## Looking Ahead 

The overall business climate and outlook in 2014 started out on a positive note and the average price of oil remained above $100 per barrel in the first quarter. Around mid-year, however, as supply stocks grew amid relatively flat global demand, the oil price per barrel began to decline. Day rates for offshore rigs also began to drop while more new-build rigs came on the market. The price of oil then began a more rapid decline after the OPEC meeting in November 2014, at which OPEC decided to maintain current production levels. By the end of 2014 oil prices hit roughly $55 a barrel, the lowest in 5 years, and continued to decrease in early 2015. While no one can predict oil prices, we must be prepared for the current low prices to be the new market norm for the foreseeable future. 

When the price of oil falls significantly, oil companies typically reduce and/or postpone their drilling and production projects, which in turn affects the volume of our booked orders. We will face whatever challenges arise by maintaining our focus on costs, looking for ways to accomplish our objectives more efficiently, adopting strategies to protect and increase our market share, and looking for new sales opportunities wherever they exist. 

Dril-Quip’s  financial health is solid and we have a substantial backlog to complete and deliver in 2015. The Company has a strong balance sheet that will allow us to face these challenges and take advantage of opportunities. We have seen economic downturns 

