Good morning, and welcome to the Tetra Technologies’ Fourth Quarter and Full-Year 2012 Results Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Stu Brightman, President and CEO. Please go ahead.

Thank you, Andrew, and welcome to the Tetra Technologies’ fourth quarter and full-year 2012 earnings conference call. Elijio Serrano, our Chief Financial Officer, is also in attendance this morning and will be available to address any of your questions. Elijio will give a brief overview of our fourth-quarter results, and I will follow with a brief presentation, which in turn will be followed by your questions. I must first remind you that this conference call may contain statements that are or may be deemed to be forward-looking statements. These statements are based on certain assumptions and analyses made by TETRA and are based on a number of factors. These statements are subject to a number of risks and uncertainties, many of which are beyond the control of the Company. You are cautioned that such statements are not guarantees of future performance and that actual results may differ materially from those projected in the forward-looking statements. In addition, in the course of the call, we may refer to net debt, revenues, gross profit – profit before tax, or earnings per share excluding the Maritech segment and special charges or other non-GAAP financial measures. Please refer to this morning’s press release or to our public website for reconciliations of non-GAAP financial measures to the nearest GAAP measures. These reconciliations are not a substitute for financial information prepared in accordance with GAAP and should be considered within the context of our complete financial results for the period. With that, Elijio, would you please start the financial overview?

Good morning, everybody. Fourth quarter revenue of $231 million increased 24% over the fourth quarter of 2011, reflecting the benefit of the three acquisitions that were completed during 2012 in addition the strong growth that we are seeing from our Fluids and Compressco division. Sequentially, revenue was down 1% of the seasonal slowdown with our Offshore Services Division. Fourth quarter profit before taxes was a loss of $5.1 million, which includes $22.9 million for Maritech and $6.2 million of non-recurring charges. Excluding these items, profit before taxes was $23.9 million, or 10.4% of revenue. During the fourth quarter, we adjusted our Maritech ARO reserve by $21.6 million, of which $8.1 million was for work completed during the fourth quarter and $13.6 million will be for work to be completed during 2013. With respect to the $6.2 million of unusual items that we recorded in the fourth, maybe give you some details and color on those as you update your models for financial results. 295,000 of this amount was for transaction related expenses related to the earlier acquisitions that is included in the line of G&A within the Production Testing Services Division. Our credit to expenses of $1.2 million adjusting the earn-up for one of our recent acquisitions that is reflected in Production Testing is included in line item for operating expenses, that’s a $1.2 million credit. In addition, we had a $1.8 million gain on the sale of assets, primarily our Wireline business that is reflected in other income expense within the Offshore Services Division. And finally, we had a $9 million charge for impairment on the plant sale from additional Offshore Service assets, mainly the DB-1 barge that is reflected in DD&A for the Offshore Service Division. Therefore on a go-forward basis, you should normalize for those items as…

Thank you, Elijio. Our adjusted fourth quarter 2012 earnings of $0.21 per share excluding Maritech, is slightly above the range we noted in our estimated earnings announcement on February 1. These results reflect a very strong performance by Fluids and Compressco, and a stronger than typical fourth quarter for our Offshore Services segment. In the Fluids Division, we continue to see the ongoing trend of increased strength in the Gulf of Mexico, as well continued growth in our Water Management business onshore in the US. We’ve invested heavily over the last several years to position ourselves for this growth in the Gulf of Mexico, and we also continue to invest capital in the Water Management business. In the Production Testing segment, fourth quarter results negatively impacted by a sluggish Canadian activity base. As we move through the first quarter, we are beginning to see positive trends in activity in Canada and we expect just to continue. In addition, we continue to face weakness in certain areas of our domestic market; however, we expect this area to improve in the second half of 2013. We continue to have high expectations for growth in certain international markets and our 2013 capital spending program (inaudible) is focused in these areas. The Compressco segment’s profitability continues to benefit from our investment in Latin America as well as continued focus on our unconventional application supporting associated gas from liquids production. We also increased average fleet utilization to 83% during the fourth quarter as a result of growth mentioned above. Given Compressco strong financial results, we increased the fourth quarter distribution to $0.42 for outstanding unit. This marks the second consecutive increase in Compressco’s quarterly distribution. In the Offshore Services Segment, excluding the special charges of $7.2 million that Elijio mentioned for the impairment of certain…

We will now begin the question-and-answer session. (Operator Instructions) The first question comes from Mike Harrison of First Analysis. Please go ahead. Mike Harrison – First Analysis: Hi, good morning.

Good morning. Mike Harrison – First Analysis: Elijio, maybe best to start with you; clearly, you’ve gotten very good traction on improving the cost structure in Offshore. You talked a little bit maybe about continuing to look for other opportunities to improve the cost structure, improve returns. Can you give any details on maybe what some of the next bigger projects might be, and how they compare in terms of potential benefits to the work that you guys have done in Offshore?

Thank you, Mike. So, yes, on the Offshore Services side, we will continue to fine tune the organization and look for opportunities leaner cost structure, just so that we can build a stronger base for performance and hitting the financial targets that they outlined for the year. So I would say that even though we’ve made really good progress on the Offshore side. We’ll consistently reassess our business cost structure to fine tune where possible. We believe that the next area to make a meaningful impact is to help our Production Testing group by ensuring that the metrics and tools that they have to better position assets through metrics such as utilization of their assets are in place. And I think that team is doing a fairly good job with localized tools that we’re going to help them develop broader tools to be able to measure utilization, and make sure that the assets are properly deployed. That they’re getting visibility to pricing that’ll give them the tools necessary to push up pricing for the markets are strong and redeploy assets, where there is weakness in certain areas. So we believe that’s the next big area that will impact our organization. Mike Harrison – First Analysis: In terms of that work you are doing in Testing, or you’re hoping to do in Testing, just thinking about that in the context of the three acquisitions that you’ve done. Does juggling those acquisitions and integrating them, does that make that work easier, harder? Are you seeing maybe some ways that the acquired businesses were doing things that it makes sense to implement those practices as overall TTI best practices?

Well, the three acquisitions, if you look at them individually Optima is an example. It’s a unique business that does not overlap with our existing service offering. Instead, it’s got the opportunity to leverage our global infrastructure and use local management to help them absorb some of the technology and assets that they have and try to grow the business in those regions. In the past Optima might move into a country, but it’s – as that one job was over, they would pull the assets back out. Now, with them being able to leverage local management, they can keep those assets in those countries longer, and get better utilization. So Optima is a good example of one to where it’s leveraging our with the technology and the service offerings that they brought. Greywolf, which is focused primarily on the Canadian and the Balkan market, is an area that we didn’t have a lot of infrastructure in and they gave us that presence. And what we’re doing there is we are now introducing some of our tools and service offerings into that market to give a broader product offering. ERS, that’s focused on the Marcellus area where we did have a smaller presence before, is an area that we can integrate and get better utilization and introduce incremental asset offerings. Now, in both cases, whether they need assets or they’ve got a temporary excess of assets due to market conditions, we now have an opportunity to move assets into or out of their markets, and make sure that they exploit opportunities where the market is strong, or that we take cost out of their system by deploying them elsewhere in the process. So, I would say that it’s not that they were lacking tools or that they’re managing it differently than we are. We’re giving them a broader footprint to allow them to move assets around and take advantage of opportunities.

And Mike, the other two things I would add to that is, as we’ve highlighted before, we’ve done a pretty good job last year as the rig count mix changed moving assets. This just kind of continues to build out that strength. And the second thing is, even in areas like Optima, we’ve already started to see the benefits of some of that geographic footprint expansion in their business leveraging some of the Tetra International infrastructure.

The key part here Mike, if I think as we make investments of around $100 million plus per year of capital investments, we’re getting better visibility as to where to target those investments and get the most out of them. Mike Harrison – First Analysis: All right. I appreciate the color there. On the Offshore business, in Q4, I know you ran some of your assets a little bit differently than you normally would. Can you talk in more detail about the changes you made? Maybe what you learned? And as you look to the first quarter, are you going to be operating things a little bit differently than in the past, or more similar to last year?

I would say both in the fourth and first quarter; we’re certainly very much focused on accelerating the Maritech work. And we’ve done that in the fourth quarter, we’ll continue to do that in the first quarter and while we’re out using some of those assets; it gives us the opportunity to look at third-party work and opportunities. So probably a little bit more aggressive doing that than we did last year. It’s always going to be challenging to get the profitability to the level we would like end of the fourth quarter and first quarter. But I think we’re optimizing it as well as we can. I think more importantly, as I said in my comments, we’re starting to see a pretty nice backlog in that segment that bodes well for the outlying quarters. Mike Harrison – First Analysis: All right. Last question from me for now is on the Fluids business. Can you talk about the gross margin strength you saw there, some of the best margins since 2006? Was that primarily driven by mix? Are you seeing some pricing strength? Are there other factors at play? And is this quarter unusually strong or is it more the shape of things to come as we see some improvement in deepwater Gulf of Mexico?

Yeah, I think it’s a little bit of all of the above, clearly that the earnings in the fourth quarter were tremendous in that group. And as I noted lot of that was driven by strength in the Gulf of Mexico, as well as some of the water business. But we also had the benefit in the fourth quarter of some lumpy international business, which again isn’t every quarter like that. It was particularly good in the fourth quarter. So the way I’d look at it overall is it kind of makes us feel very comfortable with kind of the guidance for the year based on the fourth quarter and the areas when we did the bridge year-on-year, a lot it is driven by Gulf of Mexico, continued strength in the water. So those fourth quarter results kind of just confirm that for us, as well as some of the ongoing incremental benefits. We’ll get some international projects. I think another key element of the fourth quarter as we’ve gotten our European calcium chloride business operating as usual. We had that equipment maintenance refurbed during the third quarter. That’s behind us. So there lots of pieces that contribute to it, but I’d say at a high level, those margins are probably a little higher than we would see going forward for the reasons I mentioned. Mike Harrison – First Analysis: All right. Thanks very much, guys.

The next question comes from Jim Rollyson of Raymond James. Please go ahead. James M. Rollyson – Raymond James & Associates, Inc.: Good morning, guys.

Good morning, Jim. James M. Rollyson – Raymond James & Associates, Inc.: Stu, one question back on Offshore; way back when, when the Offshore business was kind of being developed in regards to the way Maritech was initially, you kind of had pulled in a lot of assets or at least the plan was pulling in a lot of assets to help make sure you could guarantee costs for long-term abandonment of properties you were owning through Maritech. And obviously, the market has changed where you guys do more third-party work, and you’ve mostly gotten out of the Maritech business. You mentioned having the DB-1 for sale. Curious, as you think about this over the next couple, few quarters, few years, are there other parts of the Offshore business that you think might be candidates for sale? And kind of whittling it down to where you think the best margin return opportunities are or just maybe how you think about that over the next few years.

Sure, good question. Clearly this business has evolved over a period of time. We’ve added to it. We’ve tied it in with Maritech. If you look at the mix over the last several years, even with the amount of Maritech work we’ve done, the internal mix has come down in 2012. It was less than the prior years. So we’ve already started that transition. If you look at where most of that work was performed in 2012 that was in heavy lift business unit, doing work on the platform removals and lot of that was the Hedron. And we continue to be very confident that the Hedron will hit utilization going forward, even post Maritech based on the reception we’ve seen to-date. So the overall question of the asset portfolio, we’re comfortable with the mix. I mean we built the P&A to the size we want. We’ve got a minimum of major assets. We’ve announced we’re going to get rid of the DB-1. So that kind of gets the barges down to two, which is where we think, is appropriate. So I’d say overall, we’ve done almost all that work, particularly once we finish the DB-1 focused going forward is continuing to work the cost side. The guys done a nice job getting us down to that $15 million run rate referenced by Elijio continue to leverage some of the increase demand coming back with the improved permitting. Have the capability of offering a bundle of services like we currently do. Also discrete services; at the same time as appropriate and look for certain international markets. But overall, I’d say we’re pretty close to the asset mix that we want. And now we’re just need to continue to execute for the guidance we had. James M. Rollyson – Raymond James & Associates, Inc.: Okay. That’s very helpful. And then as maybe one follow-up, just maybe for Elijio. On SG&A and DD&A specifically, I know you guys have kind of put out all the guidance here at the beginning of the month. And I don’t know that you detailed those specifically. But they were quite a bit higher this particular quarter than they’ve been for the rest of the year. You mentioned a couple little things, if there is anything unusual in the fourth quarter numbers, and maybe how those trend progression for the next four quarters?

Well, on the DD&A side, Jim, remember that the $9 million of impairment charges that we announced on the sale of it for assets is included in DD&A. So you would have to normalize $9.0 million, out of DD&A, out of Q4. Then on the G&A side, there’s only a slight item in there of $300,000 almost around in for G&A. And if you look at the first three quarters compared to Q4 or G&A, we reflected in there, the G&A that comes alone with the three companies that we’ve acquired. So where we are in Q4 ought to be reflective of where we would be going into next year for G&A. James M. Rollyson – Raymond James & Associates, Inc.: So kind of low to mid $36 million in the quarter type of run rate?

So let me double check. Yes, correct. In the $36 million range and then DD&A just normalize it down by $9 million. James M. Rollyson – Raymond James & Associates, Inc.: Perfect.

Reflect the impairment charge. James M. Rollyson – Raymond James & Associates, Inc.: Great, it’s very helpful. Thank you, guys.

Thanks Jim.

The next question comes from Blake Hutchinson of Howard Weil. Please go ahead. Blake Hutchinson – Howard Weil, Inc.: Again maybe just nailing down a couple of numbers from the quarter, rather than revisiting some of the conversation from earlier in the month. Elijio, given your commentary around the transaction related expenses and credits falling within Production Testing, is it proper to assume that more run rate PBT for the quarter would have been a little bit above 21%?

So for Production Testing, they have a net of $900,000 of credit that will not repeat, so if you exclude that $900,000 credit that will be reflective of what occurred in the fourth quarter. Blake Hutchinson – Howard Weil, Inc.: Okay, great. And then going back to Stu’s comment; again, stick into the quarter and how we baseline this. The Offshore Services business, first of all, I think I heard a $6.1 million clean PBT number and backing that out, should I be thinking about a 24% gross margin level? And was the current period result already fully reflective of the early cost reduction measures?

I’d say you need to back those adjustments out of the margin to get to that adjusted and the majority of the cost reductions would have late third quarter, early fourth quarter. So I would say it’s not reflective of the full amount. I don’t know if, Elijio, you’ve got an estimate without the split?

That’s correct. So on the costs saving initiatives, we did not yet get the full benefit during Q4. Those reductions that I said added up to the $14.9 million. You will see that in the first quarter. Blake Hutchinson – Howard Weil, Inc.: Okay.

And then back your first question, out of the profitability, looking at either profit before tax or looking at gross margin, make sure to correct for the $9 million of impairment charges in the Offshore Services Division. The $1.8 million gain on the sale of the wireline and the other assets is reflected below the line. So you don’t have to normalize for those if you’re looking at operating income or gross margin. Blake Hutchinson – Howard Weil, Inc.: Okay. That’s below the line, great. Okay, I appreciate it. That’s all I had, guys.

Thanks, Blake.

The next question comes from Joe Gibney of Capital One. Please go ahead. Joseph Gibney – Capital One Southcoast, Inc.: Thanks. Good morning. Stu, I was just curious if you could comment a little bit, a couple questions around the U.S. onshore portion of your Fluids business. Just the non-water handling portion of that business, just curious how you would characterize trends there? Is it flat to down right now, and stabilizing kind of exiting the year, just kind of curious how things are trending there?

Yeah, I’d say it’s kind of flattish and we expect it to be like that over the first half of the year then hopefully improving as we get to the middle part. And I think that the North American piece, if you just look at across the entire company, I’d say that the parts that we are seeing strength obviously on Compressco with some of the focus, on some of the shale activity and some of the unconventional that certainly help that business a lot. And I think some of the investment on the Water side as helped that and then kind of the more traditional flow back testing in more traditional onshore fluids that’s the product been changed the most, but we expect to see that improve as we get through the middle of the year. Joseph Gibney – Capital One Southcoast, Inc.: Okay, helpful. And then on the Water handling side, as we think about capital being allocated to this business this year, and some of the capital is allocated towards the tail end of last year, given the growth you guys have laid out for 2013. How big of a piece now? Is it reasonable to say that Water handling could be roughly 25% of your Fluids mix from a divisional perspective in 2013?

Yeah, that’s probably a little bit on the high side. Joseph Gibney – Capital One Southcoast, Inc.: Okay.

Even with the capital we’re going, and it’s still going to be probably more close to the 20% to 25%. Joseph Gibney – Capital One Southcoast, Inc.: Okay, helpful. I appreciate it, guys. I’ll turn it back. That’s all I had.

Thanks Joe.

The next question comes from Stephen Gengaro of Sterne Agee. Please go ahead. Stephen D. Gengaro – Sterne Agee & Leach Inc.: Thanks. Good morning, guys.

Good morning. Stephen D. Gengaro – Sterne Agee & Leach Inc.: I was look at and I know you guys have made a lot of efforts on the cash flow side. Elijio, how should we think about sort of the working capital needs, and how that sort of shows up in 2013 and 2014? I mean our sense is, it’s pretty neutral, but can you comment on that a bit?

Right, so we do have top line growth that we envision and build into our forecast to occur, so that by the end of the year, we ought to be approaching $1 billion in revenue. And there will be some use of working capital, especially as we expand into some of the international market, some of our national oil company have processes that are a bit more bureaucratic that they trying to get through their system. So you might see an impact on that. However, you’re right. We expect that with the lot of the initiatives we’re taking to improve DSO that we ought to be able to neutralize it. So I would say that as you model TETRA, I would be closer to neutral to a slight use of working capital as we ramp up toward $1 billion target for the year. Stephen D. Gengaro – Sterne Agee & Leach Inc.: Okay.

And some of the initiatives that we’ll take will be gradual that, so however, before the end of the year, if we’re not seeing almost double-digit DSO improvements. I would be disappointed. Stephen D. Gengaro – Sterne Agee & Leach Inc.: Okay. That’s helpful. And then just to go back real quickly to Fluids. The El Dorado efforts, are they part of what’s showing up in the real healthy margins? And I understand maybe they got, I don’t say ahead of themselves, but the margin is maybe not quite sustainable at these levels. But are all the positives that you’ve been working on really starting to show up and where we’re going to see sort of a higher sustained run rate versus the last two years?

I think as we said before, we think this business will kind of move towards the mid 20s gross margin. For some of the reasons, we talked about the continued growth in the Gulf of Mexico, the investment in Water, the improvement in El Dorado, hopefully expanding international component of it. And if you look at the fourth quarter, I would say the larger contributors to that margin would be the international mix, which was very strong during the fourth quarter, which again is the lumpy with kind of tried to normalize that for the full 2013 guidance, as well as continued strength in the Gulf of Mexico in Water. So we’re continuing to make progress in El Do, but that wasn’t the main contributor to that uplift. So we still have some benefit in front of us from that. Again I caution you as said in one of the earlier questions to use that fourth quarter margin as you run rate, I think that was a higher than anticipated and I think that the 2013 guidance is more appropriate for that margin. Stephen D. Gengaro – Sterne Agee & Leach Inc.: Okay, thanks. And then just one quick follow-up, the Water business relative to the rest of Fluids, are margins the same, a little better, a little worse?

It’s probably a little better. Stephen D. Gengaro – Sterne Agee & Leach Inc.: Okay, great. That’s helpful. Thanks.

All right, take care.

The next question comes from Bill Dezellem of Tieton Capital Management. Please go ahead. William Dezellem – Tieton Capital Management: Thank you. That’s Bill Dezellem with Tieton Capital Management. And relative to the Fluids business, you did reference a number of the items, as you pointed out, why we should not just automatically use the level of profitability. However, each of those items that you addressed, seem to tie in with your longer-term goals. And so the question is, over time, would it be correct that this fourth quarter actually gives us a window into what you would hope to accomplish if you are successful having more international contracts, et cetera, et cetera? And ultimately, that this really demonstrates the hockey stick potential of the profitability in this business?

I think the fourth quarter is certainly as you noted where we’d like to end up with each of the pieces. And I think we’re making good progress as we move through 2012 and exited 2012 in that direction. I agree with the basic premise. I would just caution a little bit that we did have an unusually high international component that if you annualize that on – the fourth quarter, international component that we’re going to get to that number in 2013. We’re certainly going to continue to build it. But that really had nice impact on the fourth quarter. But I think all the other components we’ve talked about exactly why we see the margins trending up and it gives consistent with the investment we’ve made over a long period of time and position ourselves for the Offshore and investment we’ve made more recently positioning ourselves for some of the water related business in the shales. William Dezellem – Tieton Capital Management: Allow me to try to put you in a box here for a moment, relative to the international opportunities. 2013, it is too early to be thinking about repeating Q4. But as we move into 2014, is that a more reasonable timeframe to think that some of your international efforts may pay off in that form?

I think we continue to have long-term focus on growing international. We’re encouraged by some of the recent trends. I would expect 2014 to be stronger than 2013 in that area. And again kind of annualizing the fourth quarter international compared to 2014 and that’s probably, which still be a pretty optimistic assumption. But we clearly are focused on growing that piece on many fronts including the international. William Dezellem – Tieton Capital Management: Thank you.

Thanks Bill.

(Operator Instructions) The next question comes from Trey Cowan of Clarkson Capital Markets. Please go ahead. Trey Cowan – Clarkson Capital Markets: Good morning, guys. Nice quarter.

Thank you. Trey Cowan – Clarkson Capital Markets: If I did my math correctly, looking at your EBITDA for the full year, it looks like, backing out Maritech, it grew almost 20% versus the prior year. What are you guys thinking about for 2013? I know this is kind of revisiting your guidance a little bit. But can you help us with that on the divisions, as far as what kind of EBITDA you are seeing for next year?

Well, Trey, we provided the guidance, we sort of blade by division what we thought PBT was. We laid out what DD&A was by division. And then we gave an estimate for G&A. So the press release that we previously issued sort of laid it out individually. Is there maybe one division you want to ask specifically about? Trey Cowan – Clarkson Capital Markets: Yeah, I just wanted to understand Offshore a little bit more precisely, given the calculations you have to do to get Maritech out of it.

When we gave the guidance, we specifically laid out what we thought the eliminations would be. So that you look at Offshore Services excluding the Maritech work. And if you’re asking then how much of the EBITDA or how much of the margin might disappears, we could complete some of the Maritech work. I think the Maritech work has represented a smaller proportion of Offshore Services over the last two years. And we believe that the remaining $84 million and $87 million of Maritech work that needs to be done. About one-third of that is the non-operated properties that does not flow through the Offshore Services division. And in the rest of it, when we’re using our asset on them, we’re eliminating that one and we think that those margins are consistent with what we’ve been seen on margin pricing. That will eliminate consistently. Trey Cowan – Clarkson Capital Markets: Okay, great; and then different topic altogether. Looking at Latin America, specifically Brazil, what are you guys seeing in Brazil for 2013?

Overall, we’re looking at Brazil similar to what we saw last year. As you know, having followed us for a period of time; we’re always pretty cautious down in Brazil. We just don’t have this much line of side as we like a times. So we’ve still got a pretty sizable investment in Fluids and testing down there and expect that will perform similar. Hopefully, there is some upside to that. But given past several years, we’ve always taken a fairly cautious outlook on Brazil. Trey Cowan – Clarkson Capital Markets: Okay, great. Thank you, guys.

Thanks.

(Operator Instructions) This concludes our question-and-answer session. I would like to turn the conference back over to Stu Brightman for any closing remarks.

Thank you. And again I appreciate the questions, and we’ll look forward to updating the group early May on the first quarter results. Thank you.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your line.