According to BP Statistical Review of World Energy 2007, oil consumption increased from 73.6 million barrels per day, or mmbpd, in 1997 to 83.7 mmbpd in 2006 at a CAGR of 1.5%, and oil production increased from 72.2 mmbpd in 1997 to 81.7 mmbpd in 2006 at a CAGR of 1.4%.

Oil is projected by EIA to remain the key source for energy in the next few decades, followed by coal, natural gas, renewable energies and nuclear. According to EIA, oil is expected to account for approximately 40% of global primary energy consumption through 2030. Each of coal and natural gas is expected to account for around 20% to 25% of the global primary energy consumption during the same period. The projected growth of oil production and increasing oil demand are expected to help sustain a high level of drilling activity, which will in turn result in an increasing demand for Oil Country Tubular Goods, or OCTG.

According to BP Statistical Review of World Energy 2007, global gas consumption and production have experienced higher growth than global oil consumption and production, with gas consumption increasing from 217 billion cubic feet per day, or bcfpd, in 1997 to 276 bcfpd in 2006, at a CAGR of 2.7%, and gas production increasing from 216 bcfpd in 1997 to 277 bcfpd in 2006, at a CAGR of 2.8%.

From 1997 to 2006, China’s crude oil consumption growth has significantly outpaced its oil production growth, with a CAGR of 6.6% for consumption compared to a CAGR of 1.5% for production. The natural gas market in China has experienced even higher growth, with gas consumption increasing at a CAGR of 13.0% and gas production increasing at a CAGR of 11.1% between 1997 and 2006.

The Company manufactures a broad range of seamless OCTG, which can be subdivided into API products and non-API products.

API products are manufactured in accordance with a standard which is considered to be the basic or minimum standard that must be met for oilfield equipment. API is the primary trade association of the oil and natural gas industry in the United States and promotes the standardization of oilfield equipment by setting and maintaining more than 500 standards and recommended practices. The API standard is a benchmark standard, and API products are produced according to the API specifications.

Non-API products are custom-made products. In addition to meeting API standards, non-API products are made with qualifications or specifications developed to meet customers’ special needs, such as higher strength, higher corrosion resistance or premium connectors. Non-API products are generally made to a higher standard than API products, and therefore more stringent technical standards and complex manufacturing techniques are required.

The Company manufactures three major types of seamless OCTG, namely casing, tubing and drill pipes, all of which are used extensively in the oil and gas industries.

Casing is a large-diameter pipe that lines the wellbore. Casing is used to prevent the wall of the wellbore from collapsing and allows drilling fluid to circulate and extraction to take place.

Tubing is a pipe used for the transportation of crude oil and natural gas from the oil or gas layer to the surface after drilling has been completed. Tubing must be made to withstand the pressure generated from the extraction process. Tubing is manufactured in the same way as casing, except that an additional process known as ‘‘upsetting’’ is applied to thicken the pipes.

Drill pipes are steel tubes fitted with threaded ends and are used to connect the rig surface equipment with the bottomhole assembly. Drill pipes are also used to transport drilling fluid to the bit and to raise, lower and rotate the bottomhole assembly and the bit. Drill pipes must be manufactured to withstand severe external and internal pressure, distortion, bending and vibration.

Cost of revenues increased by 30.4% from $129.4 million in the six months ended June 30, 2006 to $168.8 million in the six months ended June 30, 2007.

Gross profit increased by 52.8% from $38.8 million in the six months ended June 30, 2006 to $59.3 million in the six months ended June 30, 2007.

Net interest income of $26,000 in the six months ended June 30, 2006, compared to a net interest expense of $4.5 million in the six months ended June 30, 2007

Net income increased by 31.5% from $28.0 million, for the six months ended June 30, 2006 compared with $36.8 million for the six months ended June 30, 2007.