# Dear Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-equipment-services/NYSE_TS_2017/NYSE_TS_2017.mmd` · pages 5-11_

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Dear Shareholders,

2017 has been an important year for Tenaris in which we have put the Company back on a growth path, after two very difficult ones. The market has begun to recover, our mills have been put back to work and we have Bay City up and running. We have made excellent progress with advancing our Rig Direct \( ^{®} \)  program around the world and our financial and economic results are improving rapidly.

The recovery has so far been concentrated in North America, where oil and gas companies have increased their investment spending in new shale wells thanks to remarkable improvements in well productivities and drilling efficiencies as well as lower supply costs. This year, the recovery has begun to spread across most of our markets, and should extend to offshore markets in 2019. Longer-term, higher energy efficiencies and the ongoing transition to a lower-carbon energy matrix will limit the growth in oil and gas demand worldwide although it is likely to be many years before we see any decline in consumption.

The technological advances in shale drilling over the past three years, with the use of longer laterals, multiple fracturing stages, and pad drilling, have contributed not only to extraordinary gains in well productivities but also to changing product requirements. Tenaris has been at the forefront of developing new products to accompany these advances, such as our TenarisHydril Wedge XPTM connections, BlueCoil \( ^{®} \)  coiled tubing products, and AlphaRod \( ^{®} \)  sucker rods.

The start up of our Bay City mill marks the culmination of an intense collaborative effort over three and a half years. It represents much of the best of Tenaris in terms of the scale and planning of the undertaking, the innovation of the design, the sharing of expertise across generations, the integration with the local community and the final achievement. The world's most advanced seamless pipe mill, representing an investment outlay of $1.8 billion, is now ramping up to serve its most dynamic market, just as the US government is imposing Section 232 tariffs to reduce steel imports.

At the inauguration ceremony held on 11th December, 2017, members of the US government expressed their support for the investment and their hope that Tenaris would continue to play a role in the American energy revolution and manufacturing revival, while community leaders praised the Company for keeping its promises.

Now we have our industrial and service infrastructure fully prepared to support our Rig Direct \( ^{®} \)  strategy. This is aimed at reducing overall drilling costs and simplifying the operations of our oil and gas customers, integrating and shortening the supply chain. We have made important progress over the year, not only in the USA and Canada, where the market has been growing rapidly, but throughout the world. In December, we provided Rig Direct \( ^{®} \)  services to 360 rigs worldwide, up 50% from a year previously, covering 150 customers.

In North America, we opened new service centers in Midland, Oklahoma and Grand Prairie, and major oil companies and many large independents now use our Rig Direct \( ^{®} \)  services. In Latin America, we extended the range of our Rig Direct \( ^{®} \)  services as we renewed long-term agreements with YPF, Ecopetrol and Pemex. In the Eastern Hemisphere, we established Rig Direct \( ^{®} \)  operations in Thailand, Italy and Indonesia, expanded our services in the North Sea and Romania, opened a new premium Dope less \( ^{®} \)  threading facility in Kazakhstan and will start new operations in the UAE and for Shell's unconventional drilling operations in China.

This expansion is transforming the relation that Tenaris has with many of its customers and provides further opportunities for competitive differentiation.

Our offshore line pipe business had an excellent year. We have booked the majority of the relevant projects that have been sanctioned over the past two years, including ENI's Zohr project, which achieved an offshore record of two and half years to go from discovery to first production. We supplied line pipe for Anadarko's Constellation project in the Gulf of Mexico and ENI's Sankofa development in Ghana and were awarded the Tenghizchevroil

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Future Growth Project in Kazakhstan. We have a large backlog to deliver in 2018. Overall, for the two years, this represents a volume of around 500,000 tons, a notable achievement even if prices reflect a highly competitive environment.

During the year, we made an important step in upgrading the environmental performance of our mills, approving and initiating investments amounting to over $50 million dedicated to this purpose. Our newer facilities in Bay City, Tamsa and Colombia have been constructed to the highest environmental standards and we will continue to invest in our more established facilities to upgrade their performance. Through our global industrial system based on electric furnace steel making and our Rig Direct \( ^{\circledR} \)  service capabilities, we offer arguably the most environmentally-efficient supply of tubular products to the energy industry.

As we started operations at Bay City, restarted and ramped up operations at our other mills, and expanded our Rig Direct \( ^{\circledR} \)  operations, we delivered a record 1.4 million hours of training through the year. We achieved this, even as we renewed the entire curriculum at Tenaris University to put our employees at the center of developing their knowledge, skills and careers. This emphasis on individual empowerment and responsibility as well as an increased transparency in the Company's relationship with each employee is at the heart of our efforts to enhance employee engagement and performance at all levels.

Our economic and financial results improved through the year. In the fourth quarter, we were able to recover a 20% EBITDA margin and, for the year, we recorded a positive net income of $536 million, which included a gain on the sale of our Republic Conduit business at the beginning of the year.

Our financial position remains very solid. We ended the year with net cash of \(680 million on our balance sheet, while maintaining our strategic investments. Working capital has increased to support a growing level of sales, the expansion of our Rig Direct \( ^{\circledR} \)  program and production for offshore pipelines that inevitably have a long lead-time. Our Board of Directors is proposing to maintain our annual dividend pay out at \)0.41 per share ($0.82 per ADS), amounting to 89% of earnings for the year, based on our financial position and the strong prospects we see ahead.

Coming out from a profound crisis, and after completing a substantial investment program, these results demonstrate a strong differentiation from our competitors, and leave us well placed to continue increasing our service level to our customers and respond to the various challenges of our markets.

The recent US governmental ruling to implement Section 232 tariffs on steel imports could create a structural change in our most dynamic market. To the extent, however, that it is aimed at reducing imports, it should be positive for us given our extensive domestic capacity. We aim to take full leverage of the investments we have made to consolidate and strengthen our position throughout North America and worldwide.

As we move forward, I sense a renewed spirit of satisfaction among our employees with what we have accomplished during the year. In a year that was also marked by catastrophic events, I was particularly impressed by the way our employees in Houston and Bay City responded in very difficult personal circumstances at the time of Hurricane Harvey and by the solidarity of our Mexican employees for the victims of the earthquakes. I want to thank all of them for the commitment and support that they have shown through this period and look forward to seeing their continuing contributions in the time ahead. I would also like to express my thanks to our customers, suppliers and shareholders for their continuing support and confidence in Tenaris.

March 27, 2018

/s/ Paolo Rocca

Paolo Rocca