Good morning, ladies and gentlemen. Welcome to the Newpark Resources Third Quarter Earnings Conference Call. During today's presentation all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator instructions). This conference is being recorded, today, Friday, October 31st of 2008. At this time I would like to turn the conference over to Ms. Carol Cole [ph] with DRG&E. Please go ahead.

Thank you, Vance, and good morning, everyone. We appreciate your joining us for the Newpark Resources Conference Call today to review 2008 third quarter results. We would also like to welcome our internet participants listening to the call simulcast live over the internet. Before I turn the call over to management, I have a few housekeeping items to cover. For those of you who do not receive an e-mail of the release this morning I would like to be added to the distribution list. Please call the DRG&E offices at 713-529-6600 to provide us your contact information, or you can e-mail me at the address shown on the context section of the press release. There will be a replay of today's call, and that will be available via webcast on the company's Web site at www.newpark.com. There will also be a recorded replay, which will be available until November 7th, and that information is in yesterday's release. Please note that the information reported on this call speaks only as of today, October 31st, 2008, and therefore you are advised to time-sensitive information may no longer be accurate as of the time of the replay. In addition, the comments made by management today of Newpark during this conference call may contain forward-looking statements within the meaning of the United States Federal Securities laws. These forward-looking statements reflect the current views of the management of Newpark. However, various risks, uncertainties, and contingencies could cause Newpark's actual results performance or achievement to differ materially from those expressed in the statements made by management. The listeners are encouraged to read the company's 2007 annual report on Form 10-K, subsequently filed quarterly reports on Form 10-Q, and current report on Form 8-K to understand certain of those risks, uncertainties and contingencies. Now with all that said I would like to turn the call over to Newpark President and CEO, Mr. Paul Howes.

Thank you, Carol. Good morning to everyone. We would like to take this opportunity to thank all of you for joining us today for our third quarter conference call. With me today is Jim Braun, our Chief Financial Officer. I would like to begin by first commenting on the pending sale of the environmental business, and then highlight some of the results of the quarter. Following my remarks, Jim will cover the operational and financial details of the quarter. I would then conclude the discussion of our market outlook before opening the call to Q&A. Now let me briefly address the sale of the environment business to CCS. After signing agreement with CCS in April 2008, we made our initial HSR filing in May. In July, the FTC issued a request for additional information and documents as part of its standard review process. On October 23rd, the FTC informed us that they intend to file suit to block the sale due to their belief that the transaction would be anti-competitive and they have filed a complaint in Federal District Court, seeking a temporary restraining order and preliminary injunction to preserve the competitive status quo pending an administrative trial. It's our belief that the FTC conclusions are erroneous [ph]. We disagree with their position, and at this time we intend to oppose the FTC's request to obtain a preliminary injunction to prevent the closing of the sale. Given the circumstances it is unlikely that the transaction will close during the fourth quarter. Now turning our attention to the quarter, I would like to emphasize how pleased I am with our financial results in what has become an increasingly challenging environment for oil field service companies. We continue to make strong progress growing the company both in domestic and international market. Revenues…

Thank you, Paul, and good morning, everyone. As Paul mentioned in his opening remarks for the third quarter of 2008 we reported record revenues of $212 million, up 38% from the third quarter of last year. Sequentially, revenues were up 9% from the second quarter of 2008, and operating income rose 29% over the third quarter of 2007 to $19.9 million and rose 28% sequentially. Income from continuing operations in the third quarter of 2008 was $11.7 million or $0.13 per share. This is an increase in the EPS from the $0.08 per share that we reported for the third quarter of 2007 and a $0.10 that we reported in the second quarter of 2008. Now let me review our segment results. Revenues for the Fluids System and Engineering business increased 45% to $189 million for the third quarter as compared to $130 million for the same period last year. We saw improvements in revenue across all of our regions being driven by higher activity levels, market share gains and some pricing improvement. Our U.S. Fluids business revenues were up 40% to $103 million in the third quarter as the US rig count increased 11% over the same time period. As Paul mentioned East Texas, West Texas, Oklahoma, and the Rockies reported strong results driven by market share gains. The Gulf Coast business did well in spite of loss in revenues due to the hurricanes which we estimate to be $4 million. Canada saw revenues almost double from a year ago to $7.7 million on a 25% increase in the Canadian rig count. Our completion Fluids and Services business based in Oklahoma also reported strong results compared to last year, reporting a 44% increase in revenues to $24.4 million. And our barite wholesale business came in strong as well, up…

Thanks, Jim. I'm extremely pleased with the progress we made in the quarter. We have increased penetration in the key markets, particularly overseas and have been able to reap the benefits of operational efficiencies we developed in our fluids business. Within our Mats and Integrated Services business, I am encouraged by our results in Colorado and the sequential improvement in Southern Louisiana. However, there is still room for improvement. Looking forward, in the U.S., we expect the fourth quarter to be down slightly, as we start to see the rig count fall as a result of lower natural gas prices and the tight credit market. Our Mediterranean operation should see continued good growth although not at the same rate we saw last year. We are encouraged by the market share gains in Canada as well as the higher rig activity. In Brazil, we expect to sign the Petrobras deepwater contract in November with revenues after the first of the year. In closing, I am pleased with the quarter's results, and believe the future of Newpark is bright. The successes we have enjoyed give us the confidence to pursue new opportunities on a global basis. With that, we will now take your questions. Operator?

Thank you, sir. (Operator instructions). And our first question comes from the line of Jim Rolothan [ph] with Raymond James. Please go ahead. Jim Rolothan – Raymond James: Hey, good morning, guys. Nice quarter.

Thank you. Jim Rolothan – Raymond James: Paul, could you spend maybe just a minute on – obviously, you have been working on selling your environmental business for a while with some delays. Assuming that the Department of Justice kind of stays against you, maybe what your options are from there, and how that may affect your – I think you guys wanted to redeploy that capital you’re your other businesses or even look at possibly other opportunities, just kind of spend a minute on how that all might play out?

This matter involves obviously pending litigation with the Federal Trade Commission, and hope you can appreciate that it's a very sensitive area at this time and we're really not going to comment or speculate on what might transpire as we go forward. Jim Rolothan – Raymond James: Okay. Switching, I guess, gears to the international Fluids business. Obviously, you guys have been making pretty good strides there. You are starting up with Petrobras in the deepwater, you mentioned in the first quarter. Remind us again of how the margins might look initially on that business versus what you have been posting so far and maybe where that trends over time?

Well, certainly, initially, in the margins, we expect those to be somewhat lower, because we have got start-up expenses and bringing on new people and equipment. The contract also involves solid controls in addition to the fluids technology. So we would initially expect lower margins, but hopefully strengthening through the end of next year. Jim Rolothan – Raymond James: Great. Thank you.

Thank you. Our next question comes from the line of Karen David-Green with Oppenheimer. Please go ahead. Karen David-Green – Oppenheimer: Thanks and good morning.

Good morning, Karen.

Good morning, Karen. Karen David-Green – Oppenheimer: Just wanted to – I got follow-up a little bit more on the previous question, going back to the environmental services unit. Can you just walk us through kind of your – you said you intend to oppose the FTC request – a time line on how this could unfold over the next – over the coming quarters?

Yes, again, Karen, because it's – we're in pending litigation. We are working with the FTC on time lines right now, but that's still in negotiation with the FTC. One thing about – the business is performing very well, and – but as new information becomes available we'll certainly make that available to the market. Karen David-Green – Oppenheimer: Okay. Great. And then you also mentioned pricing increases during the quarter. Can you kind of talk through the magnitude of those increases, and if you think, given the outlook for 2009, whether or not you think some of those are going to hold?

Karen, as you know we worked hard over the last several quarters trying to move prices up to help offset some of the cost increases that we saw. We have been successful. You see it in the margin line. Certainly, as we move forward into next year, and as activity slows down, and customer spending slows down, there will be pressure on pricing. The trade-off, of course is that we obviously see a decrease in some of the prices of the products we buy because they are hydrocarbon based. So we will do the same thing in '09 as we have in '08 and that is work to maintain and improve our margins in spite of where pricing or cost of products, commodities are to us. Karen David-Green – Oppenheimer: Great. And then lastly, I notice in the press release the comment was made you have plans in place to react quickly based on market changes. Can you just take a few minutes and elaborate on what those are?

Certainly, depending – and again we expect different regions in North America to be impacted differently, but, again, we have got contingency plans that if rig activities fall dramatically in a particular region, and then we'll respond accordingly to eliminate some of our fixed cost but –

And Karen, we also have some ability to redeploy resources or redeploy people for those markets. Again, whatever activity level decline you might think is going to happen next year, it's not going to be universal across all the markets in the North America, and consequently, we'll have some opportunity to move people to the right places, but that will be part of the plan. Karen David-Green – Oppenheimer: Great. Thanks a lot. And once again, congratulations on a very good quarter.

Thanks, Karen.

Our next question comes from the line of Mike Harrison with First Analysis. Please go ahead. Mike Harrison – First Analysis: Hi, good morning.

Hi, Mike. Mike Harrison – First Analysis: Not to beat a dead horse on the environmental services, I know you can't speak too much about it, but have you come up with any estimates for what the costs could be to contest that decision?

We have. It's not a small amount. Certainly cost us couple of million dollars to fight that in the end. Mike Harrison – First Analysis: And then just in terms of business trends overall maybe in both the Fluids side and the Mats side of the business, can you talk about how business looked in October relative to September, and whether you have seen any signs of pronounced slowing in any areas or any areas that may have stabilized?

Mike, it's difficult looking month-to-month, but just looking at the month of October versus September, we didn't see a significant change in the amount of work we were doing just on that month-to-month comparison. A lot of the talk and lot of the conversations that we've had with customers over the last 30 days to 45 days, certainly have indicated that they see themselves cutting back some. A lot of that, I don't know that has actually occurred yet, because they had contractual obligations for those rigs to that period of time, which is why we haven't seen that fall off. Certainly, as we get towards the end of the year I think we will see some of that, and of course, I think we will see some of that also in the first quarter next year. Mike Harrison – First Analysis: In terms of the Lot-B contract with Petrobras, can you remind me what the duration of that contract is going to be? In other words how much would you expect to see of those 350 million Real in 2009?

Yes, the contract itself can run up to five years, and the more – the timing is also determined about the value of the contract, and they have got the amount of money to spend, and it's how fast they spend it. It would tend to be ratable, but it could be fast or slow depending on rig availability and access to the equipment. Mike Harrison – First Analysis: Alright. Thanks very much.

Thank you. Our next question comes from the line of Terese Fabian, Sidoti. Please go ahead. Terese Fabian – Sidoti and Company: Hi, I have to get my question there about the environmental whole services segment sale. Also I got – who is the law firm representing you with the FTC? Is this somebody who has had success in these cases?

It's Howley, out of Washington, D.C., is very experienced in this area. Terese Fabian – Sidoti and Company: Okay. Is one – do you have any, like proportions or any ratios of success in these cases as they are realized with the FTC?

We certainly have some internal discussions, but that's nothing that we can share with the market at this time. Terese Fabian – Sidoti and Company: Okay. A question on the G&A cost, $6.8 million, how much of that is going to be – on the continually running forward, you have the employee-based incentive comp, you have legal fees, professional fees, is this going to be sort of a run rate going on?

Terese, I think it would come down to the more traditional, roughly $5 million a quarter now. Certainly, in the fourth quarter is where – in litigation I expect those expenses to be higher because of legal fees, but the normal run rate about $5 million is what I would expect. Terese Fabian – Sidoti and Company: Okay. And then on the – on the uses of cash. You have bought back shares under the current circumstances, are you going to be continuing to buyback, or would you be using those to pay down debt or just to accumulate cash do you think?

Certainly, 60 days ago, our view on that issue and the conservation of cash is significantly different. We are certainly much more aware and cognizant of what's going on in the credit market and I would expect to see holding on to more cash and buying back shares. Terese Fabian – Sidoti and Company: Okay. I'll queue back up. I have a couple of other questions. Thank you.

Our next question comes from the line of Marshal Atkins with Raymond James. Please go ahead. Marshal Atkins – Raymond James: Alright, guys. I'm not going to ask you about the environmental business. Actually it seems like the real bright spot in the story and the change you guess may have been in the fluids business and obviously the market share gain. Help me to understand how you are getting these market share gains? In other words, are you coming in at lower prices than the competitors? Is it going in to areas that you didn't participate in before? Is it that your products are just better than everyone? Help us to understand what's driving the market share gains?

Yes, sure, Marshall, this is Paul. Certainly, a part of that is that we have been successful in drawing our business internationally. Historically, the company had been very strong with the independent, small, medium, or large independents. Starting about, 12 months to 18 months ago, we start making a big push for the majors, super majors, the IOCs, the NOCs. We're starting to get a lot of traction there with the recent contract awards in Brazil, both with the super majors as well as Petrobras, the re-sign [ph] of the contract with Sonatrach in Algeria. And domestically, certainly, I think it's a combination of technology as well as our people, because the value equation, certainly our product technology brings value, but it's also our people and the knowledge of the formations and the customers, and we have been very successful in leveraging those relationships in very specific regions from East Texas, West Texas, Rockies, Oklahoma, and – at the end of the day, one of the things that we really try to do is bring value beyond what our competitors are currently doing, and we seem to be very successful in doing that. Marshal Atkins – Raymond James: Is any of it due to pricing lower, or – I guess, how would your prices compare to your competition?

We normally don't, don't try to feed on pricing. Again, our objective here is to continue to improve margins and try to move our pricing up. And so we think we're differentiating more on the technology and the people side, we lose business right now as well. I mean, we win some and we're losing some. We lose some on pricing, so.

Hey, Marshal, I think the other thing I would add, you look at the margin, historically, the 13.5% this quarter tends to be at the high-end of the margin range, and if – the contrary is you are buying a lot of business and therefore we see the margin suffering, we don't, we're making – we're very disciplined approach to get new business without cutting prices and perform, and improve our ability to deliver effective cost and hence increasing margins. But I think that's what you're seeing. Marshal Atkins – Raymond James: That's really what I was getting at. Seems like you're kind of getting both there, so that's good. Couple of other quick ones just in terms – you went through your different regions, but just give me a quick snapshot of how much of your – and I'm talking mainly on the Fluids side here. How much of your business is international versus U.S.? Let me rephrase it, international versus North America, because I think that's kind of all linked in U.S. natural gas prices. And secondly – and maybe it's really the same question, how much would you view as oil driven versus gas driven?

The Fluids business is roughly 20%, international which we use the same definition that being non-North American and U.S. and Canada natural gas driven markets. So 80% North America, 20% international. Roughly, we view the international market is the well-driven piece [ph] and the North American piece is driven as the gas although we certainly seen a little bit of uptick in oil drilling in the U.S. in the last year, but that's how we segmented the market to see it. Marshal Atkins – Raymond James: And let's looking forward to '010 I mean the throw out of rough gas on where that might be given the Petrobras situation in your view? The tach [ph] you are having on the international side, is that going to be 70-30, 50-50 or how do you see that – ?

Three years ago was 85-15, now, 80-20, we expected to continue to move there ways we grow faster internationally, particularly we see gas prices have an impact on drilling in at least in '09 and '010. 50-50 is a big number long way out there, but certainly, the 75-25 is the next mark for us. And our strategy has always been to grow and develop both business particularly international to give us a little bit of stability, help weather the storms on a volatile natural gas market in North America. Marshal Atkins – Raymond James: Great. Thanks, guys.

Marshal, thank you.

Thank you.

Our next question comes from the line of Vijay Singh with Janco Partners. Please go ahead. Vijay Singh – Janco Partners: Hi, good morning.

Good morning, Vijay. Vijay Singh – Janco Partners: Jim, the question on Mat business, the margins sequentially slip quite a bit and we were little bit under the impression that the on the cost cutting you guys have done and you are approaching the most steady state margin. And then the revenue mix, if you can elaborate that's what that revenue mix is doing, because my understanding is that the Colorado business is higher margin business, and a composite sales were down sequentially. So that shouldn't have affected that margin. I am trying to get a sense on what the steady state margin that we can model and what needs to happen to achieve that?

Vijay, in the last call, we talked about we had taken the actions, and we have got to steady state the user terms of around 10% and of course, this quarter was 5%. If you were to adjust that for the expense that we incurred in shipping the Mats to the UK, and the duties that were incurred to do that, all that expense hit in the third quarter which impact us by about five points. So we were at that 10% rate absent that. That money that we spent is really in an investment for us in the future as we now have the Mats there, there will be able to rent generate cash flow over the succeeding quarter, so, if you just see – just for that you back to the 10% steady state and I think that is a level at least the activity we have seen that should be a flow for that business moving forward. Vijay Singh – Janco Partners: So then – it wasn't a much revenue mix then as much as it was one-time expense shipping expense?

It was sequential basis, certainly a little more revenue mix in the – on the year-over-year comparison, but you're right, on sequential. Vijay Singh – Janco Partners: In terms of the rigs the contract that your customers have on pricing, and in your conversation with them, do you get a sense for there, there is a certain commodity price that they would be sensitive to the beyond wage day or below wage day would actually reduce their activities quite a bit?

What certainly – Vijay, this is Paul, there are certain tipping points for our customers. And that varies depending on what region the country here in the U.S. that they are drilling in. So that varies by account I think and how efficient they are what formation they are drilling in. So I guess various across the Mat. Vijay Singh – Janco Partners: Very helpful. Thank you very much.

Our next question comes from the line of Pierre Conner with Capital One Southcoast. Please go ahead. Pierre Conner – Capital One Southcoast: Good morning, Paul and Jim.

Hi, Pierre.

Good morning. Pierre Conner – Capital One Southcoast: What is the – I will go further on Marshal's question of the mix of business and I apologize if jumped off a second you may have answered some of this, but so, 80% of – and again, strictly, Fluids Systems and Engineering, is that North America? Remind us that split on your onshore versus offshore of that amount?

Yes, the North American piece is the vast majority of it is onshore, it's land. Pierre Conner – Capital One Southcoast: Have some opportunity for expansion I guess on the offshore?

Yes, I think exactly. That's we are very encouraged by our recent contracts in Brazil to super majors in Petrobras in deepwater. Historically, we have done in deepwater the Gulf of Mexico and but we do see that as a market that we are going to reenter and we have been working on. Pierre Conner – Capital One Southcoast: So I can understand a little bit on the cost structure side, again of that, can you break that down at least generally on – you got some – there is a large percentage of that there is some barite cost, of course, you mentioned that you potentially have seen even some cost relief on some of your product lines that are hydrocarbon-based. And then what's the labor component of that? Is it nominal?

It certainly not nominal. The labor cost is important. These are the good we are service fees business we have lot of employees out there, but the product cost is significant. And you got the facility infrastructure the storage tank, the blending facilities, the mixing inventory. So it's large area product in the facility infrastructure piece. Pierre Conner – Capital One Southcoast: That’s the biggest piece. Is there anything – you mentioned again go back to about some of your supply cost potential, what about an organics of barite and movement downward there additional availability?

We've certainly on the ore side, the raw material side, we are not seeing any significant movement in pricing in China right now. Though we are seeing pretty significant decrease in some of the spot markets on the ocean going freight, those about North America. Pierre Conner – Capital One Southcoast: Okay, good. Gentlemen, thanks very much.

(Operator instructions). And our next question is a follow-up question from the line of Terese Fabian with Sidoti. Please go ahead. Terese Fabian – Sidoti and Company: Thank you. I have a question on the Brazilian market. You probably see pretty expansive opportunities there. And I know that you already constructed your facility for production. What are your plans – like who do you see working there and would you be working outside of Brazil also? Would you have a Ava model there?

We certainly there are other IOCs that work offshore in Brazil, and we do work and communicate with them on a weekly basis about future opportunities and tenders that maybe coming up, but more broadly within Latin America. Right now we're focusing on bringing home the Petrobras contract, and the – the other one was super major, but maybe near the end of '09 we would look to expand in to other parts of Latin America, but probably more in the latter half of early '09 or early '010. Terese Fabian – Sidoti and Company: And with your work in the Mediterranean you'll perhaps come in the Eastern Europe now. Does that becoming a significant portion of your revenue from there or still pretty minor?

It's certainly growing. We have been real excited about the growth in Romania. We have recently been awarded new work in Hungary. And we're also very excited about the work in the Black Sea in our third well that we have there. So significant piece, no, but a growing piece that we like. Terese Fabian – Sidoti and Company: And any new work in Egypt?

We have had two test wells, we are drilling another new well in Egypt right now, and – but again, just starting to gear that country up. Terese Fabian – Sidoti and Company: Okay. Thank you.

Thank you. At this time there are no additional questions. I would like to turn it back to management for any closing remarks.

We would like to thank you once again for joining us on this call and for your interest in Newpark Resources. We look forward to talking to you again after the conclusion of the fiscal year. Good bye. Take care. Have a great day.