to comply with the management certification and auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, and will be required to comply with Section 404 in our annual report for the year ended December 31, 2009 (subject to any change in applicable SEC rules). Furthermore, upon completion of this process, we may identify control deficiencies of varying degrees of severity under applicable U.S. Securities and Exchange Commission, or SEC, and Public Company Accounting Oversight Board, or PCAOB, rules and regulations that remain unremediated. As a public company, we will be required to report, among other things, control deficiencies that constitute a “material weakness” or changes in internal controls that, or that are reasonably likely to, materially affect internal control over financial reporting. A “material weakness” is a significant deficiency or combination of significant deficiencies in internal control over financial reporting that results in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

If we fail to implement the requirements of Section 404 in a timely manner, we might be subject to sanctions or investigation by regulatory authorities such as the SEC or the PCAOB. If we do not implement improvements to our disclosure controls and procedures or to our internal controls in a timely manner, our independent registered public accounting firm may not be able to certify as to the effectiveness of our internal control over financial reporting pursuant to an audit of our internal control over financial reporting. This may subject us to adverse regulatory consequences or a loss of confidence in the reliability of our financial statements. We could also suffer a loss of confidence in the reliability of our financial statements if our independent registered public accounting firm reports a material weakness in our internal controls, if we do not develop and maintain effective controls and procedures or if we are otherwise unable to deliver timely and reliable financial information. Any loss of confidence in the reliability of our financial statements or other negative reaction to our failure to develop timely or adequate disclosure controls and procedures or internal controls could result in a decline in the price of our common stock. In addition, if we fail to remedy any material weakness, our financial statements may be inaccurate, we may face restricted access to the capital markets and our stock price may be adversely affected.

We are a “controlled company” within the meaning of the New York Stock Exchange rules and, as a result, will qualify for, and may rely on, exemptions from certain corporate governance requirements.

A company of which more than 50% of the voting power is held by an individual, a group or another company is a “controlled company” within the meaning of the New York Stock Exchange rules and may elect not to comply with certain corporate governance requirements of the New York Stock Exchange, including:


	•	the requirement that a majority of our board of directors consist of independent directors;

	•	the requirement that we have a nominating/corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and


	•	the requirement that we have a compensation committee that is composed entirely of independent directors.

Following this offering, we will rely on all of the exemptions listed above. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the New York Stock Exchange.

We are a newly combined company with a limited combined operating history, and the financial statements presented in this prospectus may therefore not give you an accurate indication of what our future results of operations are likely to be.

The Red Man Transaction closed on October 31, 2007 and we have operated as a combined company only since that time. Our limited combined operating history may make it difficult to forecast our future operating results and financial condition. Because of the significance of the Red Man Transaction, the financial statements for periods prior to the transaction are not comparable with those after the transaction, and the lack of comparable data may make it difficult to evaluate our results of operations and future prospects. The only historical financial statements of our combined company included in this prospectus are audited financial statements for the eleven months ended December 31, 2007 (which includes McJunkin’s results for the full eleven-month period and Red Man’s results for only the two months following October 31, 2007) and unaudited financial statements for the six months ended June 26, 2008. Pro forma financial information that assumes that the Red Man Transaction closed on January 1, 2007 as opposed to the actual closing date of October 31, 2007 is presented with respect to the twelve months ended December 31, 2007 and the six months ended June 28, 2007. However, due to our limited combined operating history, these historical financial statements and the related pro forma information may not give you an accurate indication of what our actual results would have been if the combination had been completed at the beginning of the periods presented or of what our future results of operations and financial condition are likely to be. In addition, we acquired Midway-Tristate Corporation in April 2007, and we acquired the remaining approximate 49% minority voting interest in Midfield in July 2008, but our pro forma financial statements do not (and are not required to) give effect to either of these transactions.

Additionally, other historical financial statements reflecting the separate historical results of operations, financial position and cash flows of McJunkin and Red Man prior to the Red Man Transaction are also included in this prospectus. These financial statements reflect the results of operations, financial condition and cash flows of McJunkin and Red Man as stand-alone companies and thus they may not give you an accurate indication of what our combined results would have been if the Red Man Transaction had been completed at an earlier time or of what our future results of operations and financial condition are likely to be.

Risks Related to this Offering and our Common Stock

There is no existing market for our common stock, and we do not know if one will develop to provide you with adequate liquidity. If our stock price fluctuates after this offering, you could lose a significant part of your investment.

Prior to this offering, there has not been a public market for our common stock. If an active trading market does not develop, you may have difficulty selling any of our common stock that you buy. The initial public offering price for the shares will be determined by negotiations among the Company, the selling stockholder and the underwriters and may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell shares of our common stock at prices equal to or greater than the price you paid in this offering. The market price of our common stock may be influenced by many factors including:


	•	fluctuations in oil and natural gas prices;

	•	the failure of securities analysts to cover our common stock after this offering or changes in financial estimates by analysts;

	•	announcements by us or our competitors of significant contracts or acquisitions or other business developments;


	•��	variations in quarterly results of operations;

	•	loss of a large customer or supplier;

	•	U.S. and international general economic conditions;

	•	increased competition;

	•	terrorist acts;

	•	future sales of our common stock or the perception that such sales may occur; and

	•	investor perceptions of us and the industries in which our products are used.

As a result of these factors, investors in our common stock may not be able to resell their shares at or above the initial offering price. In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies like us. These broad market and industry factors may significantly reduce the market price of our common stock, regardless of our operating performance.

Following the completion of this offering, certain affiliates of The Goldman Sachs Group, Inc. will continue to control us and may have conflicts of interest with other stockholders. Conflicts of interest may arise because affiliates of our principal stockholder have continuing agreements and business relationships with us.

Upon completion of this offering, certain affiliates of The Goldman Sachs Group, Inc. (the “Goldman Sachs Funds”) will control % of our outstanding common stock, or % if the underwriters exercise their option in full. As a result, the Goldman Sachs Funds will continue to be able to control the election of our directors, determine our corporate and management policies and determine, without the consent of our other stockholders, the outcome of any corporate transaction or other matter submitted to our stockholders for approval, including potential mergers or acquisitions, asset sales and other significant corporate transactions. The Goldman Sachs Funds will also have sufficient voting power to amend our organizational documents.

Conflicts of interest may arise between our principal stockholder and us. Affiliates of our principal stockholder engage in transactions with our company. One affiliate of our principal stockholder, Goldman Sachs Credit Partners, L.P., is the joint lead arranger for our $1,275 million senior secured credit facilities and our $450 million term loan facility. See “Certain Relationships and Related Party

Transactions”. Further, the Goldman Sachs Funds are in the business of making investments in companies and may, from time to time, acquire and hold interests in businesses that compete directly or indirectly with us and they may either directly, or through affiliates, also maintain business relationships with companies that may directly compete with us. In general, the Goldman Sachs Funds or their affiliates could pursue business interests or exercise their voting power as stockholders in ways that are detrimental to us but beneficial to themselves or to other companies in which they invest or with whom they have a material relationship. Conflicts of interest could also arise with respect to business opportunities that could be advantageous to the Goldman Sachs Funds and they may pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. Under the terms of our amended and restated certificate of incorporation, the Goldman Sachs Funds will have no obligation to offer us corporate opportunities. See “Description of Our Capital Stock — Corporate Opportunities”.

As a result of these relationships, the interests of the Goldman Sachs Funds may not coincide with the interests of our company or other holders of our common stock. So long as the Goldman Sachs Funds continue to control a significant amount of the outstanding shares of our common stock, the Goldman Sachs Funds will continue to be able to strongly influence or effectively control our

decisions, including potential mergers or acquisitions, asset sales and other significant corporate transactions. See “Certain Relationships and Related Party Transactions”.

We do not currently intend to pay dividends in the foreseeable future.

It is uncertain when, if ever, we will declare dividends to our stockholders. We do not currently intend to pay dividends in the foreseeable future. Our ability to pay dividends is constrained by our holding company structure under which we are dependent on payments by our subsidiaries. Additionally, we and our subsidiaries are parties to credit agreements which restrict our ability and their ability to pay dividends. See “Dividend Policy” and “Description of our Indebtedness”. You should not rely on an investment in us if you require dividend income. In the foreseeable future, the only possible return on an investment in us would come from an appreciation of our common stock and there can be no assurance that our common stock will appreciate after this offering.

Shares eligible for future sale may cause the price of our common stock to decline.

Sales of substantial amounts of our common stock in the public market, or the perception that these sales may occur, could cause the market price of our common stock to decline. This could also impair our ability to raise additional capital through the sale of our equity securities. Under our amended and restated certificate of incorporation, we are authorized to issue up to 800 million shares of common stock, of which 155,912,942 shares of common stock (excluding 282,771 shares of non-vested restricted stock) are currently outstanding. Of these shares, the shares of common stock sold in this offering will be freely transferable without restriction or further registration under the Securities Act by persons other than “affiliates”, as that term is defined in Rule 144 under the Securities Act. Our principal stockholder, directors and executive officers, who collectively beneficially own shares, will enter intolock-up agreements, pursuant to which they will agree, subject to certain exceptions, not to sell or transfer, directly or indirectly, any shares of our common stock for a period of 180 days from the date of this prospectus, subject to extension in certain circumstances. Upon the expiration of theselock-up agreements, all of these shares of common stock will be tradable subject to limitations imposed by Rule 144 under the Securities Act. See “Shares Eligible for Future Sale”.

3435

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words “believe”, “expect”, “anticipate”, “intend”, “estimate” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Our forward-looking statements include, among others, statements about our business strategy, our industry, our future profitability, and the costs of operating as a public company. These statements involve known and unknown risks, uncertainties and other factors, including the factors described under “Risk Factors”, that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. Such risks and uncertainties include, among other things:


	•	decreases in oil and gas prices;

	•	decreases in oil and gas industry expenditure levels, which may result from decreased oil and natural gas prices or other factors;

	•	increased usage of alternative fuels, which may negatively affect oil and gas industry expenditure levels;

	•	U.S. and international general economic conditions;

	•	our ability to compete successfully with other companies in our industry;

	•	the risk that manufacturers of our products will sell a substantial amount of goods directly to end users in the markets that we serve;

	•	unexpected supply shortages;

	•	cost increases by our suppliers;

	•	our lack of long-term contracts with most of our suppliers;

	•	increases in customer, manufacturer and distributor inventory levels;

	•	price reductions by suppliers of products sold by us, which could cause the value of our inventory to decline;

	•	decreases in steel prices, which could significantly lower our profit;

	•	increases in steel prices, which we may be unable to pass along to our customers, which could significantly lower our profit;

	•	our lack of long-term contracts with many of our customers and our lack of contracts with customers that require minimum purchase volumes;

	•	changes in our customer and product mix;

	•	the potential adverse effects associated with integrating Red Man into our business and whether the Red Man Transaction will yield its intended benefits;

	•	ability to integrate acquired companies into our business;

	•	the success of our acquisition strategies;

	•	our significant indebtedness;

	•	the dependence on our subsidiaries for cash to meet our debt obligations;

	•	changes in our credit profile;

	•	a decline in demand for certain of our products if import restrictions on these products are lifted;

3536


	•	environmental, health and safety laws and regulations;

	•	the sufficiency of our insurance policies to cover losses, including liabilities arising from litigation;

	•	product liability claims against us;

	•	pending or future asbestos-related claims against us;

	•	the potential loss of key personnel;

	•	interruption in the proper functioning of our information systems or failure to timely and properly complete our current information systems integration project;

	•	loss of third-party transportation providers;

	•	potential inability to obtain necessary capital;

	•	risks related to hurricanes and other adverse weather events;

	•	the failure of Red Man Distributors LLC to continue to be certified as a minority business enterprise;

	•	impairment of our goodwill or other intangible assets;

	•	adverse changes in political or economic conditions in the countries in which we operate;

	•	potential increases in costs and distraction of management resulting from the requirements of being a public company;

	•	risks relating to evaluations of internal controls required by Section 404 of the Sarbanes-Oxley Act;

	•	the operation of our company as a “controlled company”; and

	•	our limited operating history as a combined company.

You should not place undue reliance on our forward-looking statements. Although forward-looking statements reflect our good faith beliefs, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise.

3637.1

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of shares of our common stock by PVF Holdings LLC, the selling stockholder. PVF Holdings LLC intends to distribute the net proceeds of this offering, after giving effect to the underwriting discount, to its members, which include certain members of our board of directors and senior management team and various of their affiliates. See “Principal and Selling Stockholders”.

Additionally, affiliates of Goldman, Sachs & Co. own a majority interest in PVF Holdings LLC. Accordingly, such affiliates will receive a significant portion of the proceeds from this offering. See “Underwriting”.

3738

DIVIDEND POLICY

Following the completion of this offering, we do not anticipate paying any cash dividends in the foreseeable future. We currently intend to retain future earnings from our business, if any, to finance operations and the expansion of our business. Any future determination to pay cash dividends will be at the discretion of our board of directors and will be dependent upon our financial condition, results of operations, capital requirements and other factors that the board deems relevant. In addition, the covenants contained in our subsidiaries’ credit facilities limit the ability of our subsidiaries to pay dividends to us, which limits our ability to pay dividends to our stockholders. Our ability to pay dividends is also limited by the covenants contained in our $450 million term loan facility, and our ability to pay dividends may be further limited by covenants contained in the instruments governing future indebtedness that we or our subsidiaries may incur in the future. See “Description of Our Indebtedness”.

On May 21, 2008, our board of directors approved a dividend of $475 million to our stockholders, of which $474,096,204 was distributed to PVF Holdings LLC and $903,796 was held by us in accordance with the terms of our restricted stock award agreements with holders of our restricted stock. PVF Holdings LLC distributed its share of the proceeds of the dividend to its members, including certain members of our board of directors and management team, in accordance with the terms and conditions of the Limited Liability Company Agreement of PVF Holdings LLC. See “Certain Relationships and Related Party Transactions — Transactions with the Goldman Sachs Funds — May 2008 Dividend”. For a list of our executive officers and directors who received proceeds of this dividend and the amount of proceeds that each received, see the table in “Certain Relationships and Related Party Transactions — Transactions with Executive Officers and Directors — May 2008 Dividend” on page ~~147.~~151. This dividend is not indicative of future dividends we may pay to our stockholders.

3839

CAPITALIZATION

The following table sets forth our consolidated cash and cash equivalents and capitalization as of June 26, 2008:


	•	on an actual basis; and


	•	on an as adjusted basis to give effect to (1) the payment of expenses in connection with this offering and (2) transactions in connection with our purchase of the minority interest in Midfield Supply ULC, one of our subsidiaries, on July 31, 2008.

You should read this table in conjunction with ~~“Unaudited Pro~~“Pro Forma Consolidated Financial Statements”, “Selected Historical Consolidated Financial Data”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes included elsewhere in this prospectus.


	June 26, 2008			June 26, 2008
	Actual		As Adjusted	Actual			As Adjusted
	(in millions)			(in millions)

Cash and cash equivalents	$	8.8	$	$	8.8		$	8.8

Debt (including current portion):
Senior secured revolving credit facility(1)		204.4			204.4			309.8
Senior secured term loan facility		567.8			567.8			567.8
Junior term loan facility		450.0			450.0			450.0
Midfield revolving credit facility(2)		51.7			51.7			51.7
Midfield term loan facility		9.8			9.8			9.8
Midfield notes payable		1.0			1.0			1.0

Total debt before Midfield shareholder loans		1,284.7			1,284.7			1,390.1
Midfield shareholder loans(3)		29.1			29.1			—

Total debt		1,313.8			1,313.8			1,390.1
Minority interest in subsidiaries(3)					58.2			1.3
Stockholders’ equity:
Common stock, $0.01 par value per share; shares authorized, shares issued and outstanding(4)
Preferred stock, $0.01 par value per share; no shares authorized, issued or outstanding, actual; shares authorized; no shares issued and outstanding as adjusted
Common stock, $0.01 par value per share; 800,000,000 shares authorized, 155,682,364 shares issued and outstanding(4)					1.6			1.6
Preferred stock, $0.01 par value per share; 150,000,000 shares authorized, no shares issued and outstanding					—			—
Additional paid-in capital					1,168.0			1,200.8
Retained earnings					(341.8	)		(347.2	)
Other comprehensive loss					(3.5	)		(3.5	)

Total stockholders’ equity		825.7			824.3			851.7

Total capitalization	$		$	$	2,196.3		$	2,243.1


(1)		As of June 26, 2008, we had outstanding $204.4 million of borrowings and availability of $490.9 million under our senior secured revolving credit facility. During October 2008, we upsized our revolving credit facility from $700 million to $800 million and obtained a commitment from an additional lender for $100 million effective January 2, 2009, which would upsize our revolving credit facility to $900 million as of January 2, 2009.


(2)		As of June 26, 2008, we had outstanding $51.7 million of borrowings and availability of $51.6 million under the Midfield revolving credit facility. The as adjusted amount includes ~~$5.4~~


		$5.4 million in drawings under our revolving credit facility for purposes of paying expenses in connection with this offering.


(3)		The as adjusted column gives effect to total payments made in connection with our purchase on July 31, 2008 of all of the minority interest in Midfield Supply ULC, one of our subsidiaries. Total


		payments consisted of CDN$90.04 million (US$87.97 million) paid to shareholders of and lenders to Midfield Holdings (Alberta) Ltd., the holder of the minority interest, and approximately US$47.7 million paid to former shareholders of Red Man pursuant to the stock purchase agreement entered into in connection with the Red Man Transaction. In connection with the purchase of the minority interest, the Midfield shareholder loans were paid in full. ~~Our minority interest in subsidiaries was eliminated upon consummation of the purchase because we had no minority interest in subsidiaries other than the purchased interest.~~


(4)		The number of shares of common stock outstanding on an actual and as adjusted ~~basis:~~basis as of June 26, 2008:


	•	excludes 1,899,852 shares of common stock issuable upon the exercise of stock options granted to certain of our employees pursuant to the McJ Holding Corporation 2007 Stock Option Plan; and


	•	excludes 296,786 shares of non-vested restricted stock awarded to certain of our employees and directors pursuant to the McJ Holding Corporation 2007 Restricted Stock Plan.

4041

DILUTION

Our pro forma net tangible book value per share as of June 26, 2008, ~~both~~ before ~~and after~~ giving effect to this offering, was approximately ~~$ million.~~$(6.10). After giving effect to this offering, our pro forma net tangible book value per share as of June 26, 2008 would have been $(6.14) (due to the costs and expenses incurred by our company in connection with this offering). Pro forma net tangible book value per share represents the amount of tangible assets less total liabilities divided by the pro forma number of shares of common stock outstanding (giving effect to the 500 for 1 split of our common stock which ~~will occur prior to the pricing of this offering)~~occurred on October 16, 2008). There will be no increase in our pro forma net tangible book value per share on account of this offering because we will not receive any proceeds from the sale of shares in this offering. Purchasers of shares in this offering will not incur ~~immediate~~substantial dilution because our pro forma net tangible book value per share will not be significantly affected by this ~~offering.~~offering, other than as a result of offering-related costs and expenses.

The following table sets forth as of June 26, 2008 the number of shares of common stock purchased from us or to be purchased from the selling stockholder, total consideration paid or to be paid and the average price per share paid by our existing stockholders and by new investors, on a pro forma basis to give effect to the 500 for 1 split of our common stock which ~~will occur prior to the pricing of this offering:~~occurred on October 16, 2008:

Shares Purchased

Total Consideration

Average Price

Number

Percent

Amount

Percent

Per Share

Existing stockholders(1)

New investors(2)(3)

Total


(1)		Total consideration and average price per share paid by the existing stockholders give effect to the $475 million distribution made to the existing stockholders in May 2008 using proceeds from our senior secured revolving credit facility and junior term loan facility. If the table were adjusted to not give effect to these payments, existing stockholders’ total consideration for their shares would be $ with an average share price of $ .

(2)		A $1.00 increase (decrease) in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) total consideration paid by new investors and total consideration paid by all stockholders by $ million, assuming the number of shares offered by the selling stockholder, as set forth on the cover page of the prospectus, remains the same.

(3)		If the underwriters exercise their option to purchase shares from the selling stockholder in full, then new investors would purchase shares, or approximately % of shares outstanding, and the total consideration paid by new investors would increase to $ , or % of the total consideration paid (based on the midpoint of the range set forth on the cover page of this prospectus).

As of June 26, 2008, there were options outstanding to purchase shares of our common stock, with exercise prices ranging from $ to $ per share and a weighted average exercise price of $ per share (after taking into account the 500 for 1 split of our common stock which ~~will occur prior to the pricing of this offering)~~occurred on October 16, 2008). Also, as of June 26, 2008, there were 296,786 shares of unvested restricted stock outstanding (after giving effect to the stock split). The tables and calculations above assume that those options have not been exercised and the restricted stock has not vested. If these options were exercised at the weighted average exercise price and the restricted stock was fully vested, the additional dilution per share to new investors would be $ .

4142

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

On January 31, 2007, McJunkin Red Man Holding Corporation, an affiliate of The Goldman Sachs Group, Inc., acquired a majority of the equity of the entity now known as McJunkin Red Man Corporation (then known as McJunkin Corporation) (the “GS Acquisition”). In this prospectus, the term “Predecessor” refers to McJunkin Corporation and its subsidiaries prior to January 31, 2007 and the term “Successor” refers to the entity now known as McJunkin Red Man Holding Corporation and its subsidiaries on and after January 31, 2007. As a result of the change in McJunkin Corporation’s basis of accounting in connection with the GS Acquisition, Predecessor’s financial statement data for the one month ended January 30, 2007 and earlier periods is not comparable to Successor’s financial data for the eleven months ended December 31, 2007 and subsequent periods.

McJunkin Corporation completed a business combination transaction with Red Man Pipe & Supply Co. (the “Red Man Transaction”) on October 31, 2007. At that time McJunkin Corporation was renamed McJunkin Red Man Corporation. Operating results for the eleven-month period ended December 31, 2007 include the results of McJunkin Red Man Holding Corporation for the full period and the results of Red Man Pipe & Supply Co. (“Red Man”) for the two months after the business combination on October 31, 2007. Accordingly, our results for the 11 months ended December 31, 2007 are not comparable to McJunkin’s results for the years ended December 31, 2006 and 2005.

The selected consolidated financial information presented below under the captions Statement of Operations Data and Other Financial Data for the one month ended January 30, 2007 (Predecessor) and the eleven months ended December 31, 2007, and the selected consolidated financial information presented below under the caption Balance Sheet Data as of December 31, 2007, have been derived from the consolidated financial statements of McJunkin Red Man Holding Corporation included elsewhere in this prospectus that have been audited by Ernst & Young LLP, independent registered public accounting firm. The selected consolidated financial information presented below as of and for the years ended December 31, 2005 and 2006 has been derived from the consolidated financial statements of our Predecessor, McJunkin Corporation, included elsewhere in this prospectus that have been audited by Schneider Downs & Co., Inc., independent registered public accounting firm. The selected consolidated financial information presented below as of and for the years ended December 31, 2003 and 2004 has been derived from the audited consolidated financial statements of our predecessor, McJunkin Corporation, that are not included in this prospectus.

The selected unaudited interim consolidated financial information presented below under the captions Statement of Operations Data and Other Financial Data for the six months ended June 26, 2008 and the five months ended June 28, 2007, and the selected unaudited consolidated financial information presented below under the caption Balance Sheet Data as of June 26, 2008, have been derived from our unaudited interim consolidated financial statements, which are included elsewhere in this prospectus and have been prepared on the same basis as our audited consolidated financial statements. In the opinion of management, the interim data reflect all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation of results for these periods. Operating results for the six months ended June 26, 2008 include the results of McJunkin Corporation and Red Man for the full period. Operating results for the five-month period ending June 28, 2007 do not reflect the operating results of Red Man, as the Red Man Transaction did not occur until October 31, 2007. Accordingly, the results for the six months ended June 26, 2008 are not comparable to the results for the five months ended June 28, 2007. In addition, operating results for the six-month period ended June 26, 2008 are not necessarily indicative of the results that may be expected for the year ended December 31, 2008.

The purchase price allocation for the GS Acquisition has been finalized but the purchase price allocation for the Red Man Transaction has not been finalized. We expect the purchase price allocation for the Red Man Transaction to be finalized by October 31, 2008. The purchase price has been finalized for both the GS Acquisition and the Red Man Transaction and the consideration for such transactions will not increase.

4243

The selected historical consolidated financial data presented below has been derived from financial statements that have been prepared using United States generally accepted accounting principles, or GAAP. This data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes included elsewhere in this prospectus.


	Predecessor			Successor						Predecessor			Successor
	One Month			Five Months			Six Months			One Month			Five Months			Six Months
	Ended			Ended			Ended			Ended			Ended			Ended
	January 30, 2007			June 28, 2007			June 26, 2008			January 30, 2007			June 28, 2007			June 26, 2008
				(Unaudited)			(Unaudited)						(Unaudited)			(Unaudited)
	(In millions, except per share and share data)									(In millions, except per share and share data)
Statement of Operations Data:
Sales	$	142.5		$	784.9		$	2,196.0		$	142.5		$	784.9		$	2,196.0
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown separately below)		114.6			635.9			1,803.8			114.6			635.9			1,803.8
Selling, general and administrative expenses		14.6			80.7			200.1			14.6			80.7			200.1
Depreciation and amortization		0.3			1.7			5.2			0.3			1.7			5.2
Amortization of intangibles		—			4.6			15.6			—			4.6			15.6
Profit sharing		1.3			5.6			13.5			1.3			5.6			13.5
Stock-based compensation		—			1.3			3.3			—			1.3			3.3

Total costs and expenses		130.8			729.8			2,041.5			130.8			729.8			2,041.5

Operating income		11.7			55.1			154.5			11.7			55.1			154.5
Other income (expense)
Interest expense		(0.1	)		(24.3	)		(35.0	)		(0.1	)		(24.3	)		(35.0	)
Minority interests		(0.4	)		—			(0.1	)		(0.4	)		—			(0.1	)
Other, net		—			(0.9	)		(0.3	)		—			(0.9	)		(0.3	)

Total other income (expense)		(0.5	)		(25.2	)		(35.4	)		(0.5	)		(25.2	)		(35.4	)

Income before income taxes		11.2			29.9			119.1			11.2			29.9			119.1
Income tax expense		4.6			12.3			43.2			4.6			12.3			43.2

Net income	$	6.6		$	17.6		$	75.9		$	6.6		$	17.6		$	75.9

Earnings per share, basic	$	376.70		$	171.69		$	245.41		$	376.70		$	0.34		$	0.49
Earnings per share, diluted		376.70			171.36			244.92			376.70		$	0.34		$	0.49
Weighted average shares, basic		17,510			102,594			309,421			17,510			51,297,000			154,710,500
Weighted average shares, diluted		17,510			102,792			310,034			17,510			51,396,000			155,017,000
Pro forma earnings per share, basic
Pro forma earnings per share, diluted
Pro forma weighted average shares, basic
Pro forma weighted average shares, diluted
Dividends per common share	$	—		$	—		$	1,523		$	—		$	—		$	3.05

Balance Sheet Data:
Cash and cash equivalents	$	2.0		$	16.5		$	8.8		$	2.0		$	16.5		$	8.8
Working capital		211.1			324.0			686.1			211.1			324.0			686.1
Total assets		474.2			1,551.7			3,294.3			474.2			1,551.7			3,294.3
Total debt, including current portion		4.8			747.4			1,284.7			4.8			747.4			1,284.7
Minority interest in subsidiaries		16.0			—			95.2			16.0			—			95.2
Stockholders’ equity		245.2			392.9			824.4			245.2			392.9			824.4

Other Financial Data:
Net cash provided by (used in) operating activities	$	6.6		$	1.9		$	70.5		$	6.6		$	1.9		$	70.5
Net cash provided by (used in) investing activities		(0.2	)		(933.3	)		(16.4	)		(0.2	)		(933.3	)		(16.4	)
Net cash provided by (used in) financing activities		(8.3	)		945.9			(55.2	)		(8.3	)		945.9			(55.2	)

Predecessor Successor
Year
Year
Year
Year
One Month
11 Months

Ended
Ended
Ended
Ended
Ended
Ended

December 31,
December 31,
December 31,
December 31,
January 30,
December 31,

2003

2004

2005

2006

2007

2007

(In millions, except as otherwise indicated)
Statement of Operations Data:

Sales $ 798.2 $ 1,081.2 $ 1,445.8 $ 1,713.7 $ 142.5 $ 2,124.9
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown separately below) 644.5 867.6 1,177.1 1,394.3 114.6 1,734.6
Selling, general and administrative expenses 118.7 140.5 155.7 173.9 14.6 201.9
Depreciation and amortization 4.3 3.9 3.7 3.9 0.3 5.4
Amortization of intangibles 0.5 0.5 0.3 0.3 — 10.5
Profit sharing 5.1 11.5 13.1 15.1 1.3 13.2
Stock-based compensation — — — — — 2.9

Total costs and expenses 773.1 1,024.0 1,349.9 1,587.5 130.8 1,968.5

Operating income 25.1 57.2 95.9 126.2 11.7 156.4
Other income (expense)
Interest expense (2.5 ) (2.5 ) (2.7 ) (2.8 ) (0.1 ) (61.7 )
Minority interests (0.6 ) (1.9 ) (2.8 ) (4.1 ) (0.4 ) (0.1 )
Other, net (0.9 ) (0.1 ) (1.3 ) (1.4 ) — (1.1 )

Total other income (expense) (4.0 ) (4.5 ) (6.8 ) (8.3 ) (0.5 ) (62.9 )

Income before income taxes 21.1 52.7 89.1 117.9 11.2 93.5
Income tax expense 8.9 21.3 36.6 48.3 4.6 36.6

Net income $ 12.2 $ 31.4 $ 52.5 $ 69.6 $ 6.6 $ 56.9

Earnings per share — Class A, basic $ 2,994.24 $ 2,960.24 $ 2,952.12 $ 3,972.08 — —
Earnings per share — Class A, diluted $ 2,994.24 $ 2,960.24 $ 2,952.12 $ 3,972.08 — —
Weighted average shares — Class A, basic 16,940 16,940 16,940 16,940 — —
Weighted average shares — Class A, diluted 16,940 16,940 16,940 16,940 — —
Earnings per share — Class B, basic $ 3,190.49 $ 4,200.98 $ 4,442.12 $ 4,012.08 — —
Earnings per share — Class B, diluted $ 3,190.49 $ 4,200.98 $ 4,442.12 $ 4,012.08 — —
Weighted average shares — Class B, basic 570 570 570 570 — —
Weighted average shares — Class B, diluted 570 570 570 570 — —
Earnings per share, basic — — $ 376.70 $ 410.64
Earnings per share, diluted — — $ 376.70 $ 409.84
Weighted average shares, basic — — 17,510 138,627
Weighted average shares, diluted — — 17,510 138,899
Pro forma earnings per share, basic
Pro forma earnings per share, diluted
Pro forma weighted average shares, basic
Pro forma weighted average shares, diluted
Dividends per common share, Class A $ 975 $ 6,200 $ 1,490 $ 40 $ — $ —
Dividends per common share, Class B $ 1,950 $ 12,400 $ 2,980 $ 80 $ — $ —


	Predecessor															Successor
	Year			Year			Year			Year			One Month			11 Months
	Ended			Ended			Ended			Ended			Ended			Ended
	December 31,			December 31,			December 31,			December 31,			January 30,			December 31,
	2003			2004			2005			2006			2007			2007
	(In millions, except as otherwise indicated)
Statement of Operations Data:
Sales	$	798.2		$	1,081.2		$	1,445.8		$	1,713.7		$	142.5		$	2,124.9
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown separately below)		644.5			867.6			1,177.1			1,394.3			114.6			1,734.6
Selling, general and administrative expenses		118.7			140.5			155.7			173.9			14.6			201.9
Depreciation and amortization		4.3			3.9			3.7			3.9			0.3			5.4
Amortization of intangibles		0.5			0.5			0.3			0.3			—			10.5
Profit sharing		5.1			11.5			13.1			15.1			1.3			13.2
Stock-based compensation		—			—			—			—			—			2.9

Total costs and expenses		773.1			1,024.0			1,349.9			1,587.5			130.8			1,968.5

Operating income		25.1			57.2			95.9			126.2			11.7			156.4
Other income (expense)
Interest expense		(2.5	)		(2.5	)		(2.7	)		(2.8	)		(0.1	)		(61.7	)
Minority interests		(0.6	)		(1.9	)		(2.8	)		(4.1	)		(0.4	)		(0.1	)
Other, net		(0.9	)		(0.1	)		(1.3	)		(1.4	)		—			(1.1	)

Total other income (expense)		(4.0	)		(4.5	)		(6.8	)		(8.3	)		(0.5	)		(62.9	)

Income before income taxes		21.1			52.7			89.1			117.9			11.2			93.5
Income tax expense		8.9			21.3			36.6			48.3			4.6			36.6

Net income	$	12.2		$	31.4		$	52.5		$	69.6		$	6.6		$	56.9

Earnings per share — Class A, basic	$	2,994.24		$	2,960.24		$	2,952.12		$	3,972.08		$	376.70			—
Earnings per share — Class A, diluted	$	2,994.24		$	2,960.24		$	2,952.12		$	3,972.08		$	376.70			—
Weighted average shares — Class A, basic		16,940			16,940			16,940			16,940			16,940			—
Weighted average shares — Class A, diluted		16,940			16,940			16,940			16,940			16,940			—
Earnings per share — Class B, basic	$	3,190.49		$	4,200.98		$	4,442.12		$	4,012.08		$	376.70			—
Earnings per share — Class B, diluted	$	3,190.49		$	4,200.98		$	4,442.12		$	4,012.08		$	376.70			—
Weighted average shares — Class B, basic		570			570			570			570			570			—
Weighted average shares — Class B, diluted		570			570			570			570			570			—
Earnings per share, basic		—			—			—			—			—		$	0.82
Earnings per share, diluted		—			—			—			—			—		$	0.82
Weighted average shares, basic		—			—			—			—			—			69,325,299
Weighted average shares, diluted		—			—			—			—			—			69,461,299
Dividends per common share, Class A	$	975		$	6,200		$	1,490		$	40		$	—		$	—
Dividends per common share, Class B	$	1,950		$	12,400		$	2,980		$	80		$	—		$	—


	Predecessor															Successor
	Year			Year			Year			Year			One Month			11 Months
	Ended			Ended			Ended			Ended			Ended			Ended
	December 31,			December 31,			December 31,			December 31,			January 30,			December 31,
	2003			2004			2005			2006			2007			2007
	(In millions, except as otherwise indicated)
Balance Sheet Data:
Cash and cash equivalents	$	6.3		$	10.4		$	5.9		$	3.7		$	2.0		$	10.1
Working capital		112.3			115.6			129.0			212.3			211.1			663.5
Total assets		265.3			323.9			434.0			481.0			474.2			2,925.0
Total debt, including current portion		24.7			14.2			3.1			13.0			4.8			868.4
Minority interest in subsidiaries		6.8			8.7			11.5			15.6			16.0			100.7
Stockholders’ equity		120.9			132.3			168.8			242.6			245.2			1,210.0

Other Financial Data:
Net cash provided by operating activities	$	25.1		$	32.3		$	30.4		$	18.4		$	6.6		$	110.2
Net cash (used in) investing activities		(8.5	)		(1.4	)		(6.7	)		(3.3	)		(0.2	)		(1,788.9	)
Net cash (used in) provided by financing activities		(15.5	)		(26.8	)		(21.1	)		(17.2	)		(8.3	)		1,687.2

4546

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

On January 31, 2007, McJunkin Red Man Holding Corporation, an affiliate of The Goldman Sachs Group, Inc., acquired a majority of the equity of McJunkin Red Man Corporation (then known as McJunkin Corporation) (the “GS Acquisition”). In connection with the GS Acquisition, McJunkin Corporation entered into a $575 million term loan facility on January 31, 2007. On October 31, 2007, McJunkin Corporation completed a business combination transaction with Red Man Pipe & Supply Co. (the “Red Man Transaction”). At that time McJunkin Corporation was renamed McJunkin Red Man Corporation. McJunkin Red Man Corporation entered into a $650 million revolving credit facility on October 31, 2007 in connection with the Red Man Transaction. This revolving credit facility was upsized to $700 million on June 10, 2008, to $750 million on October 3, 2008, and to $800 million on October 16, 2008.

The unaudited pro forma consolidated income statement of McJunkin Red Man Holding Corporation for the twelve months ended December 31, 2007 has been derived from (1) the audited consolidated statement of income of McJunkin Corporation for the one month ended January 30, 2007 (before the GS Acquisition), (2) the audited consolidated statement of income of McJunkin Red Man Holding Corporation for the eleven months ended December 31, 2007 (which includes the results of McJunkin for 11 months and the results of Red Man for the two months ended December 31, 2007), and (3) the audited statement of operations of Red Man Pipe & Supply Co. for the twelve months ended October 31, 2007. The unaudited pro forma consolidated income statement of McJunkin Red Man Holding Corporation for the twelve months ended December 31, 2007 has been adjusted to exclude the results of Red Man for the two months ended December 31, 2007 and to give pro forma effect to (1) the GS Acquisition and the Red Man Transaction as if each such transaction had occurred on January 1, 2007, and (2) our entering into our $575 million term loan facility and our ~~$700~~$800 million revolving credit facility, as if we had entered into these facilities on January 1, 2007.

The unaudited pro forma consolidated income statement of McJunkin Red Man Holding Corporation for the six months ended June 28, 2007 has been derived from (1) the audited consolidated statement of income of McJunkin Corporation for the one month ended January 30, 2007 (before the GS Acquisition), (2) the unaudited consolidated statement of income of McJunkin Red Man Holding Corporation for the five months ended June 28, 2007 (before the Red Man Transaction), and (3) the unaudited consolidated statement of operations of Red Man Pipe & Supply Co. for the six months ended April 30, 2007. The unaudited pro forma consolidated income statement of McJunkin Red Man Holding Corporation for the six months ended June 28, 2007 has been adjusted to give pro forma effect to (1) the GS Acquisition and the Red Man Transaction as if each such transaction had occurred on January 1, 2007, and (2) our entering into our $575 million term loan facility and our ~~$700~~$800 million revolving credit facility, as if we had entered into these facilities on January 1, 2007.

The unaudited pro forma consolidated financial statements do not give effect to our acquisition of Midway-Tristate Corporation (“Midway”) on April 30, 2007 and therefore do not include Midway’s results for the four months ended April 30, 2007 nor do they give pro forma effect to Midway as if the acquisition had occurred on January 1, 2007. Midway was not a “significant” acquisition within the meaning ofRule 3-05 ofRegulation S-X. The unaudited pro forma income statements also do not give effect to our purchase of the approximate 49% minority voting interest in Midfield, one of our subsidiaries, on July 31, 2008. Red Man originally acquired 51% of Midfield in 2005 and the purchase of the remaining 49% in July 2008 was not a “significant” acquisition within the meaning of Rule3-05

of RegulationS-K. The assets and liabilities of Midfield are included in the audited consolidated financial statements of MRM at December 31, 2007.

The unaudited pro forma consolidated financial statements are provided for informational purposes only and do not purport to represent or be indicative of the results that actually would have been obtained

had the transactions described above occurred on January 1, 2007 and are not intended to project our consolidated financial position or results of operations for any future period. The pro forma adjustments are based on available information and certain assumptions that we believe are reasonable. The pro forma adjustments and certain assumptions are described in the accompanying notes. Other information included under this heading has been presented to provide additional analysis. We will expense the costs of this offering.

The unaudited pro forma consolidated financial statements below should be read in conjunction with the historical financial statements, the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

PRO FORMA INCOME STATEMENT FOR THE SIX MONTHS ENDED JUNE 28, 2007


				McJunkin															McJunkin
	McJunkin			Red Man			Red Man						Pro Forma			McJunkin			Red Man			Red Man						Pro Forma
	One Month			Five Months			Six Months						Combined Six			One Month			Five Months			Six Months						Combined Six
	Ended			Ended			Ended						Months Ended			Ended			Ended			Ended						Months Ended
	January 30,			June 28,			April 30,			Pro Forma			June 28,			January 30,			June 28,			April 30,			Pro Forma			June 28,
	2007			2007			2007			Adjustments			2007			2007			2007			2007			Adjustments			2007
				(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)						(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	(In millions)															(In millions)
Sales	$	142.5		$	784.9		$	934.7					$	1,862.1		$	142.5		$	784.9		$	934.7					$	1,862.1
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown separately below)		114.6			635.9			779.4						1,529.9			114.6			635.9			779.4						1,529.9
Selling, general and administrative expenses		14.6			80.7			73.9						169.2			14.6			80.7			73.9						169.2
Depreciation and amortization		0.3			1.7			2.8			0.6	(a)		5.4			0.3			1.7			2.8			(0.5	)(a)		4.3
Amortization of intangibles		—			4.6			1.6			6.1	(b)		12.3			—			4.6			1.6			8.1	(b)		14.3
Profit sharing		1.3			5.6			4.4						11.3			1.3			5.6			4.4						11.3
Stock-based compensation		—			1.3			1.0			1.0	(c)		3.3			—			1.3			1.0			0.5	(c)		2.8

Total costs and expenses		130.8			729.8			863.1			7.7			1,731.4			130.8			729.8			863.1			8.1			1,731.8

Operating income		11.7			55.1			71.6			(7.7	)		130.7			11.7			55.1			71.6			(8.1	)		130.3
Other income (expense)
Interest expense		(0.1	)		(24.3	)		(9.1	)		3.1	(d)		(30.4	)		(0.1	)		(24.3	)		(9.1	)		0.5	(d)		(33.0	)
Minority interest		(0.4	)		—			(0.1	)		0.4	(e)		(0.1	)		(0.4	)		—			(0.1	)		0.4	(e)		(0.1	)
Other, net		—			(0.9	)		0.2						(0.7	)		—			(0.9	)		0.2						(0.7	)

Total other income (expense)		(0.5	)		(25.2	)		(9.0	)		3.5			(31.2	)		(0.5	)		(25.2	)		(9.0	)		0.9			(33.8	)

Income before income taxes		11.2			29.9			62.6			(4.2	)		99.5			11.2			29.9			62.6			(7.2	)		96.5
Income tax expense		4.6			12.3			23.4			(3.1	)(f)		37.7			4.6			12.3			23.4			(4.2	)(f)		36.1

Net income	$	6.6		$	17.6		$	39.2		$	(1.4	)	$	61.8		$	6.6		$	17.6		$	39.2		$	(3.0	)	$	60.4

Earnings per share, basic	$	376.70		$	171.69		$	220.22			—			—		$	376.70		$	0.34		$	220.22			—			—
Earnings per share, diluted		376.70			171.36			220.22			—			—			376.70		$	0.34			220.22			—			—
Weighted average shares, basic		17,510			102,594			178,000			—			—			17,510			51,297,000			178,000			—			—
Weighted average shares, diluted		17,510			102,792			178,000			—			—			17,510			51,396,000			178,000			—			—
Pro forma earnings per share, basic																	—			—			—			—		$	1.21
Pro forma earnings per share, diluted																	—			—			—			—		$	1.21
Pro forma weighted average shares, basic(g)																	—			—			—			—			51,297,000
Pro forma weighted average shares, diluted(g)																	—			—			—			—			51,396,000


(a)		Reflects the ~~increase~~decrease in depreciation resulting from the revaluation of our property, plant and equipment in connection with the GS Acquisition and the Red Man Transaction, as if these transactions had each occurred on January 1, 2007. All significant assets that were acquired in each of these transactions were revalued to their estimated fair value. The pro forma adjustment was determined by dividing the fair value of each asset over the newly determined life of the respective asset as determined as of the date of the transactions. This methodology assumes that a valuation completed as of January 1, 2007 would have yielded a similar result. Utilizing this asset-by-asset approach, we determined that six months of depreciation for the assets acquired in the GS Acquisition would have equated to ~~$2.5~~$1.8 million, and six months of depreciation for the assets acquired in the Red Man Transaction would have equated to ~~$2.9~~$2.4 million. Therefore, the pro


		forma adjustment includes a ~~$544,000 increase~~$0.2 million decrease in depreciation in connection with the revaluation of property, plant and equipment acquired in the GS Acquisition, and a ~~$80,000 increase~~$0.3 million decrease in depreciation in connection with the revaluation of property, plant and equipment acquired in the Red Man Transaction, for an adjustment of ~~$624,000~~$0.5 million overall.


Fair Value of Fixed Assets Acquired in the GS Acquisition	Fair Value of Fixed Assets Acquired in the GS Acquisition					Fair Value of Fixed Assets Acquired in the GS Acquisition
Asset Description		Fair Value		Average Life			Fair Value		Average Life		6 Mos. Expense
		(in millions)					(in millions)		(in years)		(in millions)

Land		$	5.0				$	6.0			$
Buildings and improvements			10.1		40
Buildings and Improvements								13.0		40		0.1
Machinery, shop equipment, and vehicles			15.7		5			15.9		6		1.4
Furniture, fixtures, and office equipment			2.9		3			2.7		4		0.3

Total Depreciation											$	1.8


Fair Value of Fixed Assets Acquired in the Red Man Transaction	Fair Value of Fixed Assets Acquired in the Red Man Transaction					Fair Value of Fixed Assets Acquired in the Red Man Transaction
Asset Description		Fair Value		Average Life			Fair Value		Average Life		6 Mos. Expense
		(in millions)					(in millions)		(in years)		(in millions)

Land		$	1.3				$	8.6			$
Buildings and improvements			3.2		40
Buildings								15.0		40		0.2
Building Improvements								2.7		7		0.1
Machinery, shop equipment, and vehicles			4.4		8			17.2		6		1.4
Furniture, fixtures, and office equipment			6.1		3			7.1		5		0.7

Total Depreciation											$	2.4


(b)		Reflects the increase in amortization of intangibles in connection with the GS Acquisition and the Red Man Transaction, as if these transactions had each occurred on January 1, 2007. In accordance with the purchase accounting method, the fair value of certain identifiable assets is amortized over the asset’s estimated life. The pro forma adjustment was determined by dividing the fair value of the intangible asset over the estimated life of the asset. This methodology assumes that a valuation completed as of January 1, 2007 would have yielded a similar result. Using straight line amortization, we determined that the six month amortization expense for the assets related to the GS Acquisition is ~~$5.3~~$5.4 million, and the six month amortization expense for the assets related to the Red Man Transaction is ~~$6.9~~$8.9 million. Therefore the pro forma adjustment includes a ~~$707,500~~$0.7 million increase in the amortization of intangibles in connection with the assets acquired in the GS Acquisition, and a ~~$5,371,000~~$7.4 million increase in amortization of intangibles in connection with the assets acquired in the Red Man Transaction, for an adjustment of ~~$6,078,500~~$8.1 million overall.

GS Acquisition-related Amortizable Intangibles
Amortizable Intangible
Value Estimated Life (in Years)
(in millions)
Backlog $ 1.6 1
Customer Base 356.0 40
Non-Compete Agreements 1.0 5


GS Acquisition Related Amortizable Intangibles
Intangible	Value		Estimated Life		6 Mos. Expense
	(in millions)		(in years)		(in millions)

Sales Order Backlog	$	1.6		1	$	0.8
Customer Base		356.0		40		4.4
Non Compete Agreements		0.9		5		.1

Total Amortization					$	5.3

Red Man Transaction-related Amortizable Intangibles
Amortizable Intangible
Value Estimated Life (in Years)
(in millions)
Red Man Backlog $ 2.0 1
Red Man Customer Base 229.0 17


Red Man Transaction Related Amortizable Intangibles
Intangible	Value		Estimated Life		6 Mos. Expense
	(in millions)		(in years)		(in millions)

Sales Order Backlog	$	2.0		1	$	1.0
Customer Base - Red Man		228.9		17		6.7
Customer Base - Midfield		31.3		13		1.2

Total Amortization					$	8.9


(c)		Reflects compensation expense relating to the equity awards granted to certain employees in connection with the GS Acquisition and the Red Man Transaction, as if each had occurred on January 1, 2007. A Black-Scholes option pricing model was used to estimate the fair value of the stock options granted in 2007. For purposes of measuring compensation, we relied on a calculated value that requires certain assumptions including the volatility based on the appropriate industry sector. For a discussion of these assumptions, see Note 9 to our historical financial statements for the eleven months ended December 31, 2007. This adjustment was calculated based on the actual expense recorded in June 2008, because this would have reflected six months of stock-based compensation expense using the aforementioned assumptions. Any forfeitures would have been immaterial in determining this adjustment.


		The Company’s total stock-based compensation expense recorded for the six months ended June 26, 2008 was $2.8 million, consisting of compensation expense related to stock options and restricted stock of $0.5 million, compensation expense related to restricted stock of $0.1 million, compensation expense related to restricted common units of PVF Holdings LLC of $0.6 million, and compensation expense related to profits units of PVF Holdings LLC of $1.6 million. See Note 10 to the Company’s Consolidated Financial Statements for the six months ended June 26, 2008 for significant assumptions used in the computation of stock based compensation. The Company calculated the pro forma adjustment for stock-based compensation expense by assuming that the total stock-based compensation


		expense for the pro forma combined six months ended June 28, 2007 would have been the same as the compensation expense actually recorded for the six months ended June 26, 2008. Therefore, the pro forma adjustment of $0.5 million is derived by subtracting the stock-based compensation expense for McJunkin Red Man for the five months ended June 28, 2007 ($1.3 million), along with the stock-based compensation expense for Red Man for the six months ended April 30, 2007 ($1.0 million), from the actual stock-based compensation expense for the six months ended June 26, 2008 of $2.8 million (which is the assumed stock-based compensation expense for the pro forma combined six-month period ending June 28, 2007).


(d)		Reflects the interest expense for (1) interest resulting from our entering into our $575 million term loan facility and the ~~$700~~$800 million revolving credit facility, as if we entered into these facilities on January 1, 2007, (2) interest resulting from debt of $71.6 million assumed in conjunction with the Red Man Transaction which includes $25.7 million of shareholder loans included in liability to shareholders in the purchase price allocation, and ~~(2)~~(3) amortization of the related deferred financing costs. To calculate interest expense, an average interest rate of 7.11% based on LIBOR was multiplied by an average annual debt balance of ~~$802~~$874 million. The total annual interest expense based on the assumptions described is ~~$57.5~~$65.9 million, and the total for six months would be ~~$28.5~~$33 million. The total adjustment to the pro forma financials for interest expense is a decrease of ~~$3.3~~$0.7 million. Deferred financing fees for both the GS Acquisition and the Red Man Transaction were recorded at the closing dates, and the pro forma adjustment assumes that both transactions occurred as of January 1, 2007. The deferred financing fees for the GS Acquisition were $15.5 million and the deferred financing fees for the Red Man Transaction were $7.7 million. These fees are amortized using the straight line amortization method over 74 months. Therefore, the six month amortization expense related to the deferred financing fees for six months is ~~$1,896,000.~~$1.9 million. The total adjustment to the pro forma financials for deferred financing fees is an increase of ~~$326,000.~~$0.3 million. Actual interest expense may be higher or lower depending upon fluctuations in interest rates. A1/8% change in interest rates would have resulted in a ~~$501,000~~$0.5 million change in interest expense for the six-month period. No pro forma adjustment has been made to reflect anthe increase in interest expense that would have resulted had we entered into our $450 million junior term loan facility at any time during the six-month period because our entry into ~~this~~the $450 million junior term loan facility was not related to funding the Red Man Transaction or the GS Acquisition.


(e)		Reflects elimination of our minority interest related to McJunkin Appalachian Oilfield Supply Company in connection with the GS Acquisition on January 31, 2007 as if we acquired the minority interest on January 1, 2007.


(f)		Reflects the reduction in income tax expense as a result of (1) the pro forma adjustments described above, which resulted in a lower amount of pre-tax income, and (2) the lower effective income tax rate applicable to our combined company, which is lower than the historical income tax rates applicable to McJunkin and Red Man separately, as if our combined company’s current income tax rate was in effect from January 1, 2007 onward. The tax rate assumed in this calculation was 37.5%. The total adjustment necessary was calculated by multiplying this rate with the total adjusted pre-tax income. The adjustment needed is the difference between this calculated rate and the tax recorded in the respective financial statements.


(g)		Stock options are disregarded in the calculation of earnings per share if they are determined to beanti-dilutive. At June 28, 2007, the company’santi-dilutive stock options totaled ~~1,169.~~$0.6 million.

PRO FORMA INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2007


				McJunkin						Red Man												McJunkin						Red Man
	McJunkin			Red Man			Red Man			Adjustments						Pro Forma			McJunkin			Red Man			Red Man			Adjustments						Pro Forma
																Combined																		Combined
				Eleven			Twelve									Twelve						Eleven			Twelve									Twelve
	One Month			Months			Months			Two Months						Months			One Month			Months			Months			Two Months						Months
	Ended			Ended			Ended			Ended						Ended			Ended			Ended			Ended			Ended						Ended
	January 30,			December 31,			October 31,			December 31,			Pro Forma			December 31,			January 30,			December 31,			October 31,			December 31,			Pro Forma			December 31,
	2007			2007			2007			2007*			Adjustments			2007			2007			2007			2007			2007*			Adjustments			2007
										(Unaudited)			(Unaudited)			(Unaudited)												(Unaudited)			(Unaudited)			(Unaudited)
	(In millions)																		(In millions)
Sales	$	142.5		$	2,124.9		$	1,982.0		$	(296.7	)				$	3,952.7		$	142.5		$	2,124.9		$	1,982.0		$	(296.7	)				$	3,952.7
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown separately below)		114.6			1,734.6			1,632.3			(252.3	)					3,229.2			114.6			1,734.6			1,632.3			(252.3	)					3,229.2
Selling, general and administrative expenses		14.6			201.9			176.9			(27.7	)					365.7			14.6			201.9			176.9			(27.7	)					365.7
Depreciation and amortization		0.3			5.4			6.0			(1.1	)		0.2	(a)		10.8			0.3			5.4			6.0			(1.1	)		(2.0	)(a)		8.6
Amortization of intangibles		—			10.5			3.7						10.4	(b)		24.6			—			10.5			3.7						14.4	(b)		28.6
Profit sharing		1.3			13.2						(1.0	)					13.5			1.3			13.2						(1.0	)					13.5
Stock-based compensation		—			2.9									3.7	(c)		6.6			—			2.9									2.8	(c)		5.7

Total costs and expenses		130.8			1,968.5			1,818.9			(282.1	)		14.6			3,650.4			130.8			1,968.5			1,818.9			(282.1	)		15.2			3,651.3

Operating income		11.7			156.4			163.1			(14.6	)		(14.6	)		302.3			11.7			156.4			163.1			(14.6	)		(15.2	)		301.4
Other income (expense)
Interest expense		(0.1	)		(61.7	)		(20.6	)		7.3			14.3	(d)		(60.8	)		(0.1	)		(61.7	)		(20.6	)		7.3			9.2	(d)		(65.9	)
Minority interests		(0.4	)		(0.1	)		—			0.1			0.4	(e)		0.0			(0.4	)		(0.1	)		—			0.1			0.4	(e)		0.0
Other, net		—			(1.1	)		(2.7	)		(0.1	)					(3.9	)		—			(1.1	)		(2.7	)		(0.1	)					(3.9	)

Total other income (expense)		(0.5	)		(62.9	)		(23.3	)		7.3			14.7			64.7			(0.5	)		(62.9	)		(23.3	)		7.3			9.6			(69.8	)

Income before income taxes		11.2			93.5			139.8			(7.3	)		0.1			237.6			11.2			93.5			139.8			(7.3	)		(5.6	)		231.6
Income tax expense		4.6			36.6			57.6			(2.4	)		(7.3	)(f)		89.1			4.6			36.6			57.6			(2.4	)		(9.6	)(f)		86.8

Net income	$	6.6		$	56.9		$	82.2		$	(4.9	)	$	7.4		$	148.5		$	6.6		$	56.9		$	82.2		$	(4.9	)	$	4.0		$	144.8

Earnings per share, basic	$	376.70		$	410.64		$	461.70			—			—			—		$	376.70		$	0.82		$	461.70			—			—			—
Earnings per share, diluted		376.70			409.84		$	461.70			—			—			—			376.70			0.82		$	461.70			—			—			—
Weighted average shares, basic		17,510			138,627			178,000			—			—			—			17,510			69,325,299			178,000			—			—			—
Weighted average shares, diluted		17,510			138,899			178,000			—			—			—			17,510			69,461,299			178,000			—			—			—
Pro forma earnings per share, basic																				—			—			—			—			—		$	2.13
Pro forma earnings per share, diluted																				—			—			—			—			—		$	2.13
Pro forma weighted average shares, basic(g)																				—			—			—			—			—			69,325,299
Pro forma weighted average shares, diluted(g)																				—			—			—			—			—			69,461,299


*		Represents actual amounts recorded by Red Man during the period; notransaction-related costs have been reversed.


(a)		Reflects the ~~increase~~decrease in depreciation resulting from the revaluation of our property, plant and equipment in connection with the GS Acquisition and the Red Man Transaction, as if these transactions had each occurred on January 1, 2007. All significant assets that were acquired in each of these transactions were revalued to their estimated fair value. The pro forma adjustment was determined by dividing the fair value of each asset over the newly determined life of the respective asset as determined as of the date of the transactions. This methodology assumes that a valuation completed as of January 1, 2007 would have yielded a similar result. Utilizing this asset-by-asset approach, we determined that a full year of depreciation for the assets acquired in the GS Acquisition would have equated to ~~$5.1~~$3.7 million, and the full year of


		depreciation for the assets acquired in the Red Man Transaction would have equated to ~~$5.7~~$4.9 million. Therefore, the pro forma adjustment includes a ~~$590,000~~$2 million decrease in depreciation in connection with the revaluation of property, plant and equipment acquired in the GS Acquisition, and a ~~$760,000 increase~~$0.01 million decrease in depreciation in connection with the revaluation of property, plant and equipment acquired in the Red Man Transaction, for an adjustment of ~~$170,000~~$2.0 million overall.


Fair Value of Fixed Assets Acquired in the GS Acquisition	Fair Value of Fixed Assets Acquired in the GS Acquisition					Fair Value of Fixed Assets Acquired in the GS Acquisition
Asset Description		Fair Value		Average Life			Fair Value		Average Life		Annual Expense
		(in millions)					(in millions)		(in years)		(in millions)

Land		$	5.0				$	6.0			$
Buildings and improvements			10.1		40
Buildings and Improvements								13.0		40		0.3
Machinery, shop equipment, and vehicles			15.7		5			15.9		6		2.7
Furniture, fixtures, and office equipment			2.9		3
Furniture, Fixtures, and office equipment								2.7		4		.6

Total Depreciation											$	3.6


Fair Value of Fixed Assets Acquired in the Red Man Transaction	Fair Value of Fixed Assets Acquired in the Red Man Transaction					Fair Value of Fixed Assets Acquired in the Red Man Transaction
Asset Description		Fair Value		Average Life			Fair Value		Average Life		Annual Expense
		(in millions)					(in millions)		(in years)		(in millions)

Land		$	1.3				$	8.6
Buildings and improvements			3.2		40
Buildings								15.0		40	$	0.4
Building Improvements								2.7		7		0.2
Machinery, shop equipment, and vehicles			4.4		8			17.2		6		2.8
Furniture, fixtures, and office equipment			6.1		3
Furniture, Fixtures, and office equipment								7.1		5		1.5

Total Depreciation											$	4.9


(b)		Reflects the increase in amortization of intangibles in connection with the GS Acquisition and the Red Man Transaction, as if these transactions had each occurred on January 1, 2007. In accordance with the purchase accounting method, the fair value of certain identifiable assets is amortized over the asset’s estimated life. The pro forma adjustment was determined by dividing the fair value of the intangible asset over the estimated life of the asset. This methodology assumes that a valuation completed as of January 1, 2007 would have yielded a similar result. Using straight line amortization, we determined that the full year amortization expense for the assets related to the GS Acquisition is $10.7 million, and the full year amortization expense for the assets related to the Red Man Transaction is ~~$13.9~~$17.9 million. Therefore, the pro forma adjustment includes a ~~$190,000~~$0.2 million increase in the amortization of intangibles in connection with the assets acquired in the GS Acquisition, and a ~~$10,250,000~~$14.2 million increase in amortization of intangibles in connection with the assets acquired in the Red Man Transaction, for an adjustment of ~~$10,440,000~~$14.4 million overall.

GS Acquisition-related Amortizable Intangibles

Amortizable Intangible

Value

Estimated Life (in Years)

(in millions)
Backlog $ 1.6 1
Customer Base 356.0 40
Non-Complete Agreements 1.0 5


GS Acquisition Related Amortizable Intangibles
Intangible	Value		Estimated Life		Annual Expense
	(in millions)		(in years)		(in millions)

Sales Order Backlog	$	1.6		1	$	1.6
Customer Base		356.0		40		8.9
Non Compete Agreements		0.9		5		.2

Total Amortization					$	10.7

Red Man Transaction-related Amortizable Intangibles

Amortizable Intangible

Value

Estimated Life (in Years)

(in millions)
Red Man Backlog $ 2.0 1
Red Man Customer Base 229.0 17
Midfield Customer Base 31.4 13


Red Man Transaction Related Amortizable Intangibles
Intangible	Value		Estimated Life		Annual Expense
	(in millions)		(in years)		(in millions)

Sales Order Backlog	$	2.0		1	$	2.0
Customer Base — Red Man		228.9		17		13.5
Customer Base — Midfield		31.3		13		2.4

Total Amortization					$	17.9


(c)		Reflects compensation expense relating to the equity awards granted to certain employees in connection with the GS Acquisition and the Red Man Transaction, as if each had occurred on January 1, 2007. A Black-Scholes option pricing model was used to estimate the fair value of the stock options granted in 2007. For purposes of measuring compensation, we relied on a calculated value that requires certain assumptions including the volatility based on the appropriate industry sector. For a discussion of these assumptions, see Note 9 to our audited historical statements for the eleven months ended December 31, 2007 for these assumptions. This adjustment was calculated based on the actual expense recorded in June 2008, because this would have reflected six months of stock based-compensation expense using the ~~aforementioned assumptions.~~significant assumptions noted in Note 10 of the Company’s Consolidated Financial Statements for the six months ended June 26, 2008. The adjustment was calculated by annualizing the actual 2008 expense. Any forfeitures would have been immaterial in determining this adjustment.


(d)		Reflects the interest expense for (1) interest resulting from our entering into our $575 million term loan facility and the ~~$700~~$800 million revolving credit facility, as if we entered into these facilities on January 1, 2007, (2) interest resulting from debt of $71.6 million assumed in conjunction with the Red Man Transaction which includes $25.7 million of shareholder loans included in liability to shareholders in the purchase price allocation, and ~~(2)~~(3) amortization of the related deferred financing ~~costs.~~costs, and the remaining debt of $71.6 million on the Red Man financial statements. To calculate interest expense, an average interest rate of 7.11% based on LIBOR was multiplied by an average annual debt balance of ~~$802~~$874 million. The total annual interest expense based on the assumptions described is ~~$57.5~~$65.9 million. The total adjustment to the pro forma financials for interest expense is a decrease of ~~$14.6~~$9.2 million. Deferred financing fees for both the GS Acquisition and the Red Man Transaction were recorded at the closing date, and the pro forma adjustment assumes that both transactions occurred as of January 1, 2007. The deferred financing fees for the GS Acquisition were $15.5 million and the deferred financing fees for the Red Man Transaction were $7.7 million. These fees are amortized using the straight line amortization method over 74 months. Therefore, the amortization expense related to the deferred financing fees for the full year is ~~$3,792,000.~~$3.8 million. The


		total adjustment to the pro forma financials for deferred financing fees is an increase of ~~$338,000.~~$0.3 million. Actual interest expense may be higher or lower depending upon fluctuations in interest rates. A1/8% change in interest rates would have resulted in a ~~$1,002,000~~$1 million change in interest expense for the twelve-month period. No pro forma adjustment has been made to reflect anthe increase in interest


		expense that would have resulted had we entered into our $450 million junior term loan facility at any time during the twelve-month period because our entry into ~~this~~the $450 million junior term loan facility was not related to funding the Red Man Transaction or the GS Acquisition.


(e)		Reflects elimination of our minority interest related to McJunkin Appalachian Oilfield Supply Company in connection with the GS Acquisition on January 31, 2007 as if we acquired the minority interest on January 1, 2007.


(f)		Reflects the reduction in income tax expense as a result of (1) the pro forma adjustments described above, which resulted in a lower amount of pre-tax income, and (2) the lower effective income tax rate applicable to our combined company, which is lower than the historical income tax rates applicable to McJunkin and Red Man separately, as if our combined company’s current income tax rate was in effect from January 1, 2007 onward. The tax rate assumed in this calculation was 37.5%. The total adjustment necessary was calculated by multiplying this rate with the total adjusted pre-tax income. The adjustment needed is the difference between this calculated rate and the tax recorded in the respective financial statements.


(g)		Stock options are disregarded in the calculation of earnings per share if they are determined to beanti-dilutive. At December 31, 2007, the company’santi-dilutive stock options totaled ~~3,533.~~$1.7 million.

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MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our financial statements and related notes included elsewhere in this prospectus. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including, but not limited to, those set forth under “Risk Factors”, “Cautionary Note Regarding Forward-Looking Statements” and elsewhere in this prospectus.

Overview

We are the largest North American distributor of pipe, valves and fittings (“PVF”) and related products and services to the energy industry based on sales and the leading PVF distributor serving this industry across each of the upstream (exploration, production, and extraction of underground oil and gas), midstream (gathering and transmission of oil and gas, gas utilities, and the storage and distribution of oil and gas) and downstream (crude oil refining and petrochemical processing) markets. We have an unmatched presence of over 250 branches that are located in the most active oil and gas regions in North America. We offer an extensive array of PVF and oilfield supplies encompassing over 100,000 products, we are diversified by geography and end market and we seek to providebest-in-class service to our customers by satisfying the most complex, multi-site needs of some of the largest companies in the energy and industrial sectors as their primary supplier. As a result, we have an average relationship of over 20 years with our top ten customers and our pro forma sales in 2007 were over twice as large as our nearest competitor in the energy industry. We believe the critical role we play in our customers’ supply chain, our unmatched scale and extensive product offering, our broad North American geographic presence, our customer-linked scalable information systems and our efficient distribution capabilities serve to solidify our long-standing customer relationships and drive our growth.

We have benefited in recent years from several growth trends within the energy industry including high levels of expansion and maintenance capital expenditures by our customers. This growth in spending has been driven by several factors, including underinvestment in North American energy infrastructure, production and capacity constraints and anticipated strength in the oil, natural gas, refined products and petrochemical markets. While current prices for oil and natural gas are high relative to historical levels, we believe that investment in the energy sector by our customers would continue at prices well below current levels. In addition, our products are often used in extreme operating environments leading to the need for a regular replacement cycle. As a result, over 50% of our historical and pro forma sales in 2007 were attributable to multi-year maintenance, repair and operations (“MRO”) contracts where we have demonstrated an over 99% average annual retention rate since 2000. The combination of these ongoing factors has helped increase demand for our products and services, resulting in record levels of customer orders to be shipped as of September 2008. For the twelve months ended December 31, 2007 on a pro forma basis, we generated sales of $3,952.7 million, Adjusted EBITDA of $370.4 million and net income of $150.8 million. During the twelve months ended December 31, 2007 on a pro forma basis, approximately 46% of our sales were attributable to upstream activities, approximately 22% were attributable to midstream activities, and approximately 32% were attributable to downstream activities. In addition, for the eleven months ended December 31, 2007, without giving pro forma effect to the Red Man Transaction, we generated sales of $2,124.9 million, EBITDA of $171 million and net income of $56.9 million, and for the twelve months ended October 31, 2007, before giving effect to the Red Man Transaction, Red Man generated sales of $1,982.0 million, EBITDA of $170 million and net income of $82.2 million.

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Key Factors Affecting Our Business

Our revenues are predominantly derived from the sale of PVF and other oilfield service supplies to the energy industry in North America. Our business is therefore dependent upon conditions in the energy sector and, in particular, maintenance and expansionary capital expenditures by our customers in the upstream, midstream and downstream sectors of the energy industry. Growth in spending has been, and we believe will continue to be, driven by several factors, including underinvestment in North American energy infrastructure, production and capacity constraints, and anticipated strength in the oil, natural gas, refined products and petrochemical markets. The outlook for future oil, natural gas, refined products and petrochemical prices are influenced by numerous factors, including but not limited to the factors listed in “Risk Factors” beginning on page 18 as well as the following factors:


	•	*Oil and gas price volatility.* Proceeds from the sale of PVF and related products to the oil and gas industry constitute a significant portion of our sales. As a result, we depend upon the oil and gas industry and its ability and willingness to make capital expenditures to explore for, develop and produce oil and gas and refined products. If these expenditures decline due to declining prices or otherwise, our business will suffer.

	•	*Fluctuations in steel prices.* Fluctuations in steel prices can lead to volatility in the pricing of our products, which can influence the buying patterns of our customers and have a negative impact on our results of operations.

	•	*Economic downturns.* The demand for our products is dependent on the general economy, the energy and industrials sectors and other factors. Downturns in the general economy or in the energy and industrials sectors (domestically or internationally) could cause demand for our products to materially decrease.

	•	*Increases in customer, manufacturer and distributor inventory levels of PVF and related products.* Customer, manufacturer and distributor inventory levels of PVF and related products can change significantly from period to period. Increases in our customers’ inventory levels can have a direct adverse affect on the demand for our products when customers draw from inventory rather than purchase new products. Reduced demand, in turn, would likely result in reduced sales volume and overall profitability. Increased inventory levels by manufacturers or other distributors can cause an oversupply of PVF and related products in our markets and reduce the prices that we are able to charge for our products. Reduced prices, in turn, would likely reduce our profitability.

History

McJunkin Corporation (“McJunkin”) and Red Man Pipe & Supply Co. (“Red Man”), two leading national PVF distributors, completed a business combination transaction in October 2007 to create our combined company (“McJunkin Red Man”). The combination created the largest North American PVF distributor to the energy industry based on sales, with pro forma sales of more than twice those of our nearest competitor in the energy industry.

McJunkin Corporation

McJunkin Corporation (formerly known as McJunkin Supply Company) was founded in 1921 in Charleston, West Virginia bybrothers-in-law Jerry McJunkin and H. Bernard Wehrle and initially primarily served the local oil and gas industry. Following post-war economic expansion, by the end of the 1960s McJunkin had 29 branches in 18 states with sales of approximately $60 million, focusing primarily on the downstream sector. In 1989 McJunkin broadened its upstream presence by merging its oil and gas division with Appalachian Pipe & Supply Co. to form McJunkin Appalachian Oilfield Supply Company (“McJunkin Appalachian”), which focused primarily on upstream oil and gas customers. Since 2001, McJunkin Corporation has integrated eight acquisitions, with pro forma

5355

revenues in the respective years of acquisition totaling approximately $300 million, and became a leading supplier of PVF products to customers in the Appalachian region and California.

In January 2007, affiliates of Goldman Sachs Capital Partners (the “Goldman Sachs Funds”) acquired a controlling interest in McJunkin Corporation. The Goldman Sachs Funds are part of Goldman Sachs’ Principal Investment Area, a leading private equity and mezzanine investor.

Red Man Pipe & Supply Co.

Red Man was founded in 1977 in Tulsa, Oklahoma by the late Lewis B. Ketchum, a member and former Chief of the Delaware Indian Tribe headquartered in Oklahoma. The heritage and tradition of the Delaware Indian was very important to Mr. Ketchum and was the basis upon which he gave the company the name “Red Man”. Red Man began as a distributor to the upstream energy sector and subsequently expanded into the midstream and downstream energy sectors. Since then, Red Man has grown organically and through a number of acquisitions in the United States. In 2005, Red Man acquired an approximate 51% voting interest in Canadian oilfield distributor Midfield, giving Red Man a significant presence in the Western Canadian Sedimentary Basin. We acquired the remaining voting interest and equity interest in Midfield on July 31, 2008.

In October 2007, McJunkin and Red Man completed a business combination transaction (the “Red Man Transaction”) to form the combined company, McJunkin Red Man.

Results of Operations

Our results of operations for the year ended December 31, 2007 consist of McJunkin Red Man Holding Corporation’s results of operations for the eleven months ended December 31, 2007 and McJunkin Corporation’s results of operations for the one month ended January 30, 2007. Our financial statements for 2007 include two reporting periods because on January 31, 2007, the entity now known as McJunkin Red Man Holding Corporation, an affiliate of the Goldman Sachs Funds, acquired a majority of the equity of the entity now known as McJunkin Red Man Corporation (then known as McJunkin Corporation, or McJunkin), and McJunkin’s basis of accounting was deemed to have changed on that date. As a result, we have compared below (1) our results of operations for the six months ended June 26, 2008 with our results of operations for the five months ended June 28, 2007 and McJunkin’s results of operations for the one month ended January 30, 2007, (2) our results of operations for the eleven months ended December 31, 2007 and McJunkin’s results of operations for the one month ended January 30, 2007 with McJunkin’s results of operations for the year ended December 31, 2006, and (3) McJunkin’s results of operations for the year ended December 31, 2006 with McJunkin’s results of operations for the year ended December 31, 2005. McJunkin Red Man Holding Corporation’s results of operations for periods subsequent to January 30, 2007 (before the GS Acquisition occurred) may not be comparable to McJunkin’s results of operations prior to that date.

Operating results for the eleven-month period ended December 31, 2007 include the results of McJunkin Red Man Holding Corporation for the full period and the results of Red Man for the two months after the business combination on October 31, 2007. Accordingly, results for the year ended December 31, 2006 (which do not reflect the operating results of Red Man) are not comparable to the results for the eleven months ended December 31, 2007 (which include the operating results of Red Man for two months). Operating results for the five-month period ending June 28, 2007 do not reflect the operating results of Red Man, as the Red Man Transaction did not occur until October 31, 2007. Accordingly, the results for the six months ended June 26, 2008 (which include the operating results of Red Man for the full period) are not comparable to the results for the five months ended June 28, 2007.

Given the materiality of Red Man’s financial results to our business, we have also compared (1) the results of operations of Red Man for the year ended October 31, 2007 with Red Man’s results

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of operations for the year ended October 31, 2006 and (2) the results of operations of Red Man for the year ended October 31, 2006 with Red Man’s results of operations for the year ended October 31, 2005. Red Man’s results of operations are included in our results of operations beginning after October 31, 2007.

Six Months Ended June 26, 2008 (Successor) Compared to the Five Months Ended June 28, 2007 (Successor) and the One Month Ended January 30, 2007 (Predecessor)

Sales. Sales include the revenue recognized from the sales of our products and services to customers and freight billings to customers, less cash discounts taken by customers in return for their early payment of our invoices to them. Our sales were $2,196 million for the six months ended June 26, 2008 as compared to $785 million for the five months ended June 28, 2007 and McJunkin’s sales of $143 million for the one month ended January 30, 2007. The increase of $1,268 million for the six months ended June 26, 2008 as compared to the combined six-month period ended June 28, 2007 was due to the inclusion of $1,047 million of Red Man sales in the six months ended June 26, 2008, as well as the inclusion of Midway Tri-State’s sales for the full six months of 2008 compared with only May and June of 2007 of approximately $48 million and significant increases in our exploration and production and petroleum refining business.

Cost of Sales. Cost of sales consists of the cost of our products at ~~their weighted average actual~~lower of cost (principally last-in, first-out (LIFO) method) or market, in-bound and out-bound freight ~~expense, LIFO~~ expense, manufacturers’ rebates, physical inventory gains/losses, and inventory obsolescence charges, less cash discounts that we earn by early payment of vendor invoices. Our cost of sales was $1,804 million for the six months ended June 26, 2008 as compared to $636 million for the five months ended June 28, 2007 and McJunkin’s cost of sales of $115 million for the one month ended January 30, 2007. As a percentage of sales, cost of sales was 82.1% for the six months ended June 26, 2008 as compared to 81.0% for the five months ended June 28, 2007 and 80.4% for the one-month period ended January 30, 2007. The increase of $1.053 billion for the six months ended June 26, 2008 as compared to the combinedsix-month period ended June 28, 2007 was due to the inclusion of $882 million of Red Man cost of sales, the inclusion of Midway’s cost of sales for the full six months of 2008 compared with only May and June of 2007 of approximately $40 million, increases in our exploration and production and petroleum refining business, and ~~additional LIFO expense~~higher product costs resulting from ~~greater rates of~~ inflation in the cost of our products in 2008. Certain purchasing costs and warehousing activities (including receiving, inspection, stocking, picking and packing costs), as well as general warehousing expenses, are included in selling, general and administrative expenses and not in cost of sales. As such, our gross profit may not be comparable to others who may include these expenses as a component of cost of goods sold. Purchasing and warehousing activities costs approximated $24.0 million for the six months ended June 26, 2008 compared to $11.4 million for the five months ended June 28, 2007 and McJunkin’s $2.3 million expense for the one month ended January 30, 2007.

Selling, General and Administrative Expenses. Costs such as salaries, wages, employee benefits, rent, utilities, communications, insurance, fuel, and taxes (other than state and federal income taxes) that are necessary to operate our branch and corporate operations are included in selling, general and administrative expenses. Also contained in this category are certain items that are non-operational in nature, including certain costs of acquiring and integrating other businesses. Our selling, general and administrative expenses were $200.1 million for the six months ended June 26, 2008 as compared to $80.7 million for the five months ended June 28, 2007 and McJunkin’s selling, general and administrative expenses of $14.6 million for the one month ended January 30, 2007. As a percentage of sales, selling, general and administrative expenses were 9.1% for the six months ended June 26, 2008 as compared to 10.3% for the combined six-month period ended June 28, 2007. The increase of $104.8 million for the six months ended June 26, 2008 as compared to the combinedsix-month period ended June 28, 2007 was due to the inclusion of Red Man’s $98.7 million of selling, general and administrative expenses; the absence of $8.6 million of expenses incurred in the 2007

periods related to the GS Acquisition (including payments of $6.2 million to former McJunkin

Appalachian shareholders); an increase in wages and benefits of $8.7 million; Red Man integration expenses of $2.3 million; and an increase in fuel expense of $0.8 million.

Depreciation and Amortization. Our depreciation and amortization was $5.2 million for the six months ended June 26, 2008 as compared to $1.7 million for the five months ended June 28, 2007 and McJunkin’s depreciation and amortization of $0.3 million for the one month ended January 30, 2007. The increase of $3.2 million for the six months ended June 26, 2008 as compared to the combined six-month period ended June 28, 2007 was due to the inclusion of depreciation on the Midway Supply and Red Man assets from the date of each transaction as well as the write up of assets to fair value in purchase accounting for the GS Acquisition and the Midway and Red Man transactions. Depreciation increased $83,000 due to the GS Acquisition, $234,000 due to the Midway transaction, and $2.6 million due to the Red Man transaction.

Amortization of Intangibles. In connection with the January 2007 acquisition of a controlling interest in McJunkin by the Goldman Sachs Funds, the April 2007 acquisition of Midway Tristate by McJunkin, and the October 2007 business combination between Red Man and McJunkin, the fair values of intangible assets were determined based upon assumptions related to future cash flows, discounts rates and asset lives. These amortizable intangible assets consist of sales order backlog at the date of the transactions, the customer base of each entity, and non-compete agreements which are amortized over a weighted average amortization period of 30.3 years. Our amortization of intangibles was $15.6 million for the six months ended June 26, 2008 as compared to $4.6 million for the five months ended June 28, 2007 and McJunkin’s amortization of intangibles of $0.02 million for the one month ended January 30, 2007. The increase of $11.0 million for the six months ended June 26, 2008 as compared to the combined six-month period ended June 28, 2007 was the result of the timing of each of the three transactions described above. In particular, the six months ended June 26, 2008 included $10.5 million of amortization expense associated with the Red Man Transaction for which there were no corresponding amounts for the five months ended June 28, 2007 and one month ended January 30, 2007. This $10.5 million of amortization expense includes $2.6 million of amortization which was estimated in 2007 because the business combination occurred late in the year and the purchase price allocation was preliminary pending receipt of appraisals and valuations at year-end. Further, amortization of intangibles increased ~~$335,000~~$0.8 million and $0.3 million for the six months ended June 26, 2008 as compared to the combined six-month period ended June 28, 2007 due to amortization expense related to the GS Acquisition and the Midway ~~transaction.~~

transaction, respectively.

Profit Sharing. We have a qualified, defined-contribution plan for employees who meet eligibility requirements, generally six months of service. This plan provides for annual discretionary contributions generally based upon company operating results. Our profit sharing expense was $13.5 million for the six months ended June 26, 2008 as compared to $5.6 million for the five months ended June 28, 2007 and McJunkin’s profit sharing of $1.3 million for the one month ended January 30, 2007. The increase of $6.6 million for the six months ended June 26, 2008 as compared to the combined six-month period ended June 28, 2007 was due to an increase in the number of our employees primarily as a result of the Midway and Red Man transactions. Profit sharing increased $7.1 million due to the Red Man Transaction.

Stock-Based Compensation. Our equity-based compensation consists of restricted common units in PVF Holdings LLC, profit units in PVF Holdings LLC, restricted stock and non-qualified stock options. In conjunction with the acquisition of McJunkin by the Goldman Sachs Funds, certain key employees received restricted common units in PVF Holdings LLC, and in conjunction with the acquisition of McJunkin by the Goldman Sachs Funds and the Red Man Transaction, certain key employees received profits units in PVF Holdings LLC. In addition, effective March 27, 2007, our board of directors approved the formation of the 2007 Restricted Stock Plan and the 2007 Stock Option Plan. The purpose of these plans is to aid us in recruiting and retaining key employees, directors and consultants of outstanding ability and to motivate such key employees, directors and

consultants to exert their best efforts on our behalf by providing them incentives in the form of restricted stock and stock options. It is expected that the Company will benefit from the added interest

which such key employees, directors and consultants will have in the welfare of the Company as a result of their proprietary interest in the Company’s success. Ourstock-based compensation was $3.3 million for the six months ended June 26, 2008 as compared to $1.3 million for the five months ended June 28, 2007 and no stock-based compensation for the one month ended January 30, 2007. The increase of $2.0 million for the six months ended June 26, 2008 as compared to the combined six-month period ended June 28, 2007 was due to the adoption of our equity plans in January and March 2007 and the addition of incremental participants as a result of the Red Man Transaction in October 2007. Stock-based compensation increased $1.7 million due to the addition of the Red Man participants in October 2007.

Operating Income. As a result of the aforementioned items, our operating income was $154.5 million for the six months ended June 26, 2008 as compared to $55.1 million for the five months ended June 28, 2007 and McJunkin’s operating income of $11.7 million for the one month ended January 30, 2007, an increase of $87.7 million for the six months ended June 26, 2008 as compared to the combined six-month period ended June 28, 2007.

Interest Expense. Our interest expense was $35.0 million for the six months ended June 26, 2008 as compared to $24.3 million for the five months ended June 28, 2007 and McJunkin’s interest expense of $0.1 million for the one month ended January 30, 2007. The increase of $10.6 million for the six months ended June 26, 2008 as compared to the combined six-month period ended June 28, 2007 was primarily due to increased amounts of debt incurredand/or assumed in conjunction with the GS Acquisition and the Midway and Red Man transactions, including Midfield’s Canadian debt. Interest expense increased approximately $3.3 million due to the GS Acquisition and the additional debt incurred on January 30, 2007. We incurred approximately $83 million of debt on our asset-backed revolving credit facility in connection with the acquisition of Midway resulting in an increase in interest expense of approximately $1.4 million. Interest expense was further increased by approximately $8.4 million as a result of the incurrence of approximately $190 million of incremental borrowings under our asset-backed revolving credit facility and the assumption of approximately ~~$68~~$72 million of debt in connection with the Red Man Transaction. Interest expense for the six months ended June 26, 2008 also reflects approximately $2.6 million of expense associated with the Junior Term Loan Facility which was entered into on May 22, 2008, the proceeds of which were used to fund a dividend to our shareholders.

Increases in interest expense associated with additions to debt noted above were partially offset by lower average interest rates experienced in 2008 as compared to 2007.

Minority Interests. Our minority interests were $0.1 million for the six months ended June 26, 2008 (all related to Midfield) as compared to none for the five months ended June 28, 2007 and McJunkin’s minority interests of $0.4 million for the one month ended January 30, 2007 (which was due to McJunkin Appalachian). The decrease of $0.3 million for the six months ended June 26, 2008 as compared to the combined six-month period ended June 28, 2007 was due to the repurchase of the minority interest held by McJunkin Appalachian’s management in January 2007. In connection with our 1989 transaction with Appalachian Pipe and Supply which formed our McJunkin Appalachian subsidiary, certain members of Appalachian’s management group retained a minority ownership in the combined company. As part of the acquisition of McJunkin by the Goldman Sachs Funds in January 2007, these minority shareholders were bought out and McJunkin Appalachian became a wholly owned subsidiary of McJunkin. On December 31, 2007, McJunkin Appalachian was merged into McJunkin Red Man Corporation. In addition, in 2005 Red Man acquired an approximate 51% interest in Midfield.

Other Income (Expense), Net. Our other expense, net was $0.3 million for the six months ended June 26, 2008 as compared to other expense, net of $0.9 million for the five months ended June 28, 2007 and McJunkin’s other expense, net of $15,000 for the one month ended January 30, 2007. The decrease of $0.6 million for the six months ended June 26, 2008 as compared to the

combined six-month period ended June 28, 2007 was due in part to $0.4 million derivatives expense, $0.1 million increase in bank charges, and $0.1 million increase in directors’ fees.

Income Tax Expense. Our income tax expense was $43.2 million for the six months ended June 26, 2008 as compared to $12.3 million for the five months ended June 28, 2007 and McJunkin’s income tax expense of $4.6 million for the one month ended January 30, 2007. The increase of

~~$26.3~~ $26.3 million for the six months ended June 26, 2008 as compared to the combined six-month period ended June 28, 2007 was due to the inclusion of Red Man’s results, which added $10.3 million to our income tax expense, and higher pre-tax income, partially offset by certain tax savings in the six months ended June 26, 2008. Our effective tax rates were 36.26% for the six months ended June 26, 2008, 41.18% for the five months ended June 28, 2007 and 41.08% for the one month ended January 30, 2007. These rates differ from the federal statutory rate of 35% principally as a result of state income taxes. The rate for the six months ended June 26, 2008 is lower than the rates for the five months ended June 28, 2007 and the one month ended January 30, 2007 primarily due to lower state taxes.

Net Income. Our net income was $75.9 million for the six months ended June 26, 2008 as compared to $17.6 million for the five months ended June 28, 2007 and McJunkin’s net income of $6.6 million for the one month ended January 30, 2007. Net income increased $51.7 million for the six months ended June 26, 2008 as compared to the combined six-month period ended June 28, 2007.

Eleven Months Ended December 31, 2007 (Successor) and One Month Ended January 30, 2007 (Predecessor) Compared to Year Ended December 31, 2006 (Predecessor)

Sales. Our sales were $2.1 billion for the eleven months ended December 31, 2007 and McJunkin’s sales were $142.5 million for the one month ended January 30, 2007, as compared to McJunkin’s sales of $1.7 billion for the year ended December 31, 2006. The increase of $554 million for the combined twelve-month period ended December 31, 2007 as compared to the year ended December 31, 2006 was due to the inclusion of Red Man’s sales of $297 million and Midway’s sales of approximately $98 million during the 2007 periods, and increases in our exploration and production and petroleum refining business.

Cost of Sales. Our cost of sales was $1.7 billion for the eleven months ended December 31, 2007 and McJunkin’s cost of sales was $115 million for the one month ended January 30, 2007, as compared to McJunkin’s cost of sales of $1.4 billion for the year ended December 31, 2006. As a percentage of sales, cost of sales was 81.6% for the combined twelve-month period ended December 31, 2007 as compared to 81.4% for the year ended December 31, 2006. The increase in cost of sales of $455 million for the combined twelve-month period ended December 31, 2007 as compared to the year ended December 31, 2006 was due to the inclusion of Red Man’s cost of sales of $252 million and Midway’s cost of sales of approximately $83 million, and increases in our exploration and production and petroleum refining ~~business, partially offset by a decrease in LIFO expense of $6.5 million due to decreased inflation rates in the cost of our products in 2007.~~business. Certain purchasing costs and warehousing activities (including receiving, inspection, stocking, picking and packing costs), as well as general warehousing expenses, are included in selling, general and administrative expenses and not in cost of sales. As such, our gross profit may not be comparable to others who may include these expenses as a component of cost of goods sold. Purchasing and warehousing activities costs approximated $34.1 million for the year ended December 31, 2007 compared to $26.9 million for the year ended December 31, 2006.

Selling, General and Administrative Expenses. Our selling, general and administrative expenses were $201.9 million for the eleven months ended December 31, 2007 and McJunkin’s selling, general and administrative expenses were $14.6 million for the one month ended January 30, 2007, as compared to McJunkin’s selling, general and administrative expenses of $173.9 million for the year ended December 31, 2006. As a percentage of sales, selling, general and administrative expenses were 9.5% for the combined twelve-month period ended December 31, 2007 as compared to 10.1% for the year ended December 31, 2006. The increase of $42.6 million for the combined

twelve-month period ended December 31, 2007 as compared to the year ended December 31, 2006 was due to the inclusion of two months of Red Man’s selling, general and administrative expenses totaling $28.0 million in the twelve-months ended December 31, 2007; payments of $6.2 million to the former McJunkin Appalachian shareholders in 2007; eight months of expenses of approximately $4.4 million from the Midway operations acquired at the end of April 2007; $4.2 million of expenses

related to the GS Acquisition in 2007; an increase in franchise taxes of $1.3 million due to the increase in shareholders equity resulting from the GS Acquisition; $0.8 million in acquisition and integration expenses related to Red Man; a $0.6 million increase in fuel costs; and $0.3 million in acquisition and integration expenses related to Midway.

Depreciation and Amortization. Our depreciation and amortization was $5.4 million for the eleven months ended December 31, 2007 and McJunkin’s depreciation and amortization was $0.3 million for the one month ended January 30, 2007, as compared to McJunkin’s depreciation and amortization of $3.9 million for the year ended December 31, 2006. The increase of $1.8 million for the combined twelve-month period ended December 31, 2007 as compared to the year ended December 31, 2006 was primarily due to the recording of depreciation expense with respect to the Red Man and Midway transactions in 2007, and the write up of McJunkin’s assets to fair value in conjunction with the GS Acquisition in January 2007. Depreciation increased $143,000 in connection with the write up of the fixed assets related to the GS Acquisition. Depreciation also increased $1.1 million and $235,000 due to the Red Man and Midway transactions, respectively.

Amortization of Intangibles. Our amortization of intangibles was $10.5 million for the eleven months ended December 31, 2007 and McJunkin’s amortization of intangibles was $16,000 for the one month ended January 30, 2007, as compared to McJunkin’s amortization of intangibles of $0.3 million for the year ended December 31, 2006. The increase of $10.2 million for the combined twelve-month period ended December 31, 2007 as compared to the year ended December 31, 2006 was due to the acquisition of McJunkin by the Goldman Sachs Funds in January 2007 ($9.8 million) and the Midway acquisition in April 2007 ($0.7 million). Intangibles amortization totaling $2.6 million with respect to the Red Man Transaction was recorded in the six months ended June 26, 2008.

Profit Sharing. Our profit sharing was $13.2 million for the eleven months ended December 31, 2007 and McJunkin’s profit sharing was $1.3 million for the one month ended January 30, 2007, as compared to McJunkin’s profit sharing of $15.1 million for the year ended December 31, 2006. The decrease of $0.6 million for the combined twelve-month period ended December 31, 2007 as compared to the year ended December 31, 2006 was due to lowernon-qualified plan contributions as a result of the departure of several members of management who left the company in connection with the GS Acquisition, offset in part by an increase of approximately 100 employees added with the Midway acquisition on April 30, 2007.

Stock-Based Compensation. Our stock-based compensation was $3.0 million for the eleven months ended December 31, 2007. McJunkin had no stock based compensation for the one month ended January 30, 2007 or for the year ended December 31, 2006. Our equity-based compensation consists of restricted common units in PVF Holdings LLC, profit units in PVF Holdings LLC, restricted stock and non-qualified stock options. In conjunction with the acquisition of McJunkin by the Goldman Sachs Funds, certain key employees received restricted common units in PVF Holdings LLC, and in conjunction with the acquisition of McJunkin by the Goldman Sachs Funds and the Red Man Transaction, certain key employees received profits units in PVF Holdings LLC. In addition, effective March 27, 2007 our board of directors approved the formation of the 2007 Restricted Stock Plan and the 2007 Stock Option Plan.

Operating Income. Our operating income was $156.3 million for the eleven months ended December 31, 2007 and McJunkin’s operating income was $11.7 million for the one month ended January 30, 2007, as compared to McJunkin’s operating income of $126.2 million for the year ended December 31, 2006. Operating income increased by $41.9 million for the combined twelve-month

period ended December 31, 2007 as compared to the year ended December 31, 2006 as a result of the items mentioned above.

Interest Expense. Our interest expense was $61.7 million for the eleven months ended December 31, 2007 and McJunkin’s interest expense was $0.1 million for the one month ended January 30, 2007, as compared to McJunkin’s interest expense of $2.8 million for the year ended December 31, 2006. The increase of $59.0 million for the combined twelve-month period ended

December 31, 2007 as compared to the year ended December 31, 2006 was primarily due to our entering into and borrowing under our then-existing $300 million asset-backed revolving credit facility and our $575 million term loan facility to finance the acquisition of McJunkin by the Goldman Sachs Funds on January 31, 2007.

Minority Interests. Our minority interests were $0.1 million for the eleven months ended December 31, 2007 and McJunkin’s minority interests were $0.4 million for the one month ended January 30, 2007, as compared to McJunkin’s minority interests of $4.1 million for the year ended December 31, 2006. The decrease of $3.6 million for the combined twelve-month period ended December 31, 2007 as compared to the year ended December 31, 2006 was primarily due to the minority shareholders in McJunkin Appalachian selling their interests as part of the January 2007 acquisition of McJunkin by the Goldman Sachs Funds whereby McJunkin Appalachian became a wholly owned subsidiary.

Other Income (Expense), Net. Our other expense, net was $1.1 million for the eleven months ended December 31, 2007 and McJunkin’s other expense, net was $15,000 for the one month ended January 30, 2007, as compared to McJunkin’s other expense, net of $1.4 million for the year ended December 31, 2006. The decrease of $0.2 million expense for the combined twelve-month period ended December 31, 2007 as compared to the year ended December 31, 2006 was due to a change in our corporate charitable contributions policy in 2007 which reduced contribution expense in 2007 by $0.4 million and a decrease in board of directors’ fees of $0.2 million, offset in part by the absence of gains from the sales of various parcels of real estate ($0.5 million) and life insurance proceeds received by McJunkin upon the deaths of certain stockholders not actively involved in management of the company, which were lower in 2007 as compared to 2006 by $0.3 million.

Income Tax Expense. Our income tax expense was $36.5 million for the eleven months ended December 31, 2007 and McJunkin’s income tax expense was $4.6 million for the one month ended January 30, 2007, as compared to McJunkin’s income tax expense of $48.3 million for the year ended December 31, 2006. The decrease of $7.2 million for the combined twelve-month period ended December 31, 2007 as compared to the year ended December 31, 2006 was due to (1) a decrease in pretax income of $13.2 million, permanent items decreased by $3.5 million due to one month of minority interest compared to 12 months in 2006, (2) a decrease in state taxable income of $14.6 million which resulted in a decrease in state income tax expense, and (3) a foreign tax credit of $.8 million in 2007 which we did not have in 2006, offset in part by an increase of $2.4 million relating to the inclusion of Red Man’s results for the last two months of 2007.

The total provision for income taxes varied from the U.S. federal statutory rate due to the following:


	Successor					Predecessor
	Period					Period				Period
	Eleven
	Months					One Month				Year
	Ended					Ended				Ended
	December 31,					January 30,				December 31,
	2007					2007				2006
	(dollars in thousands)

Federal tax expense at statutory rate	$	32,721		35	%	$	3,918	35	%	$	41,270	35	%
State taxes net of federal income tax benefit		3,971		4.2	%		502	4.5	%		5,653	4.8	%
Non-deductible expenses		424		0.5	%		26	0.2	%		409	0.3	%
Foreign		(827	)	(0.9	)%		0	0.0	%		0	0.0	%
Other		270		0.3	%		153	1.4	%		1,008	0.9	%

Income tax provision	$	36,559		39.1	%	$	4,599	41.1	%	$	48,340	41.0	%

1.00, or (c) 1.00% if such ratio is less than 2.00 to 1.00. Interest on swingline loans is calculated on the basis of the rate described in clause (i) of the preceding sentence. The weighted average interest rate on the revolving loans as of June 26, 2008 was 4.14% and the interest rate on the swingline loans was 5.25%.

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Additionally, the borrower is required to pay a commitment fee with respect to unutilized revolving credit commitments at a rate per annum equal to (i) 0.375% if the borrower’s consolidated total debt to consolidated adjusted EBITDA ratio is greater than or equal to 2.75 to 1.00 and (ii) 0.25% if such ratio is less than 2.75 to 1.00. The borrower is also required to pay fees on the stated amounts of outstanding letters of credit for the account of all revolving lenders at a per annum rate equal to (i) 1.375% if the borrower’s consolidated total debt to consolidated adjusted EBITDA ratio is greater than or equal to 2.75 to 1.00, (ii) 1.125% if such ratio is greater than or equal to 2.00 to 1.00 but less than 2.75 to 1.00, or (iii) 0.875% if such ratio is less than 2.00 to 1.00. The borrower is required to pay a fronting fee for the account of the letter of credit issuer in respect of each letter of credit issued by it at a rate for each day equal to 0.125% per annum on the average daily stated amount of such letter of credit. The borrower is also obligated to pay directly to the letter of credit issuer upon each issuance of, drawing under,and/or amendment of, a letter of credit issued by it such amount as the borrower and the letter of credit issuer agree upon for issuances of, drawings under or amendments of, letters of credit issued by the letter of credit issuer.

Prepayments. The borrower may voluntarily prepay revolving loans, swingline loans and term loans in whole or in part at the borrower’s option, in each case without premium or penalty. If the borrower refinances the term loans on certain terms prior to October 31, 2008, the borrower will be subject to a prepayment penalty of 1.00% of the aggregate principal amount of such prepayment. The borrower is required to prepay outstanding term loans with 100% of the net cash proceeds of:


	•	a disposition of any business units, assets or other property of the borrower or any of the borrower’s restricted subsidiaries not in the ordinary course of business, subject to certain exceptions for permitted asset sales;

	•	a casualty event with respect to collateral for which the borrower or any of its restricted subsidiaries receives insurance proceeds, or proceeds of a condemnation award or other compensation;

	•	the issuance or incurrence by the borrower or any of its restricted subsidiaries of indebtedness, subject to certain exceptions; and

	•	any sale-leaseback transaction permitted under the Term Loan Facility.

Not later than the date that is 90 days after the last day of any fiscal year, the borrower under the Term Loan Facility will be required to prepay the outstanding term loans under the Term Loan Facility with an amount equal to (i) 50% of “excess cash flow” for such fiscal year, provided that (a) the percentage will be reduced to 25% if the borrower’s ratio of consolidated total debt to consolidated EBITDA for the most recent four consecutive fiscal quarters is no greater than 2.50 to 1.00 but greater than 2.00 to 1.00, and (b) no prepayment of term loans with excess cash flow is required if the borrower’s ratio of consolidated total debt to consolidated EBITDA for the most recent four consecutive fiscal quarters is no greater than 2.00 to 1.00, minus (ii) the principal amount of term loans under the Term Loan Facility voluntarily prepaid during such fiscal year.

In addition, if at any time the aggregate amount of outstanding loans, unreimbursed letter of credit drawings and undrawn letters of credit under the Revolving Credit Facility exceeds the total revolving credit commitments or the borrowing base, the borrower will be required to repay outstanding loans or cash collateralize letters of credit in an aggregate amount equal to such excess, with no reduction of the commitment amount. If the amount available under the Revolving Credit Facility is less than 7% of total revolving credit commitments for any period of five consecutive business days, or an event of default pursuant to certain provisions of the Revolving Credit Facility

157

has occurred, the borrower would be required to transfer funds from certain blocked accounts daily into a collection account under the exclusive control of the agent under the Revolving Credit Facility.

Amortization. The term loans are repayable in quarterly installments in an amount equal to the principal amount of the term loans outstanding on the quarterly installment date multiplied by

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0.25%, with the balance of the principal amount due on the term loan maturity date of January 31, 2014.

Incremental Facilities. Subject to certain terms and conditions, the borrower may request an increase in revolving loan commitments and term loan commitments. The increase in revolving loan commitments may not exceed the sum of (i) $150 million, plus (ii) only after the entire amount in the preceding clause (i) is drawn, an amount such that on a pro forma basis after giving effect to the new revolving credit commitments and certain other specified transactions, the secured leverage ratio will be no greater than 4.75 to 1.00. The borrower’s ability to borrow under such incremental facilities, however, would still be limited by the borrowing base. The incremental term loan commitments may not exceed the difference between (i) up to $100 million, and (ii) the sum of all incremental revolving commitments and incremental term loan commitments taken together. Any lender that is offered to provide all or part of the new revolving loan commitments or new term loan commitments may elect or decline, in its sole discretion, to provide such new commitments.

Collateral and Guarantors. The obligations under the Senior Secured Facilities are guaranteed by the borrower’s wholly owned domestic subsidiaries. The obligations under the Revolving Credit Facility are secured, subject to exceptions, by substantially all of the assets of the borrower and the subsidiary guarantors, including (i) a first-priority security interest in personal property consisting of and arising from inventory and accounts receivable; (ii) a second-priority pledge of certain of the capital stock held by the borrower or any subsidiary guarantor; and (iii) asecond-priority security interest in, and mortgages on, substantially all other tangible and intangible assets of the borrower and each subsidiary guarantor. The obligations under the Term Loan Facility are secured, subject to certain significant exceptions, by substantially all of the assets of the borrower and the subsidiary guarantors, including (i) a second-priority security interest in personal property consisting of and arising from inventory and accounts receivable; (ii) a first-priority pledge of certain of the capital stock held by the borrower or any subsidiary guarantor; and (iii) a first-priority security interest in, and mortgages on, substantially all other tangible and intangible assets of the borrower and each subsidiary guarantor.

Covenants. The Senior Secured Facilities contain customary covenants. These agreements, among other things, restrict, subject to certain exceptions, the ability of the borrower and its subsidiaries to incur additional indebtedness, create liens on assets, engage in mergers, consolidations or sales of assets, dispose of subsidiary interests, make investments, loans or advances, pay dividends, make payments with respect to subordinated indebtedness, enter into sale and leaseback transactions, change the business conducted by the borrower and its subsidiaries taken as a whole, and enter into agreements that restrict subsidiary dividends or limit the ability of the borrower or any subsidiary guarantor to create or keep liens for the benefit of the lenders with respect to the obligations under the Senior Secured Facilities. The Senior Secured Facilities require the borrower to enter into interest rate swap, cap and hedge agreements for purposes of ensuring that no less than 50% of the aggregate principal amount of the total indebtedness of the borrower and its subsidiaries then outstanding is either subject to such interest rate agreements or bears interest at a fixed rate.

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The Term Loan Facility requires the borrower to maintain a maximum ratio of consolidated total debt to consolidated adjusted EBITDA and a minimum ratio of consolidated adjusted EBITDA to consolidated interest expense. Each of these ratios is calculated for the period that is four consecutive fiscal quarters prior to the date of calculation. These financial covenants are set forth in the table below:


	Maximum		Minimum
	Consolidated		Consolidated
	Total Debt to		Adjusted EBITDA to
	Consolidated		Consolidated
	Adjusted EBITDA		Interest Expense
Four Consecutive Fiscal Quarters Ending on:	Ratio		Ratio

June 30, 2008		4.25:1.00		3.00:1.00
September 30, 2008		4.25:1.00		3.00:1.00
December 31, 2008		4.25:1.00		3.00:1.00
March 31, 2009		3.50:1.00		3.25:1.00
June 30, 2009		3.50:1.00		3.25:1.00
September 30, 2009		3.50:1.00		3.25:1.00
December 31, 2009		3.50:1.00		3.25:1.00
March 31, 2010		2.75:1.00		3.25:1.00
June 30, 2010		2.75:1.00		3.25:1.00
September 30, 2010		2.75:1.00		3.25:1.00
December 31, 2010		2.75:1.00		3.25:1.00
March 31, 2011		2.50:1.00		3.25:1.00
June 30, 2011		2.50:1.00		3.25:1.00
September 30, 2011		2.50:1.00		3.25:1.00
December 31, 2011		2.50:1.00		3.25:1.00
March 31, 2012 and thereafter		2.50:1.00		3.50:1.00

If the borrower fails to comply with the consolidated total debt to consolidated adjusted EBITDA ratio, then within ten days after the date on which financial statements for the applicable period are due under the Term Loan Facility, the Goldman Sachs Funds and other investors in the borrower (or any direct or indirect parent of the borrower) have a cure right which allows any of them to make a direct or indirect equity investment in the borrower or any restricted subsidiary of the borrower in cash. If such cure right is exercised, the consolidated total debt to consolidated adjusted EBITDA ratio of the borrower will be recalculated to give pro forma effect to the net cash proceeds received from the exercise of the cure right. The cure right is subject to certain limitations. For the four prior consecutive fiscal quarters, there must be at least one fiscal quarter in which the cure right is not exercised. Additionally, the equity investment contributed under the cure right may not exceed the amount necessary to bring the borrower back into compliance with the restrictions regarding the borrower’s consolidated total debt to consolidated adjusted EBITDA ratio.

Although the Revolving Credit Facility does not require the borrower to comply with any financial ratio maintenance covenants, if less than 7% of the then-outstanding credit commitments are available to be borrowed under the Revolving Credit Facility at any time, the borrower will not be permitted to borrow additional amounts unless its pro forma ratio of consolidated adjusted EBITDA to consolidated fixed charges is at least 1.00 to 1.00.

The Term Loan Facility provides that the borrower and its restricted subsidiaries may not make, or commit to make, capital expenditures in excess of $25 million in any year. If the actual amount of capital expenditures made in any fiscal year is less than the amount permitted to be made in such fiscal year, the amount of such difference may be carried forward and used to make capital expenditures in the succeeding fiscal year, though the carried forward amount may not be used beyond the immediately succeeding fiscal year.

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Events of Default. The Senior Secured Facilities contain customary events of default. The events of default include the failure to pay interest and principal when due, failure to pay fees and any other amounts owed under the Senior Secured Facilities when due, a breach of certain covenants in the Senior Secured Facilities, a breach of any representation or warranty contained in the Senior Secured Facilities in any material breach, defaults in payments with respect to any other indebtedness in excess of $15 million (under the Term Loan Facility) or in excess of $30 million (under the Revolving Credit Facility), defaults with respect to other indebtedness in excess of $15 million (under the Term Loan Facility) or in excess of $30 million (under the Revolving Credit Facility) that has the effect of accelerating such indebtedness, bankruptcy, certain events relating to employee benefits plans, failure of a material subsidiary’s guarantee to remain in full force and effect, failure of the security agreement, pledge agreements pursuant to which the stock of any material subsidiary is pledged, or any mortgage for the benefit of the lenders under the Term Loan Facility to remain in full force and effect, entry of one or more judgments or decrees against the borrower or its restricted subsidiaries involving a liability of $15 million or more in the aggregate (under the Term Loan Facility) or $30 million or more in the aggregate (under the Revolving Credit Facility), and the invalidation of subordination provisions of any document evidencing permitted additional debt having a principal amount in excess of $15 million.

The Senior Secured Facilities also contain an event of default upon the occurrence of a change of control. Under the Senior Secured Facilities, a “change of control” shall have occurred if (i) the Goldman Sachs Funds and certain of their affiliates shall cease to beneficially own at least 35% of the voting power of the outstanding voting stock of the borrower (other than as a result of one or more widely distributed offerings of the common stock of the borrower or any direct or indirect parent of the borrower); or (ii) any person, entity or “group” (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial ownership of a percentage of the voting power of the outstanding voting stock of the borrower that exceeds the percentage of the voting power of such voting stock then beneficially owned, in the aggregate, by the Goldman Sachs Funds and certain of their affiliates, unless, in the case of either clause (i) or (ii) above, the Goldman Sachs Funds have, at such time, the right or the ability by voting power, contract or otherwise to elect or designate for election at least a majority of the board of directors of the borrower; or (iii) a majority of the board of directors of the borrower ceases to consist of “continuing directors”, defined as individuals who (a) were members of the board of directors of the borrower on October 31, 2007 (or January 31, 2007 for purposes of determining whether an event of default has occurred under the Term Loan Facility), (b) who have been a member of the board of directors for at least 12 months preceding October 31, 2007 or January 31, 2007, as the case may be, (c) who have been nominated to be a member of the board of directors, directly or indirectly, by the Goldman Sachs Funds and certain of their affiliates or persons nominated by the Goldman Sachs Funds and certain of their affiliates or (d) who have been nominated to be a member of the board of directors by a majority of the other continuing directors then in office.

Junior Term Loan Facility

On May 22, 2008, McJunkin Red Man Holding Corporation, as the borrower, entered into a $450 Million Term Loan Credit Agreement (the “Junior Term Loan Facility”). Goldman Sachs Credit Partners L.P. and Lehman Brothers Inc. were the co-lead arrangers and joint bookrunners under this facility. The proceeds from the Junior Term Loan Facility, along with $25 million in proceeds from revolving loans drawn under the Revolving Credit Facility, were used to fund a dividend to McJunkin Red Man Holding Corporation’s stockholders, including PVF Holdings LLC. PVF Holdings LLC distributed the proceeds it received from the dividend to its members, including the Goldman Sachs Funds and certain of our directors and members of our management. See “Certain Relationships and Related Party Transactions — Transactions with the Goldman Sachs Funds — May 2008 Dividend”. The term loans under the Junior Term Loan Facility are not subject to amortization and the principal of such loans must be repaid on January 31, 2014.

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Interest Rate and Fees. The term loans under the Junior Term Loan Facility bear interest at a rate per annum equal to, at the borrower’s option, either (i) the greater of the prime rate and the federal funds effective rate plus 0.50%, plus in either case 2.25%, or (ii) LIBOR multiplied by the statutory reserve rate plus 3.25%.

Prepayments. We may voluntarily prepay term loans under the Junior Term Loan Facility in whole or in part at our option, without premium or penalty. After the payment in full of the term loans under the Term Loan Facility, we will be required to prepay outstanding term loans under the Junior Term Loan Facility with 100% of the net cash proceeds of:


	•	a disposition of any of our or our restricted subsidiaries’ business units, assets or other property not in the ordinary course of business, subject to certain exceptions for permitted asset sales;

	•	a casualty event with respect to collateral for which we or any of our restricted subsidiaries receives insurance proceeds, or proceeds of a condemnation award or other compensation;

	•	the issuance or incurrence by us or any of our restricted subsidiaries of indebtedness, subject to certain exceptions; and

	•	any sale-leaseback transaction permitted under the Junior Term Loan Facility.

Also, after the payment in full of the term loans under the Term Loan Facility, not later than the date that is 90 days after the last day of any fiscal year, we will be required to prepay the outstanding term loans under the Junior Term Loan Facility with an amount equal to (i) 50% of “excess cash flow” for such fiscal year, provided that (a) the percentage will be reduced to 25% if the borrower’s ratio of consolidated total debt to consolidated adjusted EBITDA for the most recent four consecutive fiscal quarters is no greater than 2.50 to 1.00 but greater than 2.00 to 1.00, and (b) no prepayment of term loans with excess cash flow is required if the borrower’s ratio of consolidated total debt to consolidated adjusted EBITDA for the most recent four consecutive fiscal quarters is no greater than 2.00 to 1.00, minus (ii) the principal amount of term loans under the Junior Term Loan Facility voluntarily prepaid during such fiscal year.

We must also prepay the principal amount of the term loans under the Junior Term Loan Facility with 50% of the cash proceeds received by us from a “Qualified IPO”, net of underwriting discounts and commissions and other related reasonable costs and expenses. A “Qualified IPO” is defined as a bona fide underwritten sale to the public of our common stock or the common stock of any of our direct or indirect subsidiaries or our direct or indirect parent companies pursuant to a registration statement that is declared effective by the SEC or the equivalent offering on a private exchange or platform. Prepayment is only required if we or one of our subsidiaries receives cash proceeds from the Qualified IPO.

Collateral. The term loans under the Junior Term Loan Facility are secured by perfected security interests in and liens on substantially all of the personal property and certain real property of McJunkin Red Man Holding Corporation, including the common stock we hold of McJunkin Red Man Corporation. The term loans are not guaranteed by any of our subsidiaries or by PVF Holdings LLC.

Certain Covenants and Events of Default. The Junior Term Loan Facility contains customary covenants for a holding company facility. These agreements, among other things, restrict, subject to certain exceptions, the ability of the borrower to incur additional indebtedness, create liens on assets, and engage in activities or own assets other than certain specified activities and assets. Also, the Junior Term Loan Facility requires the borrower to maintain a maximum ratio of consolidated total debt to consolidated adjusted EBITDA and a minimum ratio of consolidated adjusted EBITDA to consolidated interest expense. Each of these ratios is calculated for the period that is four consecutive

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fiscal quarters prior to the date of calculation. These financial covenants are set forth in the table below:


	Maximum		Minimum
	Consolidated		Consolidated
	Total Debt to		Adjusted EBITDA to
	Consolidated		Consolidated
	Adjusted EBITDA		Interest Expense
Four Consecutive Fiscal Quarters Ending on:	Ratio		Ratio

June 30, 2008		4.75:1.00		2.50:1.00
September 30, 2008		4.75:1.00		2.50:1.00
December 31, 2008		4.75:1.00		2.50:1.00
March 31, 2009		4.00:1.00		2.75:1.00
June 30, 2009		4.00:1.00		2.75:1.00
September 30, 2009		4.00:1.00		2.75:1.00
December 31, 2009		4.00:1.00		2.75:1.00
March 31, 2010		3.25:1.00		2.75:1.00
June 30, 2010		3.25:1.00		2.75:1.00
September 30, 2010		3.25:1.00		2.75:1.00
December 31, 2010		3.25:1.00		2.75:1.00
March 31, 2011		3.00:1.00		2.75:1.00
June 30, 2011		3.00:1.00		2.75:1.00
September 30, 2011		3.00:1.00		2.75:1.00
December 31, 2011		3.00:1.00		2.75:1.00
March 31, 2012 and thereafter		3.00:1.00		3.00:1.00

Consolidated adjusted EBITDA is calculated under the Junior Term Loan Facility in a similar manner as under the Senior Secured Facilities. See “— Revolving Credit Facility and Term Loan Facility — Covenants.”

The Junior Term Loan Facility provides that the borrower and its restricted subsidiaries may not make, or commit to make, capital expenditures in excess of $30 million in any year. If the actual amount of capital expenditures made in any fiscal year is less than the amount permitted to be made in such fiscal year, the amount of such difference may be carried forward and used to make capital expenditures in the succeeding fiscal year, though the carried forward amount may not be used beyond the immediately succeeding fiscal year.

If the borrower fails to comply with the consolidated total debt to consolidated adjusted EBITDA ratio, then the Goldman Sachs Funds and other investors in the borrower have a cure right that is similar to the cure right provided with respect to the Term Loan Facility. See “— Revolving Credit Facility and Term Loan Facility — Covenants”.

The Junior Term Loan Facility also contains customary events of default that are similar to the events of default under the Senior Secured Credit Facilities, including an event of default upon a change of control. See “— Revolving Credit Facility and Term Loan Facility — Events of Default”.

Purchases of Outstanding Loans. Subject to certain terms and conditions, the Goldman Sachs Funds and their affiliates may from time to time seek to purchase term loans under the Junior Term Loan Facility from the lenders under the facility pursuant to open market purchases in an aggregate amount not to exceed 30% of the aggregate principal amount of the loans outstanding under the Junior Term Loan Facility. The Goldman Sachs Funds and their affiliates may contribute such purchased loans to PVF Holdings LLC as an equity contribution in return for equity interests in PVF Holdings LLC and PVF Holdings LLC will then contribute such loans to the borrower under the Junior Term Loan Facility as an equity contribution in return for additional stock of the borrower. In the case of such purchases of term loans by the Goldman Sachs Funds and their affiliates followed by

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contributions of the purchased loans to PVF Holdings LLC and then to the borrower, the loans subject to such purchases and contributions shall be cancelled.

In addition, the borrower under the Junior Term Loan Facility may from time to time seek to purchase, subject to certain terms and conditions, term loans under the Junior Term Loan Facility from the lenders under the facility pursuant to open market purchases. In the case of such purchases by the borrower, the loans subject to such purchases shall be cancelled.

Midfield CDN$150 Million (US$148.26 Million) Revolving Credit Facility

One of our subsidiaries, Midfield Supply ULC, is the borrower under a CDN$150 million (US$148.26 million) revolving credit facility (the “Midfield Revolving Credit Facility”) with Bank of America, N.A. and certain other lenders from time to time parties thereto. Proceeds from this facility may be used by Midfield for working capital and other general corporate purposes. As of June 26, 2008, US$51.7 million of borrowings were outstanding and $51.6 million were available under the Midfield Revolving Credit Facility. The facility provides for the extension of up to CDN$150 million (US$148.26 million) in revolving loans, subject to adjustments based on the borrowing base and less the aggregate letters of credit outstanding under the facility. Letters of credit may be issued under the facility subject to certain conditions, including a CDN$10 million or US$9.88 million sub-limit. The revolving loans have a maturity date of November 2, 2010. All letters of credit issued under the facility must expire at least 20 business days prior to November 2, 2010.

Interest Rate and Fees. The revolving loans bear interest at a rate equal to either (i) the Canadian prime rate, plus (a) 0.25% if the “average daily availability” (as defined in the loan and security agreement for the facility) for the previous fiscal quarter was less than CDN$30 million (US$29.65 million) or (b) 0.00% if the average daily availability for the previous fiscal quarter was greater than or equal to CDN$30 million, (US$29.65 million) or, at the borrower’s option, (ii) the rate of interest per annum equal to the rates applicable to Canadian Dollar Bankers’ Acceptances having a comparable term as the proposed loan displayed on the “CDOR Page” of Reuter Monitor Money Rates Service, plus (a) 1.75% if the average daily availability for the previous fiscal quarter was less than CDN$30 million (US$29.65 million), (b) 1.50% if the average daily availability for the previous fiscal quarter was greater than or equal to CDN$30 million (US$29.65 million) but less than CDN$60 million (US$59.3 million), or (c) 1.25% if the if the average daily availability for the previous fiscal quarter was greater than or equal to CDN$60 million (US$59.3 million).

The borrower must pay a monthly unused line fee with respect to unutilized revolving loan commitments equal to (i) 0.25% if the outstanding amount of borrowings under the facility for the immediately preceding fiscal quarter are greater than 50% of the revolving loan commitments, or (ii) 0.375% if otherwise. The borrower must pay a monthly fronting fee equal to 0.125% per annum of the stated amount of letters of credit issued and must also pay a monthly fee to the agent on the average daily stated amount of letters of credit issued equal to (i) 1.75% if the average daily availability for the previous fiscal quarter was less than CDN$30 million (US$29.65 million), (ii) 1.50% if the average daily availability for the previous fiscal quarter was greater than or equal to CDN$30 million (US$29.65 million) but less than CDN$60 million (US$59.3 million), or (iii) 1.25% if the average daily availability for the previous fiscal quarter was greater than or equal to CDN$60 million (US$59.3 million).

Prepayments. The borrower may prepay the revolving loans from time to time without premium or penalty.

Collateral and Guarantors. The Midfield Revolving Credit Facility is secured by substantially all of the personal property of Midfield Supply ULC and its subsidiary guarantors, Mega Production Testing Inc. and Hagan Oilfield Supply Ltd.

Certain Covenants and Events of Default. The Midfield Revolving Credit Facility contains customary covenants. These agreements, among other things, restrict, subject to certain exceptions,

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the ability of the borrower and its subsidiaries to incur additional indebtedness, create liens on assets, make distributions, make investments, sell, lease or transfer assets, make loans or advances, pay certain debt, amalgamate, merge, combine or consolidate with another entity, enter into certain types of restrictive agreements, engage in any business other than the business conducted by the borrower and its subsidiaries on the closing date of the Midfield Revolving Credit Facility, enter into transactions with affiliates, become a party to certain employee benefit plans, enter into certain amendments with respect to subordinated debt, make acquisitions, enter into transactions which would reasonably be expected to have a material adverse effect or cause a default, enter into sale and leaseback transactions, and terminate certain agreements.

Additionally, the Midfield Revolving Credit Facility requires the borrower to maintain a leverage ratio of no greater than 3.50 to 1.00 (measured on a monthly basis) and to maintain a fixed charge coverage ratio of at least 1.15 to 1.00 (measured on a monthly basis). The facility also prohibits the borrower and its subsidiaries from making capital expenditures in excess of $5 million in the aggregate during any fiscal year, subject to exceptions for certain expenditures and provided that if the actual amount of capital expenditures made in any fiscal year is less than the amount permitted to be made in such fiscal year, up to $250,000 of such excess may be carried forward and used to make capital expenditures in the succeeding fiscal year.

The Midfield Revolving Credit Facility contains customary events of default. The events of default include, among others, the failure to pay interest, principal and other obligations under the facility’s loan documents when due, a breach of any representation or warranty contained in the loan documents, breaches of certain covenants, the failure of any loan document to remain in full force and effect, a default with respect to other indebtedness in excess of $250,000 if the other indebtedness may be accelerated due to such default, judgments against the borrower and its subsidiaries in excess of $250,000 in the aggregate, the occurrence of any loss or damage with respect to the collateral if the amount not covered by insurance exceeds $100,000, cessation or governmental restraint of a material part of the borrower’s or a subsidiary’s business, insolvency, certain events related to benefits plans, the criminal indictment of a senior officer of the borrower or a guarantor or the conviction of a senior officer of the borrower or a guarantor of certain crimes, an amendment to the shareholders agreement among Midfield Supply ULC, the entity now known as McJunkin Red Man Canada Ltd. and Midfield Holdings (Alberta) Ltd. without the prior written consent of Bank of America, N.A., and any event or condition that has a material adverse effect on the borrower or a guarantor.

A “change of control” is also an event of default. A “change of control” occurs if (i) McJunkin Red Man Canada Ltd. ceases to own and control, directly or indirectly, 51% or more of the voting equity interests of Midfield Supply ULC, (ii) a change in the majority of directors of Midfield Supply ULC occurs, unless approved by the then-majority of directors, or (iii) all or substantially all of Midfield Supply ULC’s assets are sold or transferred.

Midfield CDN$15 Million (US$14.83 Million) Facility

One of our subsidiaries, Midfield Supply ULC, is also the borrower under a CDN$15 million (US$14.83 million) credit facility with Alberta Treasury Branches. The facility is secured by substantially all of the real property and equipment of Midfield Supply ULC and its subsidiary guarantors. The facility contains customary covenants and events of default. The borrower’s leverage ratio must not exceed 3.50 to 1, its fixed charge coverage ratio must be at least 1.15 to 1, and its ratio of tangible asset value to borrowings outstanding must be at least 2.00 to 1.

The Midfield CDN$15 million (US$14.83 million) facility and the Midfield CDN$150 million (US$148.26 million) facility are subject to an intercreditor agreement which relates to, among other things, priority of liens and proceeds of sale of collateral.

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DESCRIPTION OF OUR CAPITAL STOCK

Immediately following the completion of this offering, our authorized capital stock will consist of 800 million shares of common stock, par value $0.01 per share, and 150 million shares of preferred stock, par value $0.01 per share, the rights and preferences of which may be established from time to time by our board of directors. Upon the completion of this offering, there will be 155,912,942 outstanding shares of common stock (excluding 282,771 shares of non-vested restricted stock) and no outstanding shares of preferred stock. The following description of our capital stock does not purport to be complete and is subject to and qualified by our amended and restated certificate of incorporation and bylaws, which are included as exhibits to the registration statement of which this prospectus forms a part, and by the provisions of applicable Delaware law.

Common Stock

Holders of our common stock are entitled to one vote for each share on all matters voted upon by our stockholders, including the election of directors, and do not have cumulative voting rights. Subject to the rights of holders of any then outstanding shares of our preferred stock, our common stockholders are entitled to any dividends that may be declared by our board of directors. Holders of our common stock are entitled to share ratably in our net assets upon our dissolution or liquidation after payment or provision for all liabilities and any preferential liquidation rights of our preferred stock then outstanding. Holders of our common stock have no preemptive rights to purchase shares of our stock. The shares of our common stock are not subject to any redemption provisions and are not convertible into any other shares of our capital stock. All outstanding shares of our common stock are fully paid and nonassessable. The rights, preferences and privileges of holders of our common stock will be subject to those of the holders of any shares of our preferred stock we may issue in the future.

Our common stock will be represented by certificates, unless our board of directors adopts a resolution providing that some or all of our common stock shall be uncertificated. Any such resolution will not apply to any shares of common stock that are already certificated until such shares are surrendered to us.

Preferred Stock

Our board of directors may, from time to time, authorize the issuance of one or more series of preferred stock without stockholder approval. We have no current intention to issue any shares of preferred stock.

One of the effects of undesignated preferred stock may be to enable our board of directors to discourage an attempt to obtain control of our company by means of a tender offer, proxy contest, merger or otherwise. The issuance of preferred stock may adversely affect the rights of our common stockholders by, among other things:


	•	restricting dividends on the common stock;

	•	diluting the voting power of the common stock;

	•	impairing the liquidation rights of the common stock; or

	•	delaying or preventing a change in control without further action by the stockholders.

Limitation on Liability and Indemnification of Officers and Directors

Our amended and restated certificate of incorporation limits the liability of directors to the fullest extent permitted by Delaware law. The effect of these provisions is to eliminate the rights of our company and our stockholders, through stockholders’ derivative suits on behalf of our company, to recover monetary damages against a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior. However, our directors will be personally liable to us and our stockholders for any breach of the director’s duty of loyalty, for acts or omissions not in

165

good faith or which involve intentional misconduct or a knowing violation of law, under Section 174 of

~~161~~

the Delaware General Corporation Law or for any transaction from which the director derived an improper personal benefit. In addition, our amended and restated certificate of incorporation and bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware law. We may enter into indemnification agreements with our current directors and executive officers prior to the completion of this offering. We also maintain directors and officers insurance.

Corporate Opportunities

Our amended and restated certificate of incorporation provides that Goldman, Sachs & Co. and its affiliates (which include the Goldman Sachs Funds) have no obligation to offer us any opportunity to participate in business opportunities presented to Goldman, Sachs & Co. or its affiliates even if the opportunity is one that we might reasonably have pursued, and that neither Goldman, Sachs & Co. nor its affiliates will be liable to us or our stockholders for breach of any duty by reason of any such activities unless, in the case of any person who is a director or officer of our company, such business opportunity is expressly offered to such director or officer in writing solely in his or her capacity as an officer or director of our company. Stockholders will be deemed to have notice of and consented to this provision of our amended and restated certificate of incorporation.

Delaware Anti-Takeover Law

Our amended and restated certificate of incorporation provides that we are not subject to Section 203 of the Delaware General Corporation Law, which regulates corporate acquisitions. This law provides that specified persons who, together with affiliates and associates, own, or within three years did own, 15% or more of the outstanding voting stock of a corporation may not engage in business combinations with the corporation for a period of three years after the date on which the person became an interested stockholder. The law defines the term “business combination” to include mergers, asset sales and other transactions in which the interested stockholder receives or could receive a financial benefit on other than a pro rata basis with other stockholders.

Removal of Directors; Vacancies

Our amended and restated certificate of incorporation and bylaws provide that any director or the entire board of directors may be removed with or without cause by the affirmative vote of the majority of all shares then entitled to vote at an election of directors. Our amended and restated certificate of incorporation and bylaws also provide that any vacancies on our board of directors will be filled by the affirmative vote of a majority of the board of directors then in office, even if less than a quorum, or by a sole remaining director.

Voting

In an uncontested election of directors, a nominee for director will be elected if the votes cast for the nominee’s election exceed the votes cast against the nominee’s election. The affirmative vote of a plurality of the shares of our common stock present, in person or by proxy will decide the election of any directors ~~and the~~in a contested election. The affirmative vote of a majority of the shares of our common stock present, in person or by proxy will decide all other matters voted on by stockholders, unless the question is one upon which, by express provision of law, under our amended and restated certificate of incorporation, or under our bylaws, a different vote is required, in which case such provision will control.

Action by Written Consent

Our amended and restated certificate of incorporation and bylaws provide that stockholder action can be taken by written consent of the stockholders only if Goldman, Sachs & Co. and its affiliates beneficially own more than 25.0% of the outstanding shares of our common stock.

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Ability to Call Special Meetings

Our amended and restated certificate of incorporation and bylaws provide that special meetings of our stockholders can only be called pursuant to a resolution adopted by a majority of our board of directors or by the chairman of our board of directors. Special meetings may also be called by the holders of not less than 25% of the outstanding shares of our common stock if Goldman, Sachs & Co. and its affiliates beneficially own 25% or more of the outstanding shares of our common stock. If Goldman, Sachs & Co. and its affiliates beneficially own less than 25% of the outstanding shares of our common stock, stockholders will not be permitted to call a special meeting or to require our board to call a special meeting.

Amending Our Certificate of Incorporation and Bylaws

Our amended and restated certificate of incorporation provides that our certificate of incorporation may be amended by the affirmative vote of a majority of the board of directors and by the affirmative vote of the majority of all shares of our common stock then entitled to vote at any annual or special meeting of stockholders. In addition, our amended and restated certificate of incorporation and bylaws provide that our bylaws may be amended, repealed or new bylaws may be adopted by the affirmative vote of a majority of the board of directors or when a quorum is present at any meeting, by the vote of the holders of a majority of the voting power of our common stock entitled to vote thereon, present and voting, in person or represented by proxy.

Advance Notice Provisions for Stockholders

In order to nominate directors to our board of directors or bring other business before an annual meeting of our stockholders, a stockholder’s notice must be received by the Secretary of the Company at the principal executive offices of the Company not earlier than 120 calendar days and not later than 90 calendar days before the first anniversary of the previous year’s annual meeting of stockholders, subject to certain exceptions contained in our bylaws. If the date of the applicable annual meeting is more than 30 days before or more than 30 days after such anniversary date, notice by a stockholder to be timely must be so delivered not earlier than 120 calendar days before the date of such annual meeting and not later than 90 calendar days before the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the tenth day following the date on which public announcement of the date of such meeting is first made by the Company. The adjournment or postponement of an annual meeting or the announcement shall not commence a new time period for the giving of a stockholder’s notice as described above.

Listing

We intend to apply to list our common stock on the New York Stock Exchange under the symbol “MRC”.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is .

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SHARES ELIGIBLE FOR FUTURE SALE

Upon the completion of this offering, we will have outstanding 155,912,942 shares of common ~~stock.~~stock (excluding 282,771 shares of non-vested restricted stock). The shares sold in this offering plus any additional shares sold by the selling stockholder upon exercise of the underwriters’ option will be freely tradable without restriction under the Securities Act, unless purchased by our “affiliates” as that term is defined in Rule 144 under the Securities Act. In general, affiliates include executive officers, directors and our largest stockholders. Shares of common stock purchased by affiliates will be subject to the resale limitations of Rule 144.

The remaining shares outstanding following this offering are restricted securities within the meaning of Rule 144. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 promulgated under the Securities Act, which is summarized below.

Our executive officers and directors and our principal stockholder, PVF Holdings LLC, will enter intolock-up agreements in connection with this offering, generally providing that they will not offer, sell, contract to sell, or grant any option to purchase or otherwise dispose of our common stock or any securities exercisable for or convertible into our common stock owned by them for a period of 180 days after the date of this prospectus without the prior written consent of Goldman, Sachs & Co.

Despite possible earlier eligibility for sale under the provisions of Rule 144 under the Securities Act, any shares subject to thelock-up agreement will not be salable until thelock-up agreement expires or is waived by Goldman, Sachs & Co. Taking into account thelock-up agreement, and assuming that PVF Holdings LLC is not released from itslock-up agreement, the shares held by our affiliates will be eligible for future sale in accordance with the requirements of Rule 144 upon the expiration of thelock-up agreement.

In general, under Rule 144 as currently in effect, after the expiration oflock-up agreements, a person who has beneficially owned restricted securities for at least six months would be entitled to sell within any three-month period a number of shares that does not exceed the greater of the following:


	•	one percent of the number of shares of common stock then outstanding, which will equal approximately shares immediately after this offering; or

	•	the average weekly trading volume of the common stock during the four calendar weeks preceding the sale.

Sales under Rule 144 by affiliates are also subject to manner-of-sale requirements, notice requirements and the availability of current public information about us.

PVF Holdings LLC, which will hold shares of our common stock upon the completion of this offering if the underwriters’ option to purchase additional shares from PVF Holdings LLC is not exercised ( shares of our common stock upon completion of this offering if the underwriters’ option is exercised in full), will enter into a new registration rights agreement with us prior to the consummation of this offering. Pursuant to this registration rights agreement, PVF Holdings LLC can request that we use our reasonable best efforts to register its shares with the SEC, including in connection with this offering, on up to six occasions, including pursuant to shelf registration statements. In addition, under the registration rights agreement PVF Holdings LLC will have the ability to exercise certain piggyback registration rights with respect to its own securities if we elect to register any of our equity securities. Immediately after this offering, all of our shares held by PVF Holdings LLC will be entitled to these registration rights.

The registration rights agreement will also provide that if PVF Holdings LLC is dissolved, an amended and restated registration rights agreement will become automatically effective and the existing agreement will terminate. Pursuant to the terms of such amended and restated registration rights agreement, the existing members of PVF Holdings LLC would thereunder be entitled to certain registration rights with respect to our shares which are distributed to them in connection with any such dissolution of PVF Holdings LLC.

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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS FORNON-U.S. HOLDERS

The following is a general discussion of the material U.S. federal income and estate tax consequences of the ownership and disposition of our common stock by anon-U.S. holder. This discussion is for general information only and is not tax advice. For purposes of this discussion, the term“non-U.S. holder” means a beneficial owner of our common stock that is not, for U.S. federal income tax purposes:


	•	an individual who is a citizen or resident of the United States or a former citizen or resident of the United States subject to taxation as an expatriate;

	•	a corporation (or other entity classified as a corporation for these purposes) created or organized in, or under the laws of, the United States or any political subdivision of the United States;

	•	a partnership (including any entity or arrangement classified as a partnership for these purposes);

	•	an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or

	•	a trust, if (1) a United States court is able to exercise primary supervision over the trust’s administration and one or more “United States persons” (within the meaning of the U.S. Internal Revenue Code of 1986, as amended, or the Code) has the authority to control all of the trust’s substantial decisions, or (2) the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person.

An individual may be treated as a resident of the United States in any calendar year for U.S. federal income tax purposes, instead of as a nonresident, by, among other ways, being present in the United States on at least 31 days in that calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. For purposes of this calculation, an individual would count all of the days present in the current year, one-third of the days present in the immediately preceding year and one-sixth of the days present in the second preceding year. Residents are taxed for U.S. federal income purposes as if they were U.S. citizens.

If a partnership (or other entity taxable as a partnership for U.S. federal income tax purposes) owns our common stock, the tax treatment of a partner of the partnership may depend upon the status of the partner and the activities of the partnership and upon certain determinations made at the partner level. Partners in partnerships that own our common stock should consult their own tax advisors as to the particular U.S. federal income and estate tax consequences applicable to them.

This discussion does not address all of the aspects of U.S. federal income and estate taxation that may be relevant to anon-U.S. holder in light of thenon-U.S. holder’s particular investment or other circumstances. In particular, this discussion only addresses anon-U.S. holder that holds our common stock as a capital asset (generally, investment property) and does not address:


	•	special U.S. federal income tax rules that may apply to particularnon-U.S. holders, such as financial institutions, insurance companies, tax-exempt organizations, and dealers and traders in stocks, securities or currencies;

	•	non-U.S. holders holding our common stock as part of a conversion, constructive sale, wash sale or other integrated transaction or a hedge, straddle or synthetic security;

	•	any U.S. state and local ornon-U.S. or other tax consequences; or

	•	the U.S. federal income or estate tax consequences for the beneficial owners of anon-U.S. holder.

This discussion is based on provisions of the Code, applicable U.S. Treasury regulations and administrative and judicial interpretations, all as in effect or in existence on the date of this prospectus.

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Subsequent developments in U.S. federal income or estate tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income and estate tax consequences of owning and disposing of our common stock as set forth in this discussion.

If you are considering purchasing our common stock, you should consult your tax advisor regarding the U.S. federal, state, local andnon-U.S. income, estate and other tax consequences to you of owning and disposing of our common stock.

Dividends

We do not anticipate paying any cash dividends on our common stock in the foreseeable future. See “Dividend Policy”. In the event, however, that we pay dividends on our common stock that are not effectively connected with anon-U.S. holder’s conduct of a trade or business in the United States, a U.S. federal withholding tax at a rate of 30%, or a lower rate under an applicable income tax treaty, will be withheld from the gross amount of the dividends paid to suchnon-U.S. holder.

In order to claim the benefit of an applicable income tax treaty, anon-U.S. holder will be required to provide a properly completed and executed U.S. Internal Revenue ServiceForm W-8BEN (or other applicable form) in accordance with the applicable certification and disclosure requirements. Special rules apply to partnerships and other pass-through entities and these certification and disclosure requirements also may apply to beneficial owners of partnerships and other pass-through entities that hold our common stock. Anon-U.S. holder that is eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for a refund with the U.S. Internal Revenue Service.Non-U.S. holders should consult their own tax advisors regarding their entitlement to benefits under a relevant income tax treaty and the manner of claiming the benefits.

Dividends that are effectively connected with anon-U.S. holder’s conduct of a trade or business in the United States and, if required by an applicable income tax treaty, are attributable to a permanent establishment maintained by thenon-U.S. holder in the United States, generally will be taxed on a net income basis at the regular graduated rates and in the manner applicable to United States persons. In that case, the U.S. federal withholding tax discussed above will not apply if thenon-U.S. holder provides a properly completed and executed U.S. Internal Revenue ServiceForm W-8ECI (or other applicable form) in accordance with the applicable certification and disclosure requirements. In addition, a “branch profits tax” may be imposed at a 30% rate, or a lower rate under an applicable income tax treaty, on dividends received by a foreign corporation that are effectively connected with the conduct of a trade or business in the United States.

Gain on disposition of our common stock

Anon-U.S. holder generally will not be taxed on any gain realized on a disposition of our common stock unless:


	•	the gain is effectively connected with thenon-U.S. holder’s conduct of a trade or business in the United States and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by thenon-U.S. holder in the United States; in these cases, the gain generally will be taxed on a net income basis at the regular graduated rates and in the manner applicable to United States persons (unless an applicable income tax treaty provides otherwise) and, if thenon-U.S. holder is a foreign corporation, the “branch profits tax” described above may also apply;

	•	thenon-U.S. holder is an individual who holds our common stock as a capital asset, is present in the United States for at least 183 days in the taxable year of the disposition and meets other requirements (in which case, except as otherwise provided by an applicable income tax treaty, the gain, which may be offset by U.S. source capital losses, generally will be subject to a flat

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		30% U.S. federal income tax, even though thenon-U.S. holder is not considered a resident alien under the Code); or


	•	we are or have been a “U.S. real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that thenon-U.S. holder held our common stock.

Generally, a corporation is a “U.S. real property holding corporation” if the fair market value of its “U.S. real property interests” equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business. The tax relating to stock in a U.S. real property holding corporation generally will not apply to anon-U.S. holder whose holdings, direct and indirect, at all times during the applicable period, constituted 5% or less of our common stock, provided that our common stock was regularly traded on an established securities market. We believe that we are not currently, and we do not anticipate becoming in the future, a U.S. real property holding corporation.

Federal estate tax

Our common stock that is owned or treated as owned by an individual who is not a U.S. citizen or resident of the United States (as specially defined for U.S. federal estate tax purposes) at the time of death will be included in the individual’s gross estate for U.S. federal estate tax purposes, unless an applicable estate tax or other treaty provides otherwise and, therefore, may be subject to U.S. federal estate tax.

Information reporting and backup withholding tax

Dividends paid to anon-U.S. holder may be subject to U.S. information reporting and backup withholding. Anon-U.S. holder will be exempt from backup withholding if thenon-U.S. holder provides a properly completed and executed U.S. Internal Revenue ServiceForm W-8BEN or otherwise meets documentary evidence requirements for establishing its status as anon-U.S. holder or otherwise establishes an exemption.

The gross proceeds from the disposition of our common stock may be subject to U.S. information reporting and backup withholding. If anon-U.S. holder sells our common stock outside the United States through anon-U.S. office of anon-U.S. broker and the sales proceeds are paid to thenon-U.S. holder outside the United States, then the U.S. backup withholding and information reporting requirements generally will not apply to that payment. However, U.S. information reporting, but not U.S. backup withholding, will apply to a payment of sales proceeds, even if that payment is made outside the United States, if anon-U.S. holder sells our common stock through anon-U.S. office of a broker that:


	•	is a United States person;

	•	derives 50% or more of its gross income in specific periods from the conduct of a trade or business in the United States;

	•	is a “controlled foreign corporation” for U.S. federal income tax purposes; or

	•	is a foreign partnership, if at any time during its tax year:


	•	one or more of its partners are United States persons who in the aggregate hold more than 50% of the income or capital interests in the partnership; or

	•	the foreign partnership is engaged in a United States trade or business,

unless the broker has documentary evidence in its files that thenon-U.S. holder is not a United States person and certain other conditions are met or thenon-U.S. holder otherwise establishes an exemption.

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If anon-U.S. holder receives payments of the proceeds of a sale of our common stock from or through a U.S. office of a broker, the payment is subject to both U.S. backup withholding and information reporting unless thenon-U.S. holder provides a properly completed and executed U.S. Internal Revenue ServiceForm W-8BEN certifying that thenon-U.S. Holder is not a “United States person” or thenon-U.S. holder otherwise establishes an exemption.

Backup withholding is not an additional tax. Anon-U.S. holder generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed thenon-U.S. holder’s U.S. federal income tax liability, if any, by filing a refund claim with the U.S. Internal Revenue Service.

THE U.S. FEDERAL INCOME AND ESTATE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION PURPOSES ONLY. YOU SHOULD CONSULT YOUR TAX ADVISOR TO DETERMINE THE U.S. FEDERAL, STATE, LOCAL ANDNON-U.S. TAX CONSEQUENCES TO YOU OF OWNING AND DISPOSING OF OUR COMMON STOCK.

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UNDERWRITING

The Company, the selling stockholder and the underwriters will enter into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co. and ~~Lehman Brothers~~Barclays Capital Inc. are the representatives of the underwriters and the jointbook-running managers for this offering.


Underwriters		Number of Shares

Goldman, Sachs & Co.
~~Lehman Brothers~~Barclays Capital Inc.
J.P. Morgan Securities Inc.
Deutsche Bank Securities Inc.
Robert W. Baird & Co. Incorporated
Credit Suisse Securities (USA) LLC
Stephens Inc.
Raymond James & Associates, Inc.

Total

The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised. We expect that the underwriting agreement will provide that the obligations of the underwriters to take and pay for the shares are subject to a number of conditions, including, among others, the accuracy of the Company’s and the selling stockholder’s representations and warranties in the underwriting agreement, listing of the shares, receipt of specified letters from counsel and the Company’s independent registered public accounting firm, and receipt of specified officers’ certificates.

If the underwriters sell more shares than the total number set forth in the table above, the underwriters have an option to buy up to an additional shares from the selling stockholder. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters by the selling stockholder. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares of common stock.


	No Exercise	Full Exercise

Per Share	$	$
Total	$	$

Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover page of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $ per share from the initial public offering price. If all the shares are not sold at the initial public offering price, the representatives may change the offering price and the other selling terms. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.

The Company, its executive officers and directors and the selling stockholder have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of the representatives. This agreement does not apply to any existing

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employee benefit plans. See “Shares Eligible for Future Sale” for a description of certain transfer restrictions.

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The180-day restricted period described in the preceding paragraph will be automatically extended if: (1) during the last 17 days of the180-day restricted period the Company issues an earnings release or announces material news or a material event; or (2) prior to the expiration of the180-day restricted period, the Company announces that it will release earnings results during the15-day period following the last day of the180-day period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the18-day period beginning on the issuance of the earnings release or the announcement of the material news or material event.

Prior to this offering, there has been no public market for the common stock. The initial public offering price will be negotiated among the Company, the selling stockholder and the representatives. The factors to be considered in determining the initial public offering price of the shares include:


	•	the history and prospects for our industry;

	•	our historical performance, including our net sales, net income, margins and certain other financial information;

	•	estimates of our business potential and earnings prospects;

	•	an assessment of our management;

	•	investor demand for our shares of common stock;

	•	market valuations of companies that we and the representatives believe to be comparable; and

	•	prevailing securities markets at the time of this offering.

We intend to apply to list our common stock on the New York Stock Exchange under the symbol “MRC”. In order to meet the requirements for listing the common stock on the New York Stock Exchange, the underwriters have undertaken to sell lots of 100 or more shares to a minimum of 2,000 beneficial holders.

In connection with this offering, the underwriters may purchase and sell shares of the common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in this offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares from the selling stockholder in this offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option granted to them. “Naked” short sales are any sales in excess of that option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares of common stock in the open market after pricing that could adversely affect investors who purchase in this offering. Stabilizing transactions consist of various bids for or purchases of shares of common stock made by the underwriters in the open market prior to the completion of this offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of that underwriter in stabilizing or short covering transactions.

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Purchases to cover a short position and stabilizing transactions may have the effect of preventing or retarding a decline in the market price of the shares of common stock and, together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the shares of common stock. As a result, the price of the shares of common stock may be higher than the

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price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the New York Stock Exchange, in the over-the-counter market or otherwise.

Each underwriter has represented and agreed that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the sale of the shares in circumstances in which Section 21(1) of the FSMA does not apply to the Company; and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) it has not made and will not make an offer of shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43 million and (3) an annual net turnover of more than €50 million, as shown in its last annual or consolidated accounts;

(c) to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the representatives for any such offer; or

(d) in any other circumstances which do not require the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of shares to the public” in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the

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meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to

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do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (1) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (2) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (3) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

The securities have not been and will not be registered under the Securities and Exchange Law of Japan (the “Securities and Exchange Law”) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

The shares may not be offered, sold and delivered directly or indirectly, or offered or sold to any person for reoffering or resale, directly or indirectly, in Korea or to any resident of Korea except pursuant to the applicable laws and regulations of Korea, including the Korea Securities and Exchange Act and the Foreign Exchange Transaction Law and the decrees and regulations thereunder. The shares have not been registered with the Financial Services Commission of Korea for public offering in Korea. Furthermore, the shares may not be resold to Korean residents unless the purchaser of the shares complies with all applicable regulatory requirements (including but not limited to government approval requirements under the Foreign Exchange Transaction Law and its subordinate decrees and regulations) in connection with the purchase of the shares.

This prospectus has not been and will not be registered as a prospectus with the Registrar of Companies in India or with the Securities and Exchange Board of India. This prospectus or any other material relating to these securities is for information purposes only and may not be circulated or distributed, directly or indirectly, to the public or any members of the public in India and in any event to not more than 50 persons in India. Further, persons into whose possession this prospectus comes are

176

required to inform themselves about and to observe any such restrictions. Each prospective investor is advised to consult its advisors about the particular consequences to it of an investment in these securities. Each prospective investor is also advised that any investment in these securities by it is

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subject to the regulations prescribed by the Reserve Bank of India and the Foreign Exchange Management Act and any regulations framed thereunder.

No prospectus or other disclosure document (as defined in the Corporations Act 2001 (Cth) of Australia (“Corporations Act”)) in relation to the shares has been or will be lodged with the Australian Securities & Investments Commission (“ASIC”). This document has not been lodged with ASIC and is only directed to certain categories of exempt persons. Accordingly, if you receive this document in Australia:

(a) you confirm and warrant that you are either:

(i) a “sophisticated investor” under section 708(8)(a) or (b) of the Corporations Act;

(ii) a “sophisticated investor” under section 708(8)(c) or (d) of the Corporations Act and that you have provided an accountant’s certificate to us which complies with the requirements of section 708(8)(c)(i) or (ii) of the Corporations Act and related regulations before the offer has been made;

(ii) a person associated with the company under section 708(12) of the Corporations Act; or

(iv) a “professional investor” within the meaning of section 708(11)(a) or (b) of the Corporations Act,

and to the extent that you are unable to confirm or warrant that you are an exempt sophisticated investor, associated person or professional investor under the Corporations Act any offer made to you under this document is void and incapable of acceptance; and

(b) you warrant and agree that you will not offer any of the shares for resale in Australia within 12 months of those shares being issued unless any such resale offer is exempt from the requirement to issue a disclosure document under section 708 of the Corporations Act.

The underwriters do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered. The underwriters have informed us that they do not intend to confirm sales to discretionary accounts without the prior specific written approval of the customer.

The Company and the selling stockholder estimate that their share of the total expenses of this offering will be approximately $5.4 million.

The Company and the selling stockholder have agreed to indemnify the several underwriters against specified liabilities, including liabilities under the Securities Act.

Affiliates of Goldman, Sachs & Co. own more than 10% of the Company’s outstanding common stock. As a result, Goldman, Sachs & Co. is deemed to be an affiliate of the Company under Rule 2720(b)(1) of the NASD Conduct Rules and is deemed to have a conflict of interest under Rule 2720 of such Rules. PVF Holdings LLC, the selling stockholder in this offering, will receive the net proceeds of this offering. Affiliates of Goldman, Sachs & Co. own a majority interest in PVF Holdings LLC, which owns a majority of our outstanding common stock. Accordingly, such affiliates will receive approximately % of the proceeds from this offering. This offering will be made in compliance with the applicable provisions of Rule 2720 of the NASD Conduct Rules as required by such Rules. Rule 2720 requires that the initial public offering price be no higher than that recommended by a “qualified independent underwriter”, as defined by the Financial Industry Regulatory Authority (“FINRA”). ~~Lehman Brothers~~Barclays Capital Inc. is serving as a qualified independent underwriter and will assume the customary responsibilities of acting as a qualified independent underwriter in pricing the offering and conducting due diligence. We have agreed to indemnify ~~Lehman Brothers~~Barclays Capital Inc.

177

against any liabilities arising in connection with its role as a qualified independent underwriter, including liabilities under the Securities Act.

~~173~~

Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory, investment banking, commercial banking and other services for the company, for which they received or will receive customary fees and expenses. Furthermore, certain of the underwriters and their respective affiliates may, from time to time, enter into arms-length transactions with us in the ordinary course of their business.

Goldman Sachs Credit Partners L.P. is a co-lead arranger and joint bookrunner under our Revolving Credit Facility, Term Loan Facility and Junior Term Loan Facility. Goldman Sachs Credit Partners L.P. is also the syndication agent under the Term Loan Facility and the Junior Term Loan Facility. For a description of other transactions between us and Goldman Sachs & Co. and its affiliates, including payments of dividends and payments under our credit facilities by us to such affiliates, see “Certain Relationships and Related Party Transactions”.

~~Lehman Brothers~~

Barclays Bank PLC, an affiliate of Barclays Capital Inc. ~~is a co-lead arranger and joint bookrunner~~, has agreed to commit $100 million under ~~our~~the Revolving Credit Facility Term Loan Facility, and Junior Term Loan Facility. Lehman Brothers Inc. is also the syndication agent under the Term Loan Facility. Lehman Commercial Paper Inc., an affiliate of Lehman Brothers Inc., is an administrative agent and collateral agent under the Term Loan Facility and the Junior Term Loan Facility.effective January 2, 2009.

JPMorgan Chase Bank, N.A., an affiliate of J.P. Morgan Securities Inc., is a lender under the Revolving Credit Facility and is also a co-documentation agent and reference lender under that facility. JPMorgan Chase Bank, N.A. is also a reference lender under the Term Loan Facility and the Junior Term Loan Facility, and is a lender under the Midfield Revolving Credit Facility.

Raymond James Bank, FSB, an affiliate of Raymond James & Associates, Inc., is a lender under the Revolving Credit Facility.

A prospectus in electronic format may be made available on Internet sites or through other online services maintained by one or more of the underwritersand/or selling group members participating in this offering, or by their affiliates. In those cases, prospective investors may view offering terms online and, depending upon the particular underwriter or selling group member, prospective investors may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of shares for sale to online brokerage account holders. Any such allocation for online distributions will be made by the representatives on the same basis as other allocations.

Other than the prospectus in electronic format, the information on any underwriter’s or selling group member’s web site and any information contained in any other web site maintained by an underwriter or selling group member is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approvedand/or endorsed by us or any underwriter or selling group member in its capacity as underwriter or selling group member and should not be relied upon by investors.

If you purchase shares of common stock offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.

~~174~~178

LEGAL MATTERS

The validity of the shares of common stock offered by this prospectus will be passed upon for our company by Fried, Frank, Harris, Shriver & Jacobson LLP, New York, New York. Davis Polk & Wardwell, New York, New York is acting as counsel to the underwriters.

EXPERTS

The consolidated financial statements of McJunkin Red Man Holding Corporation and subsidiaries as of December 31, 2007, and for the period from inception (January 31, 2007) to December 31, 2007, and those of McJunkin Corporation and subsidiaries predecessor to McJunkin Red Man Holding Corporation for the period from January 1, 2007 to January 30, 2007, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

Schneider Downs & Co., Inc., independent registered public accounting firm, has audited the financial statements of McJunkin Corporation at December 31, 2005 and December 31, 2006 and for the years ended December 31, 2005 and December 31, 2006, as set forth in their report. We have included these financial statements in the prospectus and elsewhere in the registration statement in reliance on the report of Schneider Downs & Co., Inc., given on their authority as experts in accounting and auditing.

The consolidated financial statements of Red Man Pipe and Supply Company at October 31, 2007 and October 31, 2006 and for each of the three years in the period ended October 31, 2007, included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

The auditor of our predecessor, McJunkin Corporation, was Schneider Downs & Co., Inc. through December 31, 2006. At the direction of our board of directors, Schneider Downs & Co., Inc. was dismissed and on June 1, 2007 the company engaged Ernst & Young LLP as its independent registered public accounting firm for the fiscal year ended December 31, 2007. The reports of Schneider Downs & Co., Inc. on our predecessor’s financial statements for the past two fiscal years ended December 31, 2006 and 2005 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles. In connection with the audits of our predecessor’s financial statements for each of the two fiscal years ended December 31, 2006 and in the subsequent interim period through the date of appointment of Ernst & Young, LLP, there were no disagreements with Schneider Downs & Co., Inc. on any matters of accounting principles or practices, financial statement disclosure, or auditing scope and procedures which, if not resolved to the satisfaction of Schneider Downs & Co., Inc. would have caused Schneider Downs & Co., to make reference to the matter in their report. In addition, no event occurred which requires disclosure under Item 304(a)(2) of Regulation S-K. The company has requested Schneider Downs & Co., to furnish it a letter addressed to the Commission stating whether it agrees with the above statements. A copy of that letter, dated August 18, 2008, is filed as Exhibit 16 to the registration statement of which this prospectus forms a part.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement onForm S-1 under the Securities Act with respect to the common stock. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules to the registration statement. For further

~~175~~179

information with respect to us and our common stock, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, we refer you to the copy of the contract or document that has been filed as an exhibit and reference thereto is qualified in all respects by the terms of the filed exhibit.

The registration statement, including exhibits and schedules, may be inspected without charge at the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549, and copies of all or any part of it may be obtained from that office after payment of fees prescribed by the SEC. Information on the operation of the Public Reference Room may be obtained by calling the SEC at1-800-SEC-0330. The SEC maintains a web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC athttp://www.sec.gov.

~~176~~180

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Consolidated Financial Statements of McJunkin Red Man Holding Corporation and Subsidiaries
Audited Financial Statements:
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm			F-2
Consolidated Balance Sheets as of December 31, 2007 and December 31, 2006			F-3
Consolidated Statements of Income for the eleven months ended December 31, 2007, for the one month ended January 30, 2007 and for the years ended December 31, 2006 and 2005			F-4
Consolidated Statements of Stockholders’ Equity for the eleven months ended December 31, 2007, for the one month ended January 30, 2007 and for the years ended December 31, 2006 and 2005			F-5
Consolidated Statements of Cash Flows for the eleven months ended December 31, 2007, for the one month ended January 30, 2007 and for the years ended December 31, 2006 and 2005			F-6
Notes to Consolidated Financial Statements			F-7
Unaudited Financial Statements:
Consolidated Balance Sheets as of June 26, 2008 and December 31, 2007 (unaudited)			F-33
Consolidated Statements of Income for the six months ended June 26, 2008, for the five months ended June 28, 2007 and for the one month ended January 30, 2007 (unaudited)			F-34
Consolidated Statements of Cash Flows for the six months ended June 26, 2008, for the five months ended June 28, 2007 and for the one month ended January 30, 2007 (unaudited)			F-35
Notes to Consolidated Financial Statements (unaudited)			F-36
Consolidated Financial Statements of McJunkin Corporation and Subsidiaries
Audited Financial Statements:
Report of Schneider Downs & Co., Inc., Independent Registered Public Accounting Firm			~~F-55~~F-57
Consolidated Balance Sheets as of December 31, 2006 and December 31, 2005			~~F-56~~F-58
Consolidated Statements of Income for the year ended December 31, 2006 and for the year ended December 31, 2005			~~F-57~~F-59
Consolidated Statements of Shareholders’ Equity for the year ended December 31, 2006 and for the year ended December 31, 2005			~~F-58~~F-60
Consolidated Statements of Cash Flows for the year ended December 31, 2006 and for the year ended December 31, 2005			~~F-59~~F-61
Notes to Consolidated Financial Statements			~~F-60~~F-62
Report of Schneider Downs & Co., Inc., Independent Registered Public Accounting Firm			~~F-68~~F-70
Consolidated Financial Statement Schedule as of and for the years ended December 31, 2006 and December 31, 2005			~~F-69~~F-71
Consolidated Financial Statements of Red Man Pipe & Supply Co. and Subsidiaries
Audited Financial Statements:
Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm			~~F-70~~F-72
Consolidated Balance Sheets as of October 31, 2007 and October 31, 2006			~~F-71~~F-73
Consolidated Statements of Operations for the year ended October 31, 2007, for the year ended October 31, 2006 and for the year ended October 31, 2005			~~F-72~~F-74
Consolidated Condensed Statements of Comprehensive Income for the year ended October 31, 2007, for the year ended October 31, 2006 and for the year ended October 31, 2005			~~F-73~~F-75
Consolidated Statements of Preferred Stock and Stockholders’ Equity for the year ended October 31, 2007, for the year ended October 31, 2006 and for the year ended October 31, 2005			~~F-74~~F-76
Consolidated Statements of Cash Flows for the year ended October 31, 2007, for the year ended October 31, 2006 and for the year ended October 31, 2005			~~F-75~~F-77
Notes to Consolidated Financial Statements			~~F-77~~F-79

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

of McJunkin Red Man Corporation and subsidiaries

We have audited the accompanying consolidated balance sheet of McJunkin Red Man Holding Corporation and subsidiaries (the Company) as of December 31, 2007, and the related consolidated statements of income, shareholders’ equity, and cash flows for the period from inception (January 31, 2007) to December 31, 2007. We have also audited the accompanying consolidated statements of income, shareholders’ equity and cash flows of McJunkin Corporation and subsidiaries (McJunkin) predecessor to the Company for the period from January 1, 2007 to January 30, 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements of McJunkin as of December 31, 2006, and for each of the two years in the period then ended were audited by other auditors whose report dated January 13, 2007, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of McJunkin Red Man Holding Corporation and subsidiaries at December 31, 2007, and the consolidated results of their operations and their cash flows for the period from inception (January 31, 2007) to December 31, 2007, and the consolidated results of operations and cash flows of McJunkin Corporation and Subsidiaries, predecessor to the Company for the period from January 1, 2007 to January 30, 2007, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young llp

Charleston, West Virginia

August 15, 2008, except for Note 15, as to which

the date is October 16, 2008

F-2

CONSOLIDATED BALANCE SHEETS

McJUNKIN RED MAN HOLDING CORPORATION

(Dollars in thousands)

(Successor) (Predecessor)
December 31,
December 31,

2007

2006

ASSETS
CURRENT ASSETS
Cash $ 10,075 $ 3,748
Receivables, less allowances of $6,352 and $2,015 481,463 168,877
Inventories 666,188 225,304
Other current assets 1,937 3,122

TOTAL CURRENT ASSETS 1,159,663 401,051
INVESTMENTS AND OTHER ASSETS
Investments 1,680 40,985
Assets held for sale 37,500 —
Debt issuance costs 23,390 —
Notes receivable and other assets 4,376 2,995

66,946 43,980
FIXED ASSETS
Property, plant, and equipment, net 80,120 27,208
PROPERTY HELD UNDER CAPITAL LEASES 1,925 2,104
INTANGIBLE ASSETS
Goodwill 1,092,379 6,274
Intangible assets 523,998 382

1,616,377 6,656

$ 2,925,031 $ 480,999

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Trade accounts payable $ 306,509 $ 130,864
Accrued expenses and other liabilities 70,778 46,471
Income taxes payable 11,996 2,500
Deferred revenue 6,552 4,715
Deferred income taxes 80,364 3,998
Term loans due on demand 10,228 —
Current portion of long-term obligations
Long-term debt 9,553 —
Capital leases 189 167

TOTAL CURRENT LIABILITIES 496,169 188,715
LONG-TERM OBLIGATIONS
Long-term debt 848,616 13,035
Payable to shareholders 49,164 —
Deferred income taxes 215,487 15,627
Capital leases 3,446 3,635
Other liabilities 1,415 1,799

1,118,128 34,096
MINORITY INTEREST AND AMOUNTS DUE TO FORMER RED MAN SHAREHOLDERS 100,700 15,601
STOCKHOLDERS’ EQUITY
Common stock, par value $0.01 — authorized 1,000,000; issued and outstanding 299,891.4604 in 2007 — —
Common stock, Class A voting, par value $700 — authorized 37,860; issued and outstanding 16,940 in 2006 — 11,858
Common stock, Class B nonvoting, par value $700 — authorized 5,000; issued and outstanding 570 in 2006 — 399
Additional paid-in capital 1,154,148 —
Retained earnings 56,926 206,044
Other comprehensive (loss) income, net of deferred income taxes of $162 and $14,759 (1,040 ) 24,286

1,210,034 242,587

$ 2,925,031 $ 480,999


	(Successor)			(Predecessor)
	December 31,			December 31,
	2007			2006
ASSETS
CURRENT ASSETS
Cash	$	10,075		$	3,748
Receivables, less allowances of $6,352 and $2,015		481,463			168,877
Inventories		666,188			225,304
Other current assets		1,937			3,122

TOTAL CURRENT ASSETS		1,159,663			401,051
INVESTMENTS AND OTHER ASSETS
Investments		1,680			40,985
Assets held for sale		37,500			—
Debt issuance costs		23,390			—
Notes receivable and other assets		4,376			2,995

		66,946			43,980
FIXED ASSETS
Property, plant, and equipment, net		80,120			27,208
PROPERTY HELD UNDER CAPITAL LEASES		1,925			2,104
INTANGIBLE ASSETS
Goodwill		641,151			6,274
Intangible assets		975,226			382

		1,616,377			6,656

	$	2,925,031		$	480,999


LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Trade accounts payable	$	306,509		$	130,864
Accrued expenses and other liabilities		70,778			46,471
Income taxes payable		11,996			2,500
Deferred revenue		6,552			4,715
Deferred income taxes		80,364			3,998
Term loans due on demand		10,228			—
Current portion of long-term obligations
Long-term debt		9,553			—
Capital leases		189			167

TOTAL CURRENT LIABILITIES		496,169			188,715
LONG-TERM OBLIGATIONS
Long-term debt		848,616			13,035
Payable to shareholders		90,512			—
Deferred income taxes		215,487			15,627
Capital leases		3,446			3,635
Other liabilities		1,415			1,799

		1,159,476			34,096
MINORITY INTEREST		59,352			15,601
STOCKHOLDERS’ EQUITY
Common stock, par value $0.01 — authorized 800,000,000; issued and outstanding 150,072,833 in 2007		1,501			—
Common stock, Class A voting, par value $700 — authorized 37,860; issued and outstanding 16,940 in 2006		—			11,858
Common stock, Class B nonvoting, par value $700 — authorized 5,000; issued and outstanding 570 in 2006		—			399
Additional paid-in capital		1,152,647			—
Retained earnings		56,926			206,044
Other comprehensive (loss) income, net of deferred income taxes of $162 and $14,759		(1,040	)		24,286

		1,210,034			242,587

	$	2,925,031		$	480,999

See notes to consolidated financial statements.

F-3

CONSOLIDATED STATEMENTS OF INCOME

McJUNKIN RED MAN HOLDING CORPORATION

(Dollars in thousands, except per share data)


	(Successor)				(Predecessor)									(Successor)			(Predecessor)
	Eleven Months				One Month									Eleven Months			One Month
	Ended				Ended			Year Ended						Ended			Ended			Year Ended
	December 31,				January 30,			December 31,						December 31,			January 30,			December 31,
	2007				2007			2006			2005			2007			2007			2006			2005
SALES	$	2,124,919			$	142,549		$	1,713,679		$	1,445,770		$	2,124,919		$	142,549		$	1,713,679		$	1,445,770
COSTS AND EXPENSES
Cost of sales (exclusive of depreciation and amortization shown separately below)		1,734,558				114,562			1,394,294			1,177,091			1,734,558			114,562			1,394,294			1,177,091
Selling, general and administrative expenses		201,948				14,592			173,948			155,717			202,328			14,627			174,363			155,807
Depreciation and amortization		5,402				344			3,936			3,743			5,402			344			3,936			3,743
Amortization of intangibles		10,489				16			277			337			10,489			16			277			337
Profit sharing		13,167				1,338			15,064			13,144			13,167			1,338			15,064			13,144
Stock-based compensation		2,988				—			—			—			2,988			—			—			—

TOTAL COSTS AND EXPENSES		1,968,552				130,852			1,587,519			1,350,032			1,968,932			130,887			1,587,934			1,350,122

OPERATING INCOME		156,367				11,697			126,160			95,738			155,987			11,662			125,745			95,648
OTHER INCOME (EXPENSE)
Interest expense		(61,703	)			(131	)		(2,845	)		(2,707	)		(61,703	)		(131	)		(2,845	)		(2,707	)
Minority interests		(89	)			(356	)		(4,142	)		(2,774	)		(89	)		(356	)		(4,142	)		(2,774	)
Other, net		(1,090	)			(15	)		(1,259	)		(1,133	)		(710	)		20			(844	)		(1,043	)

		(62,882	)			(502	)		(8,246	)		(6,614	)		(62,502	)		(467	)		(7,831	)		(6,524	)

INCOME BEFORE INCOME TAXES		93,485				11,195			117,914			89,124			93,485			11,195			117,914			89,124
Income tax expense		36,559				4,599			48,340			36,583			36,559			4,599			48,340			36,583

NET INCOME	$	56,926			$	6,596		$	69,574		$	52,541		$	56,926		$	6,596		$	69,574		$	52,541

Per share amounts (Note 12)
Earnings per share — Class A, basic		—				—		$	3,972.08		$	2,952.12			—		$	376.70		$	3,972.08		$	2,952.13
Earnings per share — Class A, diluted		—				—		$	3,972.08		$	2,952.12			—		$	376.70		$	3,972.08		$	2,952.13
Weighted average shares — Class A, basic		—				—			16,940			16,940			—			16,940			16,940			16,940
Weighted average shares — Class A, diluted		—				—			16,940			16,940			—			16,940			16,940			16,940
Earnings per share — Class B, basic		—				—		$	4,012.08		$	4,442.12			—		$	376.70		$	4,012.28		$	4,442.11
Earnings per share — Class B, diluted		—		��		—		$	4,012.08		$	4,442.12			—		$	376.70		$	4,012.28		$	4,442.11
Weighted average shares — Class B, basic		—				—			570			570			—			570			570			570
Weighted average shares — Class B, diluted		—				—			570			570			—			570			570			570
Basic earnings per common share	$	410.64			$	376.70			—			—		$	0.82			—			—			—
Diluted earnings per common share	$	409.84			$	376.70			—			—		$	0.82			—			—			—
Weighted average common shares, basic															69,325,299			—			—			—
Weighted average common shares, diluted															69,461,299			—			—			—
Dividends per common share, Class A	$	—			$	—		$	40		$	1,490			—		$	—		$	40		$	1,490
Dividends per common share, Class B	$	—			$	—		$	80		$	2,980			—		$	—		$	80		$	2,980

See notes to consolidated financial statements.

F-4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

McJUNKIN RED MAN HOLDING CORPORATION

(Dollars in ~~thousands, except per share data)~~thousands)


	Class A				Class B														Accumulated						Class A				Class B														Accumulated
	Common				Common				Common				Additional						Other			Total			Common				Common				Common				Additional						Other			Total
	Stock				Stock				Stock				Paid-in			Retained			Comprehensive			Stockholders’			Stock				Stock				Stock				Paid-in			Retained			Comprehensive			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Earnings			Income (Loss)			Equity			Shares		Amount		Shares		Amount		Shares		Amount		Capital			Earnings			Income (Loss)			Equity

*PREDECESSOR:*
Balance at January 1, 2005		16,940	$	11,858		570	$	399		—	$	—	$	—		$	111,592		$	8,469		$	132,318			16,940	$	11,858		570	$	399		—	$	—	$	—		$	111,592		$	8,469		$	132,318
Net income for the year 2005		—		—		—		—		—		—		—			52,541			—			52,541			—		—		—		—		—		—		—			52,541			—			52,541
Change in unrealized gain on securities available for sale net of deferred taxes of $7,153 and reclassification adjustments for gains included in net income of $585		—		—		—		—		—		—		—			—			10,880			10,880			—		—		—		—		—		—		—			—			10,880			10,880

Net comprehensive income																							63,421																								63,421
Cash dividends on common stock
On Class A, $1,490 per share		—		—		—		—		—		—		—			(25,242	)		—			(25,242	)		—		—		—		—		—		—		—			(25,242	)		—			(25,242	)
On Class B, $2,980 per share		—		—		—		—		—		—		—			(1,699	)		—			(1,699	)		—		—		—		—		—		—		—			(1,699	)		—			(1,699	)

Balance at December 31, 2005		16,940		11,858		570		399		—		—		—			137,192			19,349			168,798			16,940		11,858		570		399		—		—		—			137,192			19,349			168,798
Net income for the year 2006		—		—		—		—		—		—		—			69,574			—			69,574			—		—		—		—		—		—		—			69,574			—			69,574
Change in unrealized gain on securities available for sale net of deferred taxes of $3,230		—		—		—		—		—		—		—			—			4,937			4,937			—		—		—		—		—		—		—			—			4,937			4,937

Net comprehensive income																							74,511																								74,511
Cash dividends on common stock
On Class A, $40 per share		—		—		—		—		—		—		—			(677	)		—			(677	)		—		—		—		—		—		—		—			(677	)		—			(677	)
On Class B, $80 per share		—		—		—		—		—		—		—			(45	)		—			(45	)		—		—		—		—		—		—		—			(45	)		—			(45	)

Balance at December 31, 2006		16,940		11,858		570		399		—		—		—			206,044			24,286			242,587			16,940		11,858		570		399		—		—		—			206,044			24,286			242,587
Net income for month ended January 30, 2007		—		—		—		—		—		—		—			6,596			—			6,596			—		—		—		—		—		—		—			6,596			—			6,596
Change in unrealized gain on securities available for sale net of deferred taxes of $2,589		—		—		—		—		—		—		—			—			(3,958	)		(3,958	)		—		—		—		—		—		—		—			—			(3,958	)		(3,958	)

Net comprehensive income																							2,638																								2,638

Balance at January 30, 2007		16,940	$	11,858		570	$	399		—	$	—	$	—		$	212,640		$	20,328		$	245,225			16,940	$	11,858		570	$	399		—	$	—	$	—		$	212,640		$	20,328		$	245,225

*SUCCESSOR:*
Net income for eleven months ended December 31, 2007		—	$	—		—	$	—		—	$	—	$	—			56,926		$	—		$	56,926			—	$	—		—	$	—		—	$	—	$	—			56,926		$	—		$	56,926
Foreign currency translation		—		—		—		—		—		—		—			—			(791	)		(791	)		—		—		—		—		—		—		—			—			(791	)		(791	)
Derivative valuation adjustment (net of $162 of deferred taxes)		—		—		—		—		—		—		—			—			(249	)		(249	)		—		—		—		—		—		—		—			—			(249	)		(249	)

Net comprehensive income																							55,886																								55,886
Equity contribution to acquire controlling interest and recognize new basis of accounting arising from change of controlling interest of predecessor		—		—		—		—		102,111		—		385,125			—			—			385,125			—		—		—		—		51,105,500		511		384,614			—			—			385,125
Carryover basis adjustment for continuing shareholders		—		—		—		—		—		—		(11,605	)		—			—			(11,605	)		—		—		—		—		—		—		(11,605	)		—			—			(11,605	)
Equity contribution associated with acquisition of Red Man Pipe & Supply Co.		—		—		—		—		26,472		—		104,136			—			—			104,136			—		—		—		—		13,236,000		132		104,004			—			—			104,136
Equity contribution		—		—		—		—		171,309		—		674,537			—			—			674,537			—		—		—		—		85,731,500		858		673,679			—			—			674,537
Issuance of stock subscription receivable		—		—		—		—		—		—		(1,033	)		—			—			(1,033	)		—		—		—		—		—		—		(1,033	)		—			—			(1,033	)
Stock-based compensation expense		—		—		—		—		—		—		2,988			—			—			2,988			—		—		—		—		—		—		2,988			—			—			2,988

Balance at December 31, 2007		—	$	—		—	$	—		299,892	$	—	$	1,154,148		$	56,926		$	(1,040	)	$	1,210,034			—	$	—		—	$	—		150,073,000	$	1,501	$	1,152,647		$	56,926		$	(1,040	)	$	1,210,034

See notes to consolidated financial statements.

F-5

CONSOLIDATED STATEMENTS OF CASH FLOWS

McJUNKIN RED MAN HOLDING CORPORATION
(Dollars in thousands)


	(Successor)			(Predecessor)
	Eleven Months			One Month
	Ended			Ended			Year Ended
	December 31,			January 30,			December 31,
	2007			2007			2006			2005
CASH PROVIDED BY (USED IN) OPERATIONS
Net income	$	56,926		$	6,596		$	69,574		$	52,541
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization		5,402			344			3,936			3,743
Amortization of debt issuance costs		8,010			—			—			—
Stock-based compensation		2,988			—			—			—
Deferred income taxes		(750	)		—			3,802			(4,905	)
Minority interest		89			356			4,142			2,774
Amortization of intangibles		10,489			16			277			337
Increase in fair market value of derivatives		—			—			—			(499	)
Provision for losses on receivables		380			35			414			90
Reduction of inventory loss provision		(30	)		13			(260	)		(233	)
Non-operating gains and other items not providing cash		297			(153	)		(571	)		(1,001	)
Changes to operating assets and liabilities:
Accounts receivable		46,974			(1,363	)		(5,516	)		(53,444	)
Inventories		27,821			6,700			(35,835	)		(36,386	)
Income taxes		1,778			4,595			(6,016	)		6,823
Other current assets		2,169			139			(580	)		(65	)
Accounts payable		(35,130	)		(7,665	)		(14,432	)		47,694
Deferred revenue		1,991			—			—			—
Accrued expenses and other current liabilities		(19,178	)		(2,996	)		(583	)		12,916

NET CASH PROVIDED BY OPERATIONS		110,226			6,617			18,352			30,385
INVESTING ACTIVITIES
Purchases of property, plant and equipment		(5,521	)		(417	)		(5,314	)		(8,680	)
Proceeds from the disposition of property, plant and equipment		—			—			354			955
Acquisition of controlling interest in McJunkin by GSCP		(849,053	)		—			—			—
Acquisition ofMidway-Tristate Corporation		(83,338	)		—			—			—
Acquisition of Red Man Pipe & Supply Co., net of cash acquired of $13,866		(852,422	)		—			—			—
Other investment and notes receivable transactions		1,414			259			1,698			1,024

NET CASH USED IN INVESTING ACTIVITIES		(1,788,920	)		(158	)		(3,262	)		(6,701	)
FINANCING ACTIVITIES
Proceeds from issuance of long-term obligations		897,500			—			9,731			—
Payments on long-term obligations		(78,834	)		(8,254	)		—			(11,319	)
Cash equity contribution in conjunction with acquisition of controlling interest in McJunkin by GSCP		225,653			—			—			—
Cash equity contributions		673,505			—			—			—
Debt issuance costs paid		(30,636	)		—			—			—
Dividends paid		—			—			(26,938	)		(9,765	)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		1,687,188			(8,254	)		(17,207	)		(21,084	)

Increase (decrease) in cash		8,494			(1,795	)		(2,117	)		2,600
Effect of foreign exchange rate on cash		(372	)		—			—			—
Cash — beginning of period		1,953			3,748			5,865			3,265

CASH — END OF YEAR	$	10,075		$	1,953		$	3,748		$	5,865

See notes to consolidated financial statements.

F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007


NOTE 1 —	SIGNIFICANT ACCOUNTING POLICIES

Business Operations: McJunkin Red Man Holding Corporation (the Company) is a holding company co-headquartered in Charleston, West Virginia and Tulsa, Oklahoma. Holding is a substantially owned subsidiary of PVF Holdings LLC. The Company’s wholly owned subsidiary, McJunkin Red Man Corporation and its subsidiaries (MRM) are national distributors of pipe, valves, and fittings, with locations in principal industrial, hydrocarbon producing and refining areas throughout the United States and Canada. Major customers represent the natural gas producing, petroleum refining, chemical and other segments of the raw materials processing and construction industries. Products are obtained from a broad range of suppliers.

The Company operates as a single reportable segment, which represents the Company’s business of providing industrial pipe valves and fittings to various customers through our distribution operations located throughout North America. The Company has operations in eight geographic regions, which have similar economic characteristics, and similar products and services, types or classes of customers, distribution methods and similar regulatory environments in each location. The total consolidated net sales outside of the United States were 4.49% for the eleven months ended December 31, 2007, 0.8% for the one month ended January 30, 2007 and 0.8% and 1.0% for the years ended December 31, 2006 and 2005, respectively. The percentage of total consolidated assets outside of the United States as of December 31, 2007 and 2006 was 11.0% and 0.7%, respectively.

Basis of Presentation: PVF Holdings LLC, (formerly known as McJ Holding LLC) was formed on November 20, 2006 by affiliates of The Goldman Sachs Group, Inc. (“Goldman Sachs”) and a control group of certain shareholders of McJunkin Corporation (McJunkin) for the purpose of acquiring McJunkin on January 31, 2007. The affiliates of Goldman Sachs referred to in the previous sentence are GS Capital Partners V Fund, L.P., GS Capital Partners V Offshore Fund, L.P., GS Capital Partners V GmbH & Co. KG, and GS Capital Partners V Institutional, L.P. (collectively, the “Goldman Sachs Funds”). Management and control of all of the Goldman Sachs Funds is vested exclusively in their general partners and investment managers, which are wholly owned direct and indirect subsidiaries of Goldman Sachs. The investment manager of each of the Goldman Sachs Funds is Goldman, Sachs & Co., which is a wholly owned subsidiary of Goldman Sachs. In connection with the acquisition by the Goldman Sachs Funds of a controlling interest in McJunkin, a new basis of accounting and reporting was established that reflected the Goldman Sachs Funds’ cost of the acquisition. This new accounting basis has been pushed down to the Company’s accounts and is reflected in the Company’s consolidated balance sheet (successor basis) at December 31, 2007.

Because PVF Holdings LLC and the Company had no operations, assets, or business prior to their acquisition of McJunkin, McJunkin is the predecessor of MRM, the Company, and PVF Holdings LLC. While these statements have been prepared to present the financial position and results of operations for the Company, such financial position and results would not be significantly different if reported at either the PVF Holdings LLC or the MRM levels of consolidation.

All references to the “Predecessor” relate to McJunkin for periods prior to January 31, 2007. All references to the “Successor” relate to the Company for periods subsequent to January 31, 2007. As a result, the consolidated income statements and statements of cash flows for the eleven-month period ended December 31, 2007 consist of the earnings and cash flows of the Company. The consolidated income statements and statements of cash flows of the Company for the month ended January 30, 2007 and for the years ended December 31, 2006 and 2005, are presented as Predecessor financial statements for comparison purposes.

F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The consolidated financial statements include the accounts of McJunkin Red Man Holding Corporation and its wholly owned and majority owned subsidiaries. The residual ownership in the equity and income of Midfield Supply ULC (Midfield), a 51% owned, Canada-based subsidiary, is reflected as minority interest. All significant intercompany transactions have been eliminated.

Cash Equivalents: The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents.

Financial Instruments: In the normal course of business, the Company invests in various financial assets and incurs various financial liabilities. Financial instruments that potentially could subject the Company to concentrations of credit risk consist principally of trade accounts and notes receivable and an interest rate swap agreement. The Company’s financial assets and liabilities are generally recorded in the consolidated balance sheets at historical cost, which approximates fair value. Specific treatment of certain financial instruments is discussed below.

Investments: Investments are carried at fair market value based on quoted market prices. Prior to the acquisition by the Goldman Sachs Funds on January 31, 2007, these available for sale investments were recorded at fair value and reflected as investments on the balance sheets. Changes to the fair value of the assets were recorded in other comprehensive income, net of related deferred taxes. On January 31, 2007, these investments were reclassified as assets held for sale as more fully described in Assets Held for Sale below.

Short-Term and Long-Term Borrowings: Borrowings under the credit facilities have variable rates that reflect currently available terms and conditions for similar debt. The carrying amount of this debt is a reasonable estimate of its fair value.

Leases: Management estimated the fair value of the Company’s lease obligations using discounted cash flow analysis based on the Company’s current lease rates for similar leases, and determined that the fair value is not materially different from carrying values.

Derivatives: The Company utilizes interest rate swaps to reduce its exposure to potential interest rate increases. Changes in fair values of derivative instruments were based upon independent market quotes.

Assets Held for Sale: Certain of the Company’s assets, consisting principally of certain available for sale securities and certain real estate holdings, were designated as non-core assets under the terms of the acquisition by the Goldman Sachs Funds . The Company has classified these as assets held for sale in the balance sheet. A corresponding liability to predecessor shareholders has been recognized to reflect the obligation to the shareholders of record at the date of the acquisition. Upon the sale of these assets, the proceeds net of associated taxes will be distributed to the predecessor shareholders. No gain or loss will be recognized as the result of the sale of these assets.

Allowance for Doubtful Accounts: Management’s evaluation of the adequacy of the allowance for losses on receivables is based upon periodic evaluation of accounts that may have a higher credit risk using information available about the customer and other relevant data. This formal analysis is inherently subjective and requires management to make significant estimates of factors affecting doubtful accounts, including customer specific information, current economic conditions, volume, growth and composition of the account, and other factors such as financial statements, news

F-8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

reports and published credit ratings. The amount of the allowance for the remainder of the trade balance is not evaluated individually but is based upon historical loss experience. Because this process is subjective and based on estimates, ultimate losses may differ from those estimates. Receivable balances are written off when we determine that the balance is uncollectible. Subsequent recoveries, if any, are credited to the allowance when received. The provision for losses on receivables, which is not material, is included in ~~other~~selling, general and administrative expenses in the accompanying consolidated statements of income. Activity in the allowance for doubtful accounts is set forth in the table below.


			Additions
			Charged to
	Beginning		Costs &				Ending
	Balance		Expenses		Deductions		Balance
	(In thousands)

(Successor)
Eleven months ended
December 31, 2007	$	2,059.6	$	4,450.2	$	157.6	$	6,352.2
One month ended January 30, 2007		2,015.0		45.0		0.4		2,059.6

(Predecessor)
Year ended December 31, 2006		1,743.3		414.0		142.3		2,015.0
Year ended December 31, 2005		1,722.0		90.0		68.7		1,743.3

Concentration of Credit Risk: Most of the Company’s business activity is with customers in the chemical, petroleum, refining and other segments of the raw materials processing industry. In the normal course of business the Company grants credit to these customers in the form of trade accounts receivable. These receivables could potentially subject the Company to concentrations of credit risk; however, the Company minimizes such risk by closely monitoring extensions of trade credit. The Company generally does not require collateral on its trade receivables.

The Company has a broad customer base doing business in all regions of the United States as well as parts of Canada. During 2007, 2006 and 2005, the Company did not have sales to any customers in excess of 10% of gross sales and at those respective year-ends, no individual customer balances exceeded 10% of gross accounts receivable. Accordingly, no significant concentration of credit risk is considered to exist.

Debt Issuance Costs: The Company defers costs directly related to obtaining financing and amortizes them over the term of the loan on a straight-line basis which is not materially different than the effective interest method. Such amounts are reflected in the consolidated income statement as a component of interest expense.

Derivatives and Hedging: The Company records all derivatives on the balance sheet at fair value. If a derivative is designated as a cash flow hedge, the Company measures the effectiveness of the hedge, or the degree that the gain (loss) for the hedging instrument offsets the loss (gain) on the hedged item, at each reporting period. The effective portion of the gain (loss) on the derivative instrument is recognized in other comprehensive income as a component of equity and, subsequently, reclassified into earnings when the forecasted transaction affects earnings. The ineffective portion of a derivative’s change in fair value is recognized in earnings immediately. Derivatives that do not qualify for hedge treatment are recorded at fair value with gains (losses) recognized in earnings in the period of change.

F-9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

Fixed Assets: Land, buildings and equipment are stated on the basis of cost. For financial statement purposes, depreciation is computed over the estimated useful lives of the assets principally by the straight-line method; accelerated depreciation and cost recovery methods are used for income tax purposes. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is reflected in income for the period. Maintenance and repairs are charged to expense as incurred. Ranges of estimated useful lives for financial reporting purposes are as follows:


Buildings and improvements			40 years
Machinery, shop equipment and vehicles			3-10 years
Furniture, fixtures and office equipment			3-10 years

Foreign Currency Translation and Transactions: Gains and losses from balance sheet translation of operations outside of the United States where the applicable foreign currency is the functional currency are included as a component of accumulated other comprehensive income within stockholders’ equity. Gains and losses resulting from foreign currency transactions are recognized currently in the consolidated income statements.

Goodwill and Other Intangible Assets: Goodwill represents the excess of cost over the fair value of net assets acquired. Recorded goodwill balances are not amortized but, instead, are evaluated for impairment annually or more frequently if circumstances indicate that an impairment may exist.

Intangible assets are initially recorded at fair value at the date of acquisition. Amortization is provided using the straight-line method over their estimated useful lives. The carrying value of intangible assets is subject to an impairment test on an annual basis, or more frequently if events or circumstances indicate a possible impairment. The measure of impairment is based on the estimated fair values.

Income Taxes: Deferred tax assets and liabilities are recorded for differences between the financial reporting and tax bases of assets and liabilities using the tax rate expected to be in effect when the taxes will actually be paid or refunds received.

The Company adopted Financial Accounting Standards Board (FASB) Interpretation (FIN) 48,Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109, which clarifies the accounting and disclosure for uncertain tax positions, as defined. FIN 48 requires that a tax position meet a “probable recognition threshold” for the benefit of the uncertain tax position to be recognized in the financial statements. The impact of adoption was not material.

Insurance: The Company is self-insured for portions of employee healthcare and maintains a deductible program as it relates to workers’ compensation, automobile liability, asbestos claims and general liability claims including, but not limited to, product liability claims, which are secured by various letters of credit totaling $3.1 million. Commercially comprehensive catastrophic coverage is maintained. The company’s liability and related expenses for claims are estimated based upon past experience. The company’s historical claim data is used to project anticipated losses. The reserves are deemed by the company to be sufficient to cover outstanding claims including those incurred but not reported as of the estimation date.

Under our Property & Casualty Program, we are self-insured for automobile collision and automobile comprehensive coverage. We are also self-insured for product recall. We also currentlyself-insure for ocean cargo shipments to Nigeria. The dollar volume of product fluctuates depending on the particular shipment. For all other coverage, we carry commercially reasonable and non-

F-10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

material deductibles. We have an umbrella liability policy that covers liabilities in excess of $1 million, except that this policy only covers automobile-related liabilities in excess of $3 million. We also have excess liability coverage for liabilities in excess of $25 million.

Inventories: The Company’s inventories are generally valued at the lower of cost (principallylast-in, first-out method) or market. The Company believes the LIFO method more fairly presents the results of operations by more closely matching current costs with current revenues. The Company records an adjustment each month, if necessary, for the expected annual effect of inflation, and these estimates are adjusted to actual results determined at year-end. This practice excludes certain inventories held in Canada totaling $78.6 million, at December 31, 2007, that are valued at the lower of weighted average cost or market.

Long-Lived Assets: The carrying value of long-lived assets is evaluated whenever events or changes in circumstances indicate that the carrying value of the asset may be impaired. Upon the occurrence of such an event or change in circumstance, an impairment loss is recognized when estimated undiscounted future cash flows resulting from the use of the asset, including disposition, is less than the carrying value of the asset. Impairment is measured by the amount by which the carrying amount exceeds the fair value.

Reclassifications: Certain immaterial amounts in the prior years’ financial statements have been reclassified to conform to the current year’s presentation.

Revenue Recognition: The Company recognizes revenue as products are shipped, title has transferred to the customer, and the customer assumes the risk and rewards of ownership. Out-bound shipping and handling costs are reflected in cost of goods sold, and freight charges billed to customers are reflected in revenues.

Equity-Based Compensation: The Company’s equity-based compensation consists of restricted common units, profit units, restricted stock and non-qualified stock options. The cost of employee services received in exchange for an award of an equity instrument is measured based on the grant-date fair value of the award. The Company’s policy is to expense stock-based compensation using the fair-value of awards granted, modified or settled. Restricted common units, profit units, and restricted stock are credited to equity as they are expensed over their vesting periods based on the current market value of the shares to be granted.

The fair value of non-qualified stock options is measured on the grant date of the related equity instrument using the Black-Scholes option-pricing model and is recognized as compensation expense over the applicable vesting period.

Earnings Per Share: Basic earnings per share are computed based upon the weighted average number of common units outstanding. Diluted earnings per share include the dilutive effect of restricted stock and stock options.

Recent Accounting Pronouncements: In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141R (SFAS No. 141R),Business Combinations — Revised. SFAS No. 141R requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at the fair values as of that date, with limited exceptions specified in the statement. That replaces Statement 141’s cost-allocation process, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values. The statement applies to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15,

F-11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

2008. The Company has not yet completed the analysis necessary to determine the impact adoption of this standard may ultimately have on future financial reporting.

In September 2006, the FASB issued Statement on Financial Accounting Standards No. 157 (SFAS No. 157),Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. The provisions of SFAS No. 157 are effective for fiscal years beginning after November 15, 2007. The Company does not expect adoption of SFAS No. 157 to have a material effect on its results of operations or financial position.

In February 2007, the FASB issued Statement on Financial Accounting Standards No. 159 (SFAS No. 159),The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 provides companies with an option to report selected financial assets and liabilities at fair value. It also established presentation and disclosure requirements to facilitate comparisons between companies using different measurement attributes for similar types of assets and liabilities. This statement is effective for fiscal years beginning after November 15, 2007. The Company does not expect adoption of SFAS No. 159 to have a material effect on its results of operations or financial position.

In December 2007, the FASB issued Statement on Financial Accounting Standards No. 160 (SFAS No. 160),Noncontrolling Interests in Consolidated Financial Statements — an amendment of Accounting Research Bulletin No. 51. SFAS No. 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS No. 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. This statement is effective for fiscal years beginning after December 15, 2008. The Company has not yet completed the analysis necessary to determine the impact adoption of this standard may ultimately have on future financial reporting.


NOTE 2 —	TRANSACTIONS

Acquisition of Controlling Interest in McJunkin by the Goldman Sachs Funds

The acquisition of a controlling interest in McJunkin by the Goldman Sachs Funds was accounted for in accordance with the provisions of Emerging Issues Task ForceNo. 88-16,Basis in Leveraged Buyout Transactions(EITF 88-16).EITF 88-16 requires a partial or complete change in accounting basis when there has been a change in control of voting interest. In this transaction, the Goldman Sachs Funds, which had no previous ownership interest in McJunkin, acquired an approximately 55% ownership interest in McJunkin on a fully-diluted basis. The purchase price paid to effect the acquisition was allocated to the fair value of acquired assets and liabilities at January 31, 2007.

Certain members of the Company’s executive management team held equity interests in McJunkin, the Predecessor, prior to this transaction and continue to hold equity interests in the Successor. As outlined inEITF 88-16, such members of management are deemed to be part of the control group and the basis of their interests in the Successor after the acquisition was carried over at the basis of their interests in the Predecessor prior to the acquisition as determined by the lesser of their residual interest in the Predecessor and their residual interest in the Successor. Because the 15.8% collective ownership of these individuals prior to the transaction exceeded the 8.3% collective ownership of these individuals subsequent to the transaction, their basis in the Predecessor was

F-12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

carried over to the Successor at a value equaling 8.3% of the Company’s historical basis. The difference between this historical basis and the fair value of these interests is reflected in the purchase price allocation table below as a carryover basis adjustment. In addition to these members of executive management that were deemed to be part of the control group, there were over 80 other shareholders who held equity interests in both the predecessor and successor entities. Because none of these shareholders individually held more than five percent of the successor entity, their interests were valued at fair value as required by Section 2(b)(i)(a) ofEITF 88-16.

The purchase price was approximately $1,008.5 ~~million.~~million and included $159.5 million of noncash equity consideration in the form of ownership interests in PVF Holdings LLC. The value of these ownership interests and the relative weighting between cash and equity consideration were negotiated aspects of this transaction. The sources and uses of funds in connection with the acquisition are summarized below (in millions):


Sources
Asset-Based Revolving Credit Facility	$	75.0
Term Loan Facility		575.0
Equity contribution — cash		225.6
Equity contribution — non-cash		159.5

Total sources	$	1,035.1

Uses
Consideration paid to stockholders (including non-cash rollover by McJunkin and McApple stockholders of $159.5 million)	$	983.4
Transaction costs		16.5
Debt issuance costs		22.8
General corporate purposes		7.6
Repayment of existing debt		4.8

Total uses	$	1,035.1

In connection with the purchase price allocation, the fair values of long-lived and intangible assets were determined based upon assumptions related to future cash flows, discount rates and asset lives utilizing currently available information. As of January 31, 2007, the Company recorded adjustments to reflect property and equipment, inventory, intangible assets for its tradename, customer-related intangibles, and backlog at their estimated fair values. The Company also acquired the minority interest in McJunkin Appalachian Oilfield Supply Company (McJunkin Appalachian), which became wholly owned concurrent with the acquisition by the Goldman Sachs Funds.

F-13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

The purchase price has been allocated as follows (in millions):

Cash consideration:
Paid to shareholders $ 823.9
Transaction costs paid at closing 16.5
Transaction costs paid outside of closing 8.6

849.0
Noncash consideration 159.5

Total consideration 1,008.5
Net assets acquired at historical cost 245.2
Adjustments to state acquired assets at fair value:
1) Increase carrying value of property and equipment to fair value $ 16.6
2) Increase carrying value of inventory to fair value 68.2
3) Write-off historical goodwill and tradename (6.6 )
4) Record intangible assets acquired
Customer-related intangibles 356.0
Sales order backlog 1.6
Non-compete agreements 1.0
Tradename 155.8
5) Eliminate McApple minority interest 16.0
6) Record liability to shareholders related to non-core assets (26.2 )
7) Record fair value adjustments to various other assets and liabilities 0.2
8) Tax impact of valuation adjustments (213.8 ) 368.8

Net assets acquired at fair value 614.0
Carryover basis adjustment (11.6 )

Excess purchase price recorded as goodwill $ 382.9


Cash consideration:
Paid to shareholders				$	823.9
Transaction costs paid at closing					16.5
Transaction costs paid outside of closing					8.6

					849.0
Noncash equity consideration					159.5

Total consideration					1,008.5
Net assets acquired at historical cost					245.2
Adjustments to state acquired assets at fair value:
1) Increase carrying value of property and equipment to fair value	$	16.6
2) Increase carrying value of inventory to fair value		68.2
3) Write-off historical goodwill and tradename		(6.6	)
4) Record intangible assets acquired
Customer-related intangibles		356.0
Sales order backlog		1.6
Non-compete agreements		1.0
Tradename		155.8
5) Eliminate McApple minority interest		16.0
6) Record liability to shareholders related to non-core assets		(26.2	)
7) Record fair value adjustments to various other assets and liabilities		0.2
8) Tax impact of valuation adjustments		(213.8	)		368.8

Net assets acquired at fair value					614.0
Carryover basis adjustment					(11.6	)

Excess purchase price recorded as goodwill				$	382.9

The tradename has an indefinite life and is not subject to amortization. Tradename and goodwill will be reviewed at least annually for impairment.

F-14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

The ~~purchase price was allocated~~opening balance sheet, following the allocation described above, is as follows:


Assets
Cash	$	10.9	$	10.9
Accounts receivable		168.8		168.8
Inventory		293.8		293.8
Assets held for sale		39.9		39.9
Debt issuance costs		22.8		22.8
Fixed assets		39.8		39.8
Other assets		5.7		5.7
Intangible assets		514.4		514.4
Goodwill		382.9		382.9

Total assets			$	1,479.0
		1,479.0

Liabilities and Stockholders Equity
Liabilities and Stockholder’s Equity
Accounts payable		135.2	$	135.2
Accrued expenses		50.8		50.8
Income taxes payable		7.0		7.0
Deferred income taxes		230.7		230.7
Payable to shareholders		28.0		28.0
Other liabilities		3.8		3.8
Debt		650.0		650.0

Stockholders Equity		373.5
Stockholder’s equity				373.5

Total liabilities and stockholder’s equity			$	1,479.0
	$	1,479.0

Transaction costs paid at closing included $10.6 million paid to an affiliate of the Goldman Sachs Funds as reimbursement of their costs associated with due diligence and advisory services.

Acquisition of Midway-Tristate Corporation

On April 30, 2007, MRM, through its wholly owned subsidiary McJunkin Appalachian, acquired a 100% interest inMidway-Tristate Corporation (Midway). Midway is engaged primarily in the distribution of pipe, equipment and supplies to the oil and gas and utility industries in Michigan, West Virginia, Ohio, Pennsylvania, Utah, Wyoming, and Colorado. The acquisition of Midway significantly increased McJunkin Appalachian’s presence particularly in the strategic Rocky Mountain region.

F-15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

The purchase price was approximately $83.3 million and has preliminarily been allocated as follows (in millions):


Assets acquired
Accounts receivable	$	19.5
Inventory		30.8
Fixed assets		3.4
Other assets		0.1
Customer-related intangibles		20.1
Goodwill		30.8

		104.7
Liabilities assumed
Accounts payable		11.5
Accrued expenses		2.1	��
Income taxes payable		0.2
Deferred income taxes		7.6

		21.4

Total purchase price	$	83.3

Goodwill associated with this transaction is not deductible for tax purposes, nor is any amortization associated with customer-related intangibles which have a useful life of 20 years.

Acquisition of Red Man Pipe & Supply Co.

On October 31, 2007, MRM, through its wholly owned subsidiary West Oklahoma PVF Company, acquired a 100% interest in Red Man Pipe & Supply Co. (Red Man). Red Man is a distributor of tubular goods and an operator of service and supply centers which distribute maintenance, repair and operating products utilized primarily in the energy industry as well as industrial products consisting primarily of line pipe, valves, fittings and flanges. Red Man distributes products and tubular goods through service and supply centers and sales locations strategically located close to major hydrocarbon producing and refining areas of the United States and Canada.

F-16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

The purchase price was approximately $970.4 million (including common units issued for Red Man shares of $104.1 million at closing) and has preliminarily been allocated as follows (in millions):


Assets acquired
Cash	$	13.9	$	13.9
Accounts receivable		342.3		342.3
Notes and other receivables		5.2		5.2
Inventory		378.5		378.5
Fixed assets		39.6		39.6
Other assets		0.2		0.2
Intangible Assets		451.1		451.2
Goodwill		230.8		230.7

		1,461.6		1,461.6
Liabilities assumed
Accounts payable		209.5		209.5
Accrued expenses		42.9		42.9
Income taxes payable		3.1		3.1
Deferred income taxes		60.3		60.3
Debt		71.6		45.9
Minority interest and amounts due to former Red Man shareholders		100.6
Liability to shareholders				65.3
Minority interest				61.0
Other liabilities		3.2		3.2

		491.2		491.2

Total purchase price	$	970.4	$	970.4

This allocation of the purchase price is preliminary pending receipt of appraisals and valuations for certain of Red Man’s assets, including intangible assets. Goodwill associated with this transaction is not deductible for tax purposes, nor is any amortization associated with amortizable intangibles that are still being valued.

Transaction costs capitalized in connection with the acquisition of Red Man Pipe & Supply Co. totaled $17.3 million and included $12.0 million paid to an affiliate of the Goldman Sachs Funds as reimbursement of their costs associated with due diligence and advisory services.

Subsequent to the date of the balance sheet, certain provisions of the purchase agreement, including a net working capital adjustment, were finalized resulting in an increase of the purchase price referenced above of $18.1 million, including additional shares issued of $7.0 million.

As part of the Red Man transaction, MRM indirectly acquired a call option to buy out the 49% minority interest of Midfield for approximately $100.0 million. The call option may be exercised between June 15, 2008 and December 15, 2008. The Company has concluded that it is probable the option will be exercised and has provided for the financing of such exercise in the Asset-Based Revolving Credit Facility. Accordingly, the Company has allocated $100.0 million of the purchase price to ~~minority interest and amounts due to former Red Man shareholders.~~the call option. This balance represents the total exercise price of the call option including ~~those amounts that are expected~~$60.3 million to be paid to the Midfield minority interest shareholders, included as minority interest above, as well as ~~additional amounts that are~~$39.6 million expected to be paid to the former shareholders of Red ~~Man.~~Man, included in liability to shareholders above. In the event the call option is not exercised during that time period, certain additional amounts would be due to the former shareholders of Red Man on January 15, 2009.

F-17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

Pro Forma Financial Information

The following unaudited pro forma results of operations assume that each of the transactions described above occurred on January 1, 2006. This unaudited pro forma information should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the transactions had actually occurred on that date nor the results that may be obtained in the future.


	Years Ended December 31,				Years Ended December 31,
	2007		2006		2007		2006
	(In millions)				(In millions)

Revenues	$	4,000.0	$	3,703.1	$	4,000.0	$	3,703.1
Net income		147.6		84.4		143.8		80.6

Equity Issuances

The following is a summary of our equity issuances in 2007:


									Shares
									of
							Shares		Restricted
							of		Stock
		Issue			Consideration		Common		& Stock
	Issue Date	Price			(In thousands)		Stock		Options

Equity issued to majority shareholder in exchange for cash & shares in McJunkin and McJunkin Appalachian to acquire controlling interest	January, 2007	$	7.87		$	385,125		51,105,500
Equity issued in deferred compensation to members of management	March, 2007	$	7.87	(1)						743,555
Equity issued to majority shareholder in exchange for shares of Red Man Pipe & Supply Co.	October, 2007	$	7.87		$	104,136		13,236,000
Equity issued to majority shareholder in exchange for cash	October, 2007	$	7.87		$	674,537		85,731,500
Equity issued in deferred compensation to members of management	December, 2007	$	7.87	(1)						1,340,940

Total					$	1,163,798		150,073,000		2,084,495

Common
Restricted Stock

Consideration Stock & Options
(in thousands)

Equity issued to majority shareholders in exchange for cash $ 900,158 228,571.74
Equity issued in exchange for shares in McJunkin 159,472 40,538.94
Equity issued in exchange for shares in Red Man 104,136 26,472.20
Equity issued in deferred compensation to members of management — 4,308.80 4,168.99

1,163,766 299,892 4,168.99


(1)		Note that with respect to stock options issued on such date, the exercise price was subsequently reduced to $4.83 in connection with our recapitalization in May 2008.

F-18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007


NOTE 3 —	GOODWILL AND INTANGIBLE ASSETS

The significant components of goodwill and intangible assets are as follows (in thousands):

Sales
Tradename

Order
Customer
Non Compete
(With

Backlog
Base
Agreements
Indefinite

(1 Year)

(38 Years)

(5 Years)

Life)

Goodwill

Recorded in connection with the McJunkin acquisition $ 1,601 $ 356,036 $ 970 $ 155,762 $ 382,908
Recorded in connection with the Midway acquisition — 20,118 — — 30,802
Recorded in connection with the Red Man acquisition (preliminary, see note below) — — — — 681,906
Amortization (1,467 ) (8,844 ) (178 ) — —
Impact of foreign currency translation — — — — (3,237 )

Balance at December 31, 2007 $ 134 $ 367,310 $ 792 $ 155,762 $ 1,092,379


	Sales									Tradename
	Order			Customer			Non Compete			(With
	Backlog			Base			Agreements			Indefinite
	(1 Year)			(30 Years)			(5 Years)			Life)		Goodwill

Recorded in connection with the McJunkin acquisition	$	1,601		$	356,036		$	970		$	155,762	$	382,908
Recorded in connection with the Midway acquisition		—			20,118			—			—		30,802
Recorded in connection with the Red Man acquisition (preliminary, see note below)		2,048			260,316			—			188,864		230,678
Amortization		(1,467	)		(8,844	)		(178	)		—		—
Impact of foreign currency translation		—			—			—			—		(3,237	)

Balance at December 31, 2007	$	2,182		$	627,626		$	792		$	344,626	$	641,151

Amortization of Intangible Assets

Amortization in future periods could change significantly based on the finalization of the purchase price allocation for the Red Man transaction. The potential impact on amortization expense for the two-month period from the date of the acquisition to December 31, 2007 is not material. The weighted average amortization period for each type of intangible is noted in the table above. The weighted average amortization period for all amortizable intangibles is 3830 years. Total amortization of all acquisition-related intangible assets for each of the years ending December 31, 2008 to 2012, is currently estimated as follows (in millions):

2008 $ 10.3
2009 10.1
2010 10.1
2011 10.1
2012 10.1


2008	$	27.9
2009		26.1
2010		26.1
2011		26.1
2012		26.1


NOTE 4 —	INVENTORIES

~~Equity issued in 2007:~~
~~(dollars in thousands)~~

If inventories were reported at values approximating current costs, as would have resulted from using thefirst-in, first-out method, they would have been $10.3 million and $74.4 million higher at

F-19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007


~~NOTE 4 —~~	~~INVENTORIES~~

~~If inventories were reported at values approximating current costs, as would have resulted from using thefirst-in,~~ ~~first-out method, they would have been $10.3 million and $74.4 million higher at~~ December 31, 2007 and 2006, respectively. In addition, after giving pro forma effect to profit sharing and income taxes, net income would have been higher by $6.7 million for the eleven months ended December 31, 2007, $0 for the one-month ended January 30, 2007, and $7.9 million and $13.1 million for the years ended December 31, 2006 and 2005, respectively. For the eleven months ended December 31, 2007, the Company experienced a liquidation of certain LIFO inventories resulting in income of $1.5 million.

The Company’s inventory is composed of finished goods. There are no general and administrative costs charged to inventory.


NOTE 5 —	LONG-TERM DEBT

The significant components of our long-term debt are as follows (in thousands):


	(Successor)		(Predecessor)
	December 31,		December 31,
	2007		2006
Asset-based revolving credit facility	$	234,146	$	—
Term loan facility		569,250		—
Revolving credit/term loan agreement		—		8,300
Short-term debt expected to be refinanced on a long-term basis		—		2,735
Three-year asset securitization		—		2,000
Midfield revolving credit facility		50,970		—
Midfield term loan facility		10,228		—
Midfield notes payable		3,803		—

		868,397		13,035
Less current portion		19,781		—

	$	848,616	$	13,035

Asset-Based Revolving Credit Facility: On January 31, 2007, in connection with the acquisition of McJunkin by GSCP, MRM entered into a credit agreement and related security and other agreements for a secured Asset-Based Revolving Credit Facility with The CIT Group/Business Credit, Inc. as administrative agent and collateral agent. The Asset-Based Revolving Credit Facility provided financing of up to $300.0 million, subject to a borrowing base equal to at any time the lesser of 85% of eligible accounts receivable and 85% of net orderly liquidation value of the eligible inventory, less certain reserves. The Asset-Based Revolving Credit Facility included borrowing capacity available for letters of credit and for borrowings onsame-day notice. At the closing of the acquisition, MRM utilized $75.0 million of the Asset-Based Revolving Credit Facility for loans and approximately $3.1 million for letters of credit.

On October 31, 2007, and concurrent with the close of the Red Man acquisition, MRM refinanced the initial Asset-Based Revolving Credit Facility with a new $650.0 million facility with terms substantially the same as those described above. At that date, MRM utilized $322.5 million of the new Asset-Based Revolving Credit Facility to fund a portion of the Red Man acquisition in addition to refinancing amounts previously outstanding.

~~F-20~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES~~
~~December 31, 2007~~

As of December 31, 2007, MRM had $326.5 million of unused borrowing availability under the Asset-Based Revolving Credit Facility based on a borrowing base of $563.8 million and after giving effect to $3.1 million used for letters of credit.

F-20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

The Asset-Based Revolving Credit Facility provides that MRM has the right at any time to request incremental facilities commitments, but the lenders are under no obligation to provide any such additional commitments. The Asset-Based Revolving Credit Facility permits incremental facilities (together with any new commitments under the Term Loan Facility discussed below) up to (1) $200.0 million specifically available to fund the CanHCo Call Right (which pertains to the Midfield Supply minority interest) and refinance certain indebtedness of Midfield Supply, (2) $150.0 million generally available, (3) and additional amounts available so long as the secured leverage ratio as specified in the Asset-Based Revolving Credit Facility is satisfied. If MRM were to request any such additional commitments and the existing lenders or new lenders were to agree to provide such commitments, the Asset-Based Revolving Credit Facility size could be increased as described above, but MRM’s ability to borrow would still be limited by the amount of the borrowing base.

Borrowings under the Asset-Based Revolving Credit Facility bear interest at a rate per annum equal to, at MRM’s option, either (a) a base rate determined by reference to the greater of (1) the prime rate as quoted inThe Wall Street Journaland (2) the federal funds effective rate plus1/2 of 1% or (b) a LIBOR rate, subject to certain adjustments, in each case plus an applicable margin. The applicable margin in the initial asset revolving credit facility was 0.75% with respect to base rate borrowings and 1.75% with respect to LIBOR borrowings. As part of the refinancing, these were revised to 0.50% and 1.50%, respectively. The applicable margin is subject to adjustment downward based on the MRM’s leverage ratio. In addition, MRM is required to pay a commitment fee of 0.375% per annum in respect of the unutilized commitments. This rate is also subject to adjustment downward based upon the MRM’s leverage. MRM must also pay customary letter of credit fees and agency fees.

If at any time the aggregate amount of outstanding loans, unreimbursed letter of credit drawings and undrawn letters of credit under the Asset-Based Revolving Credit Facility exceeds the lesser of (i) the total revolving credit commitments and (ii) the borrowing base, MRM will be required to repay outstanding loans or cash collateralize letters of credit in an aggregate amount equal to such excess, with no reduction of the commitment amount. If the amount available under the Asset-Based Revolving Credit Facility is less than 7% of total revolving credit commitments, or an event of default pursuant to certain provisions of the credit agreement has occurred, MRM would then be required to deposit daily in a collection account managed by the agent under the Asset-Based Revolving Credit Facility. MRM may voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans at any time without premium or penalty other than customary “breakage” costs with respect to LIBOR loans. There is no scheduled amortization under the Asset-Based Revolving Credit Facility; the principal amount of the loans outstanding is due and payable in full on October 31, 2013.

All obligations under the Asset-Based Revolving Credit Facility are guaranteed by MRM’s existing and future wholly owned domestic subsidiaries. All obligations under MRM’s Asset-Based Revolving Credit Facility, and the guarantees of those obligations, are secured, subject to certain significant exceptions, by substantially all of the assets of MRM and the subsidiaries that have guaranteed the Asset-Based Revolving Credit Facility, including:


	•	A first-priority security interest in personal property consisting of inventory and accounts receivable;

	•	A second-priority pledge of certain of the capital stock held by MRM or any subsidiary guarantor; and

	•	A second-priority security interest in, and mortgages on, substantially all other tangible and intangible assets of MRM and each subsidiary guarantor.

F-21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007


	•	~~A second-priority security interest in, and mortgages on, substantially all other tangible and intangible assets of MRM and each subsidiary guarantor.~~

The Asset-Based Revolving Credit Facility contains a number of covenants that, among other things and subject to certain significant exceptions, restrict its ability and the ability of its subsidiaries to:


	•	Incur additional indebtedness;

	•	Pay dividends on MRM’s capital stock or the capital stock of MRM’s direct or indirect parent;

	•	Make investments, loans, advances or acquisitions;

	•	Sell assets, including capital stock of MRM’s subsidiaries;

	•	Consolidate or merge with another entity;

	•	Create liens;

	•	Pay, redeem, or amend the terms of subordinated indebtedness;

	•	Enter into certain sale-leaseback transactions;

	•	Fundamentally or substantively alter the character of the business conducted by MRM and its subsidiaries; and

	•	Enter into agreements that limit (1) the ability of non-guarantors to pay dividends to MRM or any guarantor or (2) the ability of MRM or any guarantor to pledge its assets to secure its obligations under the Asset-Based Revolving Credit Facility.

In addition to other customary exceptions, the covenants limiting dividends and other restricted payments and prepayments or redemptions of subordinated indebtedness generally permit the restricted actions in additional limited amounts, subject to the satisfaction of certain conditions, principally that MRM must have at least $50.0 million of pro forma excess availability under theAsset-Based Revolving Credit Facility.

Although the credit agreement governing the Asset-Based Revolving Credit Facility does not require MRM to comply with any financial ratio maintenance covenants, if less than 7% of the then outstanding credit commitments were available to be borrowed under the Asset-Based Revolving Credit Facility at any time, MRM would not be permitted to borrow any additional amounts unless its pro forma ratio of consolidated EBITDA to consolidated Fixed Charges (as such terms are defined in the credit agreement) were at least 1.0 to 1.0. The credit agreement also contains customary affirmative covenants and events of default.

MRM was in compliance with the covenants contained in its Asset-Based Revolving Credit Facility during the eleven months ended December 31, 2007.

Term Loan Facility: On January 31, 2007, in connection with the acquisition of McJunkin by the Goldman Sachs Funds, MRM entered into a credit agreement and related security and other agreements for a $575.0 million Term Loan Facility with Lehman Commercial Paper as administrative agent and collateral agent. The full amount of the Term Loan Facility was borrowed on January 31, 2007.

On October 31, 2007, and concurrent with the close of the Red Man acquisition, the Term Loan Facility was amended to permit for the refinancing of the Asset-Based Revolving Credit Facility, as described above, in addition to revising certain provisions of the agreement as discussed in more detail below.

F-22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

At December 31, 2007, borrowings under the Term Loan Facility bore interest at a rate per annum equal to, at MRM’s option, either (a) a base rate determined by reference to the greater of (1) the prime rate as quoted inThe Wall Street Journaland (2) the federal funds effective rate plus1/2 of 1% or (b) a LIBOR rate, subject to certain adjustments, in each case plus an applicable margin. At December 31, 2007, the applicable margin with respect to base rate borrowings was 2.25% and the applicable margin with respect to LIBOR borrowings was 3.25%. The interest rate on the outstanding borrowings pursuant to the Term Loan Facility was 8.08% at December 31, 2007.

The Term Loan Facility requires MRM to prepay outstanding term loans with 50% (which percentage will be reduced to 25% if MRM’s total leverage ratio is less than a specified ratio and will be reduced to 0% if MRM’s total leverage ratio is less than a specified ratio) of its annual excess cash flow (as defined in the credit agreement). For 2007, MRM was not required to prepay any outstanding term loans pursuant to the annual excess cash flow requirements.

MRM may voluntarily prepay outstanding loans under the Term Loan Facility at any time without premium or penalty other than customary “breakage” costs with respect to LIBOR loans. The Term Loan Facility amortizes at a rate of 1.00% per year with the balance due at January 31, 2014.

All obligations under the Term Loan Facility are unconditionally guaranteed by the MRM and each wholly owned domestic subsidiary of MRM. All obligations under the Term Loan Facility, and the guarantees of those obligations, are secured, subject to certain significant exceptions, by substantially all of the assets of MRM and the subsidiaries that have guaranteed the Term Loan Facility, including:


	•	A second-priority security interest in personal property consisting of inventory and accounts receivable;

	•	A first-priority pledge of certain of the capital stock held by MRM or any subsidiary guarantor; and

	•	A first-priority security interest in, and mortgages on, substantially all other tangible and intangible assets of the MRM and each subsidiary guarantor.

The Term Loan Facility contains a number of negative covenants that are substantially similar to those governing the Asset-Based Revolving Credit Facility. The credit agreement also contains customary affirmative covenants and events of default.

MRM was in compliance with the covenants contained in its ~~credit agreements~~Term Loan Facility during the eleven months ended December 31, ~~2007 and during the one month ended January 30,~~ 2007.

Midfield Revolving Credit Facility: Midfield, the Company’s Canadian subsidiary, has a Canadian dollar revolving credit facility administered by Bank of America. This facility has a maximum limit of CAD $150 million (US$152.91 million as of 12/31/07) bearing interest at Canadian prime rate plus a margin of up to 0.25%. The revolver is secured by substantially all of Midfield’s personal property assets including accounts receivable, chattel paper, bank accounts, general intangibles, inventory, investment property, cash and insurance proceeds. The balance of the revolver is due at its maturity date, November 2, 2010.

Midfield Term Loan Facility: Midfield has a term loan facility that is due on demand. This facility bears interest at Canadian prime rate plus a margin of up to 0.5%. The term loan facility is secured by substantially all of Midfield’s real property and equipment.

During the period from October 31, 2007, the date of the Red Man Transaction, to December 31, 2007, Midfield was in compliance with the covenants contained in its revolving credit facility and other debt agreements.

F-23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

Midfield Notes Payable: Midfield has two notes payable due April 1, 2008 pursuant to holdback provisions from recent acquisitions. These amounts, totaling $3.8 million at December 31, 2007, are owed to individuals who became and continue to be shareholders of Midfield supply as a result of these transactions.

Maturities of Long-Term Debt: At December 31, 2007, annual maturities of long-term debt during the next five fiscal years and thereafter are as follows (in millions):


2008	$	19.8
2009		5.8
2010		56.8
2011		5.8
2012		5.8
Thereafter		774.6

The above table does not reflect future excess cash flow prepayments, if any, that may be required under the Term Loan Facility.

Interest Rate Swaps: The Company uses derivative financial instruments to help manage its interest rate risk. On December 3, 2007, MRM entered into a floating to fixed interest rate swap agreement, effective December 31, 2007, for a notional amount of $700.0 million to limit its exposure to interest rate increases related to a portion of its floating rate indebtedness. The interest rate swap agreement terminates after three years. At December 31, 2007, the fair value of MRM’s interest rate swap agreement was a loss of approximately $0.4 million, which amount is included in accrued liabilities.

As of the effective date, MRM designated the interest rate swap as a cash flow hedge. As a result, changes in the fair value of MRM’s swap is recorded as a component of other comprehensive income. At December 31, 2007, $0.2 million of unrecognized losses, net of tax, on the interest rate swap agreement is included in other comprehensive income.

As a result of the swap agreement, MRM’s effective fixed interest rates as to the $700.0 million in floating rate indebtedness will be 5.368% for associated indebtedness on the Asset-Based Revolving Credit Facility and 7.118% for associated indebtedness on the Term Loan Facility, per quarter through 2010 and result in an average fixed rate of 6.771%.

Interest Paid: The Company paid interest of $52.9 million for the eleven months ended December 31, 2007, $0.1 million for the one month ended January 30, 2007, and $2.8 million and $2.6 million for the years ended December 31, 2006 and 2005, respectively.

F-24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007


NOTE 6 —	PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment consisted of the following (in thousands):


	(Successor)			(Predecessor)
	December 31,			December 31,
	2007			2006
Land and improvements	$	10,911		$	4,392
Buildings and building improvements		31,624			21,416
Equipment		42,295			43,143

		84,830			68,951
Allowances for depreciation		(4,710	)		(41,743	)

	$	80,120		$	27,208


NOTE 7 —	LEASES

The Company leases land and buildings at various locations from Hansford Associates, Appalachian Leasing, and one stockholder. The Company leases land, buildings and vehicles from Prideco. Certain officers and directors of the Company participate in ownership of Hansford Associates, Appalachian Leasing and Prideco. Most of these leases are renewable for various periods through 2026 and are renewable at the option of the Company. The renewal options are subject to escalation clauses. These leases contain clauses for payment of real estate taxes, maintenance, insurance and certain other operating expenses of the properties. Leases with unrelated parties contain similar provisions.

Amortization of capital leases was as follows (in thousands):

(Successor)

(Predecessor)

Eleven

One

Months

Month

Ended

Years Ended

December 31,

January 30,

December 31,

2007

2006

2005

Amortization of capital leases

164

179

Property held under capital leases in the balance sheets consists of (in thousands):


	(Successor)			(Predecessor)
	December 31,			December 31,
	2007			2006
Land and buildings	$	2,089		$	4,881
Allowances for amortization		(164	)		(2,777	)

	$	1,925		$	2,104

Future minimum lease payments under capital leases aggregate $10.1 million of which $3.2 million represents interest and $3.4 million represents escalation and executory costs. The present value of net minimum lease payments is $3.6 million, all applicable to Hansford Associates. Annual payments under capital leases are $0.9 million for years 2008 through 2012.

F-25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

Rent expense under operating leases is as follows (in thousands):


	(Successor)		(Predecessor)
	Eleven		One
	Months		Month
	Ended		Ended		Years Ended
	December 31,		January 30,		December 31,
	2007		2007		2006		2005
Leases with Hansford Associates	$	1,498	$	136	$	1,534	$	1,474
Leases with Appalachian Leasing		134		12		153		154
Leases with Prideco		538		—		—		—
Leases with Midfield shareholders		151		—		—		—
Other operating leases		8,748		608		7,149		6,442

Total rent expense under operating leases	$	11,069	$	756	$	8,836	$	8,070

Future minimum rental payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year aggregate to $45.5 million and include leases applicable to Hansford Associates ($4.2 million), Appalachian Leasing ($0.5 million), Prideco ($0.3 million), and the stockholder ($0.1 million). Annual operating lease payments are $18.3 million, $12.7 million, $6.2 million, $4.7 million, and $3.7 million for years 2008 through 2012, respectively.


NOTE 8 —	INCOME TAXES

Income taxes included in the consolidated statements of income consist of (in thousands):


	(Successor)			(Predecessor)
	Eleven			One
	Months			Month
	Ended			Ended			Years Ended
	December 31,			January 30,			December 31,
	2007			2007			2006		2005
Current:
Federal	$	31,190		$	4,024		$	36,514	$	34,075
State		5,895			814			8,024		7,413
Foreign		224			—			—		—

		37,309			4,838			44,538		41,488
Deferred:
Federal		263			(197	)		3,129		(4,037	)
State		38			(42	)		673		(868	)
Foreign		(1,051	)		—			—		—

		(750	)		(239	)		3,802		(4,905	)

Income tax provision	$	36,559		$	4,599		$	48,340	$	36,583

F-26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

The Company’s effective tax rate varied from the statutory federal income tax rate for the following reasons (in thousands):


	(Successor)			(Predecessor)
	Eleven			One
	Months			Month
	Ended			Ended			Years Ended
	December 31,			January 30,			December 31,
	2007			2007			2006			2005
Federal tax expense at statutory rates	$	32,721		$	3,918		$	41,270		$	31,193
State taxes		3,971			502			5,653			4,254
Non-deductible expenses		424			26			409			372
Foreign		(827	)		—			—			—
Other		270			153			1,008			764

Income tax provision	$	36,559		$	4,599		$	48,340		$	36,583

Effective rate		39.10	%		40.78	%		41.0	%		41.0	%

The Company paid $38.2 million for the eleven months ended December 31, 2007, $0 for the one month ended January 30, 2007, and $50.6 million and $34.7 million in 2006 and 2005 for federal and state taxes.

Significant components of the Company’s current deferred tax assets and liabilities are as follows (in thousands):


	(Successor)			(Predecessor)
	December 31,			December 31,
	2007			2006
Deferred tax assets:
Accounts receivable valuation	$	964		$	797
Real estate and investments		26			86
Accruals and reserves		2,395			3,684
Other		819			—

Total deferred tax assets		4,204			4,567
Deferred tax liabilities:
Accounts receivable		(3,878	)		—
Inventory valuation		(75,882	)		(6,464	)
Property, plant and equipment		(6,485	)		(2,969	)
Interest in Red Man Canada		(4,138	)		—
Investments		(11,930	)		(14,759	)
Intangible assets		(197,742	)		—

Total deferred tax liabilities		(300,055	)		(24,192	)

Net deferred tax liability	$	(295,851	)	$	(19,625	)

Income tax returns are filed in the U.S. federal jurisdiction, various states, Puerto Rico and Canada. The Company is no longer subject to U.S. federal income tax examination for years through 2004.

F-27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

Effective January 1, 2007, the Predecessor adopted FIN 48,Accounting for Uncertainty in Income Taxes. This interpretation established new standards for the financial statement recognition, measurement and disclosure of uncertain tax positions taken or expected to be taken in income tax returns.

The effect of adopting FIN 48 was immaterial. Upon adoption, the liability for income taxes under FIN 48 was $0.4 million and interest and penalties were $0.2 million. Interest related to income tax liabilities is classified as interest expense and penalties are recognized as a component of income tax expense. As of December 31, 2007, there were no material changes in the reserve or the amount of unrecognized tax benefits, interest or penalties. It is not anticipated that settlement of the uncertain tax positions will have a material affect on the statutory rate. The decrease in tax liability shown below was due to expiring statute of limitations and settlement of taxes.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):


	(Successor)			(Predecessor)
	Eleven Months			One Month
	Ended			Ended
	December 31,			January 30,
	2007			2007

Beginning balance	$	667		$	667
Additions based on tax positions related to current year		—			—
Reductions due to lapse of statute of limitations		(69	)		—
Reductions for tax positions of prior years		(53	)		—
Settlements		(40	)		—

Ending balance	$	505		$	667


NOTE 9 —	STOCK-BASED COMPENSATION

Restricted Stock and Stock Option Plans: Effective March 27, 2007, the Company’s Board of Directors approved the formation of the 2007 Restricted Stock Plan and the 2007 Stock Option Plan. The purpose of these plans is to aid MRM in recruiting and retaining key employees, directors and consultants of outstanding ability and to motivate such key employees, directors and consultants to exert their best efforts on behalf of the Company by providing incentives in the form of restricted stock and stock options. The Company expects that it will benefit from the added interest which such key employees, directors and consultants will have in the welfare of the Company as a result of their proprietary interest in the Company’s success.

Under the terms of the stock option plan, options may not be granted at prices less than their fair market value on the date of the grant, nor for a term exceeding 10 years. Vesting occurs inone-third increments on the third, fourth, and fifth anniversaries of the date specified in the employees’ respective option agreements. The Company expenses the fair value of the stock option grants on a straight-line basis over the vesting period. A Black-Scholes option pricing model was used to estimate the fair value of the stock options granted in 2007. For purposes of measuring compensation, the Company relies on a calculated value that requires certain assumptions including volatility based on

F-28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

the appropriate industry sector. Following are the weighted average assumptions used to estimate the fair values of options granted during the eleven months ended December 31, 2007:


Risk-free interest rate		4.10%
Dividend yield		0.00%
Expected volatility		22.07%
Expected lives		6.2 years

A summary of the status of stock option grants under the stock option plan as of December 31, 2007, and changes during the eleven months ended on that date is as follows:

Weighted Average

Options

Exercise Price

Outstanding at January 31, 2007 — $ —
Granted 3,533.46 3,933.81
Exercised — —
Forfeited — —
Expired — —

Outstanding at December 31, 2007 3,533.46 $ 3,933.81

Options exercisable at December 31, 2007 — $ —
Options vested at December 31, 2007 — —


			Weighted Average
	Options		Exercise Price

Outstanding at January 31, 2007		—	$	—
Granted		1,766,730		4.82
Exercised		—		—
Forfeited		—		—
Expired		—		—

Outstanding at December 31, 2007		1,766,730		4.82

Options exercisable at December 31, 2007		—	$	—
Options vested at December 31, 2007		—		—

Under the terms of the restricted stock plan, restricted stock may be granted at the direction of the Board of Directors and vesting occurs in one-fourth increments on the second, third, fourth, and fifth anniversaries of the date specified in the employees’ respective restricted stock agreements. The Company expenses the fair value of the restricted stock grants on a straight-line basis over the vesting period.

The following table summarizes restricted stock activity under the restricted stock plan as of December 31, 2007, and changes during the eleven months ended on that date:


	Shares

Balance at January 31, 2007		—
Granted		~~635.52~~317,760
Forfeited		—
Issued		—

Balance at December 31, 2007		~~635.52~~317,760

Compensation expense recognized under the stock option and restricted stock plans totaled $0.3 million and $0.1 million for the eleven months ended December 31, 2007. As of December 31, 2007, the Company had $4.3 million and $1.4 million of unrecognized compensation expense related to outstanding stock options and restricted stock. These amounts will be recognized over a weighted average vesting period of five years.

Restricted Common Units: In conjunction with the acquisition of McJunkin by the Goldman Sachs Funds, certain key MRM employees received restricted common units of PVF Holdings LLC that vest over a five-year requisite service period. Compensation expense associated with these restricted common units totaled $1.0 million for the eleven months ended December 31, 2007 based upon their fair market value at the date they were issued which is being recognized on a straight-line basis over the vesting period. As of December 31, 2007, the Company had $4.6 million of

F-29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

unrecognized compensation expense related to outstanding restricted common units which will be amortized over a weighted average vesting period of four years.

Compensation expense associated with these profits units totaled $1.6 million for the eleven months ended December 31, 2007 based upon their fair market value at the date they were issued which is being amortized on a straight-line basis over the vesting period. As of December 31, 2007, the Company had $15.4 million of unrecognized compensation expense related to outstanding profits units which will be amortized over a weighted average vesting period of five years.


NOTE 10 —	EMPLOYEE BENEFIT PLANS

In 2007, the Company offered a noncontributory profit sharing plan to employees with at least six months of service. This plan provides for annual employer contributions generally based upon a formula related primarily to earnings, limited to 15% of the eligible compensation paid to all eligible employees. Employees may also participate in the McJunkin Red Man Savings Plan, whereunder any employee who has completed as least six months of service to the Company may elect to defer a percentage of their base earnings, and that deferral is partially matched by the Company, pursuant to section 401(k) of the Internal Revenue Code.

Employees of Red Man located in the United States who have attained the age of 21 are eligible to participate in the Red Man Pipe & Supply Co. Retirement Savings Plan which also exists pursuant to Section 401(k) of the Internal Revenue Code.

The Company’s provisions for the profit sharing plan and matching portion under the 401(k) plans approximated (in thousands):


	(Successor)		(Predecessor)
	Eleven		One
	Months		Month
	Ended		Ended		Years Ended
	December 31,		January 30,		December 31,
	2007		2007		2006		2005
Profit sharing expenses	$	12,294	$	1,338	$	15,064	$	13,144
401(k) savings plan expenses		1,141		73		837		830
Other		157		—		—		—


NOTE 11 —	RELATED PARTY TRANSACTIONS

In connection with Red Man’s 2005 acquisition of 51% of the shares of Midfield, a Shareholders’ Agreement between Red Man Pipe & Supply Canada, LTD., the 51% majority shareholder of Midfield Supply ULC, and Midfield Holdings (Alberta) LTD., the 49% minority interest shareholder of Midfield Supply ULC was created. This agreement, among other things, stipulates how profits of Midfield Supply ULC are shared. Midfield Holdings (Alberta) LTD’s portion of the profits are accrued and subsequently paid to shareholders of Midfield Holdings (Alberta) LTD, who are also employees of Midfield Supply ULC, via a formal Employee Profit Sharing Plan (EPSP). In connection with the EPSP,

F-30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

$8.9 million was accrued as of December 31, 2007. Expense associated with this plan is included in selling, general and administrative expenses. Red Man Pipe & Supply Canada, LTD’s portion of the profits was accrued and subsequently paid through an after-tax dividend, which has been eliminated in consolidation.


NOTE 12 —	EARNINGS PER SHARE

(Successor) (Predecessor)
Eleven Months
One Month

Ended
Ended

December 31,
January 30,
Year Ended December 31,

2007

2007

2006

2005

Net income (in thousands) $ 56,926 $ 6,596 $ 69,574 $ 52,541
Average basic shares outstanding 138,627 17,510 17,510 17,510
Effect of dilutive securities 272 — — —

Average dilutive shares outstanding 138,899 17,510 17,510 17,510

Net income per share:
Basic $ 410.64 $ 376.70 $ 3,973.39 $ 3,000.63
Diluted $ 409.84 $ 376.70 $ 3,973.39 $ 3,000.63


	(Successor)
	Eleven Months		(Predecessor)
	Ended						Year Ended December 31,
	December 31,		One Month Ended January 30, 2007				2006				2005
	2007		Class A		Class B		Class A		Class B		Class A		Class B

Net income (in thousands)	$	56,926	$	6,381	$	215	$	67,287	$	2,287	$	50,009	$	2,532
Weighted average basic shares outstanding		69,325,299		16,940		570		16,940		570		16,940		570
Effect of dilutive securities		136,000		—		—		—		—		—		—

Weighted average dilutive shares outstanding		69,461,299		16,940		570		16,940		570		16,940		570

Net income per share:
Basic	$	0.82	$	376.70	$	376.70	$	3,972.08	$	4,012.28	$	2,952.13	$	4,442.11
Diluted	$	0.82	$	376.70	$	376.70	$	3,972.08	$	4,012.28	$	2,952.13	$	4,442.11

Stock option grants are disregarded in this calculation if they are determined to be anti-dilutive. At December 31, 2007, the Company’s anti-dilutive stock options totaled ~~3,533.~~1,766,730. There were no stock options outstanding at January 30, 2007, December 31, 2006 and 2005.

NOTE 13 — SALES BY PRODUCT LINE

The percentage of our net sales by product line are as follows:


	(Successor)		(Predecessor)
	Eleven Months Ended		One Month Ended		Year Ended
	December 31,		January 30,		December 31,
	2007		2007		2006		2005
Type
Pipe, valves and fittings		77.8%		78.3%		77.9%		78.0%
Oilfield and natural gas products		21.6%		21.3%		21.7%		21.6%
Service revenue		0.6%		0.4%		0.4%		0.4%

Total		100.0%		100.0%		100.0%		100.0%


NOTE 1314 —	CONTINGENCIES

The Company is involved in various legal proceedings and claims, both as a plaintiff and a defendant, which arise in the ordinary course of business. Included in these legal proceedings are ~~cases~~

F-31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES
December 31, 2007

claims where the Company has been named as a defendant in lawsuits brought against a large number of entities by individuals seeking damages for injuries allegedly caused by certain products containing asbestos. Among other things, with the assistance of accounting and financial consultants, the Company conducted an analysis of pending and probable asbestos-related claims to determine the adequacy of its accrual for these claims. This analysis consisted of developing per claim settlement estimates for each category of claim by alleged disease type based on the Company’s historical settlement experience. These estimates were applied to each of the Company’s pending individual claims. Liability with respect to mass filings was estimated by determining the number of individual plaintiffs included in the mass filings likely to have claims resulting in settlements based on the Company’s historical experience with mass filings. Finally, ~~likely~~probable claims expected to be asserted against the Company over the next fifteen years were predicted based on public health estimates of future incidences of certain asbestos-related diseases in the general U.S. population and per claim settlement estimates were applied to those estimated claims. Based on this analysis, and the existence of certain insurance coverage, the Company believes that its current accruals for

~~F-31~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~McJUNKIN RED MAN HOLDING CORPORATION AND SUBSIDIARIES~~
~~December 31, 2007~~

pending and probable asbestos-related litigation asserted over the next 15 years are adequate. However, there is a possibility that resolution of the matters could result in additional losses in excess of current accruals. Also, there is a possibility that resolution of certain of the Company’s legal contingencies for which there are no liabilities recorded could result in a loss. Management is not able to estimate the amount of such loss, if any. However, in the opinion of the Company, after consultation with counsel, the ultimate resolution of all pending matters is not expected to have a material effect on its financial position, although it is possible that such resolutions could have a material adverse impact on results of operations in the period of resolution.

In addition to the foregoing, from time to time the Company is involved in various other legal and administrative proceedings that are incidental to its business, including claims relating to product liability, general negligence, environmental issues, employment, and other matters. It is not expected that the ultimate resolution of any of these matters will have a material adverse impact on the Company’s consolidated financial position or results of operations.

Midfield has issued a financial guarantee in the form of an irrevocable standby letter of credit for an associated entity in the amount of $5.1 million which is recorded in the accompanying balance sheet at its fair value. This letter expires January 31, 2009 subject to certain renewal provisions.


NOTE 15 —	STOCK SPLIT

On October 16, 2008, the Company’s Board of Directors declared a 500 for one stock split of its outstanding common stock. All Successor information presented in the accompanying financial statements has been retroactively adjusted to reflect the 500 for one stock split.

F-32

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

McJUNKIN RED MAN HOLDING CORPORATION
(Dollars in thousands)

June 26,
December 31,

2008

2007

(Note1)

ASSETS
CURRENT ASSETS
Cash $ 8,761 $ 10,075
Receivables, less allowances of $5,426 and $6,352 617,693 481,463
Inventories 724,208 666,188
Other current assets 4,437 1,937

TOTAL CURRENT ASSETS 1,355,099 1,159,663
INVESTMENTS AND OTHER ASSETS
Investments 1,571 1,680
Assets held for sale 36,022 37,500
Debt issuance costs 30,341 23,390
Notes receivable and other assets 3,705 4,376

71,639 66,946
FIXED ASSETS
Property, plant, and equipment, net 91,396 80,120
PROPERTY HELD UNDER CAPITAL LEASES 1,835 1,925
INTANGIBLE ASSETS
Goodwill 814,704 1,092,379
Intangible assets 959,603 523,998

1,774,307 1,616,377

$ 3,294,276 $ 2,925,031

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 453,184 $ 306,509
Accrued expenses and other liabilities 103,724 70,778
Income taxes payable 10,182 11,996
Deferred revenue 8,589 6,552
Deferred income taxes 76,538 80,364
Term loans due on demand 9,845 10,228
Current portion of long-term obligations
Long-term debt 6,717 9,553
Capital leases 259 189

TOTAL CURRENT LIABILITIES 669,038 496,169
LONG-TERM OBLIGATIONS
Long-term debt 1,268,184 848,616
Payable to shareholders 52,294 49,164
Deferred income taxes 380,512 215,487
Capital leases 3,339 3,446
Other liabilities 1,386 1,415

1,705,715 1,118,128
MINORITY INTEREST AND AMOUNTS DUE TO FORMER RED MAN SHAREHOLDERS 95,164 100,700
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value per share; 1,000,000 shares authorized issued and outstanding June 2008 — 311,364.7277, issued and outstanding December 2007 — 299,891.4604 — —
Additional paid-in capital 1,169,589 1,154,148
Retained earnings (341,763 ) 56,926
Other comprehensive (loss), net of deferred income taxes of $1,200 and $162 (3,467 ) (1,040 )

824,359 1,210,034

$ 3,294,276 $ 2,925,031


	June 26,			December 31,
	2008			2007
				(Note1)

ASSETS
CURRENT ASSETS
Cash	$	8,761		$	10,075
Receivables, less allowances of $5,426 and $6,352		617,693			481,463
Inventories		724,208			666,188
Other current assets		4,437			1,937

TOTAL CURRENT ASSETS		1,355,099			1,159,663
INVESTMENTS AND OTHER ASSETS
Investments		1,571			1,680
Assets held for sale		36,022			37,500
Debt issuance costs		30,341			23,390
Notes receivable and other assets		3,705			4,376

		71,639			66,946
FIXED ASSETS
Property, plant, and equipment, net		91,396			80,120
PROPERTY HELD UNDER CAPITAL LEASES		1,835			1,925
INTANGIBLE ASSETS
Goodwill		814,704			641,151
Intangible assets		959,603			975,226

		1,774,307			1,616,377

	$	3,294,276		$	2,925,031

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Trade accounts payable	$	453,184		$	306,509
Accrued expenses and other liabilities		103,724			70,778
Income taxes payable		10,182			11,996
Deferred revenue		8,589			6,552
Deferred income taxes		76,538			80,364
Term loans due on demand		9,845			10,228
Current portion of long-term obligations
Long-term debt		6,717			9,553
Capital leases		259			189

TOTAL CURRENT LIABILITIES		669,038			496,169
LONG-TERM OBLIGATIONS
Long-term debt		1,268,184			848,616
Payable to shareholders		89,271			49,164
Deferred income taxes		380,512			215,487
Capital leases		3,339			3,446
Other liabilities		1,386			1,415

		1,742,692			1,118,128
MINORITY INTEREST		58,187			100,700
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value per share; 800,000,000 shares authorized issued and outstanding June 2008 — 155,682,364, issued and outstanding December 2007 — 150,072,833		1,557			1,501
Additional paid-in capital		1,168,032			1,152,647
Retained earnings		(341,763	)		56,926
Other comprehensive (loss), net of deferred income taxes of $1,200 and $162		(3,467	)		(1,040	)

		824,359			1,210,034

	$	3,294,276		$	2,925,031

See notes to consolidated financial statements.

F-33

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

McJUNKIN RED MAN HOLDING CORPORATION
(Dollars in thousands, except per share data)


	(Successor)						(Predecessor)			(Successor)							(Predecessor)
	Six Months			Five Months			One Month			Six Months				Five Months			One Month
	Ended			Ended			Ended			Ended				Ended			Ended
	June 26, 2008			June 28, 2007			January 30, 2007			June 26, 2008				June 28, 2007			January 30, 2007

SALES	$	2,196,033		$	784,964		$	142,549		$	2,196,033			$	784,964		$	142,549
COSTS AND EXPENSES
Cost of sales (exclusive of depreciation and amortization shown separately below)		1,803,792			635,934			114,562			1,803,792		��		635,934			114,562
Selling, general and administrative expenses		200,116			80,714			14,592			200,226				80,889			14,627
Depreciation and amortization		5,192			1,665			344			5,192				1,665			344
Amortization of intangibles		15,623			4,624			16			15,623				4,624			16
Profit sharing		13,509			5,635			1,338			13,509				5,635			1,338
Stock-based compensation		3,319			1,291			—			3,319				1,291			—

TOTAL COSTS AND EXPENSES		2,041,551			729,863			130,852			2,041,661				730,038			130,887

OPERATING INCOME		154,482			55,101			11,697			154,372				54,926			11,662
OTHER INCOME (EXPENSE)
Interest expense		(34,973	)		(24,332	)		(131	)		(34,973	)			(24,332	)		(131	)
Minority interests		(123	)		—			(356	)		(123	)			—			(356	)
Other, net		(249	)		(822	)		(15	)		(139	)			(647	)		20

		(35,345	)		(25,154	)		(502	)		(35,235	)			(24,979	)		(467	)

INCOME BEFORE INCOME TAXES		119,137			29,947			11,195			119,137				29,947			11,195
Income tax expense		43,203			12,333			4,599			43,203				12,333			4,599

NET INCOME	$	75,934		$	17,614		$	6,596		$	75,934			$	17,614		$	6,596

Effective Tax Rate		36.26	%		41.18	%		41.08	%		36.26	%			41.18	%		41.08	%
Basic earnings per common share	$	245.41		$	171.69		$	376.70		$	0.49			$	0.34			—
Diluted earnings per common share	$	244.92		$	171.36		$	376.70		$	0.49			$	0.34			—
Weighted average common shares, basic											154,710,500				51,297,000			—
Weighted average common shares, diluted											155,017,000				51,396,000			—
Dividends per common share	$	1,523		$	—		$	—		$	3.05			$	—		$	—
Basic earnings per common share, Class A											—				—		$	376.70
Diluted earnings per common share, Class A											—				—		$	376.70
Weighted average shares — Class A, basic											—				—			16,940
Weighted average shares — Class A, diluted											—				—			16,940
Basic earnings per common share, Class B											—				—		$	376.70
Diluted earnings per common share, Class B											—				—		$	376.70
Weighted average shares — Class B, basic											—				—			570
Weighted average shares — Class B, diluted											—				—			570

See notes to consolidated financial statements

F-34

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

McJUNKIN RED MAN HOLDING CORPORATION
(Dollars in thousands)


	(Successor)						(Predecessor)
	Six Months			Five Months			One Month
	Ended			Ended			Ended
	June 26, 2008			June 28, 2007			January 30, 2007

CASH PROVIDED BY OPERATIONS
Net income	$	75,934		$	17,614		$	6,596
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization		5,192			1,665			344
Amortization of debt issuance costs		2,285			1,571			—
Stock-based compensation		3,319			1,291			—
Deferred income taxes		(2,482	)		(2,065	)		—
Minority interest		123			—			356
Amortization of intangibles		15,623			4,624			16
Change in fair market value of derivatives		413			—			—
Provision for losses on receivables		1,052			175			35
Inventory loss provision		313			65			13
Non-operating gains (losses) and other items not providing cash		(273	)		82			(153	)
Changes in operating assets and liabilities:
Accounts receivable		(138,949	)		(28,597	)		(1,363	)
Inventories		(57,634	)		(2,843	)		6,700
Income taxes		(1,763	)		(2,248	)		4,595
Other current assets		(2,509	)		526			139
Accounts payable		146,589			6,104			(7,665	)
Accrued expenses and other current liabilities		23,264			3,931			(2,996	)

NET CASH PROVIDED BY OPERATIONS		70,497			1,895			6,617
INVESTING ACTIVITIES
Purchases of property, plant and equipment		(7,550	)		(2,235	)		(417	)
Proceeds from the disposition of property, plant and equipment		1,330			39			—
Acquisition of controlling interest in McJunkin by GSCP		—			(849,053	)		—
Acquisition of Midway Tristate Corporation		(3	)		(83,338	)		—
Acquisition of Red Man Pipe & Supply		(11,391	)		—			—
Other investment and notes receivable transactions		1,177			1,331			259

NET CASH USED IN INVESTING ACTIVITIES		(16,437	)		(933,256	)		(158	)
FINANCING ACTIVITIES
Proceeds from issuance of long-term obligations		454,474			747,433			—
Payments on long-term obligations		(31,384	)		(4,896	)		(8,254	)
Cash equity contribution in conjunction with acquisition of controlling interest in McJunkin by GSCP		—			225,653			—
Cash equity contributions		5,030			507			—
Debt issuance costs paid		(9,257	)		(22,837	)		—
Dividends paid		(474,096	)		—			—

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(55,233	)		945,860			(8,254	)

(Decrease) increase in cash		(1,173	)		14,499			(1,795	)
Effect of foreign exchange rate on cash		(141	)		—			—
Cash — beginning of period		10,075			1,953			3,748

CASH — END OF PERIOD	$	8,761		$	16,452		$	1,953

See notes to consolidated financial statements.

F-35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

(Unaudited)


NOTE 1 —	SIGNIFICANT ACCOUNTING POLICIES

Business Operations: McJunkin Red Man Holding Corporation (the Company) is a holding company co-headquartered in Charleston, West Virginia and Tulsa, Oklahoma. The Company is a substantially owned subsidiary of PVF Holdings, LLC. Our wholly owned subsidiary, McJunkin Red Man Corporation and its subsidiaries (MRM) are national distributors of pipe, valves, and fittings, with locations in principal industrial, hydrocarbon producing and refining areas throughout the United States and Canada. Major customers represent the natural gas producing, petroleum refining, chemical and other segments of the raw materials processing and construction industries. Products are obtained from a broad range of suppliers.

The Company operates as a single reportable segment, which represents the Company’s business of providing industrial pipe valves and fittings to various customers through our distribution operations located throughout North America. The Company has operations in eight geographic regions, which have similar economic characteristics, and similar products and services, types or classes of customers, distribution methods and similar regulatory environments in each location. The total consolidated net sales outside of the United States was 11.7% for the six months ended June 26, 2008, 0.5% for the five months ended June 28, 2007 and 0.8% for the one month ended January 30, 2007. The percentage of total consolidated assets outside of the United States as of June 26, 2008 and December 31, 2007 was 10.5% and 0.2%, respectively. The Company has a broad customer base and did not have sales to any customer in excess of 10% of gross sales for any of the periods presented.

Basis of Presentation: PVF Holdings LLC, (formerly known as McJ Holding LLC) was formed on November 20, 2006 by affiliates of the Goldman Sachs Group, Inc. (the Goldman Sachs Funds) and a control group of certain shareholders of McJunkin Corporation (McJunkin) for the purpose of acquiring McJunkin on January 31, 2007. In connection with the acquisition by the Goldman Sachs Funds of a controlling interest in McJunkin, a new basis of accounting and reporting was established that reflected the Goldman Sachs Funds’ cost of the acquisition. This new accounting basis has been pushed down to the Company’s accounts and is reflected in the Company’s consolidated balance sheet (successor basis) at January 30, 2007.

In connection with the acquisition, GSCP and existing MRM shareholders made an aggregate cash equity contribution of $225.6 million and a noncash equity contribution of $159.5 million to PVF in exchange for 100% ownership interests in both the Company and MRM.

Because PVF Holdings LLC and the Company had no operations, assets or business prior to their acquisition of McJunkin and through December 31, 2007, MRM is the predecessor of the Company and PVF Holdings LLC as of this date. On May 22, 2008, MRM borrowed $25 million in revolving loans under its revolving credit facility and distributed the proceeds of the loans to the Company. On the same date, the Company borrowed $450 million in term loans under its term loan facility and distributed the proceeds of the term loans, together with the proceeds of the revolving loans, to its stockholders, including PVF Holdings LLC. PVF Holdings LLC used the proceeds from the dividend to fund distributions to members of PVF Holdings LLC in May 2008.

All references to the “Predecessor” relate to McJunkin for periods prior to January 31, 2007. All references to the “Successor” relate to the Company for periods subsequent to January 31, 2007. As a result, the consolidated income statements and statements of cash flows for the five-month period ended June 28, 2007 consist of the earnings and cash flows of the Company. The consolidated income statements and statements of cash flows of the Company for the month ended January 30, are presented as Predecessor financial statements for comparison purposes.

F-36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

Variable Interest Entities (VIE) are those entities in which the Company, through contractual arrangements, bears the risks of, and enjoys the rewards normally associated with ownership of the entities, and therefore, the Company is the primary beneficiary of these entities. MRM owns 49% of the outstanding equity interests of Red Man Distributors LLC (“RMD”), an Oklahoma limited liability company, formed on November 1, 2007 for the purposes of distributing oil country tubular goods in North America as a certified minority supplier. MRM is retained by RMD as an independent contractor to provide general corporate and administrative services to RMD. MRM is paid an annual services fee by RMD to provide such services. In addition, MRM is paid a license fee for the right and license to use the name “Red Man”. MRM pays RMD a specified percentage of RMD’s gross monthly revenue for the relevant month from sales of products by RMD that are sourced from McJunkin Red Man Corporation. For the six months ended June 26, 2008, the amounts paid approximated ~~$0.4~~$0.3 million (service fee), ~~$0.6~~$0.5 million (license fee) and ~~$3.7~~$2.9 million (sales payment). There were no such amounts paid in the year ended December 31, 2007. RMD is a VIE and MRM has determined that it is the primary beneficiary, therefore the Company has consolidated this entity.

The accompanying unaudited consolidated condensed financial statements of the Company have been prepared in accordance withRule 10-01 ofRegulation S-X for interim financial statements and do not include all information and footnotes required by generally accepted accounting principles for complete annual financial statements. However, the information furnished herein reflects all normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods. The results of operations for the six months ended June 26, 2008 are not necessarily indicative of the results that will be realized for the fiscal year ending December 31, 2008. The consolidated balance sheet as of December 31, 2007 has been derived from audited financial statements for the year ended December 31, 2007. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2007.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from these estimates. The consolidated financial statements include the accounts of McJunkin Red Man Holding Corporation and its wholly owned and majority owned subsidiaries. The residual ownership in the equity and income of Midfield Supply ULC (Midfield), a 51% owned, Canada-based subsidiary, is reflected as minority interest. All significant intercompany transactions have been eliminated.

There have been no significant changes in our significant accounting polices during the six months ended June 26, 2008 as compared to the significant accounting policies described in our audited financial statements for the fiscal year ending December 31, 2007.

Recent Accounting Pronouncements:

In March 2008, the FASB issued SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities. SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. It requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. This statement is effective for financial statements issued for fiscal

F-37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

years beginning after November 15, 2008. The Company is still assessing the impact of this pronouncement.

In April 2008, the FASB issued FSPFAS 142-3,Determination of the Useful Life of Intangible Assets, (FSPFAS 142-3). FSPFAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets. The intent of the position is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the intangible asset. FSPFAS 142-3 is effective for the fiscal years beginning after December 15, 2008. The Company is assessing the potential impact that the adoption of FSPFAS 142-3 may have on its consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162,The Hierarchy of Generally Accepted Accounting Principles,(SFAS No. 162). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles. This statement shall be effective 60 days following the Securities and Exchange Commission’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The Company does not believe that implementation of this standard will have a material impact on its consolidated financial statements.

In June 2008, the FASB ratified Emerging Issues Task Force IssueNo. 08-3,Accounting for Lessees for Maintenance Deposits Under Lease Arrangements,(EITF 08-3).EITF 08-3 provides guidance for accounting for nonrefundable maintenance deposits.EITF 08-3 is effective for fiscal years beginning after December 15, 2008. The Company does not currently expect the adoption ofEITF 08-3 to have a material impact on its consolidated financial statements.


NOTE 2 —	TRANSACTIONS AND SUBSEQUENT EVENT

Acquisition of Controlling Interest in McJunkin by the Goldman Sachs Funds

In connection with the acquisition of controlling interest in McJunkin by the Goldman Sachs Funds, the purchase price paid to effect the acquisition was allocated to the fair value of acquired assets and liabilities at January 31, 2007.

Certain members of the Company’s executive management team held equity interests in McJunkin, the Predecessor, prior to this transaction and continue to hold equity interests in the Successor. In accordance with the provisions of Emerging Issues Task ForceNo. 88-16,Basis in Leveraged Buyout Transactions, the basis of executive management’s interests in the Company, the Successor, after the acquisition was carried over at the basis of their interests in the Predecessor prior to the acquisition.

F-38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

The purchase price was approximately $1,008.5 million. The sources and uses of funds in connection with the acquisition are summarized below (in millions):


Sources
Asset-Based Revolving Credit Facility	$	75.0
Term Loan Facility		575.0
Equity contribution — cash		225.6
Equity contribution — non-cash		159.5

Total sources	$	1,035.1

Uses
Consideration paid to stockholders (including non-cash rollover by McJunkin and McApple stockholders of $159.5 million)	$	983.4
Transaction costs		16.5
Debt issuance costs		22.8
General corporate purposes		7.6
Repayment of existing debt		4.8

Total uses	$	1,035.1

F-39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

The purchase price has been allocated as follows (in millions):


Cash consideration:
Paid to shareholders				$	823.9
Transaction costs paid at closing					16.5
Transaction costs paid outside of closing					8.6

					849.0
Noncash consideration					159.5

Total consideration					1,008.5
Net assets acquired at historical cost					245.2
Adjustments to state acquired assets at fair value:
1) Increase carrying value of property and equipment to fair value	$	16.6
2) Increase carrying value of inventory to fair value		68.2
3) Write-off historical goodwill and tradename		(6.6	)
4) Record intangible assets acquired
Customer-related intangibles		356.0
Sales order backlog		1.6
Non-compete agreements		1.0
Tradename		155.8
5) Eliminate McApple minority interest		16.0
6) Record liability to shareholders related to non-core assets		(26.2	)
7) Record fair value adjustments to various other assets and liabilities		0.2
8) Tax impact of valuation adjustments		(213.8	)		368.8

Net assets acquired at fair value					614.0
Carryover basis adjustment					(11.6	)

Excess purchase price recorded as goodwill				$	382.9

The tradename has an indefinite life and is not subject to amortization. Tradename and goodwill are reviewed at least annually for impairment.

Transaction costs paid at closing included $10.6 million paid to an affiliate of the Goldman Sachs Funds as reimbursement of their costs associated with due diligence and advisory services.

Acquisition of Midway-Tristate Corporation

On April 30, 2007, MRM, through its wholly owned subsidiary McJunkin Appalachian , acquired a 100% interest inMidway-Tristate Corporation (Midway). Midway is engaged primarily in the distribution of pipe, equipment and supplies to the oil and gas and utility industries in Michigan, West Virginia, Ohio, Pennsylvania, Utah, Wyoming, and Colorado. The acquisition of Midway significantly increased McApple’s presence particularly in the strategic Rocky Mountain region.

F-40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

The purchase price was approximately $83.3 million and has been allocated as follows (in millions):


Assets acquired
Accounts receivable	$	19.5
Inventory		30.8
Fixed assets		3.4
Other assets		0.1
Customer-related intangibles		20.1
Goodwill		30.6

		104.5
Liabilities assumed
Accounts payable		11.5
Accrued expenses		2.1
Income taxes payable		0.2
Deferred income taxes		7.4

		21.2

Total purchase price	$	83.3

Goodwill associated with this transaction is not deductible for tax purposes, nor is any amortization associated with customer-related intangibles which have a useful life of 20 years.

Acquisition of Red Man Pipe & Supply Co.

F-41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

The purchase price was approximately $991.0 million (including common units issued for Red Man shares of $111.1 million) and has preliminarily been allocated as follows (in millions):

Assets acquired

Cash $ 13.9
Accounts receivable 335.2
Notes and other receivables 5.2
Inventory 386.3
Fixed assets 50.6
Other assets 0.3
Customer-related intangibles 260.2
Tradename 188.9
Sales order backlog 2.0
Goodwill 407.9

1,650.5
Liabilities assumed

Accounts payable 209.5
Accrued expenses 45.6
Income taxes payable 3.1
Deferred income taxes 225.9
Debt 71.6
Minority interest 100.6
Other liabilities 3.2

659.5

Total purchase price $ 991.0


Assets acquired
Cash	$	13.9
Accounts receivable		335.2
Notes and other receivables		5.2
Inventory		386.3
Fixed assets		50.6
Other assets		0.3
Customer-related intangibles		260.2
Tradename		188.9
Sales order backlog		2.0
Goodwill		407.9

		1,650.5
Liabilities assumed
Accounts payable		209.5
Accrued expenses		45.6
Income taxes payable		3.1
Deferred income taxes		225.9
Debt		45.9
Liability to shareholders		65.3
Minority interest		61.0
Other liabilities		3.2

		659.5

Total purchase price	$	991.0

Transaction costs capitalized in connection with the acquisition of Red Man Pipe & Supply Co. totaled $17.3 million and included $12.0 million paid to an affiliate of GSCP as reimbursement of their costs associated with due diligence and advisory services.

As part of the Red Man transaction, MRM indirectly acquired a call option to buy out the 49% minority interest of Midfield for approximately $100.0 million. The call option may be exercised between June 15, 2008 and December 15, 2008. On July 31, 2008 MRM exercised this call right. Approximately $68 million of the purchase price was paid in cash with proceeds from MRM’s Asset Based Revolving Credit Facility while the remainder was paid through the issuance of PVF stock. In addition to the $100.0 million purchase price, the company repaid $29 million of loans to the selling shareholders of Midfield Supply.

Pro Forma Financial Information

The following unaudited pro forma results of operations assume that each of the transactions described above occurred on January 1, 2007. This unaudited pro forma information should not be

F-42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

relied upon as necessarily being indicative of the historical results that would have been obtained if the transactions had actually occurred on that date nor the results that may be obtained in the future.


	Six Months Ended,		Six Months Ended,
	June 28,		June 28,
	2007		2007
	(in millions)		(in millions)

Pro forma sales	$	1,909.2	$	1,909.2
Pro forma net income	$	62.6	$	60.0


~~NOTE 3 —~~	~~GOODWILL AND INTANGIBLE ASSETS~~

NOTE 3 — GOODWILL AND INTANGIBLE ASSETS

The following tables present the Company’s goodwill and other intangible assets at June 26, 2008 and December 31, 2007 (in thousands).

Sales
Tradename

Order
Customer
Non Compete
(With

Backlog
Base
Agreements
Indefinite

(1 Year)

(30.5 Years)

(5 Years)

Life)

Goodwill

Recorded in connection with the McJunkin acquisition $ 1,601 $ 356,036 $ 970 $ 155,762 $ 382,908
Recorded in connection with the Midway acquisition (preliminary) — 20,118 — — 30,802
Recorded in connection with the Red Man acquisition (preliminary) — — — — 681,906
Amortization (1,467 ) (8,844 ) (178 ) — —
Impact of foreign currency translation — — — — (3,237 )

Balance at December 31, 2007 $ 134 $ 367,310 $ 792 $ 155,762 $ 1,092,379

Adjustments to purchase price allocation in connection with the Red Man acquisition 2,048 260,316 — 188,864 (273,978 )
Adjustments to purchase price allocation in connection with the Midway acquisition — — — — (170 )
Amortization (1,321 ) (14,204 ) (98 ) — —
Impact of foreign currency translation (3,527 )

Balance at June 26, 2008 $ 861 $ 613,422 $ 694 $ 344,626 $ 814,704


	Sales									Tradename
	Order			Customer			Non Compete			(With
	Backlog			Base			Agreements			Indefinite
	(1 Year)			(30 Years)			(5 Years)			Life)		Goodwill

Recorded in connection with the McJunkin acquisition	$	1,601		$	356,036		$	970		$	155,762	$	382,908
Recorded in connection with the Midway acquisition (preliminary)		—			20,118			—			—		30,802
Recorded in connection with the Red Man acquisition (preliminary)		2,048			260,316			—			188,864		230,678
Amortization		(1,467	)		(8,844	)		(178	)		—		—
Impact of foreign currency translation		—			—			—			—		(3,237	)

Balance at December 31, 2007	$	2,182		$	627,626		$	792		$	344,626	$	641,151

Adjustments to purchase price allocation in connection with the Red Man acquisition		—			—			—			—		177,250
Adjustments to purchase price allocation in connection with the Midway acquisition		—			—			—			—		(170	)
Amortization		(1,321	)		(14,204	)		(98	)		—		—
Impact of foreign currency translation													(3,527	)

Balance at June 26, 2008	$	861		$	613,422		$	694		$	344,626	$	814,704

F-43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

Amortization of Intangible Assets

The weighted average amortization period for each type of intangible is noted in the table above. The weighted average amortization period for all amortizable intangibles is ~~30.3~~30 years. The sales order backlog is amortized over one year, the non-compete agreements are amortized over the life of the agreements (five years) and the customer base is amortized based upon estimated attrition rates. Total amortization of all acquisition-related intangible assets for each of the years ending December 31, 2008 to 2012, is currently estimated as follows (in millions):


2008	$	27.9
2009		26.1
2010		26.1
2011		26.1
2012		26.1


NOTE 4 —	INVENTORIES

If inventories were reported at values approximating current costs, as would have resulted from using thefirst-in, first-out method, they would have been $65.9 million and $10.3 million higher at June 26, 2008 and December 31, 2007, respectively. In addition, after giving pro forma effect to profit sharing and income taxes, net income would have been higher by $34.9 million for the six months ended June 26, 2008 and $1.8 million for the five months ended June 28, 2007, respectively. No such amounts were recorded for the one month ended January 30, 2007. For the six months ended June 26, 2008, the Company experienced a liquidation of certain LIFO inventories resulting in income of $15.1 million. For the five months ended June 28, 2007, the Company experienced a liquidation of certain LIFO inventories resulting in income of $1.6 million. The liquidation for the one month ended January 30, 2007 was immaterial.

The Company’s inventory is composed of finished goods. There are no general and administrative costs charged to inventory.


NOTE 5 —	LONG-TERM DEBT

The significant components of our long-term debt are as follows (in thousands):


	June 26,		December 31,
	2008		2007
Asset-based revolving credit facility	$	204,394	$	234,146
Term loan facility		567,813		569,250
Junior Term loan facility		450,000		—
Midfield revolving credit facility		51,727		50,970
Midfield term loan facility		9,845		10,228
Midfield notes payable		967		3,803

		1,284,746		868,397
Less current portion		16,562		19,781

	$	1,268,184	$	848,616

Asset-Based Revolving Credit Facility: On January 31, 2007, in connection with the acquisition of McJunkin by the Goldman Sachs Funds, MRM entered into a credit agreement and related security and other agreements for a secured Asset-Based Revolving Credit Facility with The

F-44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

CIT Group/Business Credit, Inc. as administrative agent and collateral agent. The Asset-Based Revolving Credit Facility provided financing of up to $300.0 million, subject to a borrowing base equal to at any time the lesser of 85% of eligible accounts receivable and 85% of net orderly liquidation value of the eligible inventory, less certain reserves. The Asset-Based Revolving Credit Facility included borrowing capacity available for letters of credit and for borrowings onsame-day notice. At the closing of the acquisition, MRM utilized $75.0 million of the Asset-Based Revolving Credit Facility for loans and approximately $3.1 million for letters of credit.

As of June 26, 2008 and December 31, 2007, $204.4 million and $234.1 million, respectively, in borrowings were outstanding under the Asset-Based Revolving Credit Facility. As of June 26, 2008, MRM had $490.8 million of unused borrowing availability based on a borrowing base of $700 million and after giving effect to $4.8 million used for letters of credit.

The Asset-Based Revolving Credit Facility provides that MRM has the right at any time to request incremental facilities commitments, but the lenders are under no obligation to provide any such additional commitments. The Asset-Based Revolving Credit Facility permits incremental facilities (together with any new commitments under the Term Loan Facility discussed below) up to (1) $150.0 million generally available, (2) and additional amounts available so long as the secured leverage ratio as specified in the Asset-Based Revolving Credit Facility is satisfied. If MRM were to request any such additional commitments and the existing lenders or new lenders were to agree to provide such commitments, the Asset-Based Revolving Credit Facility size could be increased as described above, but MRM’s ability to borrow would still be limited by the amount of the borrowing base.

Borrowings under the Asset-Based Revolving Credit Facility bear interest at a rate per annum equal to, at MRM’s option, either (a) a base rate determined by reference to the greater of (1) the prime rate as quoted inThe Wall Street Journaland (2) the federal funds effective rate plus 1/2 of 1% or (b) a LIBOR rate, subject to certain adjustments, in each case plus an applicable margin. The applicable margin in the initial asset revolving credit facility was 0.75% with respect to base rate borrowings and 1.75% with respect to LIBOR borrowings. As part of the refinancing, these were revised to 0.50% and 1.50%, respectively. The applicable margin is subject to adjustment downward based on the MRM’s leverage ratio. In addition, MRM is required to pay a commitment fee of 0.375% per annum in respect of the unutilized commitments. This rate is also subject to adjustment downward based upon the MRM’s leverage. MRM must also pay customary letter of credit fees and agency fees. The weighted average interest rate on the revolving loans was 4.21% and 6.53% at June 26, 2008 and December 31, 2007, respectively.

F-45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

Facility. MRM may voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans at any time without premium or penalty other than customary “breakage” costs with respect to LIBOR loans. There is no scheduled amortization under the Asset-Based Revolving Credit Facility; the principal amount of the loans outstanding is due and payable in full on October 31, 2013.


	•	A first-priority security interest in personal property consisting of inventory and accounts receivable;

	•	A second-priority pledge of certain of the capital stock held by MRM or any subsidiary guarantor; and

	•	A second-priority security interest in, and mortgages on, substantially all other tangible and intangible assets of MRM and each subsidiary guarantor.

The Asset-Based Revolving Credit Facility contains a number of covenants that, among other things and subject to certain significant exceptions, restrict MRM’s ability and the ability of its subsidiaries to:


	•	Incur additional indebtedness;

	•	Pay dividends on MRM’s capital stock or the capital stock of MRM’s direct or indirect parent;

	•	Make investments, loans, advances or acquisitions;

	•	Sell assets, including capital stock of MRM’s subsidiaries;

	•	Consolidate or merge with another entity;

	•	Create liens;

	•	Pay, redeem, or amend the terms of subordinated indebtedness;

	•	Enter into certain sale-leaseback transactions;

	•	Fundamentally or substantively alter the character of the business conducted by MRM and its subsidiaries; and

	•	Enter into agreements that limit (1) the ability of non-guarantors to pay dividends to MRM or any guarantor or (2) the ability of MRM or any guarantor to pledge its assets to secure its obligations under the Asset-Based Revolving Credit Facility.

F-46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

pro forma ratio of consolidated EBITDA to consolidated Fixed Charges (as such terms are defined in the credit agreement) were at least 1.0 to 1.0. The credit agreement also contains customary affirmative covenants and events of default.

MRM was in compliance with the covenants contained in its Asset-Based Revolving Credit Facility during the six months ended June 26 2008, and the eleven months ended December 31, 2007.

Term Loan Facility: On January 31, 2007, in connection with the acquisition of McJunkin by GSCP, MRM entered into a credit agreement and related security and other agreements for a $575.0 million Term Loan Facility with Lehman Commercial Paper as administrative agent and collateral agent. The full amount of the Term Loan Facility was borrowed on January 31, 2007.

These borrowings bear interest at a rate per annum equal to, at MRM’s option, either (a) the greater of the prime rate and the federal funds rate effective rate plus 0.50%, plus in either case 2.25%; or (b) LIBOR plus 3.25%. On June 26, 2008 and December 31, 2007, $567.8 million and $569.3 million, respectively, were outstanding under the Term Loan. The weighted average interest rate on the term loan was 6.13% and 8.08% at June 26, 2008 and December 31, 2007, respectively.

The Term Loan Facility requires MRM to prepay outstanding term loans with 50% (which percentage will be reduced to 25% if MRM’s total leverage ratio is less than a specified ratio and will be reduced to 0% if MRM’s total leverage ratio is less than a specified ratio) of its annual excess cash flow (as defined in the credit agreement). For 2008 and 2007, MRM was not required to prepay any outstanding term loans pursuant to the annual excess cash flow requirements.

All obligations under the Term Loan Facility are unconditionally guaranteed by MRM and each wholly owned domestic subsidiary of MRM. All obligations under the Term Loan Facility, and the guarantees of those obligations, are secured, subject to certain significant exceptions, by substantially all of the assets of MRM and the subsidiaries that have guaranteed the Term Loan Facility, including:


	•	A second-priority security interest in personal property consisting of inventory and accounts receivable;

	•	A first-priority pledge of certain of the capital stock held by MRM or any subsidiary guarantor; and

	•	A first-priority security interest in, and mortgages on, substantially all other tangible and intangible assets of the Company and each subsidiary guarantor.

MRM was in compliance with the covenants contained in the Term Loan Facility during the six months ended June 26, 2008 and the eleven months ended December 31, 2007.

F-47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

Junior Term Loan Facility: On May 22, 2008, McJunkin Red Man Holding Corporation, as the borrower, entered into a $450 Million Term Loan Credit Agreement (the “Junior Term Loan Facility”). The proceeds from the Junior Term Loan Facility, along with $25 million in proceeds from revolving loans drawn under the Revolving Credit Facility, were used to fund a dividend to McJunkin Red Man Holding Corporation’s stockholders, including PVF Holdings LLC. PVF Holdings LLC distributed the proceeds it received from the dividend to its members, including the Goldman Sachs Funds and

~~F-47~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~McJUNKIN RED MAN HOLDING CORPORATION~~

~~June 26, 2008~~

certain of the Company’s directors and members of its management. The term loans under the Junior Term Loan Facility are not subject to amortization and the principal of such loans must be repaid on January 31, 2014.

The term loans under the Junior Term Loan Facility bear interest at a rate per annum equal to, at the borrower’s option, either (i) the greater of the prime rate and the federal funds effective rate plus 0.50%, plus in either case 2.25%, or (ii) LIBOR multiplied by the statutory reserve rate plus 3.25%. On June 26, 2008, $450.0 million was outstanding under the Junior Term Loan Facility and the interest rate on these loans was 5.73%.

We may voluntarily prepay term loans under the Junior Term Loan Facility in whole or in part at our option, without premium or penalty. After the payment in full of the term loans under the Term Loan Facility, we will be required to prepay outstanding term loans under the Junior Term Loan Facility with 100% of the net cash proceeds of:


	•	a disposition of any of our or our restricted subsidiaries’ business units, assets or other property not in the ordinary course of business, subject to certain exceptions for permitted asset sales;

	•	a casualty event with respect to collateral for which we or any of our restricted subsidiaries receives insurance proceeds, or proceeds of a condemnation award or other compensation;

	•	the issuance or incurrence by us or any of our restricted subsidiaries of indebtedness, subject to certain exceptions; and

	•	any sale-leaseback transaction permitted under the Junior Term Loan Facility.

Also, after the payment in full of the term loans under the Term Loan Facility, we will be required to prepay the outstanding term loans under the Junior Term Loan Facility. We must also prepay the principal amount of the term loans under the Junior Term Loan Facility with 50% of the cash proceeds received by us from a “Qualified IPO”, net of underwriting discounts and commissions and other related reasonable costs and expenses. A “Qualified IPO” is defined as a bona fide underwritten sale to the public of our common stock or the common stock of any of our direct or indirect subsidiaries or our direct or indirect parent companies pursuant to a registration statement that is declared effective by the SEC or the equivalent offering on a private exchange or platform.

The Junior Term Loan Facility contains a number of negative covenants that are substantially similar to those governing the Asset-Based Revolving Credit Facility. The credit agreement also contains customary affirmative covenants and events of default.

We were in compliance with the covenants contained in the Junior Term Loan Facility during the six months ended June 26, 2008.

F-48

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

property assets including accounts receivable, chattel paper, bank accounts, general intangibles, inventory, investment property, cash and insurance proceeds. The balance of the revolver is due at its maturity date, November 2, 2010.

Midfield Notes Payable: Midfield has two notes payable pursuant to holdback provisions from recent acquisitions. These amounts, totaling $1.0 million and $3.8 million at June 26, 2008 and

~~F-48~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~McJUNKIN RED MAN HOLDING CORPORATION~~

~~June 26, 2008~~

December 31, 2007, respectively, are owed to individuals who became and continue to be shareholders of Midfield supply as a result of these transactions. These notes were paid in August 2008.

Maturities of Long-Term Debt: At June 26, 2008, annual maturities of long-term debt during the next five fiscal years and thereafter are as follows (in millions):


2008	$	16.6	$	13.7
2009		5.8		5.8
2010		56.8		56.8
2011		5.8		5.8
2012		5.8		5.8
Thereafter		1,194.0		1,196.9

The above table does not reflect future excess cash flow prepayments, if any, that may be required under the Term Loan Facility.

Interest Rate Swaps: The Company uses derivative financial instruments to help manage its interest rate risk exposure. On December 3, 2007, MRM entered into a floating to fixed interest rate swap agreement, effective December 31, 2007, for a notional amount of $700.0 million to limit its exposure to interest rate increases related to a portion of its floating rate indebtedness. The interest rate swap agreement terminates after three years. At June 26, 2008 and December 31, 2007, the fair value of MRM’s interest rate swap agreement was a loss of approximately $3.2 million and $0.4 million, respectively, which amount is included in accrued liabilities. As of the effective date, MRM designated the interest rate swap as a cash flow hedge.

For cash flow hedges, the effective portion of the gain or loss on the derivative hedging instrument is reported in other comprehensive income, while the ineffective portion is recorded in current earnings as other income or other expense. At June 26, 2008 and December 31, 2007, $1.6 million and $0.2 million, respectively, of unrecognized losses, net of tax, on the interest rate swap agreement is included in other comprehensive income. During the six months ended June 26, 2008, the Company recognized a hedge ineffectiveness loss of $0.4 million on the consolidated statements of income. There was no hedge ineffectiveness at December 31, 2007.

As a result of the swap agreement, MRM’s effective fixed interest rates as to the $700.0 million in floating rate indebtedness will be 4.868% for associated indebtedness on the Asset-Based Revolving Credit Facility and 7.118% for associated indebtedness on the Term Loan Facility, per quarter through 2010 and result in an average fixed rate of 6.672%.


NOTE 6 —	INCOME TAXES

Management evaluates the estimated annual effective income tax rate for interim periods based on current and forecasted business levels and activities, including enacted tax laws. Items unrelated

F-49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

to current year ordinary income are recognized entirely in the period identified as a discrete item of tax. The interim period income tax provisions are comprised of tax on ordinary income at the most recent estimated annual effective tax rate, adjusted for the effect of discrete items.

The effective tax rates were 36.26% for the six months ended June 26, 2008, 41.18% for the five months ended June 28, 2007 and 41.08% for the one month ended January 30, 2007. These rates differ from the federal statutory rate of 35% principally as a result of state and foreign income taxes. The rate for the six months ended June 26, 2008 is lower than the rates for the five months ended June 28, 2007 and the one month ended January 30, 2007 primarily due to lower state taxes.

~~F-49~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~McJUNKIN RED MAN HOLDING CORPORATION~~

~~June 26, 2008~~

During the interim period, there were no material changes to the amount of previously disclosed unrecognized tax benefits.


NOTE 7 —	CONTINGENCIES

The Company is involved in various legal proceedings and claims, both as a plaintiff and a defendant, which arise in the ordinary course of business. Included in these legal proceedings are ~~cases~~claims where the Company has been named as a defendant in lawsuits brought against a large number of entities by individuals seeking damages for injuries allegedly caused by certain products containing asbestos. Among other things, with the assistance of accounting and financial consultants, the Company conducted an analysis of pending and probableasbestos-related claims to determine the adequacy of its accrual for these claims. This analysis consisted of developing per claim settlement estimates for each category of claim by alleged disease type based on the Company’s historical settlement experience. These estimates were applied to each of the Company’s pending individual claims. Liability with respect to mass filings was estimated by determining the number of individual plaintiffs included in the mass filings likely to have claims resulting in settlements based on the Company’s historical experience with mass filings. Finally, ~~likely~~probable claims expected to be asserted against the Company over the next fifteen years were predicted based on public health estimates of future incidences of asbestos-related diseases in the general U.S. population and per claim settlement estimates were applied to those estimated claims. Based on this analysis and the existence of certain insurance coverage, the Company believes that its current accruals for pending and probable asbestos-related litigation asserted over the next 15 years are adequate. However, there is a possibility that resolution of the matters could result in additional losses in excess of current accruals. Also, there is a possibility that resolution of certain of the Company’s legal contingencies for which there are no liabilities recorded could result in a loss. Management is not able to estimate the amount of such loss, if any. However, in the opinion of the Company, after consultation with counsel, the ultimate resolution of all pending matters is not expected to have a material effect on its financial position, although it is possible that such resolutions could have a material adverse impact on the Company’s results of operations.

Midfield has issued a financial guarantee in the form of an irrevocable standby letter of credit for an associated entity in the amount of $4.9 million which is recorded in the accompanying balance sheet at its fair value. This letter expires January 31, 2009 subject to certain renewal provisions.

F-50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008


NOTE 8 —	FAIR VALUE MEASUREMENTS

On January 1, 2008, the Company adopted Statement of Financial Accounting Standard No. 157,Fair Value Measurements(SFAS No. 157), which clarifies the definition of fair value, establishes a framework for measuring fair value under accounting principles generally accepted in the United States, and enhances disclosures about fair value measurements. In accordance with Financial Accounting Standards Board Staff PositionNo. 157-2, “Effective Date of FASB Statement No. 157”, the Company will delay application of SFAS No. 157 for non-financial assets and non-financial liabilities until January 1, 2009.

~~F-50~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~McJUNKIN RED MAN HOLDING CORPORATION~~

~~June 26, 2008~~

SFAS No. 157 clarified the definition of fair value as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date.

SFAS 157 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy established by SFAS No. 157 is as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date.

Level 2: Significant observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs for the asset or liability. Unobservable inputs should reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability (including all assumptions about risk).

The Company used the following methods and significant assumptions to estimate fair value for assets and liabilities recorded at fair value.

Assets Held for Sale. Included in assets held for sale are certain investments held for sale that are reported at fair value utilizing Level 1 inputs. The fair value of these investments held for sale is determined by obtaining quoted prices on nationally recognized securities exchanges.

Derivatives. Derivatives are reported at fair value utilizing Level 2 inputs. The Company obtains dealer quotations to value its interest rate swaps.

The following table presents assets and liabilities measured at fair value on a recurring basis.


June 26, 2008	Total		Level 1		Level 2		Level 3
	(In thousands)

Assets:
Assets Held for Sale (Investments)	$	33,595	$	33,595	$	—	$	—
Liabilities:
Derivatives (Interest Rate Swaps)	$	3,248	$	—	$	3,248	$	—

Effective January 1, 2008, the Company adopted the provisions of SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115(SFAS No. 159). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. The Company ~~has not elected to account for any of its assets or liabilities at fair value and therefore adoption of SFAS No. 159 on January 1, 2008 did not effect its financial statements.~~

F-51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

has not elected to account for any of its assets or liabilities at fair value and therefore adoption of SFAS No. 159 on January 1, 2008 did not effect its financial statements.


NOTE 9 —	COMPREHENSIVE INCOME


	(Successor)					(Predecessor)
	Six Months Ended			Five Months Ended		One Month Ended
	June 26,			June 28,		January 30,
	2008			2007		2007

Net income	$	75,934		$	17,614	$	6,596
Changes in accumulated other comprehensive income (loss):
Change in unrealized gain on securities
Available for sale, net of tax		—			—		(3,958	)
Derivative valuation adjustment, net of tax		(1,386	)		—		—
Foreign currency translation, net of tax		(1,041	)		—		—

Comprehensive Income	$	73,507		$	17,614	$	2,638


NOTE 10 —	STOCK-BASED COMPENSATION

Under the terms of the stock option plan, options may not be granted at prices less than their fair market value on the date of the grant, nor for a term exceeding 10 years. Vesting occurs inone-third increments on the third, fourth, and fifth anniversaries of the date specified in the employees’ respective option agreements. The Company expenses the fair value of the stock option grants on a straight-line basis over the vesting period. A Black-Scholes option pricing model was used to estimate the fair value of the stock options granted in 2007 and 2008. For purposes of measuring compensation, the Company relies on a calculated value that requires certain assumptions including volatility based on the appropriate industry sector. Following are the weighted average assumptions used to estimate the fair values of options:


	2008		2007

Risk-free interest rate		3.19%		4.10%
Dividend yield		0.00%		0.00%
Expected volatility		22.07%		22.07%
Expected lives		6.2 years		6.2 years

F-52

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

A summary of the status of stock option grants under the stock option plan as of June 26, 2008, and changes during the six months ended on that date is as follows:

Weighted Average

Options

Exercise Price

Outstanding at January 1, 2008 3,533.46 $ 2,411.17
Granted 394.61 4,348.19
Exercised — —
Forfeited (128.37 ) (2,411.17 )
Expired — —

Outstanding at June 26, 2008 3,799.70 $ 2,612.34

Options exercisable at June 26, 2008 — $ —
Options vested at June 26, 2008 — —


				Weighted Average
	Options			Exercise Price

Outstanding at January 1, 2008		1,766,730		$	4.82
Granted		197,305			8.70
Exercised		—			—
Forfeited		(64,185	)		(4.82	)
Expired		—			—

Outstanding at June 26, 2008		1,899,850		$	5.22

Options exercisable at June 26, 2008		—		$	—
Options vested at June 26, 2008		—			—

The following table summarizes restricted stock activity under the restricted stock plan as of June 26, 2008, and changes during the six months ended on that date:


	Shares

Balance at January 1, 2008		~~635.52~~317,760
Granted		—
Forfeited		(~~41.95~~20,975	)
Issued		—

Balance at June 26, 2008		~~593.57~~296,785

Recognized compensation expense under the stock option and restricted stock plans is set forth in the table below. There were no such expenses for the one month ended January 30, 2007.

Six Months
Five Months

Ended
Ended

June 26,
June 28,

2008

2007

Compensation expense Stock options $ 501,000 $ 80,000
Restricted stock 139,000 39,000

Total compensation expense $ 640,000 $ 119,000


	Six Months		Five Months
	Ended		Ended
	June 26,		June 28,
Compensation expense	2008		2007

Stock options	$	501,000	$	80,000
Restricted stock		139,000		39,000

Total compensation expense	$	640,000	$	119,000

At June 26, 2008, the Company had $7.3 million and $1.1 million of unrecognized compensation expense related to outstanding stock options and restricted stock, respectively.

Restricted Common Units: In conjunction with the acquisition of McJunkin by the Goldman Sachs Funds, certain key MRM employees received restricted common units of PVF Holdings LLC that vest over a five-year requisite service period. Compensation expense associated with these restricted common units totaled $0.6 million for the six months ended June 26, 2008 and $0.5 million for the five months ended June 28, 2007 based upon their fair market value at the date they were

F-53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

issued which is being recognized on a straight-line basis over the vesting period. There was no such expense for the one month ended January 30, 2007. As of June 26, 2008, the Company had $4.1 million of unrecognized compensation expense related to outstanding restricted common units which will be amortized over a weighted average vesting period of four years.

Profits Units: In conjunction with the acquisition of McJunkin by the Goldman Sachs Funds and the Red Man acquisition, certain key MRM employees received profits units in PVF Holdings LLC that vest over a five-year requisite service period. These units entitle their holders to a share of any distributions made by PVF Holdings LLC once common unit holders have received a return of all capital contributed to PVF Holdings LLC. Compensation expense associated with these profits units totaled $1.6 million for the six months ended June 26, 2008 and $0.7 million for the five months ended June 28, 2007 based upon their fair market value at the date they were issued which is being amortized on a straight-line basis over the vesting period. There was no such expense for the one month ended January 30, 2007. As of June 26, 2008, the Company had $13.8 million and of unrecognized compensation expense related to outstanding profits units which will be amortized over a weighted average vesting period of five years.


NOTE 11 —	EARNINGS PER SHARE

Basic earnings per share are computed based on the weighted-average number of common shares outstanding, excluding any dilutive effects of stock options and restricted stock. Diluted earnings per share are computed based on the weighted-average number of common shares outstanding including any dilutive effect of stock options and restricted stock. The dilutive effect of stock options and restricted stock are calculated under the treasury stock method. Earnings per share are calculated as follows:

(Successor) (Predecessor)
Six Months
Five Months
One Month

Ended
Ended
Ended

June 26,
June 28,
January 30,

2008

2007

2007

Net income (in thousands) $ 75,934 $ 17,614 $ 6,596

Average basic shares outstanding 309,421 102,594 17,510
Effect of dilutive securities 613 198 —

Average dilutive shares outstanding 310,034 102,792 17,510

Net income per share:
Basic $ 245.41 $ 171.69 $ 376.70
Diluted $ 244.92 $ 171.36 $ 376.70


	(Successor)				(Predecessor)
	Six Months		Five Months		One Month
	Ended		Ended		Ended
	June 26,		June 28,		January 30, 2007
	2008		2007		Class A		Class B

Net income (in thousands)	$	75,934	$	17,614	$	6,381	$	215

Average basic shares outstanding		154,710,500		51,297,000		16,940		570
Effect of dilutive securities		306,500		99,000		—		—

Average dilutive shares outstanding		155,017,000		51,396,000		16,940		570

Net income per share:
Basic	$	0.49	$	0.34	$	376.70	$	376.70
Diluted	$	0.49	$	0.34	$	376.70	$	376.70

Stock option grants are disregarded in this calculation if they are determined to be anti-dilutive. At June 26, 2008, the Company’s anti-dilutive stock options totaled ~~3,800.~~1,899,850. At June 28, 2007, the Company’s anti-dilutive stock options totaled ~~1,169.~~584,500. There were no stock options outstanding at January 30, 2007.

F-54

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

NOTE 12 — SALES BY PRODUCT LINE

The percentage of our net sales by product line are as follows:


	(Successor)				(Predecessor)
	Six Months Ended		Five Months Ended		One Month Ended
	June 26,		June 28,		January 30,
Type	2008		2007		2007

Pipe, valves and fittings		80.9%		79.1%		78.3%
Oilfield and natural gas products		18.5%		20.3%		21.3%
Service revenue		0.6%		0.6%		0.4%

Total		100.0%		100.0%		100.0%

NOTE 13 — RELATED PARTY TRANSACTIONS

Leases

The Company leases certain land and buildings from Hansford Associates Limited Partnership (“Hansford Associates”) and Appalachian Leasing Company (“Appalachian Leasing”). The Company leases certain equipment and buildings from Prideco, LLC (“Prideco”).

Rent expense under operating leases with related parties is as follows (in thousands):


	(Successor)				(Predecessor)
	Six Months Ended		Five Months Ended		One Month Ended
	June 26,		June 28,		January 30,
	2008		2007		2007

Leases with Hansford Associates	$	1,284	$	1,078	$	217
Leases with Appalachian Leasing		83		58		12
Leases with Prideco		64		—		—

	$	1,431	$	1,136	$	229

Future minimum rental payments required under operating leases with related parties are as follows:


	June 26,		December 31,
(in thousands)	2008		2007

Hansford Associates	$	3.5	$	4.2
Appalachian Leasing		0.4		0.5
Prideco		0.4		0.3
	$	4.3	$	5.0

F-55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN RED MAN HOLDING CORPORATION

June 26, 2008

Midfield Supply ULC

In connection with Red Man’s 2005 acquisition of 51% of the outstanding shares of Midfield, Red Man Pipe & Supply Canada, Ltd., the 51% majority shareholder of Midfield Supply ULC, and Midfield Holdings (Alberta) Ltd., the 49% minority shareholder of Midfield Supply ULC, entered into a shareholders agreement. This agreement, among other things, stipulates how profits of Midfield Supply ULC are shared. Midfield Holdings (Alberta) Ltd.’s portion of the profits are accrued and subsequently paid to shareholders of Midfield Holdings (Alberta) Ltd., who are also employees of Midfield Supply ULC, via a formal Employee Profit Sharing Plan (“EPSP”). In connection with the EPSP, $3.2 million and $8.9 million was accrued as of June 26, 2008 and December 31, 2007, respectively. Expenses associated with this plan are included in selling, general and administrative expenses. Red Man Pipe & Supply Canada, Ltd.’s portion of the profits was accrued and subsequently paid through an after-tax dividend, which has been eliminated in consolidation.

In connection with the EPSP payments, from time to time the minority shareholders make loans to the Company. These notes payable are unsecured, bear interest at 8% and have no fixed terms of repayment. Amounts payable to minority interest shareholders were $29.1 million and $25.0 million at June 26, 2008 and December 31, 2007, respectively. In connection with our purchase of the minority interest in Midfield Supply ULC in July 2008, the amounts payable to minority interest shareholders were paid in full on July 31, 2008.

Credit Facilities

Goldman Sachs Credit Partners L.P. (“GSCP”), an affiliate of Goldman, Sachs & Co. (“Goldman Sachs”), is one of the lenders under the Company’s Revolving Credit Facility, Term Loan Facility and Junior Term Loan Facility. GSCP is also a co-lead arranger and joint bookrunner under each of these facilities and is also the syndication agent under the Term Loan Facility and the Junior Term Loan Facility. GSCP was also a lender, co-lead arranger, joint bookrunner and syndication agent under the revolving credit facility that we entered into in January 2007. The January 2007 revolving credit facility was entered into in connection with the financing of the GS Acquisition and, at that time, the Company paid GSCP an $8.5 million financing fee. The January 2007 revolving credit facility was terminated in October 2007 in connection with the Company’s entering into the Revolving Credit Facility and the Red Man Transaction. In conjunction with entering into the Revolving Credit Facility and the Term Loan Facility in October 2007, the Company paid a $4.9 million financing fee to GSCP. The Company also paid a $4.4 million fee to GSCP in May 2008 in connection with the Junior Term Loan Facility and a fee of $0.5 million to GSCP in June 2008 in connection with the $50 million upsizing of the Company’s Revolving Credit Facility.


NOTE 14 —	STOCK SPLIT

F-56

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

McJunkin Corporation

Charleston, West Virginia

We have audited the accompanying consolidated balance sheets of McJunkin Corporation and subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of income, shareholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of McJunkin Corporation and subsidiaries as of December 31, 2006 and 2005, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/Schneider Downs & Co., Inc

Columbus, Ohio

January 13, 2007

~~F-55~~F-57

CONSOLIDATED BALANCE SHEETS

McJUNKIN CORPORATION AND SUBSIDIARIES

(Dollars in thousands, except per share amounts)


	December 31,
	2006			2005

ASSETS
CURRENT ASSETS
Cash	$	3,748		$	5,865
Receivables, less allowances of $2,015 and $1,743		168,877			163,775
Inventories		225,304			189,209
Other current assets		3,122			2,542

TOTAL CURRENT ASSETS		401,051			361,391
INVESTMENTS AND OTHER ASSETS
Investments:
PrimeEnergy and other oil and gas		40,396			32,226
Real estate and other		589			449

Total investments		40,985			32,675
Notes receivable		1,835			2,187
Cash value of life insurance		1,160			2,270

		43,980			37,132
FIXED ASSETS
Land and improvements		4,392			4,411
Buildings and building improvements		21,416			21,325
Equipment		43,143			42,402

		68,951			68,138
Allowances for depreciation		(41,743	)		(41,909	)

		27,208			26,229
PROPERTY HELD UNDER CAPITAL LEASES		2,104			2,283
INTANGIBLE ASSETS
Goodwill		6,274			6,274
Other intangible assets, net of accumulated amortization of $2,702 and $2,425		382			659

		6,656			6,933

	$	480,999		$	433,968

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable — trade	$	130,864		$	145,296
Accrued expenses and other liabilities		46,471			45,220
Customer prepayments		4,715			6,536
Dividends payable		—			26,216
Income taxes payable		2,500			8,516
Deferred income taxes		3,998			203
Current portion of long-term obligations:
Long-term debt		—			210
Capital leases		167			148

TOTAL CURRENT LIABILITIES		188,715			232,345
LONG-TERM OBLIGATIONS
Long-term debt		13,035			2,885
Capital leases		3,635			3,802
Other liabilities		1,799			2,290

		18,469			8,977
DEFERRED INCOME TAXES		15,627			12,389
MINORITY INTEREST IN McJUNKIN APPALACHIAN OILFIELD SUPPLY COMPANY		15,601			11,459
SHAREHOLDERS’ EQUITY
Capital stock, par value $700:
Class A common voting — authorized 37,860; issued and outstanding 16,940		11,858			11,858
Class B common nonvoting — authorized 5,000; issued and outstanding 570		399			399
Retained earnings		206,044			137,192
Other comprehensive income, net of deferred income taxes of $14,759 and $11,529		24,286			19,349

		242,587			168,798

	$	480,999		$	433,968

See notes to consolidated financial statements.

~~F-56~~F-58

CONSOLIDATED STATEMENTS OF INCOME

McJUNKIN CORPORATION AND SUBSIDIARIES

(Dollars in thousands, except per share data)


	Years Ended December 31,
	2006		2005

REVENUES
Net sales	$	1,713,679	$	1,445,770
Increase in fair market values of derivatives		—		499
Other income		2,615		2,361

TOTAL REVENUES		1,716,294		1,448,630
COSTS AND EXPENSES
Cost of goods sold (exclusive of depreciation and amortization shown separately below)		1,394,294		1,177,091
Selling, general and administrative		173,948		155,717
Profit sharing		15,064		13,144
Depreciation and amortization		3,936		3,743
Interest		2,845		2,707
Minority interest in McJunkin Appalachian		4,142		2,774
Amortization of intangibles		277		337
Other expenses		3,874		3,993

TOTAL COSTS AND EXPENSES		1,598,380		1,359,506

INCOME BEFORE INCOME TAXES		117,914		89,124
Income tax provision		48,340		36,583

NET INCOME	$	69,574	$	52,541

Earnings per share — Class A, basic	$	3,972.08	$	2,952.12
Earnings per share — Class A, diluted	$	3,972.08	$	2,952.12
Weighted average shares — Class A, basic		16,940		16,940
Weighted average shares — Class A, diluted		16,940		16,940
Earnings per share — Class B, basic	$	4,012.08	$	4,442.12
Earnings per share — Class B, diluted	$	4,012.08	$	4,442.12
Weighted average shares — Class B, basic		570		570
Weighted average shares — Class B, diluted		570		570
Dividends per common share, Class A	$	40	$	1,490
Dividends per common share, Class B	$	80	$	2,980

See notes to consolidated financial statements.

~~F-57~~F-59

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

McJUNKIN CORPORATION AND SUBSIDIARIES
Years Ended December 31, 2006 and 2005
(Dollars in thousands, except per share amounts)


	Class A				Class B							Accumulated Other
	Common Stock				Common Stock				Retained			Comprehensive
	Shares		Amount		Shares		Amount		Earnings			Income		Total

Balances at January 1, 2005		16,940	$	11,858		570	$	399	$	111,592		$	8,469	$	132,318
Net income for the year 2005				—				—		52,541			—		52,541
Unrealized and realized gain inPrimeEnergy-net of deferred taxes		—		—		—		—		—			10,880		10,880

Net comprehensive income				—				—		52,541			10,880		63,421
Cash dividends on common stock:
On Class A, $1,490 per share				—				—		(25,242	)		—		(25,242	)
On Class B, $2,980 per share		—		—		—		—		(1,699	)		—		(1,699	)

Balances at December 31, 2005		16,940		11,858		570		399		137,192			19,349		168,798
Net income for the year 2006				—				—		69,574			—		69,574
Unrealized and realized gain inPrimeEnergy-net of deferred taxes		—		—		—		—		—			4,937		4,937

Net comprehensive income		—		—		—		—		69,574			4,937		74,511
Cash dividends on common stock:
On Class A, $40 per share		—		—		—		—		(677	)		—		(677	)
On Class B, $80 per share		—		—		—		—		(45	)		—		(45	)

Balances at December 31, 2006		16,940	$	11,858		570	$	399	$	206,044		$	24,286	$	242,587

See notes to consolidated financial statements.

~~F-58~~F-60

CONSOLIDATED STATEMENTS OF CASH FLOWS

McJUNKIN CORPORATION AND SUBSIDIARIES

(Dollars in thousands)


	Years Ended December 31,
	2006			2005

CASH PROVIDED BY (USED IN) OPERATIONS
Net income	$	69,574		$	52,541
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization		3,936			3,743
Deferred income taxes		3,802			(4,905	)
Minority interest in McJunkin Appalachian		4,142			2,774
Amortization of intangibles		277			337
Increase in fair market values of derivatives		—			(499	)
Provision for losses on receivables		414			90
Reduction of inventory loss provision		(260	)		(233	)
Non-operating gains and other items not providing cash		(571	)		(1,001	)

Changes in operating assets and liabilities:
Accounts receivable		(5,516	)		(53,444	)
Inventories		(35,835	)		(36,386	)
Income taxes		(6,016	)		6,823
Other current assets		(580	)		(65	)
Accounts payable		(14,432	)		47,694
Accrued expenses and other current liabilities		(583	)		12,916

NET CASH PROVIDED BY OPERATIONS		18,352			30,385
INVESTING ACTIVITIES
Fixed asset purchases — net of proceeds from disposals		(4,960	)		(7,725	)
Other investment and notes receivable transactions		1,698			1,024

NET CASH USED IN INVESTING ACTIVITIES		(3,262	)		(6,701	)
FINANCING ACTIVITIES
Proceeds from (Payments on) long-term obligations		9,731			(11,319	)
Dividends paid		(26,938	)		(9,765	)

NET CASH USED IN FINANCING ACTIVITIES		(17,207	)		(21,084	)

(Decrease) Increase in cash		(2,117	)		2,600
Cash — beginning of year		5,865			3,265

CASH — END OF YEAR	$	3,748		$	5,865

See notes to consolidated financial statements.

~~F-59~~F-61

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

McJUNKIN CORPORATION AND SUBSIDIARIES

December 31, 2006


NOTE A —	SIGNIFICANT ACCOUNTING POLICIES

Business Operations: McJunkin Corporation and its subsidiaries (the Company) are national distributors of pipe, valves, and fittings (PVF), with locations in principal industrial centers. Major customers represent the chemical, petroleum refining and other segments of the raw materials processing industry and the construction industry. PVF product lines and their share of total sales for 2006 and 2005 include carbon steel pipe (approximately 33% and 34%) and stainless steel and carbon steel valves (approximately 20% and 21%). Products are obtained from a broad range of suppliers.

Basis of Presentation: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The consolidated financial statements include the accounts of McJunkin Corporation and its wholly-owned and majority-owned subsidiaries. The residual ownership in the equity and income of McJunkin Appalachian Oilfield Supply Company (approximately 14%) is reflected as minority interest. All significant intercompany transactions have been eliminated. Certain 2005 amounts have been reclassified to conform to 2006 presentation. Such reclassifications did not impact net income or shareholders’ equity.

Financial Instruments: Financial instruments that potentially could subject the Company to concentrations of credit risk consist principally of trade accounts and notes receivable. The Company minimizes such risk by closely monitoring extensions of trade credit. Sales to industries in 2006 and 2005 in which the Company has significant receivables were gas utility (15% and 17%), petroleum refining (14% in both years), chemical processing (12% in both years), and contractors (12% in both years). The Company estimates losses for uncollectible accounts based on the aging of the accounts receivable and the evaluation of the likelihood of collection. Credit losses relating to customers in these industries historically have been insignificant.

The Company sells to a large,U.S.-owned, multi-national, energy company in Nigeria through its wholly-owned subsidiary, McJunkin-Nigeria Limited. The collection of the receivables generated by these sales could be negatively impacted by such factors as changes in Nigerian or worldwide economic or political conditions. Credit losses relating to sales in Nigeria have been insignificant. Total net assets invested in Nigeria at December 31, 2006 and 2005, approximated $2,956,000 and $5,205,000.

The Company believes that the carrying values of all significant assets and liabilities, which meet the definition of financial instruments, approximate their fair values.

Income Taxes: Deferred income taxes are provided under the liability method. The liability method requires that deferred tax assets and liabilities be determined based on differences between the financial reporting and tax bases of assets and liabilities using the tax rate expected to be in effect when the taxes will actually be paid or refunds received.

Insurance: The Company is self-insured for portions of employee healthcare and maintains a deductible program as it relates to workers’ compensation, automobile liability, and general liability claims including, but not limited to, product liability claims, which are secured by various letters of credit totaling $3,195,000. Commercially comprehensive catastrophic coverage is maintained. The company’s liability and related expenses for claims are estimated based upon past experience. The company’s historical claim data is used to project anticipated losses. The reserves are deemed by the company to be sufficient to cover outstanding claims including those incurred but not reported as of the estimation date.

~~F-60~~F-62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN CORPORATION AND SUBSIDIARIES

December 31, 2006

Inventories: Inventories are valued at the lower of cost (principallylast-in, first-out method) or market.

Investments: The Company has equity investments in certain oil and gas interests that are either thinly traded in the over-the-counter market or are not publicly traded. Such investments, considered available for sale, are carried at estimated fair value. Unrealized gains and losses on available-for-sale securities are recognized in comprehensive income to the extent they are material. Total accumulated gains, net of deferred taxes, in comprehensive income are $24,286,000 at December 31, 2006.

The thinly traded nature of PrimeEnergy stock results in significant fluctuations in the stock price. Accordingly, the proceeds from any sale of the stock could be significantly less than the December 31, 2006 carrying value, $40,217,000. An officer of the Company serves as a director of PrimeEnergy.

Real estate investments, primarily limited partnerships, are generally carried at the lower of cost or estimated realizable value.

Certain long-term lease transactions relating to the financing of land and buildings are accounted for as installment purchases. These properties are capitalized as leased facilities and amortized on a straight-line basis over their lease terms. The corresponding lease rental obligations represent the present value of future lease payments.

Derivative Instruments: The Company had an interest rate swap, which expired in December 2005, and collar, which expired in September 2006, that were carried at fair value as either assets or liabilities on the balance sheet. Changes in the fair value of the derivative instruments were recognized in current earnings in the year of change.

Retirement Plans: Employees with at least six months of service participate in the Company’s profit sharing plan. Contributions to the plan are based on the earnings of the Company, as defined in the plan document. Employees may also participate in the McJunkin Savings Plan, whereby a portion of the individuals’ base earnings may be deferred and partially matched by the Company, pursuant to section 401(k) of the Internal Revenue Code. The Company’s matching portion under the 401(k) plan approximated $837,000 and $830,000 in 2006 and 2005.

Revenue Recognition: The Company records sales revenue upon shipment of goods or performance of services. Shipping costs are included in cost of goods sold in the consolidated statements of income.

Intangibles: The Company tests its goodwill and intangible assets for impairment annually. The impairment tests are performed at the distribution operations reporting level of the Company, which holds 100% of the consolidated intangible assets. At December 31, 2006 and 2005, the Company had no impairment in the carrying value of its intangible assets.

Goodwill carried by the Company is not amortized for financial reporting purposes, but is eligible for deduction for income tax purposes. The Company amortizes intangible assets with finite lives, such as non-compete agreements, trade names, and customer lists and relationships over the legal or estimated lives of the individual assets, principally from one to six years.

~~F-61~~F-63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN CORPORATION AND SUBSIDIARIES

December 31, 2006

Stock Split: All prior period capital stock and applicable share amounts have been retroactively adjusted to reflect a5-for-1 split of the Company’s capital stock effective October 4, 2005.


NOTE B —	INVENTORIES

If inventories were reported at values approximating current costs, as would have resulted from using thefirst-in, first-out method, they would have been $74,414,000 and $62,188,000 higher at December 31, 2006 and 2005. In addition, after giving pro forma effect to profit sharing and income taxes, net income would have been higher by $7,947,000 in 2006 and $13,114,000 in 2005.

The Company’s inventory is composed of finished goods. There are no general and administrative costs charged to inventory.


NOTE C —	LONG-TERM DEBT

The Company maintains lines of credit that include an unsecured multi-bank revolving lending agreement totaling $60 million. In addition, McJunkin Appalachian, which is financed on a stand-alone basis with no guarantees provided by McJunkin Corporation, maintains its own long-term revolving credit/term loan agreement totaling $7.5 million. These long-term loan agreements contain covenants that require maintenance of minimum tangible net worth and other financial ratios. Such covenants could restrict investments outside the Company’s primary line of business, capital expenditures, and dividend payments.

The Company has a $50 million trade receivables securitization facility with a group of financial institutions and uses a special-purpose, wholly-owned, consolidated subsidiary, McJunkin Receivables Corporation (MRC), for the sole purpose of buying substantially all of the trade accounts receivable of the Company, other than McJunkin Appalachian, McJunkin-Nigeria and McJunkin-Puerto Rico. Under these facilities, the Company transfers all eligible accounts receivable to MRC, which in turn sells an undivided ownership interest in the receivables into commercial paper conduits administered by the banks. This agreement is accounted for as a secured borrowing; thus, all receivables outstanding under the program and corresponding debt are recognized in the consolidated balance sheet. The assets of MRC are available to satisfy the claims of the financial institutions to the extent of the securitized debt. The Company services the receivables and retains an interest in the receivables subordinate to the amount borrowed under the agreement. MRC retains the risk of credit loss on the receivables and, accordingly, the full amount of the allowance for doubtful accounts has been reflected on the consolidated balance sheets. The credit losses and delinquencies relating to these receivables were not material in 2006 and 2005.

The conduits obtain the funds to purchase interests in receivables by selling commercial paper to third-party investors. The facility provides that as accounts receivable are collected, MRC can elect to have the commercial paper conduits reinvest the proceeds in new accounts receivable. Fundings under the facility are limited to the lesser of a funding base of eligible receivables, as defined in the agreement, or $50 million. Amounts outstanding under the agreement as of December 31, 2006, were $2 million. There were no amounts outstanding at the end of 2005. Due to the current nature of the Company’s retained interest in the receivables, the book value of the receivables represents the best estimate of the fair market value. This three-year agreement bears interest at a margin over A1P1 commercial paper rates.

The facility requires the Company to comply with various affirmative or negative covenants including, among other things, accounts receivable delinquency, dilution, and days sales outstanding ratios and maintenance of a minimum $5 million net worth in MRC. The securitization agreement

~~F-62~~F-64

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN CORPORATION AND SUBSIDIARIES

December 31, 2006

contains certain restrictive covenants, including further sale or placement of liens on accounts receivable, adherence to collection policies, restrictions concerning mergers, and commingling of funds between MRC and the Company. The financial institutions may terminate the facility upon the occurrence of, and failure to cure, termination events including violations of representations, warranties and covenants. The commercial paper conduits, in addition to their rights to collect payments from that portion of the interest in the accounts receivable owned by them, also have rights to collect payments from that portion of the ownership interest in the accounts receivable that is owned by MRC. The Company was in compliance with the covenants contained in its credit agreements during the years ended December 31, 2006 and 2005.

The total trade receivables pledged as collateral under this agreement at December 31, 2006 and 2005, were $121,641,000 and $119,692,000.

Maturities of long-term debt are $2,000,000 in 2009 and $11,035,000 in 2010, including certain amounts that are due on demand but excluded from current liabilities because the Company intends to replace such borrowings with funds available under existing, unused long-term lines of credit. At December 31, 2006, the Company, exclusive of McJunkin Appalachian, had unused short-term and long-term lines of credit of $10,765,000 and $99,700,000; McJunkin Appalachian had unused short-term and long-term lines of credit of $5 million and $7.5 million.

The Company entered into an interest rate swap agreement in 2000 and interest rate collar agreement in 2001 to reduce its exposure to potential interest rate increases. The swap agreement, which expired in 2005, enabled the Company to make fixed rate (6.39%) payments and receive floating rate (one-month LIBOR) payments on a notional amount of $10 million. The collar agreement, which expired in 2006, enabled the Company to make fixed rate (ceiling rate of 5.50% and a floor rate of 4.08%) payments and receive floating rate (one-month LIBOR) payments on a notional amount of $10 million. Only interest payments, not the notional amounts, were exchanged. The differences between the amounts exchanged in 2006 and 2005 were not significant. The Company’s interest cost exposure was limited to the difference between the 5.24% (weighted average) and a lower floating interest rate, if any, applied to the notional amounts then outstanding. Management believes it mitigated counter party credit risk by entering into these agreements only with major financial institutions. There were no accumulated derivative liabilities at December 31, 2006 and 2005.

The Company paid interest of $2,831,000 and $2,630,000 in 2006 and 2005.

The Company’s long-term debt consists of:


	December 31,
	2006		2005
	(In $000’s)

Revolving credit/term loan agreement at a variable rate between LIBOR and prime, due in 2010	$	8,300	$	2,500
Short-term debt expected to be refinanced on a long-term basis at a variable rate between LIBOR and prime, due in 2010		2,735		385
Other long-term obligations		—		210
Three-year asset securitization at a variable rate based on commercial paper due in 2009		2,000		—

		13,035		3,095
Less current portion		—		210

	$	13,035	$	2,885

~~F-63~~F-65

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN CORPORATION AND SUBSIDIARIES

December 31, 2006


NOTE D —	LEASES

The Company leases land and buildings at various locations from Hansford Associates and Appalachian Leasing. Certain officers and directors of the Company participate in the ownership of Hansford Associates and Appalachian Leasing. Most of these leases are renewable for various periods through 2026 and contain clauses for escalation of lease payments, payment of real estate taxes, maintenance, insurance, and certain other operating expenses of the properties. Leases with unrelated parties contain similar provisions. Lease amortization was $179,000 in 2006 and 2005.

Property held under capital leases in the balance sheets consists of:


	December 31,
	2006			2005
	(In $000’s)

Land and buildings	$	4,881		$	4,881
Allowances for amortization		(2,777	)		(2,598	)

	$	2,104		$	2,283

Future minimum lease payments under capital leases aggregate to $11,088,000, of which $3,608,000 represents interest and $3,678,000 represents escalation and executory costs. The present value of net minimum lease payments is $3,802,000, all applicable to Hansford Associates. Annual payments under capital leases are $949,000 for years 2007 through 2011.

Rental expense under operating leases amounted to $8,836,000 in 2006 and $8,070,000 in 2005, including $1,534,000 in 2006 and $1,474,000 in 2005 applicable to leases with Hansford Associates and $153,000 in 2006 and $154,000 in 2005 applicable to leases with Appalachian Leasing. Future minimum rental payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year aggregate to $19,061,000 and include leases applicable to Hansford Associates ($3,902,000) and leases applicable to Appalachian Leasing ($180,000). Annual operating lease payments are $7,848,000, $6,616,000, $2,237,000, $956,000, and $626,000 for years 2007 through 2011.


NOTE E —	FINANCIAL INSTRUMENTS

In the normal course of business, the Company invests in various financial assets and incurs various financial liabilities. The Company’s financial assets and liabilities are recorded in the consolidated balance sheets at historical cost, which approximates fair value.

Investments: Investments are carried at fair market value based on quoted market prices.

Derivatives: The Company utilized interest rate swaps and collars to reduce its exposure to potential interest rate increases. Changes in fair values of derivative instruments were based upon independent market quotes.

~~F-64~~F-66

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN CORPORATION AND SUBSIDIARIES

December 31, 2006


NOTE F —	INCOME TAXES

Income taxes included in the consolidated statements of income consist of:


	Years Ended December 31,
	2006		2005
	(in $000’s)

Federal:
Current	$	36,514	$	34,075
Deferred		3,129		(4,037	)

		39,643		30,038
State and local:
Current		8,024		7,413
Deferred		673		(868	)

		8,697		6,545

INCOME TAX PROVISION	$	48,340	$	36,583

The Company’s effective tax rate varied from the statutory federal income tax rate for the following reasons:


	Years Ended December 31,
	2006			2005
	(in $000’s)

Federal tax expense at statutory rates	$	41,270		$	31,193
State taxes		5,653			4,254
Non-deductible sales expenses		409			372
Other		1,008			764

INCOME TAX PROVISION	$	48,340		$	36,583

Effective rate		41.0	%		41.0	%

The Company paid $50,553,000 and $34,665,000 in 2006 and 2005 for federal and state taxes.

~~F-65~~F-67

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN CORPORATION AND SUBSIDIARIES

December 31, 2006

Significant components of the Company’s current deferred tax assets and liabilities are as follows:


	December 31,
	2006			2005
	(in $000’s)

Deferred tax assets:
Accounts receivable valuation	$	797		$	689
Real estate and investment bases differences		86			312
Expenses deductible as paid		3,684			3,453

Total deferred tax assets		4,567			4,454
Deferred tax liabilities:
Inventory valuation		(6,464	)		(2,612	)
Accelerated depreciation and amortization		(2,969	)		(2,905	)
Investment basis difference		(14,759	)		(11,529	)

Total deferred tax liabilities		(24,192	)		(17,046	)

Net deferred tax liabilities	$	(19,625	)	$	(12,592	)


NOTE G —	CONTINGENCIES

The Company is involved in various legal proceedings and claims, both as a plaintiff and a defendant, which arise in the ordinary course of business. Included in these legal proceedings are ~~cases~~claims where the Company has been named as a defendant in lawsuits brought against a large number of entities by individuals seeking damages for injuries allegedly caused by certain products containing asbestos. Among other things, with the assistance of accounting and financial consultants, the Company conducted an analysis of pending and probableasbestos-related claims to determine the adequacy of its accrual for these claims. This analysis consisted of developing per claim settlement estimates for each category of claim by alleged disease type based on the Company’s historical settlement experience. These estimates were applied to each of the Company’s pending individual claims. Liability with respect to mass filings was estimated by determining the number of individual plaintiffs included in the mass filings likely to have claims resulting in settlements based on the Company’s historical experience with mass filings. Finally, ~~likely~~probable claims expected to be asserted against the Company over the next fifteen years were predicted based on public health estimates of future incidences of certain asbestos-related diseases in the general U.S. population and per claim settlement estimates were applied to those estimated claims. Based on this analysis and the existence of certain insurance coverage, the Company believes that its current accruals for pending and probable asbestos-related litigation asserted over the next 15 years are adequate. However, there is a possibility that resolution of these matters could result in additional losses in excess of current accruals. Also, there is a possibility that resolution of certain of the Company’s legal contingencies for which there are no liabilities recorded could result in a loss. Management is not able to estimate the amount of such loss, if any. However, in the opinion of the Company, after consultation with counsel, the ultimate resolution of all pending matters is not expected to have a material effect on its financial position, although it is possible that such resolutions could have a material adverse impact on net income and cash flows.

~~F-66~~F-68

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

McJUNKIN CORPORATION AND SUBSIDIARIES

December 31, 2006


NOTE H —	SALES BY PRODUCT LINE

The percentage of our net sales by product line are as follows:


	Year Ended
	December 31,
Type	2006			2005

Pipe, valves and fittings		77.9	%		78.0	%
Oilfield and natural gas products		21.7	%		21.6	%
Service revenue		0.4	%		0.4	%

Total		100.0	%		100.0	%


NOTE I —	SUBSEQUENT EVENT

On December 4, 2006, McJunkin entered into a definitive agreement (the Merger Agreement) to be acquired by McJ Holding Corporation (ParentCo), a wholly owned subsidiary of McJ Holding LLC (HoldCo). Both ParentCo and HoldCo were formed by Goldman Sachs Capital Partners (GSCP) for purposes of facilitating this acquisition. On January 12, 2007, McJunkin’s shareholders voted to approve the Merger Agreement. Under the terms of the Merger Agreement, McJunkin’s shareholders will exchange their shares in McJunkin for cash and ownership units of HoldCo in a transaction valued at approximately $1.065 billion, including associated fees and refinanced debt. At the conclusion of the transaction, McJunkin shareholders will own an approximate 40% interest in HoldCo with GSCP and their affiliates holding the remaining interest. The transaction is expected to close on or about January 30, 2007.

It is anticipated that the acquisition will be financed with a term loan of $575 million, asset-based revolver borrowings of $75 million, existing capital leases of $3.6 million and an equity investment of approximately $411 million, which includes equity rolled over from existing McJunkin shareholders of approximately $169 million.

Under the provisions of the Merger Agreement, certain of the Company’s assets will be liquidated subsequent to closing and distributed to McJunkin’s current shareholders. These include the investment in PrimeEnergy as well as certain real estate holdings. At December 31, 2006, these assets had a net book value of approximately $27.1 million.

~~F-67~~F-69

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

McJunkin Corporation

Charleston, West Virginia

We have audited the consolidated financial statements of McJunkin Corporation and subsidiaries as of December 31, 2006 and 2005, and for the years then ended, and have issued our report thereon dated January 13, 2007. Our audits also included the consolidated financial statement schedule of the Company listed in the accompanying schedule. This consolidated financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits. In our opinion, the consolidated financial statement schedule as of and for the years ended December 31, 2006 and 2005, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Schneider Downs & Co., Inc.

Columbus, Ohio

January 13, 2007

~~F-68~~F-70

Schedule II — Valuation and Qualifying Accounts Worksheet


	(B) Balance		(C) Additions				(E) Balance
	at Beginning		Charged to				at end
(A) Description (1)	of Period		Costs and Expenses		(D) Deductions (1)		of Period

Allowance for
Doubtful Accounts
2005	$	1,722,000	$	90,000	$	68,654	$	1,743,346
2006	$	1,743,346	$	414,000	$	142,346	$	2,015,000


(1)		Includes write off of uncollectible accounts receivable, net of recoveries.

~~F-69~~F-71

Report of Independent Auditors

To the Board of Directors and Stockholders
Red Man Pipe & Supply Co.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income, preferred stock and stockholders’ equity, and cash flows present fairly, in all material respects, the financial position of Red Man Pipe and Supply Co. and Subsidiaries (the “Company”) at October 31, 2006 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended October 31, 2007 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP

Tulsa, Oklahoma

February 15, 2008

~~F-70~~F-72

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

October 31, 2006 and 2007


	2006			2007
	(in thousands of dollars, except share amounts)

Assets
Current assets
Cash	$	457		$	13,866
Accounts receivable, less allowance for doubtful accounts of $2,204 and $1,755 in 2006 and 2007, respectively		303,629			329,073
Inventories		336,714			329,272
Income tax receivable		5,473			—
Other current assets		929			243

Total current assets		647,202			672,454

Property, plant and equipment, net		29,931			39,583
Goodwill		76,198			91,077
Intangible assets, net of accumulated amortization of $4,047 and $8,913 in 2006 and 2007, respectively		28,422			30,034
Investments		6,689			5,057
Other assets		2,558			120

Total assets	$	791,000		$	838,325

Liabilities and Stockholders’ Equity
Current liabilities
Operating lines of credit	$	27,028		$	—
Trade accounts payable		187,162			209,513
Accrued liabilities		63,043			41,988
Income taxes payable		3,457			3,427
Notes payable		6,939			3,910
Deferred revenue		1,488			—
Term loans due on demand		3,975			10,519
Deferred income tax liabilities		22,721			28,974

Total current liabilities		315,813			298,331

Long-term debt, less current portion		207,418			31,434
Payable to minority interest shareholders		28,009			25,718
Deferred income tax liabilities		5,923			7,826
Other long-term liability (Note 2)		—			125,113

Total liabilities		557,163			488,422

Commitments and contingencies (Notes 7 and 9)
Minority interest		49,423			76,064
Stockholders’ equity
Preferred stock, $2,500 par value, 2,000 shares authorized, none issued and outstanding as of October 31, 2006 and 2007		—			—
Class A common stock, $0.01 par value, 50,000,000 shares authorized, 144,831 and 143,976 issued and outstanding as of October 31, 2006 and 2007, respectively		2			2
Class B common stock, $0.01 par value, 50,000,000 shares authorized, 34,344 issued and outstanding as of October 31, 2006 and 2007		—			—
Additional paid-in capital		2,480			8,159
Retained earnings		176,091			258,274
Accumulated other comprehensive income		6,343			7,404

		184,916			273,839
Treasury stock, at cost		(502	)		—

Total stockholders’ equity		184,414			273,839

Total liabilities and stockholders’ equity	$	791,000		$	838,325

The accompanying notes are an integral part of these consolidated financial statements.

~~F-71~~F-73

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended October 31, 2005, 2006 and 2007


	2005			2006			2007
	(in thousands of dollars)

Sales	$	1,224,174		$	1,815,345		$	1,981,990

Costs and expenses
Cost of products sold		1,023,030			1,551,118			1,632,320
Selling, general and administrative expenses		100,211			172,192			186,551

Total costs and expenses		1,123,241			1,723,310			1,818,871

Operating income		100,933			92,035			163,119

Other income (expense)
Interest expense		(8,431	)		(15,024	)		(20,641	)
Other, net		973			3,317			(2,658	)

		(7,458	)		(11,707	)		(23,299	)

Income before income taxes		93,475			80,328			139,820
Income tax expense		34,208			26,498			57,572

		59,267			53,830			82,248
Non-controlling interest		—			176			65

Earnings before discontinued operations		59,267			53,654			82,183
Discontinued operations
Earnings (loss) from discontinued operations, net of EPSP and income tax (Note 4)		528			(2,177	)		—
Gain on sale of discontinued operations, net of EPSP and income tax		—			8,170			—

Net income	$	59,795		$	59,647		$	82,183

The accompanying notes are an integral part of these consolidated financial statements.

~~F-72~~F-74

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended October 31, 2005, 2006 and 2007


	2005			2006		2007
	(in thousands of dollars)

Net income	$	59,795		$	59,647	$	82,183
Other comprehensive income, net of taxes
Change in value of cash flow derivative instruments used as cash flow hedges		(743	)		—		—
Reclassification — derivative settlements		1,226			—		—
Currency translation adjustments		248			6,095		1,061

Comprehensive income	$	60,526		$	65,742	$	83,244

The accompanying notes are an integral part of these consolidated financial statements.

~~F-73~~F-75

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

Years Ended October 31, 2005, 2006 and 2007


					Common Stock														Accumulated																Common Stock														Accumulated
	Class C				Voting					Non-Voting				Additional					Comprehensive												Class C				Voting					Non-Voting				Additional					Comprehensive
	Preferred Stock				Class A					Class B				Paid-in			Retained		Income			Treasury Stock									Preferred Stock				Class A					Class B				Paid-in			Retained		Income			Treasury Stock
	Shares		Amount		Shares			Amount		Shares		Amount		Capital			Earnings		(Loss)			Shares			Amount			Total			Shares		Amount		Shares			Amount		Shares		Amount		Capital			Earnings		(Loss)			Shares			Amount			Total
	(in thousands of dollars, except per share amounts)																														(in thousands of dollars, except per share amounts)

Balances at October 31, 2004		—	$	—		146		$	2		34	$	—	$	2,628		$	56,649	$	(483	)		(1	)	$	(87	)	$	58,709			—	$	—		146		$	2		34	$	—	$	2,628		$	56,649	$	(483	)		(1	)	$	(87	)	$	58,709
Net income		—		—		—			—		—		—		—			59,795		—			—			—			59,795			—		—		—			—		—		—		—			59,795		—			—			—			59,795
Acquisition of treasury stock		—		—		—			—		—		—		—			—		—			(1	)		(61	)		(61	)		—		—		—			—		—		—		—			—		—			(1	)		(61	)		(61	)
Retirement of treasury stock		—		—		(2	)		—		—		—		(148	)		—		—			2			148			—			—		—		(2	)		—		—		—		(148	)		—		—			2			148			—
Gain on derivative instruments designated and qualifying as cash flow hedging instruments		—		—		—			—		—		—		—			—		483			—			—			483			—		—		—			—		—		—		—			—		483			—			—			483
Currency translation adjustments		—		—		—			—		—		—		—			—		248			—			—			248			—		—		—			—		—		—		—			—		248			—			—			248

Balances at October 31, 2005		—		—		144			2		34		—		2,480			116,444		248			—			—			119,174			—		—		144			2		34		—		2,480			116,444		248			—			—			119,174

Net income		—		—		—			—		—		—		—			59,647		—			—			—			59,647			—		—		—			—		—		—		—			59,647		—			—			—			59,647
Acquisition of treasury stock		—		—		—			—		—		—		—			—		—			(1	)		(502	)		(502	)		—		—		—			—		—		—		—			—		—			(1	)		(502	)		(502	)
Currency translation adjustments		—		—		—			—		—		—		—			—		6,095			—			—			6,095			—		—		—			—		—		—		—			—		6,095			—			—			6,095

Balances at October 31, 2006		—		—		144			2		34		—		2,480			176,091		6,343			(1	)		(502	)		184,414			—		—		144			2		34		—		2,480			176,091		6,343			(1	)		(502	)		184,414

Net income		—		—		—			—		—		—		—			82,183		—			—			—			82,183			—		—		—			—		—		—		—			82,183		—			—			—			82,183
Retirement of treasury stock		—		—		—			—		—		—		(502	)		—		—			1			502			—			—		—		—			—		—		—		(502	)		—		—			1			502			—
Shareholder contributions (Note 2)		—		—		—			—		—		—		6,181			—		—			—			—			6,181			—		—		—			—		—		—		6,181			—		—			—			—			6,181
Currency translation adjustments		—		—		—			—		—		—		—			—		1,061			—			—			1,061			—		—		—			—		—		—		—			—		1,061			—			—			1,061

Balances at October 31, 2007		—	$	—		144		$	2		34	$	—	$	8,159		$	258,274	$	7,404			—		$	—		$	273,839			—	$	—		144		$	2		34	$	—	$	8,159		$	258,274	$	7,404			—		$	—		$	273,839

The accompanying notes are an integral part of these consolidated financial statements.

~~F-74~~F-76

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended October 31, 2005, 2006 and 2007


	2005			2006			2007
	(in thousands of dollars)

Cash flows from operating activities
Net income	$	59,795		$	59,647		$	82,183
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation and amortization		3,916			8,300			9,680
Write-off of obsolete inventories		2,289			3,383			4,363
Gain on disposal of assets		(60	)		(83	)		(2,336	)
Impairment loss on goodwill and intangible assets		—			—			5,149
Stock compensation expense		—			—			963
Equity in earnings of unconsolidated subsidiary		(705	)		—			—
Gain on sale of discontinued operations		—			(16,585	)		—
Deferred income taxes		15,364			(2,056	)		7,214
Minority interest		—			176			66
Other, net		(271	)		(277	)		—
Decrease (increase) in assets
Accounts receivable		(59,120	)		(63,380	)		(8,626	)
Income tax receivable		135			—			5,008
Inventories		(65,164	)		(98,085	)		18,724
Other assets		(1,799	)		(1,563	)		3,162
Increase (decrease) in liabilities
Accounts payable and accrued liabilities		30,528			53,027			(22,937	)
Income tax payable		1,223			1,936			(329	)
Other current liabilities		—			(736	)		—
Other long-term liabilities		2,450			(163	)		—

Net cash provided by (used in) operating activities		(11,419	)		(56,459	)		102,284

Cash flows from investing activities
Purchase of property, plant and equipment		(5,801	)		(14,468	)		(12,193	)
Proceeds from disposal of property, plant and equipment		347			1,285			3,673
Proceeds from disposal of subsidiary		—			35,220			—
Business acquisitions		(45,874	)		(12,784	)		(3,747	)
Advance to related parties		—			(4,877	)		—
Repayment of advances to unconsolidated subsidiaries		957			—			—
Purchases of investment		—			(879	)		—
Other, net		(40	)		—			(243	)

Net cash provided by (used in) investing activities		(50,411	)		3,497			(12,510	)

The accompanying notes are an integral part of these consolidated financial statements.

~~F-75~~F-77

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended October 31, 2005, 2006 and 2007


	2005			2006			2007
	(in thousands of dollars)

Cash flows from financing activities
Advances on long-term debt		1,143,106			1,403,024			1,353,302
Payments on long-term debt		(1,093,917	)		(1,338,977	)		(1,398,620	)
Extinguishment of debt		—			—			(120,027	)
Advances on operating lines of credit		371			—			—
Payments on operating lines of credit		(396	)		(2,665	)		(27,606	)
Advances on notes payable		20,450			1,757			—
Advances from affiliates		—			—			120,027
Advances to affiliate		—			—			2,504
Repayments of term loans		(675	)		(1,619	)		—
Repayment of notes payable		—			(20,369	)		(7,087	)
Advances (payments) to minority interest shareholders		(7,974	)		13,087			(6,238	)
Acquisition of treasury stock		(61	)		(502	)		—
Repayments to shareholders		—			(918	)		—
Capital contributions		—			—			6,181
Financing costs		—			—			(898	)
Other		—			(155	)		292

Net cash provided by (used in) financing activities		60,904			52,663			(78,170	)

Effect of exchange rate changes on cash and cash equivalents		18			(161	)		1,805

Net increase (decrease) in cash		(908	)		(460	)		13,409
Cash
Beginning of year		1,825			917			457

End of year	$	917		$	457		$	13,866

Supplemental cash flow data
Interest paid	$	7,228		$	18,133		$	21,961
Income taxes paid		18,144			30,436			45,118

The accompanying notes are an integral part of these consolidated financial statements.

~~F-76~~F-78

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2005, 2006 and 2007


1.	Summary of Significant Accounting Policies and Nature of Operations

Nature of Operations

Red Man Pipe & Supply Co. (“the Company”) is a distributor of tubular goods, including oil country tubular goods and line pipe, and operates service and supply centers which distribute maintenance, repair and operating products utilized primarily in the energy industry as well as industrial products consisting primarily of line pipe, valves, fittings and flanges. The Company distributes products and tubular goods through service and supply centers and sales locations strategically located close to the major hydrocarbon producing and refining areas of the United States and Canada. Additionally, the Company distributes its products and tubular goods to customers in various locations outside of North America.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Red Man Pipe & Supply Co. and its majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. Investments that are not wholly owned, but where we exercise control, are fully consolidated with the equity held by minority owners reflected as minority interest in the accompanying financial statements. Investments in unconsolidated affiliates, over which we exercise significant influence, but not control, are accounted for by the equity method. Investments in which we exercise no control or significant influence are accounted for under the cost method.

Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents.

Derivatives and Hedging

The Company follows Financial Accounting Standard No. 133 (including subsequent amendments)Accounting for Derivative Instruments and Hedging Activities. These statements require all derivatives to be recognized on the balance sheet and measured at fair value. If a derivative is designated as a cash flow hedge, the Company is required to measure the effectiveness of the hedge, or the degree that the gain (loss) for the hedging instrument offsets the loss (gain) on the hedged item, at each reporting period. The effective portion of the gain (loss) on the derivative instrument is recognized in other comprehensive income as a component of equity and, subsequently, reclassified into earnings when the forecasted transaction affects earnings. The ineffective portion of a derivative’s change in fair value is required to be recognized in earnings immediately. Derivatives that do not qualify for hedge treatment under FAS 133 must be recorded at fair value with gains (losses) recognized in earnings in the period of change. There were no derivatives outstanding at October 31, 2006 and 2007.

Insurance

The Company is self-insured for portions of employee healthcare, maintained a large deductible program for Automobile Collision, and maintains a guaranteed cost program as it relates to Workers Compensation, Automobile Liability, and General Liability, including but not limited to Product Liability.

Under our Property & Casualty Program, we have an Umbrella Liability policy that covers liabilities in excess of $1 million. We also have Excess Liability coverage for liabilities in excess of $25 million.

~~F-77~~F-79

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2005, 2006 and 2007

Inventories

The Company accounts for inventories using theLast-In, First-Out (“LIFO”) method. The majority of the Company’s inventories are valued at the lower of LIFO cost or market. If the LIFO method of valuing inventories were not used, total inventories would have been $70.0 and $62.0 million higher at October 31, 2006 and 2007, respectively. However, certain of the Company’s Canadian-based inventories, totaling $73.6 million and $79.1 million at October 31, 2006 and 2007, respectively, are valued utilizing the lower of cost or market method. The Company’s inventory is composed of finished goods. There are no general and administrative costs charged to inventory.

During 2007, inventory quantities were reduced. This reduction resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the current cost of purchases, the effect of which decreased costs of products sold by approximately $28.3 million in 2007. There were no LIFO liquidations in 2005 and 2006.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost and include expenditures for facilities as well as significant improvements to existing facilities. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is reflected in income for the period. Maintenance and repairs are charged to expense as incurred.

Depreciation and amortization are computed utilizing both straight-line and accelerated methods over the estimated useful lives of the property. The ranges of estimated useful lives for financial reporting are as follows:


	Years

Buildings and improvements		5 -- 40
Machinery, shop equipment and vehicles		5 -- 12
Furniture, fixtures and office equipment		3 -- 7
Leasehold improvements		5 -- 15

Depreciation expense from continuing operations for the years ended October 31, 2005, 2006 and 2007 was $2,828,000, $4,770,000 and $5,971,000, respectively.

Revenue Recognition

The Company recognizes revenue as products are shipped or accepted by the customer.

The results of discontinued operations (Note 4) include manufacturing revenue generated on long-term fixed price contracts. Revenue on these contracts is recognized on the percentage of completion basis. The Company progress bills the customers based upon the contract terms. When the amount that is billed is greater than the revenue that is recognized based upon the percentage of completion, deferred revenue is recognized. Anticipated losses are provided for in the period incurred.

Rental, service and other revenues are recorded when such services are performed and collectibility is reasonably assured.

Income Taxes

The Company follows the provisions of Statement of Financial Accounting Standards No. 109,Accounting for Income Taxes(“SFAS No. 109”). SFAS No. 109 requires the measurement of deferred tax assets and liabilities based on the future tax consequences attributable to the differences between

~~F-78~~F-80

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2005, 2006 and 2007

the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

As the result of a recent FASB deferral, FIN 48,Accounting for Uncertainty in Income Taxes(“FIN 48”) is effective for the Company for fiscal years beginning after December 15, 2007. FIN 48 prescribes a two-step model for how companies should recognize and measure uncertain tax positions. FIN 48 also requires several new disclosures. The Company is assessing the impact FIN 48 will have on our financial statements.

Treasury Stock

The Company utilizes the cost method to account for its treasury stock acquisitions and dispositions.

Freight

The Company followsEITF 00-10 “Accounting for Shipping and Handling Fees and Costs”. Accordingly, all out-bound shipping and handling costs are reflected in cost of goods sold and all freight reimbursements billed to customers are reflected in revenues.

Comprehensive Income

The Company follows Statement of Financial Accounting Standards No. 130,Reporting Comprehensive Income(“SFAS No. 130”). SFAS 130 established rules for the reporting and display of comprehensive income and its components. Comprehensive income includes gains and losses on hedging activities.

Foreign Currency Translation and Transactions

Gains and losses from balance sheet translation of operations outside of the United States where the applicable foreign currency is the functional currency is included as a component of accumulated other comprehensive income within stockholders’ equity. Gains and losses resulting from foreign currency transactions are recognized currently in the consolidated statements of operations.

Goodwill and Other Intangible Assets

Goodwill represents the excess of cost over the fair value of net assets acquired. Recorded goodwill balances are not amortized but, instead, evaluated for impairment annually or more frequently if circumstances indicate that an impairment may exist. The goodwill valuation, which is prepared each fiscal year, is largely influenced by projected future cash flows and, therefore, is significantly impacted by estimates and judgments.

Intangible assets are initially recorded at cost. Amortization is provided using the straight-line method over 3 to 10 years which is intended to amortize the cost of assets over their estimated useful lives. The carrying value of intangible assets are reviewed for possible impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable.

As a result of the Company’s annual impairment analysis, impairment losses of $3,954,000 related to goodwill and $1,195,000 related to intangibles were recognized in 2007 (2006: $0). The impairment charge was recorded in Other, net in the Consolidated Statement of Operations.

~~F-79~~F-81

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2005, 2006 and 2007

Use of Estimates

Fair Value Measurements

In September 2006, the FASB issued Statement 157,Fair Value Measurements, which establishes a framework for measuring fair value and requires additional disclosures about fair value measurements. The Company does not believe this pronouncement will have a material impact on our financial statement. The provisions of this statement are effective for fiscal years beginning after November 15, 2007.


2.	Merger Agreement

On July 6, 2007 Red Man Pipe & Supply Co. and its Shareholders, collectively entered into a definitive agreement to be acquired by a subsidiary of McJunkin Corporation (“McJunkin”). The Company’s Shareholders approved the Merger Agreement and the transaction closed on October 31, 2007. In exchange for all of the outstanding stock of the Company, Shareholders received cash and other considerations. In conjunction with this Merger Agreement certain Shareholders exchanged some of their shares for common units in McJ Holding LLC, the ultimate parent corporation of McJunkin Corporation. McJ Holding LLC is majority-owned by Goldman Sachs Capital Partners and their affiliates. In connection with this merger, the combined company has been renamed McJunkin Red Man Corporation. The cash consideration to be ultimately paid to the shareholders of the company approximates $1.1 billion, less debt and certain transaction expenses, and is subject to a working capital adjustment and any additional consideration related to McJunkin’s right to purchase the remaining equity of the Company’s majority-owned Canadian subsidiary, Midfield Supply ULC (“Midfield”). As part of the agreement McJunkin loaned the Company $120,027,000 in order to pay off the Company’s existing Revolving credit facility. McJunkin also agreed to accept the obligation arising from certain transaction expenses and from the termination of the Phantom Stock plan. This amounted to $6,181,000 of capital contributions.


3.	Business Acquisitions

On June 2, 2006, the Company purchased certain assets from Bear Tubular, Inc., for $4,613,000 in cash. The summary of the purchase price allocation is as follows:


	(In thousands of dollars)

Inventory	$	2,553
Property, plant and equipment		260
Goodwill		1,800

	$	4,613

In 2006, through a series of transactions, Red Man Pipe & Supply Canada Ltd. (“Red Man Canada”) acquired 100% interest in four separate companies. The consideration paid consisted of

~~F-80~~F-82

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2005, 2006 and 2007

$8,171,000 of cash and $246,000 of share capital in one of the Company’s majority-owned subsidiaries. The summary of the total purchase allocation is as follows:


	(In thousands of dollars)

Current assets	$	12,170
Property, plant and equipment		2,213
Goodwill		4,195
Intangibles		2,615
Current liabilities		(11,053	)
Long-term debt		(1,723	)

	$	8,417

On June 14, 2005, the Company formed Red Man Canada. Through a series of transactions Red Man Canada acquired 21,975 shares (51%) of Midfield. The shares were acquired for $45,874,000. The summary of the purchase price allocation is as follows:


	(In thousands of dollars)

Assets acquired
Accounts receivable	$	54,585
Inventory		37,285
Property and equipment		23,154
Intangible assets		27,106
Goodwill		67,469
Other assets		2,527

		212,126

Liabilities assumed
Accounts payable and accrued liabilities		(56,989	)
Debt and notes payable		(31,710	)
Payable to shareholders		(22,125	)
Minority interest		(45,609	)
Deferred income tax liabilities		(7,757	)
Other liabilities		(2,062	)

		(166,252	)

Purchase price	$	45,874

On May 1, 2007, the Company acquired 100% of the outstanding shares of Northern Boreal in exchange for cash and shares. Northern Boreal operates an oilfield supply store. Consolidated earnings of Northern Boreal since acquisition date have been included in these financial statements.

On April 3, 2007, the Company acquired 100% of the outstanding shares of Hagan Oilfield Supply Ltd., and affiliated companies (“1236564” and “1048025”) in exchange for cash and shares. Consolidated earnings of Hagan since acquisition date have been included in these financial statements. The Company subsequently amalgamated the operations of the three companies on November 1, 2007, into Hagan Oilfield Supply Ltd (“Hagan”), which operates three oilfield supply stores.

~~F-81~~F-83

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2005, 2006 and 2007

The consideration paid and the fair values of the net assets acquired are as follows:


				Northern
	Hagan			Boreal			Total
	(in thousands of dollars)

Consideration paid
Cash	$	1,882		$	2,773		$	4,655
Shares issued in Midfield Supply ULC		217			820			1,037
Notes payable		701			1,495			2,196

	$	2,800		$	5,088		$	7,888

Net assets acquired
Current assets	$	98		$	3,812		$	3,910
Property, plant and equipment		127			244			371
Goodwill		2,045			2,638			4,683
Intangible assets		610			1,167			1,777
Current liabilities		(80	)		(2,773	)		(2,853	)

	$	2,800		$	5,088		$	7,888


4.	Business Divestitures

On June 30, 2006, a subsidiary of the Company, Nusco Pipe and Supply ULC, disposed of its manufacturing business located in Nisku, Alberta, Canada, as well as its 80% interest in Nusco Northern Manufacturing Ltd. and its wholly owned subsidiary Moe’s. The Company received proceeds of $41,106,000 consisting of cash of $35,220,000, warrants with an estimated fair value of $308,000 and an assumption of long-term debt of $5,578,000.

The carrying amounts of the disposed assets relating to this sale are as follows:


	(in thousands
	of dollars)

Current assets	$	5,790
Property, plant and equipment		14,760
Goodwill		7,943
Intangibles		297
Current liabilities		(130	)
Minority interest		(2,416	)
Long-term liabilities		(1,724	)

	$	24,520

~~F-82~~F-84

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2005, 2006 and 2007

The results of operations for the discontinued operations were as follows:


	June 15, 2005			November 1, 2005
	to			to
	October 31, 2005			June 30, 2006
	(in thousands of dollars)

Revenue	$	15,170		$	28,031
Cost of sales		(10,819	)		(21,880	)
Expenses		(2,494	)		(4,608	)
Amortization		—			(540	)
Bonuses		(1,032	)		(3,326	)
Other income		—			447

Earnings (loss) before income taxes		825			(1,876	)
Provision for current income taxes		(297	)		(301	)

Earnings (loss) from discontinued operations	$	528		$	(2,177	)

Comparative figures have been restated as a result of these discontinued operations.

On November 1, 2006, the Company’s 100% owned subsidiary, Midfield Supply USA Ltd. disposed of all of its working capital assets with proceeds equal to book value ($888) and plant and equipment with proceeds equal to net book value ($5) to the Company’s majority shareholder. Midfield Supply USA Ltd. ceased operating at this time.


5.	Property, Plant and Equipment

Property, plant and equipment consists of the following as of October 31, 2006 and 2007:


	2006		2007
	(in thousands
	of dollars)

Land	$	3,802	$	4,300
Buildings and improvements		11,140		16,172
Machinery, shop equipment and vehicles		11,840		24,178
Furniture, fixtures and office equipment		24,455		21,254
Leasehold improvements		1,763		2,996

		53,000		68,900
Less: Accumulated depreciation and amortization		23,069		29,317

	$	29,931	$	39,583


6.	Operating Lines of Credit(in thousands of dollars)

The Company has one Canadian dollar line of credit with Bank of America, which is further described in Note 7.

In 2006 bank indebtedness consisted of three Canadian dollar and one U.S. dollar revolving lines of credit. The Canadian dollar lines of credit had a maximum limit of $30,000 bearing interest to Canadian prime rate plus 0.625%, a maximum limit of $25,000 bearing interest at prime plus 0.5% and a maximum limit of $1,500 bearing interest at prime plus 0.5%. The U.S. dollar line of credit had

~~F-83~~F-85

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2005, 2006 and 2007

a maximum of $250 US, bearing interest at 5.875%. All of these lines of credit were fully repaid in the current year.


7.	Long-Term Debt, Notes Payable and Term Loans

Long-term debt, notes payable and term loans as of October 31, 2006 and 2007 consists of the following:


	2006		2007
	(in thousands of dollars)

Revolving credit facility(A)	$	207,418	$	—
Notes payable(B)		6,939		3,910
Term loans due on demand(C)		3,975		41,953

		218,332		45,863
Less: Current portion		10,914		14,429

	$	207,418	$	31,434

(A)

At October 31, 2006, the Credit Facility, as amended and restated, permitted the Company to borrow amounts up to the lesser of (i) $260 million or (ii) an amount equal to the borrowing base plus the outstanding balance on the term loan portion. On the revolving credit portion of the Credit Facility, the Company is permitted to borrow amounts up to the lesser of (i) $260 million or (ii) an amount equal to the borrowing base amount. The borrowing base amount is determined through a computation of eligible accounts receivable and inventories as defined in the Credit Facility. The amount of unused borrowings available under the Credit Facility at October 31, 2006 was $52.6 million. The borrowings under the revolving credit portion of the Credit Facility bear an interest rate equal to the lesser of the Eurodollar rate, as defined in the Credit Facility plus a margin based upon the average daily availability and a fixed charge coverage ratio, as defined in the Credit Facility or the maximum legal rate permitted by applicable state or federal law, as defined in the Credit Facility. The term loan portion of the Credit Facility bears interest at (i) the lesser of the bank’s Eurodollar margin plus the Eurodollar base rate, as defined in the Credit Facility, or the maximum legal rate permitted by applicable state or federal law, as defined in the Credit Facility or (ii) the lesser of the bank’s base rate margin, plus the base rate, as defined by the Credit Facility, or the maximum legal rate permitted by applicable state or federal law, as defined by the Credit Facility. The term loan was paid off in 2006. The Company pays a fee on the unused portion of the Credit Facility equal to 0.25% per year. Additionally, the Company will pay a fee equal to 2.5% per annum of the face amount of the letters of credit outstanding during the month, for which letter of credit guarantees have been issued. As discussed in Note 2, the Credit Facility was paid off on October 31, 2007, using funds loaned from McJunkin Corporation.

The amended and restated credit agreement contained customary restrictions and limitations on the Company’s ability to incur liens, incur additional debt, make investments or engage in transactions with affiliates, make capital expenditures, and pay dividends or make other distributions. The Company was also subject to financial covenants which included a total leverage and a fixed charge ratio.

~~F-84~~F-86

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2005, 2006 and 2007

(B) Notes payable


	2006		2007
	(in thousands of dollars)

Due to related parties	$	5,154	$	3,910
Unsecured note payable		1,785		—

	$	6,939	$	3,910

The amounts due to related parties are unsecured, bear interest at varying rates from 0% to 8% per annum, and are due on demand, with no fixed terms of repayment. The parties are related due to some common directors, or they are shareholders of the Company.


	2006		2007
	(in thousands of dollars)

Borrowings under line of credit with interest at prime plus margin of 0.25%, due in October 2010(D)	$	—	$	31,434
Revolving term loan facility with interest at prime plus margin of up to 0.5% (6.75% at October 31, 2007), due on February 28, 2008		—		10,420
Term loan payable in monthly installments of $57,107 including interest at Canadian bank prime plus 1.25%		3,787		—
Other		188		99

	$	3,975	$	41,953

(D)

On November 2, 2006, Midfield entered into a loan and security agreement for a CAD150 million revolving credit facility. As of October 31, 2007, $31.4 million of borrowings were outstanding under the facility and the unused borrowing capacity was approximately $125.8 million. Midfield must pay a monthly fee with respect to unutilized revolving loan commitments equal to amounts ranging from 0.25% to 0.375%, depending upon average borrowing levels for the previous quarter. The facility provides for borrowings up to CAD150 million, subject to adjustments based on the borrowing base and less the aggregate letters of credit outstanding under the facility. Letters of credit may be issued under the facility subject to certain conditions, including a CAD10 million sub-limit. The revolving loan has a maturity date of November 2, 2010. All letters of credit issued under the facility must expire at least 20 business days prior to November 2, 2010.

The revolving credit facility bears interest with various variable interest rate options. Midfield can elect a variable rate based upon either the Canadian prime rate or Canadian Dollar Bankers’ Acceptance rate (“Canadian BA”). If the Canadian prime rate is elected, the rate ranges from prime rate to prime rate plus 0.25%, depending upon average borrowing levels for the previous quarter. If the Company elects the Canadian BA rate, the rate ranges from Canadian BA rate plus 1.25% to 1.75%, depending upon borrowing levels for the previous quarter.

The revolving credit facility is secured by substantially all of the personal property of Midfield, with a carrying value of $317.3 million at October 31, 2007. Provisions contained in the revolving credit facility require Midfield to maintain certain financial ratios and limit capital expenditures. At

~~F-85~~F-87

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2005, 2006 and 2007

October 31, 2007, the Company was in compliance with all such debt covenants. Prior to October 31, 2007, Midfield obtained waivers for various events of default under its revolving credit facility, including events of default for not providing financial statements when due and making capital expenditures in excess of certain limits.

The CAD150 million facility is subject to an inter-creditor agreement which relates to, among other things, priority of liens and proceeds of sale of collateral.

Aggregate future principal maturities of long-term debt as of October 31, 2007, are as follows:


	(in thousands
	of dollars)

Year ending October 31,
2008	$	10,519
2009		—
2010		31,434
2011		—

	$	41,953

During February 2003, the Company entered into a swap agreement and swapped $50 million at a variable rate (“LIBOR”) for a fixed rate of 3.88%. This derivative instrument was settled monthly on the first day of the month and terminated in October 2005. This derivative qualified as a cash flow hedge under FAS 133. The fair value of this derivative instrument at October 31, 2005 was approximately $0. This instrument expired effective October 31, 2005.


8.	Stockholders’ Equity

Common Stock

The Company has two classes of common stock. One class consists of 50,000,000 authorized shares of $.01 par value voting Class A Common stock. As of October 31, 2006 and 2007, there were 144,831 and 143,976 shares, issued and outstanding, respectively. The other class consists of 50,000,000 authorized shares of $.01 par value nonvoting Class B Common Stock. As of October 31, 2006 and 2007, there were 34,344 shares issued and outstanding.

Preferred Stock

The Company also has 2,000 authorized shares of $2,500 par value redeemable Class C Preferred Stock. As of October 31, 2002, there were 2,000 preferred shares issued and outstanding, and there were no preferred shares issued or outstanding as of October 31, 2006 and 2007. The Class C Preferred Stock is nonvoting and subordinate to indebtedness of the Company, but bears full preference to the Common Stock as to dividends and to redemption in the event of liquidation of the Company. On November 30, 1999, certain rights and privileges relating to the Class C Preferred Stock were amended. Effective April 1, 2000, the Preferred Stock bears an annual dividend of 8%, payable quarterly, beginning on June 30, 2000. Effective April 1, 2002, the preferred stock annual dividend rate was increased to 9% per annum, payable quarterly, beginning on July 1, 2002. Dividends paid on Class C Preferred Stock were $0, $0 and $0 during 2005, 2006 and 2007, respectively.

~~F-86~~F-88

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2005, 2006 and 2007

In September 2003, the Company redeemed the 2,000 shares of Class C Preferred Stock for $5,000,000.

Incentive Stock Plan

In December 1997, the Company established the Red Man Pipe & Supply Co. Incentive Stock Plan (the “Incentive Plan”) in which officers, employees and directors are eligible to participate. The Incentive Plan authorizes the grant of incentive stock options, non-qualified stock options and awards of restricted stock. Incentive stock options may only be awarded to employees and the exercise price may not be less than the fair market value of the Class A common stock on the date of grant (or 110% of such fair market value if granted to employees who own more than 10% of the combined voting power of all classes of the stock of the Company). The exercise price of non-qualified stock options shall be determined by the Board of Directors or its committee and shall not be less than the fair market value of the Class A Common Stock on the date of grant. The vesting period for all options will be determined by the Board of Directors or its committees at the time of the grant. The incentive stock option may not be exercised after the expiration of 10 years from the date of grant (or 5 years if granted to employees who own more than 10% of the combined voting power of all classes of stock of the Company). No options have been granted under the Incentive Plan. In connection with the Merger Agreement (Note 2), the Incentive Stock Plan was terminated on October 31, 2007.

A restricted stock award will consist of shares of Class A Common Stock that are nontransferable or subject to risk of forfeiture until specific conditions are met. The restrictions will lapse in accordance with the schedule or other conditions as determined by the Board of Directors or its committee. During the restriction period, the recipient of restricted stock will have certain rights as a shareholder, including the right to vote the stock and receive dividends. No awards have been granted under the Incentive Plan. In connection with the Merger Agreement (Note 2), the Incentive Stock Plan was terminated on October 31, 2007.

Phantom Stock Plan

In April 2003, the Company established the Red Man Pipe & Supply Co. Phantom Stock Plan (the “Phantom Plan”) in which officers and key employees are eligible to participate. The Plan authorizes the grant of up to 5,000 shares of phantom stock. The shares are credited to the participants’ accounts and are eligible for redemption payment after vesting at a price per share based upon the annual stock valuation. As of October 31, 2005, 1,957 shares had been granted under the Phantom Plan and have a redemption value of approximately $750,000, upon vesting in years 2012 through 2027. Selling, general and administrative expenses include compensation expense related to the Phantom Plan of $84,000, $426,000 and $2,482,000 for the periods ended October 31, 2005, 2006 and 2007, respectively. In connection with the Merger Agreement (Note 2), the Phantom Plan was terminated on October 31, 2007, in exchange for an agreement to pay Phantom Plan participants a total of $3,075,000.


9.	Leases

The Company occupies facilities and operates motor vehicles under long-term operating leases that expire during the fiscal years ending 2005 through 2014. Certain of these leases are subject to renewal or purchase options and escalation clauses. The following is a schedule by year of future minimum lease payments required under the operating leases that have initial or remaining noncancelable lease terms as of October 31, 2007;

~~F-87~~F-89

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2005, 2006 and 2007


Year ending October 31	(In thousands of dollars)

2008	$	10,676
2009		7,618
2010		4,774
2011		3,508
2012		3,871
Thereafter		1,005

Total minimum lease payments	$	31,452

Rent expense on all operating leases amounted to approximately $5,700,000, $8,043,000 and $10,457,000 in 2005, 2006 and 2007, respectively.


10.	Income Taxes

The components of income (loss) from continuing operations and before income taxes are as follows:


	October 31,
	2005		2006		2007
	(In thousands of dollars)

Income (loss) before income taxes
Domestic	$	91,209	$	74,918	$	141,881
Non-United States		2,266		5,410		(2,061	)

Total income (loss) before income taxes	$	93,475	$	80,328	$	139,820

The components of income tax expense, from continuing operations, are as follows:


	October 31,
	2005		2006		2007
	(In thousands of dollars)

Current
Federal tax expense	$	16,312	$	21,791	$	42,632
State tax expense		2,324		3,542		6,198
Non-United States		208		59		2,456
Deferred tax expense		15,364		1,106		6,286

	$	34,208	$	26,498	$	57,572

~~F-88~~F-90

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2005, 2006 and 2007

The components of the net deferred tax asset (liability) were as follows:


	October 31,
	2006			2007
	(In thousands of dollars)

Current deferred tax assets (liabilities)
Inventory	$	(18,367	)	$	(22,627	)
Accounts receivable		(3,461	)		(4,103	)
Vacation accrual		663			710
Accrued insurance		394			318
Red Man Canada interest		(2,181	)		(3,987	)
Phantom stock		231			715

Current deferred tax (liabilities)	$	(22,721	)	$	(28,974	)

Noncurrent deferred tax assets (liabilities)
Property, plant and equipment	$	(1,847	)	$	(3,136	)
Intangible assets		(4,048	)		(4,690	)
Other		(29	)		—

Noncurrent deferred tax (liabilities)	$	(5,924	)	$	(7,826	)

The difference between the effective tax rate and the U.S. federal statutory rate was as follows:


	October 31,
	2005			2006			2007

Federal statutory rate		34.0	%		35.0	%		35.0	%
State income tax		4.6			4.3			4.8
Nondeductible expenses		1.0			0.7			0.3
Foreign sales corporation		(1.3	)		(1.5	)		(0.1	)
Non-United States		—			(2.3	)		0.9
Other		(1.7	)		(3.3	)		0.3

Effective tax rate		36.6	%		32.9	%		41.2	%


11.	Employee Benefit Plans

The Red Man Pipe & Supply Co. Retirement Savings Plan (the “Plan”) incorporates the provisions of Section 401(k) of the Internal Revenue Code. The Plan covers all employees in the United States who have attained the age of twenty-one (21). Participants are allowed to contribute a portion of their salary with employer matching contributions based on the contributions of the participants. The employer matching contributions were approximately $927,000, $1,081,000 and $1,215,000 for the years ended October 31, 2005, 2006 and 2007, respectively.


12.	Related Party Transactions

The Company leases certain equipment from Prideco, a partnership related by common ownership and control. The Company also leases certain buildings from Prideco. Amounts paid to Prideco for building and equipment rental were $2,205,000, $2,695,000 and $3,086,000 for the years ended October 31, 2005, 2006 and 2007, respectively.

~~F-89~~F-91

RED MAN PIPE & SUPPLY CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2005, 2006 and 2007

A stockholder leases a supply and service center to the Company for use in its operations. The stated term of the lease will expire in January 2008. The aggregate lease payments made to the stockholder were $13,200 in each of fiscal years ended October 31, 2005, 2006 and 2007.

In connection with the Company’s acquisition of 51% of the shares of Midfield Supply ULC, a Shareholders’ Agreement between Red Man Pipe & Supply Canada, LTD., the 51% majority shareholder of Midfield Supply ULC, and Midfield Holdings (Alberta) LTD., the 49% minority interest shareholder of Midfield Supply ULC was created. This agreement, among other things, stipulates how profits of Midfield Supply ULC are shared. Midfield Holdings (Alberta) LTD’s portion of the profits are accrued and subsequently paid to shareholders of Midfield Holdings (Alberta) LTD, who are also employees of Midfield Supply ULC, via a formal Employee Profit Sharing Plan (“EPSP”). In connection with the EPSP, $22,186,000 and $8,212,000 is accrued as of October 31, 2006 and 2007, respectively, and is included in selling, general and administrative expenses. Red Man Pipe & Supply Canada, LTD’s portion of the profits were accrued and subsequently paid via an after-tax dividend, which has been eliminated in consolidation.

In connection with the EPSP payments, from time to time the minority shareholder makes loans to the Company. These subordinated notes payable are unsecured, bear interest at 8% and have no fixed terms of repayment. Amounts payable to minority interest shareholders were $28,009,000 and $25,718,000 as of October 31, 2006 and 2007, respectively, for amounts loaned to the Company.

The Company has unsecured advances to a related entity, Europump Systems Inc. (“Europump”), with no fixed terms of repayment bearing interest at 8% per annum in 2006 and 0% in 2007. The outstanding balance on the advances was $4,940,000 and $2,921,000 at October 31, 2006 and 2007, respectively. The Company has also issued a financial guarantee in the form of an irrevocable standby letter of credit for Europump for an amount up to CAD5,000,000 (2006: CAD0), to support a line of credit that Europump has established with its bank. The expiry date of the letter of credit is January 31, 2008, subject to an automatic renewal of one year unless such bank elects not to renew this letter of credit.


13.	Concentration of Credit Risk and Sources of Supply

Most of the Company’s business activity is with customers in the oil and gas industry. In the normal course of business the Company grants credit to these customers. Trade accounts receivable are primarily from these customers. The Company generally does not require collateral on its trade receivables. During 2005, 2006 and 2007, the Company did not have sales to any customers in excess of 10% of gross sales.

A substantial portion of the Company’s tubular goods is purchased from two manufacturers. The Company has no long-term supply contracts with these manufacturers which would assure the Company of a continued supply of tubular products in the future. Although the Company believes there are numerous manufacturers having the capacity to supply its tubular products, the loss of one of these major suppliers could have a material adverse effect on the Company’s business, financial condition or results of operations.

~~F-90~~F-92

McJUNKIN RED MAN HOLDING CORPORATION

Common Stock

Goldman, Sachs & Co.

~~Lehman Brothers~~Barclays Capital

~~JPMorgan~~J.P.Morgan

Deutsche Bank Securities

Robert W. Baird & Co.

Credit Suisse

Stephens Inc.

Raymond James

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS


Item 13.	*Other Expenses of Issuance and Distribution.*

The following table sets forth the costs and expenses to be paid by the Registrant in connection with the sale of the shares of common stock being registered hereby. All amounts are estimates except for the SEC registration fee, the Financial Industry Regulatory Authority (“FINRA”) filing fee and the New York Stock Exchange listing fee.


SEC registration fee	$	29,475
FINRA filing fee		75,500
The New York Stock Exchange listing fee		250,000
Accounting fees and expenses		850,000
Legal fees and expenses		3,500,000
Printing and engraving expenses		650,000
Blue Sky qualification fees and expenses		10,000
Transfer agent and registrar fees and expenses		10,000
Miscellaneous expenses		25,025

Total	$	5,400,000


Item 14.	*Indemnification of Directors and Officers.*

Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation’s board of directors to grant, indemnity to directors and officers in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act of 1933, as amended (the “Securities Act”).

As permitted by the Delaware General Corporation Law, the Registrant’s Certificate of Incorporation includes a provision that eliminates the personal liability of its directors for monetary damages for breach of fiduciary duty as a director, except for liability:


	•	for any breach of the director’s duty of loyalty to the Registrant or its stockholders;

	•	for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

	•	under section 174 of the Delaware General Corporation Law regarding unlawful dividends and stock purchases; or

	•	for any transaction for which the director derived an improper personal benefit.

As permitted by the Delaware General Corporation Law, the Registrant’s Bylaws provide that:


	•	the Registrant is required to indemnify its directors and officers to the fullest extent permitted by the Delaware General Corporation Law, subject to very limited exceptions;

	•	the Registrant may indemnify its other employees and agents to the fullest extent permitted by the Delaware General Corporation Law, subject to very limited exceptions;

	•	the Registrant is required to advance expenses, as incurred, to its directors and officers in connection with a legal proceeding to the fullest extent permitted by the Delaware General Corporation Law, subject to very limited exceptions;

II-1


	•	the Registrant may advance expenses, as incurred, to its employees and agents in connection with a legal proceeding; and

	•	the rights conferred in the Bylaws are not exclusive.

The Registrant may enter into Indemnity Agreements with each of its current directors and officers to give these directors and officers additional contractual assurances regarding the scope of the indemnification set forth in the Registrant’s Certificate of Incorporation and to provide additional procedural protections. At present, there is no pending litigation or proceeding involving a director, officer or employee of the Registrant regarding which indemnification is sought, nor is the Registrant aware of any threatened litigation that may result in claims for indemnification.

The indemnification provisions in the Registrant’s Certificate of Incorporation and Bylaws and any Indemnity Agreements entered into between the Registrant and each of its directors and officers may be sufficiently broad to permit indemnification of the Registrant’s directors and officers for liabilities arising under the Securities Act.

The Registrant and its subsidiaries are covered by liability insurance policies which indemnify their directors and officers against loss arising from claims by reason of their legal liability for acts as such directors, officers or trustees, subject to limitations and conditions as set forth in the policies.

The underwriting agreement to be entered into among the Company, the selling stockholder and the underwriters will contain indemnification and contribution provisions.

Stephen W. Lake, ~~senior corporate~~executive vice president, general counsel and corporate secretary of our company, holds an employed lawyer’s professional liability policy with Ace American Insurance Company, insuring him against liability which he may incur in his capacity as an officer of our company. The policy provides for $2 million of coverage with a $10,000 deductible.


Item 15.	*Recent Sales of Unregistered Securities.*

Issuances of Shares of Common Stock

We issued shares of common stock to PVF Holdings LLC over the period from November 29, 2006 to July 7, 2008. Set forth below is a summary of all issuances made to PVF Holdings LLC during such period. All issuances of common stock to PVF Holdings LLC were exempt from registration in accordance with Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D. PVF Holdings LLC was and is an “accredited” investor within the meaning of Regulation D, owned principally and controlled by the Goldman Sachs Funds, and all issuances of common stock to PVF Holdings LLC were made on a private placement basis without general solicitation.

The Company was incorporated on November 29, 2006, and on such date the Company issued ~~100~~50,000 shares of common stock to PVF Holdings LLC at a nominal purchase price of ~~$1.00~~$.002 per share.

On January 31, 2007, in connection with the Company’s acquisition of the entity now known as McJunkin Red Man Corporation (and its affiliate McJunkin Appalachian Oilfield Supply Company), the Company issued ~~102,111.5960~~51,055,798 shares of common stock to PVF Holdings LLC at a purchase price of ~~$3,933.81~~$7.87 per share in exchange for $202,712,226.29 in cash, 2,763.0177 shares of common stock of McJunkin Corporation and 1,441.33 shares of common stock of McJunkin Appalachian Oilfield Supply Company.

On March 27, 2007, in connection with investments in PVF Holdings LLC made by a new director and a new employee of the Company, the Company issued ~~381.5277~~190,763 shares of common stock to PVF Holdings at a purchase price of ~~$3,933.81~~$7.87 in exchange for a cash contribution of $500,857.14 and $1,000,000 in the form of a10-year promissory note.

II-2

On October 31, 2007, in connection with our business combination with Red Man Pipe & Supply Co., the Company issued ~~196,917.8360~~98,458,918 shares of common stock to PVF Holdings LLC at a purchase

~~II-2~~

price of ~~$3,933.81~~$7.87 per share in exchange for a cash contribution of $671,028,298 in cash and 23,584 shares of Red Man Pipe & Supply Co.

On November 29, 2007, in connection with investments in PVF Holdings LLC made by select employees of Red Man Pipe & Supply Co. (now a subsidiary of the Company), the Company issued ~~227.9818~~13,990 shares of common stock to PVF Holdings LLC at a purchase price of ~~$3,933.81~~$7.87 per share in exchange for a cash contribution of $896,837.18.

On November 30, 2007, in connection with an investment in PVF Holdings LLC made by a newly appointed director of the Company, the Company issued ~~127.1033~~63,551 shares of common stock to PVF Holdings LLC at a purchase price of ~~$3,933.81~~$7.87 per share in exchange for a cash contribution of $500,000.

On December 14, 2007, in connection with an investment in PVF Holdings LLC made by an executive officer of the Company, the Company issued ~~25.4207~~12,710 shares of common stock to PVF Holdings LLC at a purchase price of ~~$3,933.81~~$7.87 per share in exchange for a cash contribution of $100,000.

On January 7, 2008, in connection with an investment in PVF Holdings made by a new executive officer of the Company, the Company issued ~~0.2179~~108 shares of common stock to PVF Holdings LLC at a purchase price of ~~$3,933.81~~$7.87 per share in exchange for a cash contribution of $857.14.

On January 9, 2008, in connection with an investment in PVF Holdings made by an executive officer of the Company, the Company issued ~~0.2179~~108 shares of common stock to PVF Holdings LLC at a purchase price of ~~$3,933.81~~$7.87 per share in exchange for a cash contribution of $857.14.

On January 15, 2008, in connection with investments in PVF Holdings LLC made by select employees of the Company’s Canadian subsidiary, the Company issued ~~9,389.4973~~4,694,748 shares of common stock to PVF Holdings LLC at a purchase price of ~~$3,933.81~~$7.87 per share in exchange for a cash contribution of $4,806,769.37 and a deferred capital contribution of $32,129,724.47.

On February 8, 2008, in connection with an investment in PVF Holdings LLC made by a new executive officer of the Company, the Company issued ~~50.8413~~25,420 shares of common stock to PVF Holdings LLC at a purchase price of ~~$3,933.81~~$7.87 per share in exchange for a cash contribution of $200,000.

On March 24, 2008, in connection with an investment in PVF Holdings LLC made in December 2007 by a recently appointed director of the Company, the Company issued ~~254.2066~~127,103 shares of common stock to PVF Holdings LLC at a purchase price of ~~$3,933.81~~$7.87 per share in exchange for a cash contribution of $1,000,000.

On April 10, 2008, in accordance with the stock purchase agreement executed in connection with our business combination with Red Man Pipe & Supply Co., it was determined that the shareholders of Red Man Pipe & Supply Co. were owed $6,680,251.39 as part of the purchase price adjustment. As a result, on April 10, 2008, PVF Holdings LLC issued 1,698.1634 common units (at $3,933.81 per unit), equal to the aggregate dollar amount of $6,680,251.39, to the shareholders of Red Man Pipe & Supply Co. In connection with this issuance, the Company issued ~~1,698.1634~~849,081 shares of common stock to PVF Holdings LLC at a price of ~~$3,933.81~~$7.87 per share.

On May 14, 2008, in connection with an investment in PVF Holdings LLC made by two directors of the Company, the Company issued ~~0.4358~~217 shares of common stock to PVF Holdings LLC at a purchase price of ~~$3,933.81~~$7.87 per share in exchange for a cash contribution of $1,714.28.

On May 16, 2008, in accordance with the stock purchase agreement executed in connection with our business combination with Red Man Pipe & Supply Co., it was determined that the shareholders of Red Man Pipe & Supply Co. were owed $343,194.72 as part of an additional purchase price adjustment. As a result, on May 16, 2008, PVF Holdings LLC issued 87.2423 common

~~II-3~~

units (at $3,933.81 per unit), equal to the aggregate dollar amount of $343,194.72, to the

II-3

shareholders of Red Man Pipe & Supply Co. In connection with this issuance, the Company issued ~~87.2423~~43,621 shares of common stock to PVF Holdings LLC at a price of ~~$3,933.81~~$7.87 per share.

On July 7, 2008, in connection with an investment in PVF Holdings LLC made by a new director of the Company, the Company issued ~~68.9942~~34,497 shares of common stock to PVF Holdings LLC at a purchase price of ~~$4,348.19~~$8.70 per share in exchange for a cash contribution of $300,000.

On September 10, 2008, the Company issued ~~340.4379~~170,218 shares of common stock to its newly hired chief executive officer in exchange for a cash contribution of $3,000,000 at a purchase price per share of ~~$8,812.18.~~$17.63. The issuance of common stock to our newly-hired chief executive officer was exempt from registration in accordance with Rule 701 of the Securities Act of 1933.

On October 3, 2008, the Company issued 28,369 shares of common stock to a new director of the Company at a purchase price per share of $17.63 in exchange for a cash contribution of $500,000. The issuance of common stock to this new director was exempt from registration in accordance with Rule 701 of the Securities Act of 1933.

Stock Option and Restricted Stock Awards

As of ~~September 10,~~October 16, 2008, we had outstanding stock options to purchase ~~7,198.9429~~3,640,814 shares of our common stock and ~~569.4220~~282,771 shares of restricted stock outstanding in connection with awards made to certain of our employees and directors in connection with services provided as our employees and directors. These numbers take into account forfeitures as a result of the termination of certain grantees’ employment. All of these awards of restricted stock and stock options were exempt from registration in accordance with Rule 701 or Section 4(2) of the Securities Act of 1933. The dates of grant and recipients of such awards are more fully described below.

On March 27, 2007, we granted options to acquire ~~1,169.3502~~584,675 shares of our common stock under the McJ Holding Corporation 2007 Stock Option Plan (the “Stock Option Plan”) to certain employees of McJunkin Corporation at an exercise price of ~~$3,933.81~~$7.87 per share (which was subsequently reduced to ~~$2,411.17~~$4.83 in connection with our recapitalization in May 2008). On March 27, 2007 we also granted ~~317.7575~~158,878 shares of restricted stock under the McJ Holding Corporation 2007 Restricted Stock Plan (the “Restricted Stock Plan”) to certain employees of McJunkin Corporation.

On December 21, 2007 and January 23, 2008, we granted options to acquire ~~800.7505~~400,375 shares of our common stock to certain employees of our subsidiary Midfield Supply ULC under the McJunkin Red Man Holding Corporation 2007 Stock Option Plan (Canada), a sub-plan of the Stock Option Plan, at an exercise price of ~~$3,933.81~~$7.87 per share (which was subsequently reduced to ~~$2,411.17~~$4.83 in connection with our recapitalization in May 2008).

On December 21, 2007, we ~~granted~~authorized the grant of options to acquire ~~1,410.8460~~705,423 shares of our common stock to certain employees of Red Man Pipe & Supply Co. under the Stock Option Plan. In addition to grants made to employees, on December ~~21,~~24, 2007 we granted options to acquire ~~76.2620~~38,130 shares of our common stock to each of two recently appointed directors in connection with their service on our board of directors. All of the options to acquire shares of our common stock described in this paragraph had an exercise price of ~~$3,933.81~~$7.87 per share, which was subsequently reduced to ~~$2,411.17~~$4.83 per share in connection with our recapitalization in May 2008. On December 21, 2007 we also granted ~~317.7581~~158,879 shares of restricted stock under the Restricted Stock Plan to certain employees of Red Man Pipe & Supply Co.

On February 8, 2008, we granted options to acquire ~~38.1310~~19,065 shares of our common stock to one of our employees under the Stock Option Plan at an exercise price of ~~$3,933.81~~$7.87 per share (which was also reduced to ~~$2,411.17~~$4.83 per share in connection with our recapitalization in May 2008).

On June 16, 2008, we granted options to acquire ~~216.0650~~108,032 shares of our common stock to certain of our employees under the Stock Option Plan at an exercise price of ~~$4,348.19~~$8.70 per share.

II-4

On June 19, 2008, we granted options to acquire ~~114.9904~~57,495 shares of our common stock to one of our employees under the Stock Option Plan at an exercise price of ~~$4,348.19~~$8.70 per share.

~~II-4~~

On August 13, 2008 we granted options to purchase ~~27.1208~~13,560 shares of our common stock to each of two of our employees under the Stock Option Plan with an exercise price of ~~$5,530.81~~$11.07 per share.

On September 10, 2008 we granted options to purchase ~~3,517.8582~~1,758,929 shares of our common stock with an exercise price of ~~$8,812.18~~$17.63 per share to our newly hired chief executive officer.

On October 3, 2008, we granted options to purchase 17,021 shares of our common stock with an exercise price of $17.63 per share to a new director of our Company.

On October 16, 2008, we granted options to purchase 26,942 shares of our common stock with an exercise price of $17.63 per share to three employees of LaBarge Pipe & Steel Company, a recently acquired subsidiary of our Company.

The amounts of our common stock, restricted stock and stock options described in this Item 15 ~~do not take into account~~and the ~~for split of our common stock which will occur prior~~corresponding share prices and exercise prices are adjusted to give retroactive effect to the ~~pricing of this offering.~~500 for 1 stock split which occurred on October 16, 2008.


Item 16.	*Exhibits and Financial Statement Schedules.*

(a) The following exhibits are filed herewith:

Number

Exhibit Title

1 .1* Form of Underwriting Agreement.
2 .1 Agreement and Plan of Merger, dated as of December 4, 2006, by and among McJunkin Corporation, McJ Holding Corporation and Hg Acquisition Corp.
2 .1.1 McJunkin Contribution Agreement, dated as of December 4, 2006, by and among McJunkin Corporation, McJ Holding LLC and certain shareholders of McJunkin Corporation.
2 .1.2 McApple Contribution Agreement, dated as of December 4, 2006, among McJunkin Corporation, McJ Holding LLC and certain shareholders of McJunkin Appalachian Oilfield Supply Company.
2 .2 Stock Purchase Agreement, dated as of April 5, 2007, by and between McJunkin Development Corporation, Midway-Tristate Corporation and the other parties thereto.
2 .2.1 Assignment Agreement, dated as of April 27, 2007, by and among McJunkin Development Corporation, McJunkin Appalachian Oilfield Supply Company, Midway-Tristate Corporation, and John A. Selzer, as Representative of the Shareholders.
2 .3 Stock Purchase Agreement, dated as of July 6, 2007, by and among West Oklahoma PVF Company, Red Man Pipe & Supply Co., the Shareholders listed on Schedule 1 thereto, PVF Holdings LLC, and Craig Ketchum, as Representative of the Shareholders.
2 .3.1 Contribution Agreement, dated July 6, 2007, by and among McJ Holding LLC and certain shareholders of Red Man Pipe & Supply Co.
2 .3.2 Amendment No. 1 to Stock Purchase Agreement, dated as of October 24, 2007, by and among West Oklahoma PVF Company, Red Man Pipe & Supply Co., and Craig Ketchum, as Representative of the Shareholders.
2 .3.3 Joinder Agreement and Amendment No. 2 to the Stock Purchase Agreement, dated as of October 31, 2007, by and among West Oklahoma PVF Company, Red Man Pipe & Supply Co., PVF Holdings LLC, Craig Ketchum, as Representative of the Shareholders, and the other parties thereto.
3 .1* Form of Amended and Restated Certificate of Incorporation of McJunkin Red Man Holding Corporation.
3 .2* Form of Amended and Restated Bylaws of McJunkin Red Man Holding Corporation.
4 .1* Specimen Common Stock Certificate.
5 .1 Form of opinion of Fried, Frank, Harris, Shriver & Jacobson LLP.
10 .1 Revolving Loan Credit Agreement, dated as of October 31, 2007, by and among McJunkin Red Man Corporation and the other parties thereto.
10 .1.1 Joinder Agreement, dated as of June 10, 2008, by and among The Huntington National Bank, McJunkin Red Man Corporation and The CIT Group/Business Credit, Inc.
10 .1.2 Joinder Agreement, dated as of June 10, 2008, by and among JP Morgan Chase Bank, N.A., McJunkin Red Man Corporation and The CIT Group/Business Credit, Inc.
10 .1.3 Joinder Agreement, dated as of June 10, 2008, by and among TD Bank, N.A., McJunkin Red Man Corporation and The CIT Group/Business Credit, Inc.


Number			Exhibit Title

	1	.1*	Form of Underwriting Agreement.
	2	.1**	Agreement and Plan of Merger, dated as of December 4, 2006, by and among McJunkin Corporation, McJ Holding Corporation and Hg Acquisition Corp.
	2	.1.1**	McJunkin Contribution Agreement, dated as of December 4, 2006, by and among McJunkin Corporation, McJ Holding LLC and certain shareholders of McJunkin Corporation.
	2	.1.2**	McApple Contribution Agreement, dated as of December 4, 2006, among McJunkin Corporation, McJ Holding LLC and certain shareholders of McJunkin Appalachian Oilfield Supply Company.
	2	.2**	Stock Purchase Agreement, dated as of April 5, 2007, by and between McJunkin Development Corporation, Midway-Tristate Corporation and the other parties thereto.
	2	.2.1**	Assignment Agreement, dated as of April 27, 2007, by and among McJunkin Development Corporation, McJunkin Appalachian Oilfield Supply Company, Midway-Tristate Corporation, and John A. Selzer, as Representative of the Shareholders.
	2	.3**	Stock Purchase Agreement, dated as of July 6, 2007, by and among West Oklahoma PVF Company, Red Man Pipe & Supply Co., the Shareholders listed on Schedule 1 thereto, PVF Holdings LLC, and Craig Ketchum, as Representative of the Shareholders.
	2	.3.1**	Contribution Agreement, dated July 6, 2007, by and among McJ Holding LLC and certain shareholders of Red Man Pipe & Supply Co.
	2	.3.2**	Amendment No. 1 to Stock Purchase Agreement, dated as of October 24, 2007, by and among West Oklahoma PVF Company, Red Man Pipe & Supply Co., and Craig Ketchum, as Representative of the Shareholders.
	2	.3.3**	Joinder Agreement and Amendment No. 2 to the Stock Purchase Agreement, dated as of October 31, 2007, by and among West Oklahoma PVF Company, Red Man Pipe & Supply Co., PVF Holdings LLC, Craig Ketchum, as Representative of the Shareholders, and the other parties thereto.
	3	.1	Amended and Restated Certificate of Incorporation of McJunkin Red Man Holding Corporation.
	3	.2	Amended and Restated Bylaws of McJunkin Red Man Holding Corporation.
	4	.1*	Specimen Common Stock Certificate.
	5	.1	Opinion of Fried, Frank, Harris, Shriver & Jacobson LLP.

II-5

Number

Exhibit Title

10 .1.4 Joinder Agreement, dated as of June 10, 2008, by and among United Bank Inc., McJunkin Red Man Corporation and The CIT Group/Business Credit, Inc.
10 .2 Revolving Loan Security Agreement, dated as of October 31, 2007, by and among McJunkin Red Man Corporation and the other parties thereto.
10 .3 Term Loan Credit Agreement, dated as of January 31, 2007, by and among McJunkin Red Man Corporation and the other parties thereto.
10 .3.1 First Amendment to Term Loan Credit Agreement, dated as of October 31, 2007, by and among McJunkin Red Man Corporation and the other parties thereto.
10 .4 Term Loan Pledge Agreement, dated as of January 31, 2007, by and among McJunkin Red Man Corporation, Lehman Commercial Paper Inc., and the other parties thereto.
10 .4.1 Supplement No. 1 to Term Loan Pledge Agreement, dated as of April 30, 2007, by and among McJunkin Red Man Corporation, Lehman Commercial Paper Inc., and the other parties thereto.
10 .4.2 Supplement No. 2 to Term Loan Pledge Agreement, dated as of April 30, 2007, by and among McJunkin Red Man Corporation, Lehman Commercial Paper Inc., and the other parties thereto.
10 .4.3 Supplement No. 3 to Term Loan Pledge Agreement, dated as of October 31, 2007, by and among McJunkin Red Man Corporation, Lehman Commercial Paper Inc., and the other parties thereto.
10 .5 Term Loan Security Agreement, dated as of January 31, 2007, by and among McJunkin Red Man Corporation, Lehman Commercial Paper Inc., and the other parties thereto.
10 .5.1 Supplement No. 1 to Term Loan Security Agreement, dated as of April 30, 2007, by and among McJunkin Red Man Corporation, Lehman Commercial Paper Inc., and the other parties thereto.
10 .5.2 Supplement No. 2 to Term Loan Security Agreement, dated as of October 31, 2007, by and among McJunkin Red Man Corporation, Lehman Commercial Paper Inc., and the other parties thereto.
10 .6 Term Loan Credit Agreement, dated as of May 22, 2008, by and among McJunkin Red Man Holding Corporation and the other parties thereto.
10 .7 Term Loan Pledge Agreement, dated as of May 22, 2008, by and between McJunkin Red Man Holding Corporation and Lehman Commercial Paper Inc.
10 .8 Term Loan Security Agreement, dated as of May 22, 2008, by and between McJunkin Red Man Holding Corporation and Lehman Commercial Paper Inc.
10 .9 Loan and Security Agreement, dated as of November 2, 2006, by and among Midfield Supply ULC and the other parties thereto.
10 .9.1 Consent and First Amendment to the Loan and Security Agreement, dated as of April 26, 2007, by and among Midfield Supply ULC and the other parties thereto.
10 .9.2 Second Amendment to the Loan and Security Agreement, dated as of May 17, 2007, by and among Midfield Supply ULC and the other parties thereto.
10 .9.3 Third Amendment, Consent and Waiver to the Loan and Security Agreement, dated as of October 31, 2007, by and among Midfield Supply ULC and the other parties thereto.
10 .9.4 Fourth Amendment to the Loan and Security Agreement, dated as of April 28, 2008, by and among Midfield Supply ULC and the other parties thereto.
10 .10 Letter Agreement, dated as of May 17, 2007, by and between Alberta Treasury Branches and Midfield Supply ULC.
10 .10.1 Amendment to Letter Agreement, dated as of October 10, 2007, by and between Alberta Treasury Branches and Midfield Supply ULC.
10 .11 Letter Agreement, dated as of September 24, 2008, by and among H.B. Wehrle, III, PVF Holdings LLC and McJunkin Red Man Corporation.
10 .12 Employment Agreement of Craig Ketchum.
10 .13 Employment Agreement of James F. Underhill.
10 .14 Employment Agreement of David Fox, III.
10 .15 Employment Agreement of Dee Paige.


Number			Exhibit Title

	10	.1**	Revolving Loan Credit Agreement, dated as of October 31, 2007, by and among McJunkin Red Man Corporation and the other parties thereto.
	10	.1.1**	Joinder Agreement, dated as of June 10, 2008, by and among The Huntington National Bank, McJunkin Red Man Corporation and The CIT Group/Business Credit, Inc.
	10	.1.2**	Joinder Agreement, dated as of June 10, 2008, by and among JP Morgan Chase Bank, N.A., McJunkin Red Man Corporation and The CIT Group/Business Credit, Inc.
	10	.1.3**	Joinder Agreement, dated as of June 10, 2008, by and among TD Bank, N.A., McJunkin Red Man Corporation and The CIT Group/Business Credit, Inc.
	10	.1.4**	Joinder Agreement, dated as of June 10, 2008, by and among United Bank Inc., McJunkin Red Man Corporation and The CIT Group/Business Credit, Inc.
	10	.1.5	Joinder Agreement, dated as of October 3, 2008, by and among Raymond James Bank, FSB, McJunkin Red Man Corporation and The CIT Group/Business Credit, Inc.
	10	.1.6	Joinder Purchase Agreement, dated as of October 3, 2008, by and among Raymond James Bank, FSB, McJunkin Red Man Corporation and The CIT Group/Business Credit, Inc.
	10	.1.7	Joinder Agreement, dated as of October 16, 2008, by and among SunTrust Bank, McJunkin Red Man Corporation and The CIT Group/Business Credit, Inc.
	10	.1.8	Joinder Purchase Agreement, dated as of October 16, 2008, by and among SunTrust Bank, McJunkin Red Man Corporation and The CIT Group/Business Credit, Inc.
	10	.2**	Revolving Loan Security Agreement, dated as of October 31, 2007, by and among McJunkin Red Man Corporation and the other parties thereto.
	10	.3**	Term Loan Credit Agreement, dated as of January 31, 2007, by and among McJunkin Red Man Corporation and the other parties thereto.
	10	.3.1**	First Amendment to Term Loan Credit Agreement, dated as of October 31, 2007, by and among McJunkin Red Man Corporation and the other parties thereto.
	10	.4**	Term Loan Pledge Agreement, dated as of January 31, 2007, by and among McJunkin Red Man Corporation, Lehman Commercial Paper Inc., and the other parties thereto.
	10	.4.1**	Supplement No. 1 to Term Loan Pledge Agreement, dated as of April 30, 2007, by and among McJunkin Red Man Corporation, Lehman Commercial Paper Inc., and the other parties thereto.
	10	.4.2**	Supplement No. 2 to Term Loan Pledge Agreement, dated as of April 30, 2007, by and among McJunkin Red Man Corporation, Lehman Commercial Paper Inc., and the other parties thereto.
	10	.4.3**	Supplement No. 3 to Term Loan Pledge Agreement, dated as of October 31, 2007, by and among McJunkin Red Man Corporation, Lehman Commercial Paper Inc., and the other parties thereto.
	10	.5**	Term Loan Security Agreement, dated as of January 31, 2007, by and among McJunkin Red Man Corporation, Lehman Commercial Paper Inc., and the other parties thereto.
	10	.5.1**	Supplement No. 1 to Term Loan Security Agreement, dated as of April 30, 2007, by and among McJunkin Red Man Corporation, Lehman Commercial Paper Inc., and the other parties thereto.
	10	.5.2**	Supplement No. 2 to Term Loan Security Agreement, dated as of October 31, 2007, by and among McJunkin Red Man Corporation, Lehman Commercial Paper Inc., and the other parties thereto.
	10	.6**	Term Loan Credit Agreement, dated as of May 22, 2008, by and among McJunkin Red Man Holding Corporation and the other parties thereto.
	10	.7**	Term Loan Pledge Agreement, dated as of May 22, 2008, by and between McJunkin Red Man Holding Corporation and Lehman Commercial Paper Inc.
	10	.8**	Term Loan Security Agreement, dated as of May 22, 2008, by and between McJunkin Red Man Holding Corporation and Lehman Commercial Paper Inc.
	10	.9**	Loan and Security Agreement, dated as of November 2, 2006, by and among Midfield Supply ULC and the other parties thereto.

II-6

Number

Exhibit Title

10 .16 Employment Agreement of Stephen D. Wehrle.
10 .17 McJ Holding Corporation 2007 Stock Option Plan.
10 .17.1 Form of McJunkin Red Man Holding Corporation Nonqualified Stock Option Agreement.
10 .18 McJ Holding Corporation 2007 Restricted Stock Plan.
10 .18.1 Form of McJunkin Red Man Holding Corporation Restricted Stock Award Agreement.
10 .19 McJunkin Red Man Holding Corporation 2007 Stock Option Plan (Canada).
10 .19.1 Form of McJunkin Red Man Holding Corporation Nonqualified Stock Option Agreement (Canada) (for plan participants who are parties to non-competition agreements).
10 .19.2 Form of McJunkin Red Man Holding Corporation Nonqualified Stock Option Agreement (Canada) (for plan participants who are not parties to non-competition agreements).
10 .20 McJunkin Red Man Corporation Deferred Compensation Plan.
10 .21 Indemnity Agreement, dated as of December 4, 2006, by and among McJunkin Red Man Holding Corporation, Hg Acquisition Corp., McJunkin Red Man Corporation, and certain shareholders of McJunkin Red Man Corporation named therein.
10 .22 Management Stockholders Agreement, dated as of March 27, 2007, by and among PVF Holdings LLC, McJunkin Red Man Holding Corporation, and the other parties thereto.
10 .22.1 Amendment No. 1 to the Management Stockholders Agreement, dated as of December 21, 2007, executed by PVF Holdings LLC.
10 .22.2 Amendment No. 2 to the Management Stockholders Agreement, dated as of December 26, 2007, executed by PVF Holdings LLC.
10 .23 Phantom Shares Surrender Agreement, Release and Waiver, dated as of October 30, 2007, by and among Red Man Pipe & Supply Co., PVF Holdings LLC, and Jeffrey Lang.
10 .24 Phantom Shares Surrender Agreement, Release and Waiver, dated as of October 30, 2007, by and among Red Man Pipe & Supply Co., PVF Holdings LLC, and Dee Paige.
10 .25* Form of Second Amended and Restated Limited Liability Company Agreement of PVF Holdings LLC.
10 .26* Form of Registration Rights Agreement by and among McJunkin Red Man Holding Corporation and PVF Holdings LLC.
10 .27 Amended and Restated Limited Liability Company Operating Agreement of Red Man Distributors LLC, dated as of September 18, 2008.
10 .28 Amended and Restated Services Agreement, dated as of September 18, 2008, by and between McJunkin Red Man Corporation and Red Man Distributors LLC.
10 .29 Employment Agreement of Andrew Lane.
10 .30 Subscription Agreement, dated as of September 10, 2008, by and among McJunkin Red Man Holding Corporation, Andrew Lane, and PVF Holdings LLC.
10 .31 McJunkin Red Man Holding Corporation Nonqualified Stock Option Agreement, dated as of September 10, 2008, by and among McJunkin Red Man Holding Corporation, PVF Holdings LLC, and Andrew Lane.
16 Letter from Schneider Downs & Co., Inc.
21 .1 List of Subsidiaries of McJunkin Red Man Holding Corporation.
23 .1 Consent of Ernst & Young LLP.
23 .2 Consent of Schneider Downs & Co., Inc.
23 .3 Consent of PricewaterhouseCoopers LLP.
23 .4 Consent of Fried, Frank, Harris, Shriver & Jacobson LLP (included in Exhibit 5.1).
24 .1** Power of Attorney.


Number			Exhibit Title

	10	.9.1**	Consent and First Amendment to the Loan and Security Agreement, dated as of April 26, 2007, by and among Midfield Supply ULC and the other parties thereto.
	10	.9.2**	Second Amendment to the Loan and Security Agreement, dated as of May 17, 2007, by and among Midfield Supply ULC and the other parties thereto.
	10	.9.3**	Third Amendment, Consent and Waiver to the Loan and Security Agreement, dated as of October 31, 2007, by and among Midfield Supply ULC and the other parties thereto.
	10	.9.4**	Fourth Amendment to the Loan and Security Agreement, dated as of April 28, 2008, by and among Midfield Supply ULC and the other parties thereto.
	10	.10**	Letter Agreement, dated as of May 17, 2007, by and between Alberta Treasury Branches and Midfield Supply ULC.
	10	.10.1**	Amendment to Letter Agreement, dated as of October 10, 2007, by and between Alberta Treasury Branches and Midfield Supply ULC.
	10	.11**	Letter Agreement, dated as of September 24, 2008, by and among H.B. Wehrle, III, PVF Holdings LLC and McJunkin Red Man Corporation.
	10	.12**	Employment Agreement of Craig Ketchum.
	10	.13**	Employment Agreement of James F. Underhill.
	10	.14**	Employment Agreement of David Fox, III.
	10	.15**	Employment Agreement of Dee Paige.
	10	.16**	Employment Agreement of Stephen D. Wehrle.
	10	.17**	McJ Holding Corporation 2007 Stock Option Plan.
	10	.17.1**	Form of McJunkin Red Man Holding Corporation Nonqualified Stock Option Agreement.
	10	.18**	McJ Holding Corporation 2007 Restricted Stock Plan.
	10	.18.1**	Form of McJunkin Red Man Holding Corporation Restricted Stock Award Agreement.
	10	.19**	McJunkin Red Man Holding Corporation 2007 Stock Option Plan (Canada).
	10	.19.1**	Form of McJunkin Red Man Holding Corporation Nonqualified Stock Option Agreement (Canada) (for plan participants who are parties to non-competition agreements).
	10	.19.2**	Form of McJunkin Red Man Holding Corporation Nonqualified Stock Option Agreement (Canada) (for plan participants who are not parties to non-competition agreements).
	10	.20**	McJunkin Red Man Corporation Deferred Compensation Plan.
	10	.21**	Indemnity Agreement, dated as of December 4, 2006, by and among McJunkin Red Man Holding Corporation, Hg Acquisition Corp., McJunkin Red Man Corporation, and certain shareholders of McJunkin Red Man Corporation named therein.
	10	.22**	Management Stockholders Agreement, dated as of March 27, 2007, by and among PVF Holdings LLC, McJunkin Red Man Holding Corporation, and the other parties thereto.
	10	.22.1**	Amendment No. 1 to the Management Stockholders Agreement, dated as of December 21, 2007, executed by PVF Holdings LLC.
	10	.22.2**	Amendment No. 2 to the Management Stockholders Agreement, dated as of December 26, 2007, executed by PVF Holdings LLC.
	10	.23**	Phantom Shares Surrender Agreement, Release and Waiver, dated as of October 30, 2007, by and among Red Man Pipe & Supply Co., PVF Holdings LLC, and Jeffrey Lang.
	10	.24**	Phantom Shares Surrender Agreement, Release and Waiver, dated as of October 30, 2007, by and among Red Man Pipe & Supply Co., PVF Holdings LLC, and Dee Paige.
	10	.25*	Form of Second Amended and Restated Limited Liability Company Agreement of PVF Holdings LLC.
	10	.26*	Form of Registration Rights Agreement by and among McJunkin Red Man Holding Corporation and PVF Holdings LLC.
	10	.27**	Amended and Restated Limited Liability Company Operating Agreement of Red Man Distributors LLC, dated as of September 18, 2008.
	10	.28**	Amended and Restated Services Agreement, dated as of September 18, 2008, by and between McJunkin Red Man Corporation and Red Man Distributors LLC.
	10	.29**	Employment Agreement of Andrew Lane.
	10	.30**	Subscription Agreement, dated as of September 10, 2008, by and among McJunkin Red Man Holding Corporation, Andrew Lane, and PVF Holdings LLC.

II-7


Number			Exhibit Title

	10	.31**	McJunkin Red Man Holding Corporation Nonqualified Stock Option Agreement, dated as of September 10, 2008, by and among McJunkin Red Man Holding Corporation, PVF Holdings LLC, and Andrew Lane.
	16**		Letter from Schneider Downs & Co., Inc.
	21	.1	List of Subsidiaries of McJunkin Red Man Holding Corporation.
	23	.1	Consent of Ernst & Young LLP.
	23	.2	Consent of Schneider Downs & Co., Inc.
	23	.3	Consent of PricewaterhouseCoopers LLP.
	23	.4	Consent of Fried, Frank, Harris, Shriver & Jacobson LLP (included in Exhibit 5.1).
	24	.1**	Power of Attorney.
	24	.2	Power of Attorney of Leonard M. Anthony and Andrew Lane.


*		To be filed by amendment.


**		Previously filed.

(b) None.

~~II-7~~


Item 17.	*Undertakings.*

The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in Item 14 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective; and

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof.

II-8

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Tulsa, State of Oklahoma, on ~~September 26,~~October 31, 2008.

McJUNKIN RED MAN HOLDING CORPORATION

By:

~~/s/~~ ~~Andrew Lane~~*

Andrew Lane
President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.


Signature	Title	Date

~~/s/~~ ~~Andrew Lane~~* Andrew Lane	President and Chief Executive Officer and Director (Principal Executive Officer)	~~September 26,~~October 31, 2008

* James F. Underhill	Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	~~September 26,~~October 31, 2008

/s/ Craig Ketchum Craig Ketchum	Chairman of the Board of Directors	~~September 26,~~October 31, 2008

* Leonard M. Anthony	Director	October 31, 2008

* Rhys J. Best	Director	~~September 26,~~October 31, 2008

* Henry Cornell	Director	~~September 26,~~October 31, 2008

* Christopher A.S. Crampton	Director	~~September 26,~~October 31, 2008

* John F. Daly	Director	~~September 26,~~October 31, 2008

* Harry K. Hornish, Jr.	Director	~~September 26,~~October 31, 2008

* Sam B. Rovit	Director	~~September 26,~~October 31, 2008

* H.B. Wehrle, III	Director	~~September 26,~~October 31, 2008


*By: /s/ Craig Ketchum Craig Ketchum, as attorney-in-fact

II-9


Delaware	1311	20-5956993
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)


8023 East 63rd Place		835 Hillcrest Drive
Tulsa, Oklahoma 74133		Charleston, West Virginia 25311
(918) 250-8541		(304) 348-5211
(Address, Including Zip Code, and Telephone Number,Including Area Code, of Registrant’s Principal Executive Offices)


Stuart H. Gelfond		Richard A. Drucker
Michael A. Levitt		Davis Polk & Wardwell
Fried, Frank, Harris, Shriver & Jacobson LLP		450 Lexington Avenue
One New York Plaza		New York, New York 10017
New York, New York 10004		(212) 450-4000
(212) 859-8000


Large accelerated filer o		Accelerated filer o		Non-accelerated filer þ		Smaller reporting company o


(1)		Includes offering price of shares of common stock which the underwriters have the option to purchase.
(2)		Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) of the Securities Act of 1933, as amended.


	Per Share	Total

Initial public offering price	$	$
Underwriting discount	$	$
Proceeds, before expenses, to the selling stockholder	$	$


	Page

Prospectus Summary		1
Risk Factors		18
Cautionary Note Regarding Forward-Looking Statements		3536
Use of Proceeds		3738
Dividend Policy		3839
Capitalization		3940
Dilution		4142
Selected Historical Consolidated Financial Data		4243
Pro Forma Consolidated Financial Statements		4647
Management’s Discussion and Analysis of Financial Condition and Results of Operations		5254
Business		8790
Management		~~106~~109
Principal and Selling Stockholders		~~136~~140
Certain Relationships and Related Party Transactions		~~140~~144
Description of Our Indebtedness		~~152~~156
Description of Our Capital Stock		~~161~~165
Shares Eligible for Future Sale		~~164~~168
Certain U.S. Federal Income Tax Considerations forNon-U.S. Holders		~~165~~169
Underwriting		~~169~~173
Legal Matters		~~175~~179
Experts		~~175~~179
Where You Can Find More Information		~~175~~179
Index to Consolidated Financial Statements		F-1
~~EX-2.1~~EX-3.1: AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
~~EX-2.1.1~~EX-3.2: AMENDED AND RESTATED BYLAWS
~~EX-2.1.2~~EX-5.1: OPINION OF FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP
~~EX-2.2~~EX-10.1.5: JOINDER AGREEMENT
~~EX-2.2.1~~EX-10.1.6: JOINDER PURCHASE AGREEMENT
~~EX-2.3~~EX-10.1.7: JOINDER AGREEMENT
~~EX-2.3.1~~EX-10.1.8: JOINDER PURCHASE AGREEMENT
~~EX-2.3.2~~EX-21.1: LIST OF SUBSIDIARIES
~~EX-2.3.3~~EX-23.1: CONSENT OF ERNST & YOUNG LLP
~~EX-5.1~~EX-23.2: CONSENT OF SCHNEIDER DOWNS & CO., INC.
~~EX-10.1~~EX-23.3: CONSENT OF PRICEWATERHOUSECOOPERS LLP
~~EX-10.1.1~~
~~EX-10.1.2~~
~~EX-10.1.3~~
~~EX-10.1.4~~
~~EX-10.2~~
~~EX-10.3~~
~~EX-10.3.1~~
~~EX-10.4~~
~~EX-10.4.1~~
~~EX-10.4.2~~
~~EX-10.4.3~~
~~EX-10.5~~
~~EX-10.5.1~~
~~EX-10.5.2~~
~~EX-10.6~~
~~EX-10.7~~
~~EX-10.8~~
~~EX-10.9~~
~~EX-10.9.1~~
~~EX-10.9.2~~
~~EX-10.9.3~~
~~EX-10.9.4~~
~~EX-10.10~~
~~EX-10.10.1~~
~~EX-10.11~~
~~EX-10.12~~
~~EX-10.13~~
~~EX-10.14~~
~~EX-10.15~~
~~EX-10.16~~
~~EX-10.17~~
~~EX-10.17.1~~
~~EX-10.18~~
~~EX-10.18.1~~
~~EX-10.19~~
~~EX-10.19.1~~
~~EX-10.19.2~~
~~EX-10.20~~
~~EX-10.21~~
~~EX-10.22~~
~~EX-10.22.1~~
~~EX-10.22.2~~
~~EX-10.23~~
~~EX-10.24~~
~~EX-10.27~~
~~EX-10.28~~
~~EX-10.29~~
~~EX-10.30~~
~~EX-10.31~~
~~EX-16~~
~~EX-21.1~~
~~EX-23.1~~
~~EX-23.2~~
~~EX-23.3~~EX-24.2: POWER OF ATTORNEY


	•	*Broad Product Offering and High Customer Service Levels:* The breadth and depth of our product offering enables us to provide a high level of service to our energy and industrial customers. Given our North American inventory coverage and branch network, we are able to fulfill orders more quickly, including orders for less common and specialty items, and provide our customers with a greater array of value added services, including multiple daily deliveries, volume purchasing, product testing and supplier assessments, inventory management and warehousing, technical support,just-in-time delivery, order consolidation, product tagging and tracking, and system interfaces customized to customer and supplier specifications, than if we operated on a smaller scaleand/or only at a local or regional level. Thus our clients, particularly those operating throughout North America, can quickly and efficiently source the most suitable products with the least amount of downtime and at the lowest total transaction cost.

	•	*Approved Manufacturer List (“AML”) Services:* Our customers rely on us to provide a high level of quality control for their PVF products. We do this by regularly auditing many of our suppliers for quality assurance through our Supplier Registration Process. We use our resulting Approved Supplier List (the “MRM ASL”) to supply products across many of the markets we support, particularly for downstream and midstream customers. This process has enabled us to achieve a preferred vendor status with many key end users in the industry that utilize our AML services to help devise and maintain their own approved manufacturer listings. In this manner, we seek to ensure that our customers timely receive reliable and high quality products without incurring additional administrative and procurement expenses. Our suppliers in turn look to us as a key partner, which has been important in establishing us as an important link in the supply chain and a leader in the industry.

	•	*Customized and Integrated Service Offering:* We offer our customers integrated supply services including product procurement, product quality assurance, physical warehousing, and inventory management and analysis using our proprietary customized information technology platform. This is part of an overall strategy to promote a “one stop” shop for PVF purchases across the upstream-midstream-downstream spectrum and throughout North America through integrated supply agreements and MRO contracts that enable our customers to focus on their core operations and increase the efficiency of their business.


*		PVF Holdings LLC is offering all of the shares to be sold in this offering. PVF Holdings LLC intends to distribute the net proceeds of this offering, after giving effect to the underwriting discount, to its members, which include certain of our directors and executive officers. See the table on page ~~139~~143 for information regarding the amount of offering proceeds to be distributed to each of our directors and executive officers.


Issuer		McJunkin Red Man Holding Corporation.

Common stock offered by the selling stockholder		shares.

Option to purchase additional shares of common stock from the selling stockholder		shares.


Common stock outstanding immediately after the offering		155,912,942 shares.


Use of proceeds		The proceeds from the sale of shares of our common stock in the offering are solely for the account of PVF Holdings LLC, the selling stockholder. We will not receive any proceeds from the sale of our common stock by the selling stockholder. See “Use of Proceeds”. PVF Holdings LLC intends to distribute the net proceeds of this offering, after giving effect to the underwriting discount, to its members, which include certain members of our board of directors and senior management team and various of their affiliates. See “Principal and Selling Stockholders” and “Underwriting”. Additionally, affiliates of Goldman, Sachs & Co. own a majority interest in PVF Holdings LLC. Accordingly, such affiliates will receive a significant portion of the proceeds from this offering. See “Underwriting”.

Proposed New York Stock Exchange symbol		“MRC”.


Risk Factors		See “Risk Factors” beginning on page 18 of this prospectus for a discussion of factors that you should carefully consider before deciding to invest in shares of our common stock.


	•	gives effect to a 500 for 1 split of our common stock ~~to be effected prior to the pricing of this offering;~~which occurred on October 16, 2008;


	•	excludes 3,640,814 shares of common stock issuable upon the exercise of stock options granted to certain of our employees and directors pursuant to the McJ Holding Corporation 2007 Stock Option Plan; and


	•	excludes 282,771 shares of non-vested restricted stock awarded to certain of our employees pursuant to the McJ Holding Corporation 2007 Restricted Stock Plan.


(1)		Represents amortization of intangibles included as a result of the GS Acquisition, our acquisition of Midway-Tristate Corporation, and the Red Man Transaction, plus associated transaction fees.


(2)		The following are certain charges and costs incurred in each of the relevant periods that are meaningful to understanding our net income and in evaluating our performance:


(3)		Adjusted EBITDA is used in our senior secured term loan facility, senior secured revolving credit facility, and junior term loan facility in the ratio of consolidated total debt to consolidated adjusted EBITDA, and is also used in our senior secured term loan facility and junior term loan facility in the ratio of consolidated adjusted EBITDA to consolidated interest expense. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Revolving Credit Facility and Term Loan Facility — Covenants”. Adjusted EBITDA is defined in our credit facilities as net income plus depreciation and amortization, amortization of intangibles, interest expense, income tax expense, stock-based compensation, LIFO expense, certain non-recurring and transaction-related expenses (including transaction costs associated with the GS Acquisition, our acquisition of Midway-Tristate Corporation, and the Red Man Transaction), minority interest, charges in connection with an employee profit sharing plan for certain employees of our subsidiary Midfield Supply ULC, and certain other adjustments, including franchise taxes and pro forma adjustments relating to acquisitions. We present Adjusted EBITDA because it is a material component of material covenants in our senior secured term loan facility and junior term loan facility. In addition, we believe it is a useful indicator of our operating performance. We believe this for the following reasons:


	•	Our management uses Adjusted EBITDA for planning purposes, including the preparation of our annual operating budget and financial projections, as well as for determining a significant portion of the compensation of our executive officers;

	•	Adjusted EBITDA is widely used by investors to measure a company’s operating performance without regard to items, such as interest expense, income tax expense, and depreciation and amortization, that can vary substantially from company to company depending upon their financing and accounting methods, the book value of their assets, their capital structures and the method by which their assets were acquired; and

	•	securities analysts use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies.


		Particularly, we believe that Adjusted EBITDA is a useful indicator of our operating performance because:


	•	Our lenders believed Adjusted EBITDA was the appropriate performance measure for the key operational covenants in our senior secured term loan facility and junior term loan facility (see “Description of Our Indebtedness”);

	•	Adjusted EBITDA measures our company’s operating performance without regard to LIFO expense, which is high due to recent inflation and therefore reflects an overstatement of the cost of goods sold over recent periods, and we believe that this adjustment assists in comparing us to our peers, because many of our peers do not use the LIFO method of inventory valuation; and

	•	Adjusted EBITDA measures our company’s operating performance without regard to non-recurring and transaction-related expenses incurred in connection with business combination transactions such as the Red Man Transaction.


		Adjusted EBITDA, however, does not represent and should not be considered as an alternative to net income, cash flow from operations, or any other measure of financial performance calculated and presented in accordance with GAAP. Our Adjusted EBITDA may not be comparable to similar measures reported by other companies because other companies may not calculate Adjusted EBITDA in the same manner as we do. Although we use Adjusted EBITDA as a measure to assess the operating performance of our business, Adjusted EBITDA has significant limitations as an analytical tool because it excludes certain material costs. For example, it does not include interest expense, which has been a necessary element of our costs. Because we use capital assets, depreciation expense is a necessary element of our costs and our ability to generate revenue. In addition, the omission of the amortization expense associated with our intangible assets further limits the usefulness of this measure. Adjusted EBITDA also does not include the payment of certain taxes, which is also a necessary element of our operations. Furthermore, Adjusted EBITDA does not account for LIFO expense, and therefore to the extent that recently purchased inventory accounts for a relatively large portion of our sales, Adjusted EBITDA may overstate our operating performance. Because Adjusted EBITDA does not account for certain expenses, its utility as a measure of our operating performance has material limitations. Because of these limitations management does not view Adjusted EBITDA in isolation or as a primary performance measure and also uses other measures, such as net income and sales, to measure operating performance.


		The following table presents a reconciliation of Adjusted EBITDA to Net income:


(a)		Includes transaction costs associated with the GS Acquisition, our acquisition of Midway-Tristate Corporation, and the Red Man Transaction.

(b)		Includes franchise tax expense, certain consulting fees, gains and losses on the sale of assets and other nonrecurring items.


		~~(4)~~Adjusted to give effect (1) to an estimated $5.4 million of expenses incurred in connection with this offering and (2) for our purchase on July 31, 2008 of the approximate 49% minority voting interest in Midfield Supply ULC, one of our subsidiaries. Our total debt, including current portion, would increase by $5.4 million due tooffering-related expenses based on our estimate of such expenses. In connection with our purchase of the minority voting interest in Midfield, our total debt, including current portion, increased from $1,284.7 million to $1,384.7 million because we incurred an additional $100 million of debt in order to fund the purchase. Our minority interest in subsidiaries was eliminated upon consummation of the purchase because we had no minority interest in subsidiaries other than the purchased interest. Our stockholders’ equity has decreased from $824.4 million to $819.0 million, or by $5.4 million, on account of the $5.4 million of offering-related expenses.


	•	the level of domestic and worldwide oil and gas production and inventories;

	•	the level of drilling activity and the availability of attractive oil and gas field prospects, which may be affected by governmental actions, such as regulatory actions or legislation, or other restrictions on drilling, including those related to environmental concerns;

	•	the discovery rate of new oil and gas reserves and the expected cost of developing new reserves;

	•	the actual cost of finding and producing oil and gas;

	•	depletion rates;

	•	domestic and worldwide refinery overcapacity or undercapacity and utilization rates;

	•	the availability of transportation infrastructure and refining capacity;

	•	increases in the cost of the products that we provide to the oil and gas industry, which may result from increases in the cost of raw materials such as steel;

	•	shifts in end-customer preferences toward fuel efficiency and the use of natural gas;


	•	the economicand/or political attractiveness of alternative fuels, such as coal, hydrocarbon, wind, solar energy and biomass-based fuels;


	•	increases in oil and gas pricesand/or historically high oil and gas prices, which could lower demand for oil and gas products;

	•	worldwide economic activity including growth in countries that are not members of the Organisation for Economic Co-operation and Development (“non-OECD countries”), including China and India;

	•	interest rates and the cost of capital;

	•	national government policies, including government policies which could nationalize or expropriate oil and gas exploration, production, refining or transportation assets;

	•	the ability of the Organization of Petroleum Exporting Countries (OPEC) to set and maintain production levels and prices for oil;

	•	the impact of armed hostilities, or the threat or perception of armed hostilities;

	•	pricing and other actions taken by competitors that impact the market;

	•	environmental regulation;

	•	technological advances;

	•	global weather conditions and natural disasters;

	•	an increase in the value of the U.S. dollar relative to foreign currencies; and

	•	tax policies.


	•	operating a significantly larger combined company with operations in more geographic areas and with more business lines;

	•	integrating personnel with diverse backgrounds and organizational cultures;

	•	coordinating sales and marketing functions;

	•	retaining key employees, customers or suppliers;

	•	integrating the information systems;

	•	preserving the collaboration, distribution, marketing, promotion and other important relationships; and

	•	consolidating other corporate and administrative functions.


	•	failure to achieve cost savings or other financial or operating objectives with respect to an acquisition;

	•	strain on the operational and managerial controls and procedures of our business, and the need to modify systems or to add management resources;

	•	difficulties in the integration and retention of customers or personnel and the integration and effective deployment of operations or technologies;

	•	amortization of acquired assets, which would reduce future reported earnings;

	•	possible adverse short-term effects on our cash flows or operating results;

	•	diversion of management’s attention from the ongoing operations of our business;

	•	failure to obtain and retain key personnel of an acquired business; and

	•	assumption of known or unknown material liabilities or regulatory non-compliance issues.


	•	limiting our ability to obtain additional financing to fund our working capital, acquisitions, expenditures, debt service requirements or other general corporate purposes;

	•	limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service debt;


	•	limiting our ability to compete with other companies who are not as highly leveraged;

	•	subjecting us to restrictive financial and operating covenants in the agreements governing our and our subsidiaries’ long-term indebtedness;

	•	exposing us to potential events of default (if not cured or waived) under financial and operating covenants contained in our or our subsidiaries’ debt instruments that could have a material adverse effect on our business, results of operations and financial condition;

	•	increasing our vulnerability to a downturn in general economic conditions or in pricing of our products; and

	•	limiting our ability to react to changing market conditions in our industry and in our customers’ industries.


	•	fund our operations;

	•	finance investments in equipment and infrastructure needed to maintain and expand our distribution capabilities;

Proposed Maximum

Title of Each Class of

Aggregate Offering

Amount of

Securities to be Registered

Price (1)(2)

Registration Fee

Common Stock, $0.01 par value

$750,000,000

$29,475 (3)