<PAGE>

                                                                      EXHIBIT 13

MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER  MATTERS

Principal Market

The  Company's  common  stock,  par  value  $.01 per  share,  is  traded  on the
NASDAQ/National Market System under the symbol "MAVK."

Stock Price and Dividend Information

The high and low closing  sales prices on the  NASDAQ/National  Market System of
the Company's Common Stock during the first,  second,  third and fourth quarters
of fiscal 1998 and fiscal 1997, respectively, were as follows:
                              Fiscal 1998                Fiscal 1997
        Quarter               High     Low               High     Low

        First                50 3/4   20 5/16            8 1/4    5 5/8
        Second               25 3/4   14 5/8             9 1/2    6 1/8
        Third                18 3/8   10 9/16           19 3/8    8 3/4
        Fourth               11 1/4    5 3/8            41 3/4   17 1/8

The Company has not  declared or paid cash  dividends  on its common stock since
its  incorporation.  The Company currently intends to retain earnings to finance
the growth and development of its businesses and does not anticipate paying cash
dividends in the near future.  Any payment of cash  dividends in the future will
depend upon the financial  condition,  capital  requirements and earnings of the
Company as well as other factors the Board of Directors may deem  relevant.  The
Company's Revolving Credit Facility with commercial lenders restricts the amount
of dividends the Company can pay to its stockholders.

Approximate Number of Holders of Common Stock

There were 299 holders of record of the  Company's  common stock as of September
30, 1998.





                                Maverick Tube Corporation and Subsidiaries

                                     Historical Financial Information

The  following   selected   financial   data  are  derived  from  the  Company's
consolidated financial statements, which have been audited by Ernst & Young LLP,
independent  auditors.  The selected data should be read in conjunction with the
consolidated financial statements, related notes and other financial information
included herein.
<TABLE>
<CAPTION>

                                                                   Year Ended September 30
                                             1998           1997           1996(2)        1995(1)        1994
                                                              (in thousands, except share data)
<S>                                      <C>            <C>            <C>            <C>            <C>    


Statement of Operations Data:
Net sales                                $  265,389     $  291,060     $  204,182     $  167,896     $  124,843
Cost of goods sold                          232,038        252,803        182,042        159,865        117,833
Gross profit                                 33,351         38,257         22,140          8,031          7,010
Selling, general and administrative          13,210         13,966         10,198          7,728          4,896
Write-down of software costs                  1,605             --             --             --             --
Total selling, general and
   administrative                            14,815         13,966         10,198          7,728          4,896
Structural start-up costs                        --             --             --            245            392
Income from operations                       18,536         24,291         11,942             58          1,722
Interest expense                              1,731          2,067          2,522          3,164          1,125
Other income                                     --             --             --            772             --
Income (loss) before income taxes            16,805         22,224          9,420         (2,334)           597
Provision for income taxes                    5,420          7,339          1,882             --            168
Net income (loss)                           $11,385        $14,885         $7,538        $(2,334)          $429
Diluted earnings (loss) per share             $0.73          $0.97          $0.50         $(0.16)         $0.04

Weighted average common
   shares outstanding                    15,564,325     15,281,653     15,000,812     14,920,274     12,844,822

Other Data:
Depreciation and amortization                 6,172          5,697          5,201          4,691          3,395
Capital expenditures                         22,181          9,537          5,497          5,592         20,759

Balance Sheet Data:
(End of period)
Working capital                              60,362         44,992         32,652         30,272         23,111
Total assets                                156,885        162,064        125,556        106,494         99,434
Current maturities of long-term debt            653            604          1,843          2,795          1,880
Long-term debt (less current maturities)      8,226          8,879         11,901         18,045         19,640
Revolving credit facility                    27,400         10,000         13,250         15,000          4,000
Stockholders' equity                         90,063         77,868         57,247         49,503         51,837
<FN>

(1)   Includes  the first  period  of  results  of  operation  of the  Company's
      structural tube facility which began operations in October 1994.
(2)   Includes the one-time  effect of the change in accounting  practice  which
      resulted in a reduction in net sales,  gross profit,  net income and basic
      and  diluted  net  income  per  common  share of  $8,700,000,  $1,000,000,
      $839,000 and $0.06, respectively.
</FN>
</TABLE>



MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 
OPERATIONS

Certain  statements  contained in the  "Management's  Discussion and Analysis of
Financial  Condition and Results of Operations"  regarding  matters that are not
historical facts (including  statements as to the beliefs or expectations of the
Company) are forward-looking statements. Because such forward-looking statements
include risks and uncertainties, actual results may differ materially from those
expressed  or  implied  by  such   forward-looking   statements.   For  example,
uncertainty continues to exist as to future levels and volatility of oil and gas
price  expectations  and their  effect on  drilling  levels  and  demand for the
Company's energy related products, the future impact of industry-wide draw-downs
of inventories and future import levels. Uncertainty also exists as to the trend
and direction of both product  pricing and purchased  steel costs.  Reference is
made to the "Risk Factors" discussed in Exhibit 99.1 of Maverick's Form 10-K for
its fiscal year ended September 30, 1998.

OVERVIEW

The Company's  products consist of Electric  Resistance Welded (ERW) Oil Country
Tubular Goods (OCTG) and line pipe which are sold primarily to distributors  who
supply end users in the energy industry and structural  tubing and standard pipe
which  are  sold   primarily  to  service   centers  who  supply  end  users  in
construction,  transportation, agriculture and other industrial uses. Demand for
the Company's energy related  products depends  primarily upon the number of oil
and natural gas wells being drilled in the United  States and Canada,  the depth
and  drilling  conditions  of these wells,  and the number of well  completions,
which are in turn  primarily  dependent on oil and natural gas prices.  Domestic
consumption  of OCTG is supplied by domestic  and  foreign  pipe  producers  and
draw-downs of existing  inventories held by distributors  and end users.  Demand
for the Company's  industrial  related  products depends on the general level of
economic activity in the United States and draw-downs of existing inventories.

According  to  published  reports,  domestic  drilling,  the  primary  factor in
determining demand for the Company's OCTG products, remained relatively constant
from fiscal 1997 to fiscal 1998. Gas related  drilling  increased  11.1% and oil
related drilling  declined 16.6%.  Average energy prices decreased during fiscal
1998, with gas decreasing 8.5% and oil decreasing 25.7%. The decreases in energy
prices had a negative  effect on drilling levels in the third and fourth quarter
of fiscal 1998 with the rig count  falling by 7.4% and 20.0%,  respectively.  At
the end of fiscal  1998,  drilling  was at 754 rigs,  down 24.4% from its fiscal
1997 year-end level of 998 rigs.  Management  estimates that consumption of OCTG
per rig rose by an  estimated  3.0%  during  fiscal  1998 due to  increased  rig
efficiency and higher completion rates.

Competition from imports  increased during fiscal 1998 from a 17.2% market share
in  1997  to  18.7%.   Management  believes  that  this  increase  is  primarily
attributable  to higher  OCTG prices in the United  States  during the first six
months of the year.  Industry  inventory build positively  impacted  demand,  as
increases in inventories resulted in additional demand of 3.1% of total domestic
OCTG  consumption.  However,  this is significantly  below the 14.2% demand from
inventory build in 1997, reflecting the downturn in drilling in 1998 as compared
to increased drilling activity during 1997.  Management  believes that the ratio
of inventories to current consumption rates is out of balance at fiscal year-end
1998, as months of supply of inventory  have increased by  approximately  30% to
7.3 months.


As a result of relatively constant drilling activity,  increased imports,  and a
relatively  small  increase  in  inventories,  management  estimates  that total
domestic  shipments of OCTG declined  during fiscal 1998 by 11.5% as compared to
fiscal  1997.  Maverick's  shipments  of OCTG were down 21.5%  primarily  due to
decreased exports to Canada, where the downturn in drilling was more significant
than in the United States.  Management  estimates that Maverick's  domestic OCTG
market share decreased to 13% during fiscal 1998 from 14% during fiscal 1997.

Published  information  suggests  that  demand  for line pipe was also up during
fiscal 1998 by an estimated  27.1%.  However,  domestic  shipments  only rose by
21.1% as import competition rose from 37.4% to 40.3%.

Management  estimates  that the demand for  structural  tube products  (commonly
referred to as hollow  structural  sections or HSS) of the type  produced by the
Company increased by 13.1% in fiscal 1998 and total domestic producer  shipments
rose by 13.0% as import market share remained relatively constant.  According to
published  reports,  the standard pipe market demand increased 4.1%, while total
domestic  producer  shipments  declined  by  0.6%  as the  import  market  share
increased from 24.9% to 28.3%.

Pricing of the  Company's  products was mixed  during the year.  Pricing of OCTG
rose by  approximately  4.9% due to increased  product pricing early in the year
and a favorable  product mix.  However,  OCTG pricing  during the fourth  fiscal
quarter was down 3.4%. Line and standard  product pricing  decreased by 4.5% and
2.7%,  respectively,  primarily  due to high  levels of imports in fiscal  1998.
Structural product pricing remained relatively constant.

Steel costs included in cost of goods sold  decreased  during fiscal 1998 by $18
per ton, or 5.3%.  Replacement costs for steel fluctuated during the year as the
cost increased by $10 per ton in February and remained at that level until July.
However,  the  Company's  major  supplier  of steel has  announced  three  price
decreases since  mid-September,  reducing the Company's current replacement cost
of steel by $50 per ton.  Based on year-end  inventory  levels and the  recently
announced price decreases, the Company estimates that such price reductions will
be fully  reflected in the Company's  cost of goods sold in the third quarter of
fiscal 1999. The supply of steel in the United States has increased dramatically
in 1998,  primarily due to previous  capacity  additions  and  increased  import
levels due largely to the  strengthening  of the dollar in  comparison  to other
world  currencies.  The Company  anticipates that these market conditions should
help keep steel costs  relatively  low during 1999.  However,  steel trade cases
filed  with  the  International  Trade  Commission  in  September,   1998  could
negatively impact the Company's future replacement cost of steel.

The  OCTG  market  conditions  described  above  impacted  the  Company  and its
competitors significantly during 1998, as sales were substantially reduced later
in the year due to the rapid fall in oil prices  and the  resulting  significant
decrease in drilling activity. Consequently, industry-wide inventory levels were
excessive.  Inventory  reductions in the fourth fiscal quarter  sharply  reduced
domestic shipments.  As the Company's recent experience  indicates,  oil and gas
prices are volatile and can have a substantial  effect upon drilling  levels and
resulting  demand for the Company's  energy related  products.  Uncertainty also
exists as to the future demand  levels and pricing for HSS and other  industrial
related  products.  Although the Company  believes that  drilling  activity will
ultimately recover from the currently depressed level, no assurance can be given
regarding the timing and extent of such recovery.

RESULTS OF OPERATIONS

The following table sets forth, for the periods presented,  certain  information
relating to the  operations  of the Company  expressed  as a  percentage  of net
sales:

                                         Year Ended September 30,
                                      1998              1997             1996
Net sales                            100.0%            100.0%           100.0%

Cost of goods sold                    87.4              86.9             89.2
                                   ------------------------------------------

Gross profit                          12.6              13.1             10.8

Selling, general and
   administrative                      5.0               4.8              5.0

Loss on write-down of software
   development costs                    .6                --               --
                                        ----------------------------------------

Total selling, general and
   administrative                      5.6               4.8              5.0
                                       --------------------------------------

Income from operations                 7.0               8.3              5.8

Interest expense, net                   .7                .7              1.2
                                   ------------------------------------------

Income before
   income taxes                        6.3               7.6              4.6

Provision for income taxes             2.0               2.5               .9
                                   ------------------------------------------

Net income                             4.3               5.1              3.7
                                   ==========================================

Fiscal Year Ended September 30, 1998 Compared to Fiscal Year Ended September 30,
1997

Overall Company

In fiscal 1998, net sales decreased  $25.7 million,  or 8.8%, from the preceding
fiscal year. These results were attributable  primarily to a decrease of 8.9% in
total  product  shipments,  from  469,958 tons in fiscal 1997 to 428,216 tons in
fiscal 1998. Overall average selling prices remained  relatively constant during
fiscal 1998.

Cost of goods sold decreased $20.8 million,  or 8.2%, in fiscal 1998 as compared
to fiscal  1997.  The overall  decrease was due  primarily to decreased  product
shipments.  However,  the overall unit cost per ton of products  sold  increased
0.7% (from an average of $538 to $542 per ton) in fiscal 1998. This increase was
due primarily to an increase in conversion  costs from a higher costing  product
mix and less  favorable  fixed  cost  absorption  due to lower  production.  The
increase in  conversion  costs was mostly offset by a decrease in steel costs by
$18 per ton, or 5.3% in fiscal 1998. See "Overview."

Gross profit  decreased  $4.9 million,  or 12.8%,  in fiscal 1998 as compared to
fiscal  1997.  Gross  profit as a  percentage  of net sales was 12.6% for fiscal
1998, as compared to 13.1% for fiscal 1997.

Selling,  general and administrative  expenses increased $849,000, or 6.1%, from
fiscal 1997 to fiscal 1998. These expenses increased  principally as a result of
the  write-down  of software  development  costs of $1.6 million in fiscal 1998.
These  costs were also  increased  by higher  sales  commissions  on  industrial
products sales and partially offset by decreased employee incentive compensation
and decreased  selling expenses related to lower energy sales volumes.  Selling,
general and administrative  expenses as a percentage of net sales increased from
4.8% in fiscal 1997 to 5.6% in fiscal 1998.

Interest  expense  decreased  $336,000,  or 16.3%, in fiscal 1998 as compared to
fiscal 1997 as a result of  decreased  average  borrowings,  decreased  interest
rates and  additional  amounts of interest  expense  capitalized on additions to
property,  plant and equipment.  The decreased  borrowings were  principally the
result of principal repayments from funds generated from operations.

The provision for income taxes decreased $1.9 million in fiscal 1998 as compared
to fiscal 1997 as a result of the reduced  level of income  before  income taxes
recorded in fiscal  1998,  as compared to fiscal 1997.  As  permitted  under the
provisions  of  Statement  of  Financial  Accounting  Standards  (SFAS) No. 109,
"Accounting for Income Taxes,"  realization of the Company's  deferred tax asset
related to net operating  loss  carryforwards  depends on generating  sufficient
taxable  income prior to their  expiration.  Management  believes  that based on
historical  results,  it is more likely than not that the Company will  generate
sufficient  future  taxable income to realize the deferred tax assets related to
net operating losses prior to their expiration.

At  September  30,  1998,   the  Company  had   available  net  operating   loss
carryforwards  of $2.3 million which it may use to offset future taxable income,
of which $1.2 million is available in 1999. In addition,  at September 30, 1998,
the  Company  had  alternative  minimum  tax credit  carryforwards  of  $598,000
available for income tax purposes.  See Note 8 of the Notes to the  Consolidated
Financial Statements as of September 30, 1998.

As a result of the foregoing factors, net income decreased $3.5 million from net
income of $14.9 million,  or $0.97 diluted earnings per share, in fiscal 1997 to
net income of $11.4  million,  or $0.73  diluted  earnings per share,  in fiscal
1998.

Energy Products Segment

Energy  product sales  decreased  $39.0  million,  or 17.4%,  from the preceding
fiscal year.  OCTG product  shipments  decreased  66,282  tons,  or 21.5%,  from
308,428 to 242,146.  The Company's  domestic shipments of OCTG fell 14.7% due to
excessive levels of industry  inventory and a declining rig count throughout the
fiscal year.  The  Company's  export  sales,  primarily to Canada,  decreased by
37.1%,  from  41,092  tons in fiscal  1997 to 25,866  tons in  fiscal  1998,  as
Canadian  drilling  activity fell from 410 rigs at the end of fiscal 1997 to 187
at the end of fiscal 1998.  Line pipe shipments  decreased by 20.4%  principally
due to  increased  import  penetration.  The  average  selling  price for energy
products was $702, an increase of $34 per ton. The increase was  principally due
to higher  product  pricing  early in the year and  improved mix of higher value
products.

Energy products cost of goods sold decreased $30.6 million,  or 15.9%,  from the
preceding fiscal year. Gross profit for energy products decreased  approximately
$8.4 million or 27.0%.  Energy  products gross profit  percentage was 12.3%,  as
compared to 13.9% in fiscal 1997.

Industrial Products Segment

Industrial  products sales increased $13.4 million, or 19.9%, from the preceding
fiscal year. Industrial products shipments increased 22.2%, from 135,029 tons in
fiscal  1997 to  164,973  tons in fiscal  1998.  The  average  selling  price of
industrial  products  was $488,  a decrease of $10 per ton.  This  decrease  was
principally due to the decline in standard pipe pricing caused by an increase in
the level of imported product.

Industrial  products costs of goods sold increased $9.8 million,  or 16.3%, from
the preceding  fiscal year.  Industrial  products  gross profit  increased  $3.5
million,  or 49.9%.  The improved  gross profit was  primarily  attributable  to
declining steel costs and improved  operating  efficiencies  during fiscal 1998,
partially  offset by slightly lower selling  prices.  Industrial  products gross
profit percentage was 13.1%, as compared to 10.5% in fiscal 1997.

Fiscal Year Ended September 30, 1997 Compared to Fiscal Year Ended September 30,
1996

Overall Company

In fiscal 1997, net sales increased $86.9 million,  or 42.5%, from the preceding
fiscal year. These results were  attributable  primarily to an increase of 36.1%
in total product shipments,  from 345,232 tons in fiscal 1996 to 469,958 tons in
fiscal  1997.  Total  sales and total  shipments  were  positively  impacted  by
Maverick's  strengthened  position in the industrial  products  market.  Overall
average selling prices  increased during fiscal 1997 by 4.7% (from an average of
$591 to $619 per ton).  This increase  augmented the increase in volume of total
sales.

Cost of goods sold increased $70.8 million, or 38.9%, in fiscal 1997 as compared
to fiscal  1996.  The overall  increase was due  primarily to increased  product
shipments.  However,  the overall unit cost per ton of products  sold  increased
2.0% (from an average of $527 to $538 per ton) in fiscal 1997. This increase was
due  primarily  to an  increase  in  delivered  steel costs in the first half of
fiscal 1997,  resulting in an increase in the average  prime steel cost of goods
sold of $17 per ton.  See  "Overview."  The  increase  in steel costs was offset
somewhat by the operating  efficiencies  achieved by Maverick and improved fixed
cost absorption.

Gross profit  increased  $16.1 million,  or 72.8%, in fiscal 1997 as compared to
fiscal  1996.  Gross  profit as a  percentage  of net sales was 13.1% for fiscal
1997, as compared to 10.8% for fiscal 1996.

Selling,  general and administrative  expenses increased $3.7 million, or 36.9%,
from fiscal 1996 to fiscal  1997.  These  expenses  increased  principally  as a
result of increased employee incentive compensation, salary increases, increased
selling  expenses  related to higher  sales  volumes  and the  increase in sales
commissions on industrial products. Selling, general and administrative expenses
as a  percentage  of net sales  decreased  from  5.0% in fiscal  1996 to 4.8% in
fiscal 1997.

Interest  expense  decreased  $455,000,  or 18.0%, in fiscal 1997 as compared to
fiscal 1996 as a result of decreased  borrowings.  The decreased borrowings were
principally the result of principal repayments from internally generated funds.

The provision for income taxes increased $5.5 million in fiscal 1997 as compared
to fiscal 1996 as a result of the Company generating $12.8 million in additional
income before income taxes in fiscal 1997, as compared to fiscal 1996.

As a result of the foregoing factors, net income increased $7.4 million from net
income of $7.5  million,  or $0.51 per  share,  in fiscal  1996 to net income of
$14.9 million, or $0.97 per share, in fiscal 1997.

Energy Products Segment

Energy  product sales  increased  $76.3  million,  or 51.7%,  from the preceding
fiscal year. OCTG product  shipments  increased  108,036 tons, or 53.9%.  During
fiscal 1997,  an increase in  consumption  of OCTG resulted from the average rig
count  rising  by 146 or  19.2%  and a build  in  existing  inventories  held by
distributors.  Also export sales, primarily to Canada,  increased by 95.8%, from
20,985 tons in fiscal 1996 to 41,092 tons in fiscal 1997,  as Canadian  drilling
rose by 18.8%. Line pipe shipments decreased by 12.0% principally due to lack of
available  capacity at Maverick.  The average  selling price for energy products
was $668, an increase of $28 per ton. The increase was principally due to higher
product pricing and improved sales of higher value products.

Energy products cost of goods sold increased $62.3 million,  or 47.7%,  from the
preceding fiscal year. Gross profit for energy products increased  approximately
$14.1 million or 82.3%.  Energy  products gross profit  percentage was 13.9%, as
compared to 11.6% in fiscal 1996.

Industrial Products Segment

Industrial  products sales increased $10.6 million, or 18.6%, from the preceding
fiscal year. Industrial products shipments increased 17.7%, from 114,728 tons in
fiscal  1996 to  135,029  tons in fiscal  1997.  The  average  selling  price of
industrial  products  was $498,  an increase of $4 per ton.  This  increase  was
principally due to improved product pricing.

Industrial  products costs of goods sold  increased $8.5 million or 16.5%,  from
the preceding  fiscal year.  Industrial  products  gross profit  increased  $2.0
million  or  40.3%.  The  improved  gross  profit   percentages  were  primarily
attributable  to improved  product pricing and improved  operating  efficiencies
during fiscal 1997.  Industrial  products gross profit  percentage was 10.5%, as
compared to 8.9% in fiscal 1996.

LIQUIDITY AND CAPITAL RESOURCES

Working capital at September 30, 1998 was $60.4 million and the ratio of current
assets to current  liabilities  was 3.3 to 1, as compared to September  30, 1997
when working  capital was $45.0  million and the current ratio was 1.7 to 1. The
increase in working capital was  principally due to a $19.2 million  decrease in
accounts  payable,  a $3.5  million  decrease  in accrued  expenses  and a $12.7
million  decrease  in  deferred  revenue,  partially  offset by a $12.2  million
decrease in accounts receivable and a $7.8 million decrease in inventories.  The
above changes in accounts  receivable,  inventories,  accounts payable,  accrued
expenses  and  deferred  revenue  are  due to the  decreased  volume  of  energy
business,  particularly  in the last half of the fiscal year.  Cash  provided by
operating  activities  for fiscal 1998 was $3.1 million.  The primary  source of
cash was net  income,  exclusive  of the  impact  of non cash  items  (primarily
depreciation, amortization and deferred income tax expense) of $18.7 million.

During fiscal 1997 and 1996,  net cash provided by operations  was $16.7 million
and $14.2  million,  respectively.  In these  years,  the net cash  provided  by
operations was primarily used to fund capital  expenditures  and the pay-down of
net long-term borrowings.

Cash  used in  investing  activities  in  fiscal  1998,  1997 and 1996 was $22.2
million, $9.4 million and $5.5 million, respectively. This use was primarily for
purchases of property,  plant,  and  equipment of $22.2  million (of which $11.5
million was spent on the  purchase  of the  production  facility  for cold drawn
mechanical  tubing),  $9.5 million and $5.5 million during fiscal 1998, 1997 and
1996, respectively.

During fiscal 1998, 1997 and 1996, cash provided (used) by financing  activities
was $17.0 million, ($5.0) million and ($8.6) million. Cash provided by financing
activities  in fiscal 1998 was  primarily  attributable  to a $17.4  million net
increase in the Company's Revolving Credit Facility used to fund the purchase of
the  production  facility  for cold drawn  mechanical  tubing and other  working
capital  needs.  The increase in the  Company's  Revolving  Credit  Facility was
offset by other regularly  scheduled term debt payments.  Cash used by financing
activities  in fiscal 1997 was primarily  attributable  to the pay-off of a $3.7
million  term note used to finance  the  relocation  of the energy  facility  to
Arkansas, a $3.3 million net decrease in the Company's Revolving Credit Facility
and other  regularly  scheduled  term debt  payments.  These debt pay-downs were
partially offset by $2.5 million of proceeds from the exercise of stock options.
The cash used by financing activities in fiscal 1996 was primarily attributed to
the pay-off of a $5.5 million term note (the proceeds of which were used in 1995
to finance the  structural  facility)  and a $1.8  million  net  pay-down of the
Company's Revolving Credit Facility.

The Company's  capital  budget for fiscal 1999 is $16.5  million,  which will be
used to complete  and enhance the newly  purchased  cold drawn  mechanical  tube
facility, acquire new equipment for its existing manufacturing facilities and to
purchase and install a new  enterprise  resource  planning  system.  The Company
expects that it will meet its ongoing working  capital and capital  requirements
from a combination of cash flow from operations, including a $5.1 million income
tax refund,  which  constitutes  its primary source of liquidity,  and available
borrowings under its Revolving Credit Facility.

In September 1998, the Company entered into a new Revolving Credit Facility. The
Revolving  Credit Facility  provides for maximum  borrowings up to the lesser of
the eligible  borrowing base or $50.0 million,  and bears interest at either the
prevailing  prime rate or the Eurodollar  rate,  adjusted by an interest margin,
depending upon certain financial measurements.  The Revolving Credit Facility is
secured by the Company's accounts  receivable and inventories and will mature on
September 30, 2003. As of September 30, 1998, the  applicable  interest rate was
6.61 percent per annum, and the Company had $4.9 million in additional available
borrowings under the Revolving Credit Facility. The Company anticipates that the
borrowing base will expand during the year as the cold drawn  mechanical  tubing
facility  starts  operations  in the  first  quarter  of  fiscal  1999,  thereby
generating accounts receivable and inventory balances. As of September 30, 1998,
the Company had $748,000 in cash and cash equivalents.

Year 2000 Readiness Disclosure

The Company is in the implementation  phase of its conversion to a new Year 2000
compliant  enterprise  resource  planning  system which will replace and upgrade
many of the Company's older information systems, some of which are not Year 2000
compliant.  The integrated  information provided by this new system will enhance
the  Company's  ability  to make more  informed  decisions  regarding  sales and
inventory,  optimize  inventory  levels and minimize  costs.  Implementation  is
expected to be completed by the fourth fiscal quarter of 1999. The total cost of
the system  implementation,  including the cost of software and related internal
cost, is expected to be $4.7 million, of which  approximately  $700,000 has been
expended  through  September 30, 1998. In addition,  the Company is performing a
separate  evaluation of its other systems,  including its manufacturing  related
systems,  for Year 2000 compliance and is contacting its significant  customers,
suppliers  and  vendors  to  determine  their  Year  2000  compliance.  Business
interruption  caused by these  suppliers could  negatively  impact the Company's
operations. These evaluations and the conversion of these systems (if necessary)
are also  expected to be completed in the same time frame as the  implementation
of the Company's new enterprise  resource  planning system and the cost of these
procedures is not expected to be material.


Although the Company  believes that the plans  described  above will address its
Year 2000 issues and as a result, the Company will not be significantly impacted
by it, the Company has established a contingency plan to address  non-compliance
issues.  This plan involves the  utilization of various manual  procedures  that
bypass computer  applications  and may be utilized in the event of a significant
system  shutdown or if the Company faces problems with its customers,  suppliers
or vendors.  If the Company is required to implement its contingency  plan, such
action could have an adverse effect on the  operations,  liquidity and financial
condition of the Company.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>

                                         Maverick Tube Corporation
                                              and Subsidiaries
                                        Consolidated Balance Sheets
                                     (In thousands, except share data)
                                                                                          September 30

                                                                                 1998                  1997
<S>                                                                    <C>                     <C>
Assets
Current assets:
   Cash and cash equivalents                                           $           748         $        2,886
   Accounts receivable, less allowances of $391
      and $388 in 1998 and 1997, respectively                                   15,515                 27,714
   Inventories                                                                  61,685                 69,436
   Deferred income taxes                                                         1,827                  5,104
   Income taxes refundable                                                       5,078                     --
   Prepaid expenses and other current assets                                     1,200                    798
                                                                       ----------------        --------------
Total current assets                                                            86,053                105,938

Property, plant and equipment                                                   69,879                 55,506
Other assets                                                                       953                    620
                                                                       ---------------         --------------
                                                                       $       156,885         $      162,064
                                                                       ===============         ==============
Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable                                                    $        12,301         $       31,477
   Accrued expenses and other liabilities                                        9,153                 12,614
   Deferred revenue                                                              3,584                 16,251
   Current maturities of long-term debt                                            653                    604
                                                                       ---------------         --------------
Total current liabilities                                                       25,691                 60,946

Long-term debt, less current maturities                                          8,226                  8,879
Revolving credit facility                                                       27,400                 10,000
Deferred income taxes                                                            5,505                  4,371
Commitments and contingencies (Notes 5, 11 and 12)                                  --                     --

Stockholders' Equity:
Preferred stock, $.01 par value; 5,000,000
   authorized shares                                                                --                     --
Common stock, $.01 par value; 40,000,000
   authorized shares; 15,437,474 and 15,410,974
   shares issued and outstanding in 1998 and 1997,
   respectively                                                                    154                    154
Additional paid-in capital                                                      44,216                 43,406
Retained earnings                                                               45,693                 34,308
                                                                       ---------------         --------------
                                                                                90,063                 77,868
                                                                       ---------------         --------------
                                                                       $       156,885         $      162,064
                                                                       ===============         ==============
<FN>
See accompanying notes.
</FN>
</TABLE>


                            Maverick Tube Corporation
                                and Subsidiaries
                        Consolidated Statements of Income
                      (In thousands, except per share data)


                                                      Year ended September 30
                                                  1998      1997          1996

Net sales                                      $265,389   $291,060     $204,182
Cost of goods sold                              232,038    252,803      182,042
                                               ---------------------------------
Gross profit                                     33,351     38,257       22,140

Selling, general and administrative              14,815     13,966       10,198
Income from operations                           18,536     24,291       11,942
Interest expense                                 (1,731)    (2,067)      (2,522)
                                               ---------------------------------
Income before income taxes                       16,805     22,224        9,420

Provision for income taxes                        5,420      7,339        1,882
                                               ---------------------------------
Net income                                     $ 11,385   $ 14,885     $  7,538
                                               =================================

Basic earnings per share                       $    .74   $    .99     $    .50
                                               =================================
Diluted earnings per share                     $    .73   $    .97     $    .50
                                               =================================

See accompanying notes.

<TABLE>
<CAPTION>

                            Maverick Tube Corporation
                                and Subsidiaries
                 Consolidated Statements of Stockholders' Equity
                        (In thousands, except share data)


                                                                Common Stock
                                            ------------------------------------------------------------------------
                                                                                   Additional
                                                                                     Paid-in     Retained Earnings
                                                  Shares            Amount           Capital
                                            ------------------------------------------------------------------------
<S>                                              <C>                 <C>            <C>                 <C>   

Balance at October 1, 1995                       14,880,458          $149           $ 37,469            $11,885
   Net income                                            --            --                --               7,538
   Exercise of stock options                         63,684             1               205                  --
                                            ------------------------------------------------------------------------
Balance at September 30, 1996                    14,944,142           150             37,674             19,423
   Net income                                            --            --                 --             14,885
   Exercise of stock options                        466,832             4              2,482                 --
   Tax benefit associated with the
      exercise of nonqualified stock
      options                                            --            --              3,250                 --
                                            ------------------------------------------------------------------------
Balance at September 30, 1997                    15,410,974           154             43,406             34,308
   Net income                                            --            --                 --             11,385
   Exercise of stock options                         26,500            --                162                 --
   Tax benefit associated with the
      exercise of nonqualified stock
      options                                            --            --                648                 --
                                            ------------------------------------------------------------------------
Balance at September 30, 1998                    15,437,474          $154           $ 44,216            $45,693
                                            ========================================================================

<FN>
See accompanying notes.
</FN>
</TABLE>
<TABLE>
<CAPTION>

                            Maverick Tube Corporation
                                and Subsidiaries
                      Consolidated Statements of Cash Flows
                                 (In thousands)

                                                                            Year ended September 30
                                                                    1998               1997             1996
                                                              -----------------------------------------------------
<S>                                                              <C>              <C>               <C>  

Operating activities
Net income                                                       $    11,385      $    14,885       $    7,538
Adjustments to reconcile net income to net cash provided by
   operating activities:
     Depreciation and amortization                                     6,172            5,697            5,201
     Deferred income taxes                                             1,161            2,577              585
     Provision for losses on accounts receivable                           3               44              339
     Loss (gain) on sale of equipment                                     49               50               (3)
     Loss on write-down of software development costs
                                                                       1,605               --               --
     Changes in operating assets and liabilities:
       Accounts receivable                                            12,196           (9,358)             175
       Inventories                                                     7,751          (18,812)         (17,352)
       Prepaid expenses and other current assets                      (1,582)              59                5
       Other assets                                                     (381)             (67)             207
       Accounts payable                                              (19,176)           8,435            5,623
       Accrued expenses and other liabilities                         (3,461)           5,136            3,746
       Deferred revenue                                              (12,667)           8,075            8,176
                                                              -----------------------------------------------------
Cash provided by operating activities                                  3,055           16,721           14,240

Investing activities
   Expenditures for property, plant and equipment                    (10,717)          (9,537)          (5,497)
   Expenditures for purchase of production facility                  (11,464)              --               --
   Proceeds from disposals of equipment                                   30               96                3
Collection of notes receivable                                            --               18               15
                                                              -----------------------------------------------------
Cash used by investing activities                                    (22,151)          (9,423)          (5,479)
Financing activities
Proceeds from long-term borrowings and notes                         121,000            92,400          64,250
   Principal payments on long-term borrowings and notes
                                                                    (104,204)          (99,911)        (73,095)

                                                              -----------------------------------------------------
                                                                      16,796            (7,511)         (8,845)
Proceeds from exercise of stock options                                  162             2,486             206
                                                              -----------------------------------------------------
Cash provided (used) by financing activities                          16,958            (5,025)         (8,639)

                                                              -----------------------------------------------------
Increase (decrease) in cash and cash equivalents                      (2,138)            2,273             122
Cash and cash equivalents at beginning of year                         2,886               613             491
                                                              -----------------------------------------------------

Cash and cash equivalents at end of year                         $       748       $     2,886      $      613
                                                              =====================================================


Supplemental  disclosures  of cash flow  information:  
Cash paid during the year for:
     Interest (net of amounts capitalized of $355, 
       $268 and $81)                                             $     1,733       $     2,138      $    2,677
     Income taxes                                                $     6,242       $     4,020      $    1,370
<FN>
See accompanying notes.
</FN>
</TABLE>
                   Maverick Tube Corporation and Subsidiaries

1. Summary of Significant Accounting Policies

Principles of Consolidation

The  consolidated  financial  statements  include the accounts of Maverick  Tube
Corporation and its wholly owned subsidiaries  (collectively  referred to as the
Company).  All  significant  intercompany  accounts and  transactions  have been
eliminated.

Revenue Recognition

The Company  records revenue from product sales when the product is shipped from
its  facilities.  Prior to January 1, 1996, the Company had recorded  revenue on
the sale of energy products to certain  customers at the time the goods were set
aside  for  storage  at the  customer's  request.  Included  in the  results  of
operations for the year ended  September 30, 1996 was a one-time  effect of this
change in practice which resulted in a reduction in net sales, gross profit, net
income  and basic  and  diluted  net  income  per  common  share of  $8,700,000,
$1,000,000, $839,000 and $0.06, respectively.

Inventories

Inventories are principally valued at the lower of average cost or market.

Property, Plant and Equipment

Property,  plant and equipment are stated on the basis of cost.  Depreciation is
computed  under the  straight-line  method over the  respective  assets'  useful
lives. Useful lives of the Company's assets are as follows:

           Land and leasehold improvements                10 to 20 years
           Buildings                                      20 to 40 years
           Transportation equipment                       4 to 5 years
           Machinery and equipment                        5 to 12 years
           Furniture and fixtures                         3 to 7 years


Income Taxes

Deferred taxes are provided on an asset and liability  method  whereby  deferred
tax assets are  recognized for deductible  temporary  differences  and operating
loss and other  tax  credit  carryforwards  and  deferred  tax  liabilities  are
recognized for taxable  temporary  differences.  Temporary  differences  are the
differences between the reported amounts of assets and liabilities and their tax
bases.

Stock-Based Compensation

As permitted by Statement  of  Financial  Accounting  Standards  (SFAS) No. 123,
"Accounting  for  Stock-Based  Compensation,"  the  Company  follows  Accounting
Principles  Board Opinion No. 25 and related  interpretations  in accounting for
its director and employee stock options.  The Company grants stock options for a
fixed number of shares to directors and employees  with an exercise  price equal
to the fair  value of the  shares  at the time of the  grant.  Accordingly,  the
Company has not  recognized  compensation  expense  for any of its stock  option
grants.  If the Company had elected to recognize  compensation cost based on the
fair value of the options  granted at the grant date as  prescribed  by SFAS No.
123,  net income and  earnings  per share for 1998,  1997 or 1996 would not have
been reduced by a material  amount.  The  compensation  cost associated with the
fair value of the options  calculated in 1998,  1997 and 1996 is not necessarily
representative of the potential effects on reported net income in future years.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles  requires  management to periodically  make estimates and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results could differ from those estimates.

Earnings per Common Share

Effective  December 31, 1997,  the Company  adopted SFAS No. 128,  "Earnings per
share."  SFAS No. 128  replaced  the  calculation  of primary and fully  diluted
earnings per share with basic and dilutive  earnings per share.  Basic  earnings
per share excludes any dilutive  effects of options.  Diluted earnings per share
is very similar to the previously reported fully diluted earnings per share. All
earnings per share amounts have been presented, and where appropriate,  restated
to conform to the SFAS No. 128 requirements.

The  reconciliation for diluted earnings per share for years ended September 30,
1998, 1997 and 1996 is as follows (in thousands):
                                               1998         1997          1996
                                             -----------------------------------

Average shares outstanding utilized in the
   computation of basic earnings per share   15,437        15,018         14,940

Dilutive effect of outstanding stock options    127           264             60
                                             -----------------------------------

Average shares utilized in
   the computation of diluted
   earnings per share                        15,564        15,282         15,000
                                             ===================================

Net income used in basic and diluted
   earnings per share                       $11,385       $14,885         $7,538
                                             ===================================

Business Segments

The Company's two identifiable  segments are energy products,  consisting of Oil
Country  Tubular Goods (OCTG) and line pipe products sold primarily to customers
in the  energy  industry,  and  industrial  products,  consisting  primarily  of
structural  tubing and standard pipe products.  Energy  products are used in the
completion of new wells and the handling and transporting of the oil and natural
gas  produced  from these  wells.  Industrial  products are sold to customers in
various industries including construction,  agriculture and transportation.  The
Company's  products are sold primarily to a network of distributors and are sold
throughout the United States and Canada.

Sales  commission  expenses  are  charged  directly to the  associated  business
segments.  Remaining selling,  general and administrative expenses are allocated
based upon the net sales dollars generated by each segment.

In  1997,  the  Financial  Accounting  Standards  Board  issued  SFAS  No.  131,
"Disclosures about Segments of an Enterprise and Related  Information." SFAS No.
131 specifies the presentation and disclosure  requirements for business segment
information.  The Company is required to adopt this statement in fiscal 1999 and
has  determined  that  SFAS  No.  131 will  have no  significant  impact  on the
Company's disclosures.

Cash Equivalents

The Company's  policy is to consider demand deposits and short-term  investments
with a maturity of three months or less when purchased as cash equivalents.

Financial Instruments

Financial instruments consist of cash and cash equivalents, accounts receivable,
accounts payable and long-term debt  obligations.  The carrying value of amounts
reported  in the  consolidated  balance  sheets  for cash and cash  equivalents,
accounts  receivable and accounts payable  approximate fair value.  Management's
estimate of the fair value of long-term debt  obligations is discussed in Note 4
to the consolidated financial statements.

2.  Purchase of Production Facility

On September  18,  1998,  the Company  acquired  assets that will be used in the
production  of cold drawn  tubular  products  at a  production  facility in West
Mayfield,  Pennsylvania  from PMAC,  Ltd.  for  $11,464,000.  This  facility  is
expected to begin production during the Company's first quarter of fiscal 1999.

3.  Write-Down of Software Developments Costs

During the year ended  September 30, 1998, the Company  recorded a pretax charge
of $1,605,000 in selling,  general and administrative expense for the write-down
of certain  software  development  costs relating to  information  systems being
replaced by a new enterprise resource planning system.

4.  Stock Split

On August 1, 1997,  the Company  declared a two-for-one  stock split effected in
the form of a 100% stock dividend to all stockholders of record as of August 12,
1997.  The  dividend  was paid on August 21,  1997 and  increased  the number of
shares  outstanding  from  7,544,071 to  15,088,142.  Approximately  $75,000 was
transferred from retained earnings to common stock to record this dividend.  All
share  and  per  share  amounts,  including  stock  option  information,  in the
accompanying  consolidated  financial  statements  have been restated to reflect
this stock dividend.


5. Long-Term Debt and Revolving Credit Facility

Long-term  debt and  revolving  credit  facility at September  30, 1998 and 1997
consists of the following (in thousands):
<TABLE>
<CAPTION>

                                                                                  1998           1997
                                                                             ------------------------------
<S>                                                                             <C>           <C>

Capital lease  obligation,  secured by property,  plant and equipment  
(net book value  $9,359,000  at September 30,  1998);  payable in 
monthly  installments (including interest at 8.0%) of $59,479; final 
payment due on August 1, 2007                                                   $    4,540    $     4,875


Capital  lease  obligation,  secured  by  property  and plant  (net  
book  value $6,629,000 at September 30, 1998); interest of 7.5% 
payable monthly;  payable in monthly  principal  installments of 
approximately  $20,000 (plus interest) commencing on March 1, 1996; 
increasing to $31,250 in years two through seven and  increasing  
to $240,417 in year eight;  final payment due on February 1, 2004
                                                                                     4,339          4,608
Revolving credit notes, secured by all accounts receivable and 
inventories;  due on  September  30,  2003;  interest  payable  
monthly at either  prime or the Eurodollar  rate,  adjusted by an
interest  margin,  depending  upon  certain financial measurements
                                                                                    27,400         10,000
                                                                             ------------------------------
                                                                                    36,279         19,483
Less current maturities                                                               (653)          (604)
                                                                             ------------------------------
                                                                                $   35,626    $    18,879
                                                                             ==============================
</TABLE>


In September 1998, the Company entered a new revolving credit facility.  The new
revolving credit agreement provides for advances up to the lesser of $50,000,000
or the  eligible  borrowing  base  as  defined  in the  facility  agreement.  At
September 30, 1998, there was $27,400,000  outstanding under this line of credit
at an interest rate of 6.61 percent. In addition, the Company had an outstanding
letter of credit under this revolving  credit agreement of $350,000 at September
30, 1998 (which expires in September 1999).  Additional  available borrowings at
that date were $4,913,000. The agreement includes restrictive covenants relating
to levels of funded debt and other  financial  measurements  and  restricts  the
amount of dividends that can be paid on common stock. The revolving



5.  Long-Term Debt and Revolving Credit Facility (continued)

credit agreement  requires an annual commitment fee based upon certain financial
measurements.

The present  value of future  minimum  lease  payments  under the capital  lease
obligations as of September 30, 1998 is as follows (in thousands):

                                                              Present Value 
                        Total Minimum                         Minimum Lease
                        Lease Payments        Interest          Payments
                        --------------------------------------------------

1999                    $ 1,313                 $660                  $653
2000                      1,320                  612                   708
2001                      1,315                  555                   760
2002                      1,315                  493                   822
2003                      2,711                  371                 2,340
Thereafter                4,072                  476                 3,596
                        --------------------------------------------------
                        $12,046              $ 3,167               $ 8,879
                        ==================================================

Property, plant and equipment at September 30, 1998 and 1997 include $18,295,000
and  $17,483,000,   respectively,  under  leases  that  have  been  capitalized.
Accumulated  depreciation  for these assets was  $2,307,000  and  $1,815,000  at
September 30, 1998 and 1997, respectively.

The fair  value of the  Company's  long-term  debt is based on  estimates  using
discounted cash flow analyses, based on quoted market prices for similar issues.
The estimated fair value of debt at September 30, 1998 was $36,802,000.

6. Property, Plant and Equipment

Property,  plant and  equipment  at  September  30, 1998 and 1997 consist of the
following (in thousands):

                                                            1998           1997
                                                --------------------------------

    Land                                              $   1,520       $   1,519
    Land and leasehold improvements                       1,132             521
    Buildings                                            23,392          22,212
    Transportation equipment                              1,356           1,204
    Machinery and equipment                              71,534          54,470
    Furniture and fixtures                                2,838           2,780
                                                --------------------------------
                                                        101,772          82,706
    Less accumulated depreciation                       (31,893)        (27,200)
                                                --------------------------------
                                                      $  69,879       $  55,506
                                                ================================

7. Inventories

Inventories  at  September  30,  1998  and 1997  consist  of the  following  (in
thousands):

                                                       1998            1997  
                                                --------------------------------

Finished goods                                         $  34,674      $  41,188
Work-in-process                                            2,868          3,589
Raw materials                                             12,042         14,065
In-transit materials                                       7,003          6,911
Storeroom parts                                            5,098          3,683
                                                --------------------------------
                                                       $  61,685      $  69,436
                                                ================================

Finished   goods  at  September  30,  1998  and  1997  include   $3,538,000  and
$13,590,000, respectively of customer-obligated inventory.

8. Income Taxes

The  components of the provision for income taxes for the years ended  September
30, 1998, 1997 and 1996 are as follows (in thousands):

                                              1998          1997          1996
                                         ---------------------------------------

Current:
   Federal                                $  4,120        $3,804     $   1,297
   State                                       139           958            --
Deferred                                     1,161         2,577           585
                                         ---------------------------------------
                                          $  5,420        $7,339      $  1,882
                                         =======================================

The difference between the effective income tax rate and the U.S. federal income
tax rate for the years ended  September 30, 1998,  1997 and 1996 is explained as
follows (in thousands):

                                                1998         1997          1996
                                           -------------------------------------

Provision at statutory tax rate            $  5,714      $  7,845      $  3,203
State and local taxes, net of federal 
tax benefit                                     139           958            --
Alternative minimum tax                          --          (510)        1,282
Operating loss carryforwards                     --            --        (1,192)
Decrease in valuation allowance                  --        (1,147)       (1,590)
Benefit of foreign sales corporation           (354)           --            --
Other items                                     (79)          193           179
                                           -------------------------------------
                                           $  5,420      $  7,339      $  1,882
                                           =====================================

The  1997  decrease  in  the  valuation   allowance  relates  primarily  to  the
utilization of alternative minimum tax credit carryforwards.  Realization of the
Company's  deferred  tax assets is dependent on  generating  sufficient  taxable
income prior to the expiration of the net operating loss carryforwards. Although
realization is not assured,  management believes it is more likely than not that
the net deferred tax assets will be realized.

Temporary  differences which give rise to deferred tax assets and liabilities at
September 30, 1998 and 1997 are as follows (in thousands):

                                                           1998           1997
                                                         ----------------------
Deferred tax assets:
      Various accrued liabilities and reserves           $1,280          $1,419
      Net operating loss carryforwards                      818           1,288
      Alternative minimum tax carryforwards                 598             390
      Tax benefit associated with the exercise
         of nonqualified stock options                       --           3,250
                                                         ------          ------
         Total deferred tax assets                        2,696           6,347

Deferred tax liabilities:
      Accelerated depreciation                            5,712           5,101
      Asset valuations                                      662             513
                                                         ------          ------
         Total deferred tax liabilities                   6,374           5,614
                                                         ------           -----
         Net deferred tax assets (liabilities)          $(3,678)         $  733
                                                         ======          ======

The  Company  has  available   acquired  net  operating  loss  carryforwards  of
$2,320,000  at  September  30,  1998 which it may use to offset  future  taxable
income.   The  acquired  net  operating  loss   carryforwards   are  limited  to
approximately  $1,160,000 annually. Any unused amounts can be carried forward to
increase the limitation in the following  taxable year. These net operating loss
carryforwards  expire  in 2000.  The  total  carryforwards  will be  applied  to
financial statement earnings after temporary differences. At September 30, 1998,
the  Company  had  alternative  minimum  tax credit  carryforwards  of  $598,000
available for income tax purposes. These credit carryforwards do not expire.

9. Defined Contribution Plans

The Company  sponsors a defined  contribution  401(k) plan that is  available to
substantially  all employees.  The plan may be amended or terminated at any time
by the Board of Directors.  The Company,  although not required to, has provided
matching  contributions to the plan for the years ended September 30, 1998, 1997
and 1996 of $704,000, $590,000 and $343,000, respectively.

The Company also began  sponsoring  two  deferred  compensation  plans  covering
officers  and key  employees  in  1996.  One  plan  provides  for  discretionary
contributions based solely upon the Company's profitability and the individuals'
gross wages. The other plan provides for fixed contributions to certain officers
of the  Company.  The  Company  contribution  to these plans for the years ended
September  30,  1998,  1997  and  1996  was  $310,000,  $200,000  and  $192,000,
respectively.

10. Segment Information

The following table sets forth data for the years ended September 30, 1998, 1997
and 1996 for the reportable  industry segments of energy products and industrial
products.  Intersegment  sales are not material.  Identifiable  assets are those
used in the Company's operations in each segment.
<TABLE>
<CAPTION>

                                     Energy         Industrial
                                    Products         Products          Corporate          Total
<S>                               <C>               <C>                 <C>            <C>   
1998:

Net sales                         $184,824          $80,565             $    --        $265,389

Operating income (loss)             14,680            5,461              (1,605)*        18,536

Identifiable assets                 99,357           46,095              11,433         156,885

Depreciation and amortization        4,255            1,448                 469           6,172

Capital expenditures                 7,512           12,186               2,483          22,181

1997:

Net sales                         $223,879          $67,181             $    --        $291,060

Operating income                    17,641            6,650                  --          24,291

Identifiable assets                116,433           34,565              11,066         162,064

Depreciation and amortization        3,760            1,455                 482           5,697

Capital expenditures                 8,385               363                  789         9,537

1996:

Net sales                         $147,555          $56,627             $    --        $204,182

Operating income                    10,529            1,413                  --          11,942

Identifiable assets                 87,091           32,033               6,432         125,556

Depreciation and amortization        3,375            1,331                 495           5,201

Capital expenditures                 3,757              894                 846           5,497
<FN>

*        During  the year ended  September  30,  1998,  the  Company  recorded a
         pre-tax charge of $1.6 million in selling,  general and  administrative
         expense  for the  write-down  of  certain  software  development  costs
         relating to  information  systems  being  replaced by a new  enterprise
         resource planning system.
</FN>
</TABLE>

Transactions with one significant  energy customer for the years ended September
30, 1998 and 1996  represented  approximately 14 percent and 16 percent of total
sales, respectively.  Transactions with two significant energy customers for the
year ended  September  30, 1997  represented  approximately  25 percent of total
sales.

Export sales were  $18,828,000,  $26,665,000 and $13,244,000 for the years ended
September  30,  1998,  1997 and 1996,  respectively.  These  energy  sales  were
primarily to Canadian customers.


11. Operating Leases

The Company  rents office  facilities  and  equipment  under  various  operating
leases.  Future minimum  payments  under  noncancellable  operating  leases with
initial or  remaining  terms in excess of one year,  are as follows at September
30, 1998 (in thousands):

                  1999                                $       2,142
                  2000                                        1,971
                  2001                                        1,687
                  2002                                        1,316
                  2003                                        1,357
                                                       -------------------
                                                      $       8,473
                                                       ===================

Rent expense for all operating  leases was  $1,937,000,  $1,222,000 and $973,000
for the years ended September 30, 1998, 1997 and 1996, respectively.

12. Contingencies

Various  claims,  incidental  to the ordinary  course of  business,  are pending
against the Company.  In the opinion of  management,  after  consultations  with
legal  counsel,  resolution  of these matters is not expected to have a material
effect on the accompanying financial statements.

13. Stock Option Plans

The Company  sponsors two  employee  stock option plans (the "1990 Plan" and the
"1994  Plan")  allowing  for  incentive  stock  options and  nonqualified  stock
options.  The Company also  sponsors a stock option plan for eligible  directors
(the "Director Plan") allowing for non-qualified  stock options.  The 1990 Plan,
1994 Plan and the  Director  Plan provide that  340,000,  1,000,000  and 200,000
shares, respectively,  may be issued under the plans at an option price not less
than the fair market  value of the stock at the time the option is granted.  The
1990 Plan,  1994 Plan, and the Director Plan expire in December  2000,  November
1999 and November 2004, respectively.  The options vest pursuant to the schedule
set forth for each option. Effective August 29, 1997, the Compensation Committee
of the Board of  Directors  removed the  exercise  restriction  with  respect to
certain  options  granted in 1995 which made them  immediately  exercisable.  At
September 30, 1998 and 1997, 607,500 and 272,500 shares were available for grant
under the option plans.

The fair value of the options granted was estimated at the date of grant using a
Black-Scholes   option  pricing  model  with  the  following   weighted  average
assumptions   for  fiscal  years  ended  September  30,  1998,  1997  and  1996,
respectively:  risk-free  interest rate of 5.57%,  5.53% and 6.05%;  no dividend
payments  expected;  volatility  factors  of the  expected  market  price of the
Company's  common  stock of  0.555,  0.478  and  0.478;  and a  weighted-average
expected life of the options of 7.2 years, 1.0 year and 4.7 years.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options which have no vesting  restrictions  and are fully
transferable.  In  addition,  option  valuation  models  require  the  input  of
subjective  assumptions  including the expected stock price volatility.  Because
the Company's stock options have  characteristics  significantly  different from
those of traded options and because changes in the subjective input  assumptions
can materially  affect the fair value  estimate,  in management's  opinion,  the
existing models do not necessarily provide a reliable single measure of the fair
value of its stock options.

The following table summarizes option activity and related information for years
ended September 30, 1998, 1997 and 1996:
<TABLE>
<CAPTION>


                                                                       Weighted         Weighted
                                                     Shares Under       Average          Average
                                                         Option        Exercise Price  Fair Value
         <S>                                            <C>               <C>                <C>

         Options outstanding at
            October 1, 1995                              798,000          $5.26
         Options exercised                               (63,684)          3.25
         Options expired                                (146,316)          5.37
         Options granted                                 284,000           5.29              $2.42
                                                         -------           ----
         Options outstanding at
            September 30, 1996                           872,000           5.39
         Options exercised                              (466,832)          5.33
         Options expired                                  (3,000)          5.92
         Options granted                                  37,500           8.50              $1.80
                                                          ------           ----
         Options outstanding at
            September 30, 1997                           439,668           5.71
         Options exercised                               (26,500)          6.13
         Options expired                                 (60,000)          5.31
         Options granted                                 125,000          15.11              $2.20
                                                         -------          -----
         Options outstanding at
            September 30, 1998                           478,168          $8.20
                                                         =======          =====
</TABLE>


The following table summarizes information about fixed stock options outstanding
at September 30, 1998:
<TABLE>
<CAPTION>

                                                    Options Outstanding                    Options Exercisable
Range of                                 Weighted-Average   Weighted-                        Weighted-
Exercise                                  Remaining         Average                           Average
Prices                     Options     Contractual Life    Exercise Price          Options   Exercise Price
<S>                    <C>               <C>                   <C>                  <C>          <C>

$4.00 to $5.88         181,986           3.4 years             $  4.57               71,986      $  5.44
$6.13 to $8.50         171,182           3.2                   $  7.00               81,182      $  7.42
$11.38 to $21.75       125,000           7.8                   $ 15.11               45,000      $ 21.75
---------------------------------------------------------------------------------------------------------
$4.00 to $21.75        478,168           4.5                   $  8.20              198,168      $  9.96
=========================================================================================================
</TABLE>

14. Shareholder Rights Plan

In  July  1998,  the  Company's  Board  of  Directors  adopted  a  common  stock
shareholder  rights plan ("Right") which entitles each  shareholder of record to
receive a dividend  distribution  of common stock upon the occurrence of certain
events. The Right becomes exercisable the day that a public announcement is made
that a person or group of  affiliated or  associated  persons has  acquired,  or
obtained  the  right  to  acquire,  beneficial  ownership  of 20% or more of the
outstanding  shares of common stock, or the tenth day following the commencement
of a tender  offer or  exchange  offer that would  result in a person or a group
becoming  the  beneficial  owners  of 20% or more of such  outstanding  share of
common stock. When exercisable,  each Right entitles the holder to purchase $100
worth of the  Company's  common  stock for $50.  Until a Right is  exercised  or
exchanged,  the  holder  thereof  will have no rights  as a  shareholder  of the
Company,  including,  without  limitation,  the right to receive dividends.  The
Right is subject to redemption by the Company's  Board of Directors for $.01 per
Right at any time prior to the date which a person or group acquires  beneficial
ownership of 20% or more of the Company's common stock or subsequent  thereto at
the option of the Board of Directors. The Rights expire July 23, 2008.

15. Quarterly Financial Data (Unaudited)

The  results  of  operations  by quarter  for 1998 and 1997 were as follows  (in
thousands):
<TABLE>
<CAPTION>

                                                                 Quarter Ended
                                      December 31, 1997    March 31,      June 30, 1998     September 30,
                                                              1998                               1998
                                      ------------------------------------------------------------------------
<S>                                        <C>             <C>              <C>              <C>
 1998
 Net sales                                 $  86,479       $  70,548        $  56,590        $  51,773
 Gross profit                                 13,774          10,329            5,671            3,578
 Net income (loss)                             6,570           4,707            1,330           (1,221)*
 Basic earnings (loss) per    share
                                               .43              .30              .09              (.08)*
 Diluted earnings (loss) per share
                                               .42              .30              .09              (.08)*

</TABLE>
<TABLE>
<CAPTION>
                                                                 Quarter Ended
                                      December 31, 1996    March 31,      June 30, 1997      September 30,
                                                              1997                               1997
                                      -------------------------------------------------------------------------
<S>                                        <C>             <C>              <C>              <C> 
 1997
 Net sales                                 $  64,190       $  66,920        $  74,669        $  85,281
 Gross profit                                  6,663           7,692            9,794           14,108
 Net income                                    2,608           2,978            3,938            5,361
 Basic earnings per share                      .18              .20              .26              .35
 Diluted earnings per share                    .18               .19              .25              .35
<FN>

*        During the quarter  ended  September 30, 1998,  the Company  recorded a
         pre-tax charge of $1.6 million in selling,  general and  administrative
         expense  for the  write-down  of  certain  software  development  costs
         relating to  information  systems  being  replaced by a new  enterprise
         resource planning system.
</FN>
</TABLE>


                         Report of Independent Auditors


Board of Directors and Stockholders
Maverick Tube Corporation

We have audited the  accompanying  consolidated  balance sheets of Maverick Tube
Corporation and  subsidiaries as of September 30, 1998 and 1997, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three years in the period  ended  September  30,  1998.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Maverick Tube  Corporation and  subsidiaries at September 30, 1998 and 1997, and
the  consolidated  results of their  operations and their cash flows for each of
the three years in the period ended  September  30,  1998,  in  conformity  with
generally accepted accounting principles.


/s/ Ernst & Young

St. Louis, Missouri
October 28, 1998