec Competence Center located in Rio de Janeiro, on the grounds of the University of Rio de Janeiro, near the research center of Petrobras.

22 patents filed in 2014€95.7million dedicated

to R&D in 2014500 researchers and technicians in the Group

VALLOUREC’S INNOVATION ECOSYSTEM

AULNOYE-AYMERIES – FRANCE

The Vallourec Research Center Connections is the expert in VAM® premium threaded connections, from design to testing.

DÜSSELDORF – GERMANY

The Vallourec Research Center Technology innovates in Vallourec’s core processes. The Group laboratory, located in Riesa, functions as a mini-plant with advanced equipment and pushes the boundaries for hot forming steels and alloys.

Vallourec in 2014

34

The energy of your

challenges

THE VALLOUREC TEAM

Customer culture is the driver for

Vallourec teams.

Activity report

35

Vallourec University

is open to all,

offering degree

programs for non-

executives and trainees.

The Experts program distin-

guishes and builds

loyalty with the 317

Vallourec specialists

in core Group

professions.

Vallourec continues

to progress toward

the ultimate goal of zero accidents.

Safety drives excellence, this is Vallourec’s

conviction.

Visitors to a Vallourec plant are struck by the simplicity of relationships.

Women represent 11% of the Group’s overall workforce

and 21% of the management. Vallourec is taking steps to fully leverage this half of the available

talent pool.

Vallourec in 2014

36

THE VALLOUREC TEAM

A culture shared throughout the worldVallourec has always fostered an entrepreneurial culture, with employees feeling involved and proud of their expertise. In recent decades, the Group has evolved, becoming more international and professional. Processes have been implemented for operations, managers in the field are focused on operational excellence and the Vallourec spirit continues.Visitors to Vallourec plants who meet with the team are struck by the simplicity of relationships. They are both direct – close management erases barriers – and careful – respect for the individual is a core value. Decisions are guided by the general interest. All of this contributes to employees’ attachment to the company, their pride in belonging and an ability to adapt, acquired over the years.

EXPERT AND PROUD TO BE PART OF VALLOURECThey are operators, supervisors, engineers, researchers, sales people, buyers, in-house lawyers... their know-how is the Group’s best asset, their commitment is the guarantee of excellence and sustainable satisfaction of its customers. It is Vallourec employees who make the difference.

The Vallourec Group has grown through mergers and acquisitions of companies around the world. Yet, all Vallourec employees, whether in Houston, Belo Horizonte, Düsseldorf or Aulnoye-Aymeries, share a common culture, marked by a spirit of engineering, nourished by a passion for tubes, driven by a desire to invent, living the imperative for safety.

Opinion: one year after the major surveyLaunched in 2013 with almost all Vallourec employees worldwide, the Opinion survey indicated the levels of engagement: 80% of employees responded, a rare score for this type of survey, with 76% of respondents expressing a positive opinion. Two strong expectations emerged: strengthening synergies between teams and better recognition of performance. In 2014, the Group worked to respond, with the development of action plans by each site. The Group defines the framework for building commitment and motivation, which is built on eight HR standards applicable throughout the world, and provides a support methodology. The HR standards, integrated as part of the industrial excellence program, help drive the progress of employees and the company.

Wherever they come from and whatever their profession, Vallourec employees share a common culture.

514,000hours of training

95% of executives have received

a performance review

Activity report

37

THE VALLOUREC TEAM

At Vallourec, we build careersThe Human Resources department works closely with the divisions to adjust needs and develop potential. The people review, a snapshot of the population of 3,800 Vallourec managers, enables talent to be identified and leveraged by providing new challenges. Any vacant position is offered first to this pool of employees via the Talent 360 platform, allowing them to seize opportunities for development.The Group recruits most of its employees from engineering schools and universities, with employees acting as “ambassadors” on behalf of Vallourec with future graduates. Training at Vallourec University, internal mobility and expatriation are all means for leveraging the pool of skills. Vallourec University is open to all and offers degree programs for non-executives and apprentices.Specific to Vallourec is its Experts program, which identifies and builds loyalty among employees with specialized knowledge in Vallourec’s key professions such as metallurgy and rolling. The body, strategic for Vallourec, is growing, bringing together 317 experts as of the end of 2014.

Talented women at Vallourec Women make up 11% of Vallourec’s overall workforce and 21% of its managers. Although close to the 25% average for engineering schools and scientific universities, this ratio is not sufficient for Vallourec. The Group is taking steps to reverse this trend in order to fully leverage this important pool of talent.The Gender Diversity committee is guiding this approach toward greater balance. A network of Vallourec women managers has been set up to foster this trend throughout the Group. The latest initiative is the mentoring of high-potential women managers by Vallourec senior executives in order to further develop female talent.

Vallourec in 2014

38

THE VALLOUREC TEAM

All visitors entering a Vallourec site are immediately invited to consider the potential risks to which they may be exposed and receive a series of simple instructions before proceeding on their guided visit, outfitted with personal protective equipment (PPE). Dots trace the path, protective barriers prevent access to machines and posters provide reminders on the value of a life: “A parent cannot be replaced.”

A key to manufacturing excellenceSafety is the top priority and the first point of Vallourec’s industrial excellence program. Management believes those who pay attention to danger pay attention to everything and that safety is a driver of excellence.This determination has paid dividends. In the field, safety is the priority of each and every person, in every gesture and every day. Through actions and campaigns, Vallourec teams have made the journey from simple compliance to awareness of the safety of others. Having achieved this level of safety maturity, Vallourec continues to make progress toward the ultimate goal of zero accident.

SAFETY: PRIORITY FOR ONE AND ALL

Safety is part of a responsible industrial approach and at Vallourec, it involves everyone. Rooted in the Group’s culture and human experience, safety is also a driver of excellence. For the Group, but also for its customers.

<1LTIR goal for 2018

96% of accidents have a component

related to behavior

1/5All managers have safety as one

of their five annual objectives

Activity report

39

THE VALLOUREC TEAM

Considerable progress, but safety can never be taken for granted In 2008, Vallourec launched its comprehensive program of continuous improvement in safety, in response to deteriorating safety indicators in 2007. Six years later, all Vallourec employees worldwide share a common vision of safety reflected in the results. The LTIR(1), the frequency rate of accidents with lost time and the industry benchmark, dropped from 9.2 in 2008 to 1.3 in 2014, surpassing the objective of 2. TRIR(2), which counts all accidents with and without lost time, also fell over the same period, from 31 to 4.2, compared to an objective of 5.Despite this progress and despite all efforts, the Group unfortunately experienced two fatal accidents among its employees in 2014 in Brazil and Abu Dhabi. In response, it has focused its actions on unlikely, but potentially very serious events and is deploying specific rules and techniques, as well as dedicated training. Anticipating the worst is the best way of avoiding accidents: it is a cultural shift that illustrates Vallourec’s resolve to eradicate the risk of fatal accidents.

Mobilization continues96% of accidents are due to behavior. The Group is redeploying the “12 golden rules,” which are a non-negotiable common base. These safety instructions cover all areas of personal protection, including the use of PPE, the proper use of hand tools and use of protected passages when moving about. Lessons learned from accidents have caused the Group to refocus on basic safety rules. It starts with locking and logging equipment before any human intervention and rules of handling loads at height, for which the risk of serious accident is among the highest. Other areas include procedures in confined spaces and falls from heights, for which the need for enhanced diligence has been reinforced.Beyond behaviors, the Group is working on physical protection on manufacturing lines and while working with or around machinery, to keep operators at a safe distance from danger, on the continuous upgrading of equipment and on improved ergonomics.

Exemplary managementThe sharing of the responsibilities by each level of management and the involvement of local managers underline the importance of the topic and help crystallize attention. The quarter-hour weekly safety sessions with the team keep attention focused on the subject. Analysis and quantification of risks by position has enabled indicators to be identified for monitoring them over time. Safety visits also contribute to improve results with each operator visited and observed at their post twice a year by a manager who looks for ways to reduce risks. In 2014, more than 32,000 such safety visits were carried out across the Group.Employees participated in 350 safety continuous improvement teams in 2014, including on three subjects common to all plants: working “hands free” (50% of accidents involve hands), reporting all health and safety information and continuous updating of risk assessments.

2014 safety successThe Group has greatly improved communication about “near misses,” which are now reported and shared throughout the management line and between plants to allows risks to be anticipated and prevented.Vallourec teams focus on the number of days without an accident, a collective success which involves everyone and which is celebrated. In 2014, Aulnoye-Aymeries celebrated 250 days without an accident by holding a luncheon for everyone at the site. Vallourec Mexico passed the four-year mark without an accident, a new record celebrated by the entire team.

(1) LTIR: lost-time injury rate (number of accidents with lost time per million hours worked)(2) TRIR: total recordable injury rate, with and without lost time (total number of accidents per million hours worked)

June 19, 2014 was a day dedicated to safety. Teams at all Vallourec sites worldwide exchanged experiences and best practices, participated in workshops on risk awareness, both at work and at home, and witnessed the awarding of the

prestigious 2014 Vallourec Safety Award to the Mexican plant with the best performance in the Group: four years without a lost-time accident.

Safety Day across Vallourec

THE VALLOUREC TEAM

VALLOUREC WOMENThey are operators, researchers or top managers around the world. They share the same passion and demonstrate each day the future of women at Vallourec.

NEETA RAJESH Inside Sales Manager

at Vallourec Drilling Products Middle East, Jebel Ali, United Arab Emirates

 When Vallourec arrived in the region in 2008, Neeta applied for a sales assistant position. Two years later,

the company acquired two plants in Jebel Ali and Abu Dhabi and Neeta was promoted to Inside Sales Manager. Today, she leads a four-member team responsible for designing the commercial offers and supervises the entire order processing, through final delivery. “Customers in the Middle East are extremely demanding. Our maxim is customer satisfaction so we have to be very proactive.” Since 2012, she has also been in charge of ensuring excellence in the management of a major contract with National Drilling Company, the biggest customer of Vallourec Drilling Products in the Middle East. “The tube industry is still very male-dominated, but Vallourec offers women attractive career paths and opportunities to take on more responsibility. I trust the company to allow me to go further.”

TF1, Orange, Club Med, Vallourec. After an accomplished career as an

attorney and women’s advocate, Stéphanie joined the masculine world of steel in February 2014, determined to contribute to the evolution of women in the industry. Throughout her career, she has seen legal departments feminized and has taken women's issues to heart and head on, defending the right to balance ambition and personal life. But what in fact makes them different? “They are engaged, factual and freer in their remarks, which is useful in these difficult times. Women think about sustainability, their vision is guided

by overall empathy.” Stéphanie supports the advancement of women at Vallourec with an action plan to attract young female engineers and a project for the mentoring of women by top managers to help Vallourec’s home-grown female talent emerge. She believes “we have a good example of a success story at the head of our Supervisory Board,” with Vivienne Cox. Convincing those around her and progressing based on facts is her method. “I never wanted to make it an issue,” she concludes, “but it remains a real battle.”

STÉPHANIE FOUGOU Group General Counsel,

Manager of the “Gender Diversity” Steering Committee,

Boulogne-Billancourt, France

-

“Women think about sustainability, their vision is guided by overall empathy.”

Vallourec in 2014

40

Activity report

41

THE VALLOUREC TEAM

THIARA RODRIGUES Engineer, Vallourec Competence Center, Rio de Janeiro, Brazil

MISTY FIELDS Computer Numeric Control Machinist at Vallourec Star, Muskogee, U.S.A.

 In impeccable French, Thiara explains that she does what she always dreamed of: to search. To learn, invent and see one’s findings applied. She was hired by Vallourec in 2011 in the Quality and Research

Department, to work on cold drawing as an intern. Vallourec saw her potential and supported her throughout her university studies: from the five-month metallurgy induction training program at Aulnoye-Aymeries to the Belo Horizonte Research Center and today at the Rio Competence Center. At 24, Thiara completed her masters with a research project on the application of nanoparticles for steel tube coatings. With 15 women dedicated to research in Brazil, gender is not an issue, says Thiara. Man or woman, the passion is the same. “The transformation of steel is a fascinating area of research. It's impressive how temperature variations are used to change the properties of a material.” A remarkable phenomenon found in all Vallourec pipe mills around the world.

“I like the hands-on aspect of working the lathe and all the other machines associated with the threading process,”

says Misty enthusiastically. She oversees the thread and alone ensures the entire stage, from setting the threading machine controls on her line to the handling of the impressively sized tubes. Misty already has had a lengthy career in operations. Entering TCA in 2000, she joined Vallourec Star in 2009 when it purchased TCA. Today, she is one of the few women working in this production area. “It’s never been an issue for me,” she says of working in a traditionally male-dominated position. "You just have to pull your own weight and show that you can do the job." The team spirit transcends differences and builds the cohesion on which Vallourec runs. “We have a good team, with good communication,” says Misty. “That’s important in making sure we produce quality pipe. Everyone is more than willing to help one another out.”

-

“The transformation of steel is a fascinating

area of research.“

Vallourec in 2014

42

Chairman VIVIENNE COX Director of BG Group Plc and Pearson Plc

Vice Chairman PATRICK BOISSIER Chairman of the Construction and Naval Activities Industry Group (GICAN)

Members CÉDRIC DE BAILLIENCOURT

CFO of the Bolloré Group

OLIVIER BAZIL

Director of Legrand, Michelin, Firmenich International and Château Palmer

PASCALE CHARGRASSE

Business Development Manager at Valinox Nucléaire, representing employee shareholders

JEAN-FRANÇOIS CIRELLI

Member of the Supervisory Board of Vallourec

OUR GOVERNANCE

GOVERNANCE

SUPERVISORY BOARD Composition on March 31, 2015

Vallourec’s governance is composed of a Supervisory Board and a Management Board. The Management Board provides management direction, while the Supervisory Board oversees this direction as the representative body of the shareholders. The GMC (Group Management Committee) implements the strategy defined by the Management Board.

PHILIPPE CROUZET Chairman of the Management Board

JEAN-PIERRE MICHEL Chief Operating Officer

OLIVIER MALLET

Chief Financial Officer and General Counsel

MANAGEMENT BOARD

Activity report

43

MICHEL DE FABIANI

Director of BP France and Valéo, Member of the Supervisory Board of Valco

JOSÉ CARLOS GRUBISICH

Chairman of Eldorado Brasil Celulose SA, Director of Halliburton

ANNE-MARIE IDRAC

Director of Saint-Gobain, Bouygues and Total

HENRI POUPART-LAFARGE

Executive Vice President of Alstom and President of Alstom's Transport sector

PIERRE PRINGUET(1)

Vice Chairman of the Board of Directors of Pernod Ricard, Director of Iliad, Avril and Cap Gemini and Chairman of AFEP

ALEXANDRA SCHAAPVELD

Member of the Supervisory Board of Holland Casino, Bumi Armada Berhad and Société Générale

Non-voting Board member FRANÇOIS HENROT

Chairman of Investment Banking Activities, Rothschild Group

Vallourec.com

GOVERNANCE

STÉPHANIE FOUGOU Group General Counsel

PHILIPPE CARLIER Senior Vice President Europe

DIDIER HORNET Senior Vice President Eastern Hemisphere

ALEXANDRE LYRA Senior Vice President South America

FRANÇOIS CURIE Group Vice President Human Resources

NICOLAS DE COIGNAC Senior Vice President North America

GROUP MANAGEMENT COMMITTEE

(1) At its February 23, 2015 meeting, Vallourec’s Supervisory Board coopted Mr. Pierre Pringuet as a member of the Supervisory Board, replacing Mr. Edward G. Krubasik, who resigned. The ratification of his appointment will be proposed at the Shareholders' Meeting on May 28, 2015.

SHAREHOLDERSSHAREHOLDERS

CLOSER TO OUR SHAREHOLDERSThe Group’s priority is to maintain relationships based on trust with all shareholders, whether individual or institutional, French or foreign.

This relationship is the result of sustained communication, constructive dialogue and direct contacts managed by the Investor Relations and Financial Communication team.

For the latest news The Group publishes a number of financial communications such as press releases on the Group’s results and businesses, Shareholder Letters and the Shareholder’s guide. Available on the Group’s website (www.vallourec.com), they are sent electronically to Club members and by a simple registration process. To enable its shareholders and financial analysts to follow the Group news in real time, Vallourec is present on Twitter, Facebook and LinkedIn.

Sharing information Vallourec meetings with individual shareholders in 2014 included participating in panel discussions in Lyon in June and in Paris in December along with members of the oil services sector. Several hundred shareholders participated to discuss the future of the sector, deepen their knowledge of the Group and engage in dialogue with the Vallourec team.

Relations with institutional investors and financial analysts in 2014 included nearly 350 meetings and conference calls by the Group’s Management and Investor Relations team. Almost 50 days were dedicated to roadshows and conferences in global financial centers, particularly in Europe and the United States, addressing challenges in the oil sector.

SHAREHOLDING STRUCTURE AT DECEMBER 31, 2014

VALLOUREC SHARE DATA

7.61%of Vallourec‘s share capital is held by Group employees

Listed on Euronext Paris Eurolist (compartment A)

Admitted to the Deferred Settlement Service

ISIN share code: FR0000120354 (ticker: VK)

ISIN ADR share code: US 92023R2094 (ticker: VLOWY)

Indices: Euronext 100, SBF 120, Euronext Vigeo France 20, Euronext Vigeo Europe 120 and Euronext Vigeo Eurozone 120.

Market capitalization at March 31, 2015: €3 billion.

Vallourec in 2014

44

82.05% Public

7.61% Group employees

7.47% CDC Group

1.51% Nippon Steel &

Sumitomo Metal Corporation

1.36% Treasury shares

SHAREHOLDERS

The loyalty of individual shareholders is essential for Vallourec. To reinforce the bonds of trust and proximity, the Group decided to create a Club, open

to any adult individual holding at least one registered share or 100 bearer shares. A program of regular meetings and discussions helps shareholders to better

understand Vallourec while enabling the Group to better understand shareholder expectations.

New: Vallourec Shareholders Club

EARNINGS PER SHARE AND DIVIDEND IN €

DIVIDEND DISTRIBUTION KEY DATES

DIVIDEND MAINTAINED

Vallourec’s dividend policy, approved by the Supervisory Board, targets the distribution of an average of 33% of consolidated net income, Group share over the long term. With the cash flow generated in 2014, despite lower results, Vallourec will propose at the May 28, 2015 General Shareholders’ Meeting that the dividend paid for 2014 be maintained at the same level of the previous year, €0.81 per share. This dividend corresponds to a payout ratio of 44.3% of consolidated net income, Group share.

June 3, 2015: Record date

June 4, 2015: Share quoted ex-dividend

June 4-17, 2015: Option period: shareholders elect to receive the dividend in cash or shares and return the instructions to their financial institution.

From June 25, 2015: Dividend payment

Activity report

45

Meetings with nearly 350funds and institutional investors were held at 14 financial centers

A new hotline A toll-free number (0 800 505 110, from landlines in France) provides shareholders with simplified access to information such as the financial calendar and the ability to listen to commentary on the latest results and be put in touch with the Investor Relations and Financial Communication team or the registered shares securities management service.

Employee share ownership: 7th operation, same participation In 2014, nearly 15,000 employees in 13 countries were invited to subscribe to the seventh employee share offer launched by the Group. Their massive participation resulted in 7.61% of company shares held by employees at December 31, 2014, confirming employees’ commitment to the company and their confidence in its future.

Vallourec.com

2012 2013 2014

Earnings per share €1.8 €2.1 €1.9(1)

Dividend per share €0.69 €0.81 €0.81

Payout ratio(2) 39.7% 39.6% 44.3%

(1) Adjusted earnings per share (excluding impairment impacts). Earnings per share including impairment impacts were – €7.3 in 2014.(2) The payout ratio is calculated based on the total number of shares outstanding at December 31.

Members of the Vallourec Shareholders

Club are invited to discussion sessions

with a team dedicated to Club members.

Vallourec in 2014

46

FINANCIAL RESULTSDespite an oil and gas environment that deteriorated sharply in the second half, Vallourec demonstrated financial resilience in 2014. The Group benefited primarily from the growth of the Oil & Gas activity in the USA, supported by the successful ramp up of its new American mill.

INDICATORS

SALES VOLUMES IN KT

The 7.6% increase in volumes was partly offset by a negative price and product mix effect (–3.7%) and a negative translation effect (–1.7%).

2012

2013

2014

2,323

EBITDA AND EBITDA MARGIN IN € MILLION AND AS A % OF SALES

EBITDA stood at €855 million, down 7.1% compared with 2013.

2012

2013

2014

855

RESPONSIBLE PERFORMANCE TARGETS

As a leader of its industry, Vallourec must set the standard for corporate social responsibility. The Group has made a commitment to all of its stakeholders to make a difference.

ENSURE THE SAFETY AND PROTECT THE HEALTH

OF OUR EMPLOYEES

86%The decrease in the accident frequency rate with

and without lost time (TRIR) and with lost time (LTIR) between 2008 and 2014.

In 2014, the Group again exceeded its targets. The TRIR was 4.2 compared to a target of 5. The LTIR dropped to 1.3 and the severity rate of accidents to 0.06. Despite these efforts, 2014 was marked unfortunately by two fatal accidents. More than ever, the Group is mobilized to improve safety.

2015 Objective: reduce TRIR to 4.

15.0

%

16.5

%

14.8

%*

2,092 2,159

788*

920

Activity report

47

INDICATORS

SALES BY MARKET IN 2014 IN %

SALES IN € MILLION

Group sales increased by 2.2% (+3.9% at constant exchange rates), driven mainly by Oil & Gas and Power Generation.

2012

2013

2014

5,701

NET INCOME, GROUP SHARE IN € MILLION

Net income, Group share was a loss of €924 million. Adjusted net income, Group share (excluding impairment impacts) amounted to €239 million, a decrease of 8.8% compared with 2013.

2012

2013

2014

239**

In 2014, Oil & Gas sales rose by 3.5% compared with 2013, reaching a record of €3,796 million, to represent today 66.6% of total Group sales, compared with 65.8% in 2013. The Power Generation activity recorded an increase of 6.6% in 2014. The Petrochemicals and Industry & Other activities declined respectively by 6.5% and 2.1% compared with 2013.

TRAIN AND MOTIVATE OUR EMPLOYEES

76%The portion of employees worldwide

satisfied to be part of Vallourec, according to the 2013 “Opinion” survey.

In 2014, action plans were developed and deployed locally to respond to expectations expressed in the survey.

The next satisfaction survey should take place in 2016.

ESTABLISH A NETWORK OF RELIABLE AND RESPONSIBLE

SUPPLIERS

576The number of suppliers involved

in Vallourec’s social and environmental responsibility evaluation,

an increase of 261 over 2013.

2015 Objective: involve 750 suppliers in the process, an increase of 174.

SATISFY OUR SHAREHOLDERS OVER THE LONG TERM

B+The average rating of Vallourec

by four major non-financial rating agencies, meeting the Group’s objective for 2014.

As at December 1, 2014, Vallourec was included in the Euronext Vigeo France 20, Euronext Vigeo Europe 120 and Euronext Vigeo Eurozone 120.

2015 Objective: obtain an A– in the surveys expected during 2015.

SALES BY REGION IN 2014 IN %

The share of sales generated in North America rose from 26.2% in 2013 to 30.6% in 2014. This increase was made possible by higher volumes in the United States. The share of sales generated in South America was down 5 points, mainly due to Petrobras’ decision to eliminate most of its tube inventories. Sales in the Middle East benefited from an exceptional backlog generated in 2013.

2014

Adjusted

66.6% Oil & Gas

5.1% Petrochemicals

10.7% Power generation

7.8% Mechanical engineering

3.3% Automotive

6.5% Construction & Other

16.1% South America

30.6% North America

25.2% Asia and the Middle East

19.1% Europe

9.0% Rest of the world

* Figures have been restated with the impact of the change in method of accounting for actuarial gains and losses on post-employment benefits (revised standard IAS 19).** Excluding impairment impacts (as part of its annual impairment review, Vallourec reassessed the carrying value of its global asset base and recorded an impairment of assets amounting to €1,104 million. See Registration Document filed with the AMF on April 10, 2015, No. D.15-035, Chapter 6, Notes 2.3 and 28 to the consolidated financial statements).

(924)

5,326 5,578

221* 262

NET DEBT IN € MILLION

As at December 31, 2014, the Group’s net debt amounted to €1,547 million, a decrease of €84 million compared with the end of 2013, representing a gearing ratio of 37.1%.

2012

2013

2014

1,547

To learn more, the 2014 Registration Document, including the annual financial report, is available.

Vallourec.com

OTHER 2014 INDICATORS

IMPROVE THE ENERGY EFFICIENCY OF OUR EQUIPMENT,

REDUCE CARBON EMISSIONS

15%Improvement in Vallourec’s energy performance

between 2008 and 2014.

At Group level, except Vallourec & Sumitomo Tubos do Brasil and the new pipe mill ramping up in Youngstown, energy consumption reached 968 kWh/metric ton processed compared to an objective of 954 kWh/metric ton processed. A ratio weighed on by lower production levels and investments in energy performance.

2015 Objective: 1,070 kWh/metric ton processed on a scope extended to all Group plants.

RESPECT OUR ENVIRONMENT AND PROTECT BIODIVERSITY

94%The portion of the Group’s waste recycled

in 2014, meeting the objective set (excluding Vallourec & Sumitomo Tubos do Brasil and the new pipe mill in Youngstown).

2015 Objective: 94.5% of waste recycled on a scope extended to all Group plants.

21%of women managers

€6.6 million spent on actions to benefit local communities

514,000hours of professional training

55%of steel produced from recycled scrap

94%of production from ISO 14001 certified sites

CAPITAL EXPENDITURE IN € MILLION

Capital expenditure was €388 million in 2014, down 31.6% compared with 2013, 2013 being the year when the new tube mill in Youngstown, USA started production.

2012

2013

2014

388

Vallourec in 2014

48

803

567

1,614 1,631

Published by the Vallourec Corporate Communications Department. Design and production: . English version: ALTO International. Photo credits: Boris Bertram – Franck Dunouau – Philippe Dureuil – Eric Flogny/Picture Tank – Thiago Fernandes – Gyro Photography/amanaimages/Corbis – Howest/Ivan Varyukhin/Landbysea/Getty Images – Bruno Lavorato – Stéphane Remael/La Company – Ewen Weatherspoon – Vallourec photo library. All rights reserved. This document was printed on Condat coated, PEFC certified paper.

Vallourec at a glance

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REGISTERED OFFICE

27, avenue du Général Leclerc 92100 Boulogne-Billancourt, France

552 142 200 RCS Nanterre

Tel.: +33 (0)1 49 09 35 00 Fax: +33 (0)1 49 09 36 94

WWW.VALLOUREC.COM

A French limited liability company (société anonyme) with Management and Supervisory Boards and issued capital of €261,195, 950