Oil-country tubular-goods suppliers clearly benefited as domestic drilling accelerated during the second quarter. Lone Star Technologies Inc., Maverick Tube Corp. and NS Group Inc. each reported record earnings for the three months ending June 30. Total pretax earnings for the three companies came in 229.0% higher on revenues that rose 12.1% year-to-year. "Demand for our energy products continued to move ahead in the U.S. during the quarter, offsetting the normal seasonal decline in Canada," says Maverick president Gregg Eisenberg. "Consumption improved 9% from the last quarter and 52% from a year ago." NS Group president Rene Robichaud notes that demand for the Newport, Kentucky, company's tubular goods reflected drilling that rose 9% during the quarter to an average 1,239 rigs in operation in the U.S. "As a result, total shipments of our energy products increased 28% and we achieved record quarterly shipments of our seamless energy products," he says. The American Petroleum Institute's latest well-completion report shows 9,902 U.S. oil wells, gas wells and dry holes were drilled during the second quarter of 2001-45% more than the 6,824 during second-quarter 2000. The number of gas wells drilled jumped 69% year-to-year to 5,911, while the 3,002 oil wells drilled represented a 23% increase. The total number of exploratory wells drilled in the U.S. was 54% higher, while the number of development wells drilled was 44% higher. API also reports a 53% increase in total footage drilled-to 50.4 million feet. Tubular imports, as well as the domestic rig count, will determine whether these strong performances can be sustained, Wall Street oil-service analysts say. "A lot depends where the rig count goes. We are modeling a 15% reduction through the end of the year-about 200 rigs, which is pretty aggressive," says J. Marshall Adkins, oil-service analyst with Raymond James & Associates Inc. "That would exert downward pressure on pipe orders and pricing. But it's not a given. The rig count could hold up." Congress and the Bush administration also appear to be responding to pressure for steel tariffs, which would include tubular goods. "If they get the tariffs that they say they need, demand might drop but prices could hold up as imports fall due to increased trade restrictions," Adkins says. "We're taking a cautious approach in both respects, but we could be pleasantly surprised." Tubular-goods suppliers say they're feeling the foreign competition. "Imports remain in excess of 30% of domestic tubular-goods shipments," notes Rhys Best, chairman and president of Lone Star Technologies. The Bush administration's Steel Global Safeguard (Section 201) Investigation involves 31 product groups, including tubular goods, and the inquiry could adjust the level of imports, he adds. Eisenberg says imports captured about 29.6% of U.S. tubular-goods demand during the second quarter, about the same as the prior quarter and second-quarter 2000.