Ipsco Inc. announced net income of $126 million on sales of $667 million for the second quarter of 2005. and net income of $281 million on sales of $1,413 million for the first six months of 2005.

Second Quarter Results—The $126 million net income was nearly double the $66 million in last year's second quarter. Sales of $667 million reflect an increase of $119 million over the second quarter of 2004. Basic and diluted earnings per share were $2.59 and $2.56, respectively, compared to $1.38 and $1.22 per share in the second quarter last year. Operating income per ton shipped was $263 compared to $134 in the second quarter of 2004.

Six Month Results—Net income of $281 million ($5.62 per share) compares to $98 million ($1.78 per share) for the first six months of 2004.

Ipsco's enhanced sales performance was driven by higher pricing levels in all product lines and strong energy tubular shipments partially offset by volume reductions in the steel mill product and large diameter pipe product lines. Average pricing was $830 per ton, inclusive of surcharge, compared to $620 per ton a year ago. Shipments were 803,000 tons, down 9% (81,000 tons) from the second quarter of 2004. Large diameter shipments of 13,000 tons declined 82% (59,000 tons) from last year's level reflecting the low level of contract activity in the first half of 2005.

Steel mill product shipments declined 38,000 tons as a result of the previously reported six-day Montpelier outage and reduced service center orders for steel products. Energy tubular shipments were 38,000 tons (32%) higher than the second quarter of 2004, reflecting continued strong demand and drill rate activity despite unusually wet weather, which impacted shipments in Canada.

Comments—"End user demand for steel plate remained strong in the first half of 2005 and OEM shipments in the second quarter were stable," said David Sutherland, President and CEO. "However, market uncertainty over recent declines in steel pricing levels resulted in delayed service center inventory replenishment and order patterns exhibiting very short lead times. In part because of this market uncertainty, we have moved a planned 17-day reheat furnace maintenance project for Montpelier into the third quarter. In addition, a precautionary outage in Mobile early in July, necessitated by Hurricane Dennis, was extended to seven days to allow reheat furnace maintenance."

"It is anticipated that with these maintenance efforts behind us, Ipsco will be well positioned in the fourth quarter to take advantage of the continued strength in Ipsco's steel markets, as well as a continued strong second half energy tubular market which now includes second half orders for well over 100,000 tons of large diameter pipe."

Second quarter 2005 diluted earnings per share increased $0.07 per share due to the share buyback program announced and initiated in March of 2005. Earnings per share were diluted by $0.08 per share due to the junior subordinated notes (retired in November 2004) and $0.06 due to the preferred shares (redeemed in May of 2004). The junior subordinated notes and the preferred shares did not impact the 2005 diluted earnings per share calculations.

During the quarter, the company redeemed all $71 million of its 7.32% Series B Senior Notes and purchased for cancellation on the open market, $41 million of the 8.75% Unsecured Notes due June 1, 2013 and CDN $2 million of the 7.80% Canadian Debentures due December 1, 2006. Total debt repaid during the quarter was $114 million excluding pre-payment premiums. The debt redemptions resulted in debt extinguishment expense for the quarter of $10 million ($0.13 per diluted share).

Outlook—The company believes that end user demand for steel mill products will remain strong throughout the second half. Surcharge related pricing declines will be largely offset by scrap cost declines, however, there will be timing differences between revenue changes and the cost of scrap consumed. In addition there will be some slide in steel prices due to both market pressure from buyers and due to the influence of hot-rolled coil price declines, particularly on Ipsco's coil and cut-to-length product sales.

The market for large diameter pipe has improved significantly in the second half, as has Ipsco's participation in this market. Ipsco has booked in excess of 100,000 tons for delivery in the remainder of the year. North American OCTG shipments in general and small diameter line pipe shipments in Canada are expected to be at historically high levels, as strong as weather will allow, through the balance of 2005.

Foreign exchange fluctuations and their impact on inter-company obligations raised by debt retirement and the Share Repurchase Program may or may not impact third quarter net income and earnings per share.

The company expects increased large diameter pipe shipments, increased energy tubular shipments, and the flow through of second quarter scrap purchase price reductions to help offset price declines on steel mill products and the steel product volume reductions related to the third quarter's planned maintenance. With the combination of these factors, the company expects third quarter earnings to be in the range of $2.35 to $2.55 per diluted share.

Ipsco operates steel mills at three locations and pipe mills at six locations in the United States and Canada. As a low cost North American steel producer, Ipsco has a combined annual steel making capacity of 3,500,000 tons. The company's tubular facilities produce a wide range of tubular products including line pipe, oil and gas well casing and tubing, standard pipe and hollow structurals. Steel can also be further processed at Ipsco's five temper leveling and coil processing facilities.