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According to the Energy Information Administration’s Annual Energy Outlook for 2006, the future for the petroleum industry and related service companies looks very bright for many years. This is obviously good news to MESA but more importantly, good news for our customers. The real task for MESA is to ensure we have created an infrastructure within our company to keep up with our customer’s requirements during these growth periods while maintaining the levels of service and quality the industry now expects from MESA.

The key to balancing growth and maintaining service and quality is a clear understanding of market trends. Understanding which markets have the greatest opportunity for our customers’ competitive advantage and aligning MESA growth strategies with our customers’ objectives is critical. Here are four key trends with possible impact for the oil and gas industry as outlined by Deloitte, a leading consulting and financial advisor.

Robust growth in demand for crude oil, natural gas and petroleum products

• Increased profitability and cash flow for most companies
• Increased capital spending to expand production to meet demand growth – upstream, midstream, downstream and LNG
• More capital attracted to enter the industry and more new companies entering the industry
• International expansion by many companies

Competitive operating environment in all industry sectors

• Intense competition in all industry sectors
• Pressure to meet growth targets
• Pressure to improve performance (operational excellence)
• Pressure to manage costs
• Improving employee retention and performance
• Cyclical nature of the industry creates challenges for long-term planning

Challenging regulatory environment – environmental, fiscal, legal and safety

• In downstream, increased capital investments and higher operating costs driven by clean-fuels and other environmental regulations
• Access to some high-potential areas for oil and gas exploration blocked by regulations
• Substantial costs for compliance with health, safety and environmental regulations

An aging workforce throughout many of the established oil and gas regions, struggling to attract and retain younger people in the face of increased competition from other sectors

• Challenges related to the aging workforce in the industry and attracting a new generation of management talent
• Improving employee retention and performance

Throughout this newsletter, you will see articles related to several of these key trends for the petroleum industry and MESA’s approach to addressing these issues: development of a qualified workforce; robust growth in the demand for MESA products; safety.

At MESA, we want to know more about our customers’ business than just how to provide industry-leading materials and service for his cathodic protection needs. We want to know what will drive their future success and how MESA can help address tomorrow’s competitive advantages and tomorrow’s markets.

MESA is targeted on the future. Almost 10 years ago, we began our quality improvement journey. Our sights are set on steady, continuous improvement based on our customers’ current and future expectations. We are ready to take on future challenges and look forward to continuing our quest to remain the #1 supplier in the cathodic protection industry.