Any stockholder, who so requests, may obtain a printed copy of any of these documents from the Company. Changes in or waivers to our Code of Business Conduct and Ethical Practices involving directors and executive officers of the Company will be posted on its website. Both the market for offshore drilling and production equipment and services and the Company’s business are substantially dependent on the condition of the oil and gas industry and, in particular, the willingness of oil and gas companies to make capital expenditures on exploration, drilling and production operations offshore. The level of capital expenditures has generally been dependent upon the prevailing view of future oil and gas prices, which are influenced by numerous factors affecting the supply and demand for oil and gas, including worldwide economic activity, interest rates and the cost of capital, environmental regulation, tax policies, and the ability of OPEC and other producing nations to set and maintain production levels and prices. The price of crude oil began to drop sharply during the fourth quarter of 2014. In November 2014, OPEC met and decided to continue its 30 million barrel per day production target in an effort to retain its market share. OPEC’s December 2014 and January 2015 production averaged 30.24 million barrels per day and 30.37 million barrels per day, respectively. Production at this rate could produce a market oversupply which would cause prices to continue to decline amid softening demand and global economic weakness. Capital expenditures are also dependent on the cost of exploring for and producing oil and gas, the availability, expiration date and price of offshore leases, the discovery rate of new oil and gas reserves in offshore areas and technological advances. Oil and gas prices and the level of offshore drilling and production activity have historically been characterized by significant volatility. Declines in oil and gas prices may adversely affect the willingness of some oil and gas companies to make capital expenditures on exploration, drilling and production operations offshore, which could have an adverse impact on the Company’s results of operations, financial position and cash flows. In 2012, Brent Crude oil prices ranged between $88.69 per barrel and $128.14 per barrel with an average price of $111.57 per barrel and ended the year at $110.80 per barrel. In 2013, Brent Crude oil prices ranged between $96.84 per barrel and $118.90 per barrel with an average price of $108.56 per barrel and ended the year at $109.95 per barrel. In 2014, Brent Crude oil prices ranged between $55.27 per barrel and $115.19 per barrel with an average price of $98.97 per barrel and ended the year at $55.27 per barrel. We expect this decrease to have a significant effect on major integrated, large independent and foreign national oil and gas companies’ capital expenditure budgets. Many companies have already announced significant reductions in their 2015 capital budget plans. The Company expects continued volatility in both crude oil and natural gas prices, as well as in the level of drilling and production related activities. Even during periods of high prices for oil and natural gas, companies exploring for oil and gas may cancel or curtail programs, or reduce their levels of capital expenditures for exploration and production, for a variety of reasons. A significant and prolonged decline in hydrocarbon prices would likely have a material adverse effect on the Company’s results of operations. See “Item 1A. Risk Factors—A material or extended decline in expenditures by the oil and gas industry could significantly reduce our revenue and income.” Dril-Quip’s revenues are generated from two sources: products and services. Product revenues are derived from the sale of offshore drilling and production equipment. Service revenues are earned when the Company provides technical advisory assistance services for installation of the Company’s products, reconditioning services of its customer-owned products and rental of running tools for installation and retrieval of the Company’s products. In 2014, the Company derived 83% of its revenues from the sale of its products and 17% of its revenues from services compared to 84% and 16% in 2013 and 83% and 17% in 2012, respectively. Products and Services 6 Overview and Industry Outlook