Ladies and gentlemen, thank you for standing by. Welcome to the Newpark Resources, fourth quarter earnings conference call. During today’s presentation all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions) I’d now like to turn the conference over to Ken Dennard with the DRG&E. Please go ahead.

Thank you, Michaela. Good morning everyone. I appreciate you joining us for the Newpark Resources conference call today, to review 2008 fourth quarter and year end results. Also I’d like to welcome our internet participants listening to the call as it is being simulcast live over the web. Before I turn the call to management I do have the normal housekeeping details to run through. For those of you who didn’t receive an e-mail of the release and would like to be added to the distribution list, please call our offices at DRG&E; that’s 713-529-6600 and provide us your contact information or of course you can always e-mail me, which I think most of you have my e-mail address. There is a replay of today’s call and that will be available via webcast on the company’s web site at www.newpark.com and there is also a telephonic recorded replay which will be available for a week, until February 27 and that information is also in the release. Please note that information reported on this call, speaks only as of today February 20, 2009 and therefore you are advised that time sensitive information may no longer be accurate as of the time of any replay listening. In addition, the comments made today by management 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 listener is encouraged to read the company’s 2007 Annual Report on Form 10-K and subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, to understand certain of those risks, uncertainties and contingencies. Also management will refer to adjusted income from continuing operations and adjusted earnings per share. These are non-GAAP financial managers which managements believes are helpful for an understanding of the company’s operations. Please refer to the company’s earnings release to obtain a full reconciliation of these measures comparable to GAAP. Now, with all that behind us, let me turn the call over to Newpark’s President and CEO Mr. Paul Howes. Paul.

Thank you, Ken and good morning to everyone. We’d like to take this opportunity to thank all of you for joining us today for our 2008 fourth quarter conference call. With me today are Bruce Smith, President of our Drilling Fluids Business and Jim Braun, our Vice Chief Financial Officer. Following my remarks, Bruce will provide an update on our Fluids Business and Jim will then discuss our other operating segments as well as the total company results for the fourth quarter and full year. I will then conclude with a discussion of our market outlook before opening the call to Q-and-A. I would like to begin by first commenting on our environmental services business, or, as we call it, NESI. As you may remember, we had intended to sell NESI to CCS last year, but we mutually agreed to terminate the sales agreement in November as a result of litigation from the Federal Trade Commission. We had previously reported NESI as a discontinued operation. Starting today and going forward, we will be reporting it as a separate operating segment within our continuing operations. Now turning our attention to the fourth quarter, I would like to emphasize how pleased I am with our financial results in our fluids and NESI businesses during this increasingly challenging environment for oilfield service companies. Despite the decline in domestic drilling activity at the end of the quarter, we grew our revenues by 31% to $227 million in the fourth quarter over the same period last year. Adjusted income from continuing operations for the quarter rose 6% to $10.2 million or $0.12 per share. In the international markets, our offshore deepwater operations in Brazil are ramping up nicely, under recently signed contracts with major and national oil companies. To support this new market, our Brazilian…

Thank you, Paul. This morning, I’ll present a review of the Fluid Systems and Engineering segment. First, I’d like to point out that we had a solid quarter and an excellent year in fluids. Although the quarter started tailing off in November, we got off to a good start in October and the momentum allowed us to post strong results. It is important to note that at the first sign of the downturn, we began taking steps to streamline operating costs. For example, we have reduced our workforce by 15% and are implementing further reductions as the market dictates. In this difficult environment, we intend to remain vigilant in seeking opportunities to cut costs and enhance operating efficiencies. Looking at the fourth quarter results, fluid revenues were $191 million, an increase of 40% over last year. In the U.S., our Gulf Coast and mid-continent revenues were up 43% and 69% respectively, contributing an aggregate $110 million or 58% of the total revenues. Customer rig activity and market share gains in East Texas and West Texas, which are part of the Gulf Coast region, contributed to the strong revenue growth. Canadian revenues were flat at $4.8 million. Our completion fluids and services business based in Oklahoma, also reported positive results compared to last year, reporting an 8% increase in revenues to $20.4 million. Our barite wholesale business came in strong, up 40% to revenues of $17.4 million. Our international business reported strong results as well, growing revenues by 43% to $38 million in the fourth quarter of 2008, compared to a year ago. The increase was mainly due to continued penetration into the North African and Eastern European markets, and our growing Brazilian business. Fourth-quarter revenues from our Mediterranean business increased by 20% to $31.5 million year-over-year. In Brazil, we saw…

Thank you Bruce and good morning, everyone. I’d like to discuss our well site construction and environmental services business, before finishing with our consolidated results. In our well site construction business, revenues were $20.9 million in the quarter, down 11% from the prior year. Our revenue increase of $1.6 million in the quarter from our Colorado-based business was more than offset by a decline in the Gulf Coast. On a sequential basis, revenues decreased 7% despite a $1 million increase in composite mat sales. This business has experienced the same tough market conditions described by Bruce, particularly in its Gulf Coast operations. Operating margins for the segment were adversely affected by the decline in revenues and asset write-downs. The fixed-cost structure of this business makes it vulnerable to operating profit volatility when revenues fall significantly. However, in response to declines, our reduction in headcount began in mid-November. It lagged the rapid deterioration in market activity. In Canada, our inventory of wooden mats was written down in the quarter by $600,000 and manufacturing assets specific to the Bravo product line were also written down by $400,000. The Bravo products are mostly related to the events industry, which is not strategic to our company, and we are looking to exit this offering and dispose of the assets. As Paul mentioned, NESE reported $15.1 million of revenue in the quarter, up 3% from the third quarter of 2008. They recovered nicely from hurricanes Ike and Gustav, but the slowing activity impacted them as well. Operating margins were 2.8% in the quarter, but include a $2.6 million charge to write down injection disposal assets that we do not intend to develop in this market. Adjusting for this item, operating margins were 20% in the fourth quarter of 2008. And now turning to the consolidated…

Thanks Jim. I’m pleased with our performance during the quarter and the year. We have increased penetration into key markets, particularly overseas, and have been able to reap the benefits of operational efficiencies we have developed in our fluids business. Within our mats and integrated service segment, I am encouraged by our new leadership in that group. Finally, I am proud of the employees in NESE for their continued success and focus on their business during the sales process. Looking forward, our Mediterranean operations are expected to see continued growth, although not at the same rate we saw last year. In Brazil, we expect to benefit from recently-signed contracts and the potential for new business. In the U.S., we expect 2009 to be a difficult year as we anticipate continued reductions in the U.S. rig count. However, we believe there are opportunities to grow, even during a downturn, by attracting new customers and entering new markets. We remain open to investing in these additional growth opportunities in 2009. In closing, I believe the long-term future of Newpark is bright. The successes we have achieved give us the confidence to pursue new opportunities on a global basis. With that, we will now take your questions.

(Operator Instructions). Your first question comes from Marshall Adkins - Raymond James & Associates Inc. Marshall Adkins - Raymond James & Associates Inc : A few quick ones here. First of all, let’s hone in on the well site construction. Obviously, that was very disappointing relative to our model. It sounds like a chunk of that was asset write-downs. If I heard you correctly, roughly $1 million of asset write-downs in that area?

That’s correct Marshall. Marshall Adkins - Raymond James & Associates Inc : So, if we back that out, you’re still at a negative margin. What do you do there to turn that around in ‘09? Can you cut costs in that area? Can you get that to a profitable stage for the rest of ‘09?

Those are the exact things we’re doing. We continue to focus on the costs, but we are also trying to grow and expand that business into some new markets. There are some opportunities up in Wyoming, there are some opportunities for that business up in the Marcellus shale, as well as, you may remember, we sent 2,000 mats to the UK last quarter. We have the opportunity to deploy another 2,000 mats to put them in use and work over there. So a combination of growing that business, but also being very tight and looking at our cost structure in South Texas as well as Southern Louisiana. Marshall Adkins - Raymond James & Associates Inc : So, obviously, we all know that the outlook for North America sucks right now. Can you get that to a break-even business in ‘09 in your mind, or should we be thinking about maybe negative margins there in ‘09?

The goal is to get that business unit back to profitability. Even today, fortunately, it’s still cash-flow positive. That business does about almost $10 million a year in depreciation, so it continues to generate cash, but having a business that is not profitable is not our strategy, so we’re taking the steps to get that thing turned around.

Your next question comes from Mike Harrison - First Analysis Securities.

In terms of the headcount reductions, you did quantify the 15% there, and in terms of the other cost-saving actions, can you quantify how much cost saving you expect to generate in 2009 from those actions?

Let me talk a little bit about the headcount. We’ve had a reduction since the end of 2008 of about 145 people. Most of those have been in Bruce’s fluids business. That represents the 15% of his head reduction. That translates into just under $7 million annualized salaries for those individuals.

Going forward for the full year of 2009, we haven’t seen where the bottom is yet in terms of the rig count decline. So we’re going to have to again, right-size the business as we move forward here in 2009. So there probably will be additional headcounts going forward.

And then, in terms of the overall E&P activity levels that you’re seeing right now, can you give us a sense of how much you’re expecting the market could decline during 2009? And also, maybe, about how you’re thinking about the market in the first half as compared to the second half? It sounded like your CapEx plans assume that there is going to be some kind of recovery in the second half.

Let me take part of that. I’m not sure where the market is going to go in 2009. I’m not sure if we’ve seen the bottom yet. Certainly, at the present time in our fluids business, our reduction in activity is pretty commensurate with what the market has done, but there are some bright spots there. So, in addition to focusing on the cost side and the cost-reduction side, we are still very focused in growing our business into the Marcellus, which is new for us, adding on to what we have in the Haynesville shale, where we have a strong position, remaining strong in the Fayetteville, looking at the Eagle Ford shale in south Texas, where I feel we have a strong position. So we’re taking a dual approach to this, and certainly we’re going to be cognizant of the cost reductions required and we’re actively pursuing that, but we’re also actively pursuing new customers and new areas and having some successes along the way.

I think, initially, when we entered this year, we thought we could see some recovery, though, into the third and fourth quarter, but currently, now, we don’t really see any real recovery coming, maybe at the end of this year, early next year. So --

I think the comment about the capital wasn’t intended to imply that we were forecasting that recovery. What we do is we’ve got the flexibility that if it comes, we can spend capital on projects that make sense, but if it doesn’t, we can hold on to that cash and wait till that recovery eventually starts to occur.

(Operator Instructions). Your next question comes from Terese Fabian - Sidoti & Company. Terese Fabian - Sidoti & Company: I have a question on your Petrobras contract that extends over a three to five-year period of time. Can you give any indication of the ramp-up of revenues for ‘09?

A little early to tell yet, I think. We just are now approaching the point where we will begin supplying on that contract. We haven’t physically supplied to it as of this moment in time. So I really am not in a position, I don’t think, to say how it’ll ramp up, but certainly, we will be commencing at the latter part of the first quarter and we expect to be on approximately 13 rigs, quite quickly and the ramp-up then will continue from that point, but as to an exact number, I’m not too sure at this present time. Terese Fabian - Sidoti & Company : Do you have any indication of what revenue per rig might be?

No, we don’t at this time, as we have basically haven’t done any work yet for Petrobras, so it’s a little soon for us to be able to establish that, I think, but -- .

We will need a couple quarters to get behind us on that so we will have better visibility on the longer-term revenue per rig there in that deepwater market.

Your next question comes from Karen David-Green - Oppenheimer & Co. Karen David-Green - Oppenheimer & Co : Just wanted to follow-up a little bit more on the fluids segment. Can you talk a little bit about what you’re seeing in terms of pricing, both in the U.S. market as well as the international market? And then, should we assume that those margins are equal the U.S. and international, or, going forward, can you give us some indication of how you’re viewing the differentials between those two markets?

Certainly in the current U.S. climate, there is significantly more pricing pressure coming from our customer base, today in the U.S. than there is in the international side of things. The international side of things also tends to be more long-term and contractual. So you tend to have a better handle on where you are. I think in the U.S., it’s a little too soon yet to tell where the margins are heading, but they’re certainly not going up, but there is a very competitive pricing pressure, but I really can’t quantify that, I don’t think, at this moment in time.

Karen just again, we expect margins to continue down some in the first quarter here in the U.S., but expect to see stronger margins in our international operations. Karen David-Green - Oppenheimer & Co : And then, are the U.S. margins in the fourth quarter, were they equal to the international, or were they even quite a bit weaker in the fourth quarter? I’m just trying to get an indication of magnitude of change going forward.

Karen they probably ran a couple hundred basis points lower in the U.S. than international.

Your next question comes from Vijay Singh - Janco Partners.

I have a question on the margin decline. How much of that came from pricing? You talked about foreign exchange accounting for one-third, but I was wondering if you can tell me how much was it because of pricing?

Of that balance, probably about 10% of it came from pricing, maybe 15%, and then the balance came from a combination of product mix, more of our lower-margin products, as well as the geographic mix. We had a higher percentage of our business in the fourth quarter in Louisiana Gulf Coast and Texas Gulf Coast, which traditionally carry a little bit lower margins than Oklahoma and the Rockies and the like.

And then, it looks like accounts receivable DSOs jumped up a little bit. Is that just year-end collection process, or is there something more than that?

No, it’s not. It’s the year-end phenomenon of our customers holding onto their cash. It was exacerbated this year by the credit situation. The good news is, after the first of the year, here in the first seven weeks of the year, we have seen $20 million of cash come in and go to reduction of our debt. So we anticipate and plan for it to come in, and in fact, it has been coming in nicely.

Your next question comes from Marshall Adkins - Raymond James & Associates Inc. Marshall Adkins - Raymond James & Associates Inc : Coming back at you guys. On the fluids, obviously transition year for ‘09 from U.S. to international. As you establish the Brazilian stuff and other areas, what would you envision your percent of international business in ‘10 versus where we are today?

I think Marshall, as we look at it, we think we will be approaching that 70-30 split, 70 North America, 30 international, sometime by the end of ‘09, maybe beginning of ‘10. Marshall Adkins - Raymond James & Associates Inc : And versus if you look back over the last year that was almost nothing, right, not much 5%?

It’s moved up from maybe 5-15 to about 80-20 now, so you get a combination of a growing international business and a softening North American business, it can change pretty quick.

Your next question comes from Terese Fabian - Sidoti & Company. Terese Fabian - Sidoti & Company : I see on the cash-flow statement on acquisition expense for 2008, did you in fact do an acquisition in the fourth quarter?

No Terese, what we did is, coming into the year our Brazilian operations, we had a minority partner, and we purchased or bought them out during the course of the year. That’s what the acquisition includes.

But today, we have 100% of that Brazilian business.

Correct. The Brazilian entity in which we operate and own the contract is a wholly-owned subsidiary of Newpark. Terese Fabian - Sidoti & Company : And on the capital expense guidance for the year, what part of that $28 million, I think you said, would be something that you would do no matter what, $4.5 million in Brazil?

$3.5 million in Brazil. There’s probably $10 million to $12 million that we would have to spend. Regardless, so there is quite a bit of discretion, quite a bit of flexibility in that $28 million number.

(Operator Instructions). Your next question comes from Karen David-Green - Oppenheimer & Co. Karen David-Green - Oppenheimer & Co : I was just wondering if you could give us a little bit more information with regards to the new award in Brazil, the international oil company in terms of possible size, and also when you could see that actually hit the revenue line.

At the present time, it’s a one-rig, one-well operation and I guess any future follow-up work will be dependent upon what they find or not find when they drill the first well. We expect that to begin sometime during the second quarter, but we have not received an official starting time yet.

Your next question comes from Mike Harrison - First Analysis Securities.

I had another question on Brazil. This facility expansion, $3.5 million, can you give us some more details on that project? And also, maybe provide a broader update on your plans to expand your fluids business elsewhere in Latin America, outside of Brazil?

I’ll take the first part first. Because of the existing operation that we have, the first plant that we built in Brazil was pretty well utilized for that customer. That’s going to be ongoing work now. I imagine they’ve seen what they’ve needed to see and they’re now formulating subsequent wells. So, in terms of that original plant, it was pretty well tied up and utilized to its full capacity. So the expansion really was to be able to handle, A, the new contract that we got and any other work that we will pick up as we go forward and as we hopefully pick up more work in that arena. Currently in Latin America, we don’t have any expansion plans for the Company in Latin America. We wish to keep the focus fairly and squarely on Brazil until we get the Petrobras contract up and running and functioning efficiently, as the other IOC contract up and running efficiently. We do, however, have expansion plans over in the European sector through the Ava company, and we’re looking now at certain countries that we may enter into later in ‘09, or we may not, depending upon what we find when we look, but we’re looking at some potential entries into the Middle Eastern area.

Bruce is it fair to say the expansion in Brazil, the new facility, is about a 60% expansion over the current facility that’s there?

That’s correct.

A question for Jim. I was wondering if you could walk through your debt covenants and where you stood as of the end of 2008.

We’ve got a funded debt-to-capital ratio that has a limit of 45%. We’re at about 33%. We’ve got a debt-to-EBITDA, which is a max of three and we’re under two and then, we have a funded coverage ratio that has a minimum of 1.2 times, and we’re currently at about 2.8 and we will have those details in the 10-K that we expect to file in about a two-week period of time, but that’s a summary of them.

Your next question comes from Terese Fabian - Sidoti & Company. Terese Fabian - Sidoti & Company : I have a question on the Mediterranean, Eastern Europe area. You said that you did not expect the same rate of growth, although you did see expansion there. What is happening in Eastern Europe? Is that a significant portion of that revenue that Ava is reporting there, and is that in any jeopardy with the events in Eastern Europe now?

No. It’s certainly not a significant part of the Ava company. It predominantly relates to Romania, where they’re into more of a completion mode rather than a drilling mode at the present time. So the business hasn’t gone away, it’s just in a slightly different phase at the moment and will rebound at some point during 2009, but they’re in the completion phase now, which takes away from the drilling activity for a few months.

I was going to add in terms of the Middle East, and that’s an area that historically Newpark has not competed in, we see that as a real opportunity for us to go forward in terms of our product technology and our services. So that will be an area that we will be targeting for growth in ‘09. Terese Fabian - Sidoti & Company : A question on the industrial material sales. They came in the fourth quarter, pretty strong. Who is buying, and is that going to be continuing?

That’s a business that roughly half of it is sale of barite to other fluids companies, and then the other half is to industrial users, companies in the paint, the sound-deadening industry, and the automotive industry. We would expect in those revenues to come down, not only commensurate with the rig activity that you’ve seen, but also with just the general recession in some of the other industrial businesses in the country.

Thank you. At this time, I would like to turn the call back over to management for any closing remarks.

We’d 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 at the conclusion of our first quarter. Thank you.

Ladies and gentlemen, this concludes the Newpark Resources fourth-quarter earnings conference call. This conference will be available for replay after 12 pm Eastern Standard Time today through February 27 of 2009 at midnight. You may access the replay system at any time by dialing 303-590-3000 and entering the access code of 11124367 #. Thank you for your participation and at this time, you may now disconnect. and are :