Newpark Resources, Inc. (NR)

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Newpark Resources Inc. (NR)

Bank Of America Merrill Lynch 2012 Global Energy Conference

November 14, 2012


Paul Howes – President and Chief Executive Officer


[Call starts abruptly]

By Newpark Resources one of the dominant players in fluids, very important part of the drilling process. And with that, I will turn it over to CEO, Paul Howes.

Paul Howes

Thank you very much. Good morning and I would like to welcome you to the Newpark Resources presentation. My name is Paul Howes and I am the President and Chief Executive Officer. This morning, I would like to provide you with an overview of Newpark and our three businesses, discuss how we differentiate through technology and customer support and what we are doing to position the company for continued growth.

Introduce or reacquaint you with the company, Newpark is a service provider to the oil and gas industry. Currently, we have three business segments, Fluid Systems and Engineering which offers drilling fluids and related engineering services. Mats and integrated services offering matting solutions for the protection of the environment and to stabilize unstable soil condition and environmental services which collects in disposes of non-hazardous oil field and industrial wastes from offshore rigs and land locations in and around the Gulf of Mexico.

Over the past several years, the Fluids business has become more prominent in our revenue mix as we have focused our growth and our investment capital in this segment of our business. Our Fluids business contributes over 80% of total revenues and through continued expansion effort, now spans the major markets of North America, North Africa, Eastern Europe, Latin America, and Asia-Pacific.

Over the past few years our mat business has become a strong contributor to operating income driven by our ability to help our customers improve their environmental protection programs as they’ve expanded into developing shale plays in the US markets. And while it represents a small part of our business, our Environmental Services segment is one of the market leaders in the Gulf Coast which consistently contributes positive earnings and cash flow.

Now let me talk a bit more about our Drilling Fluids business. Our market share in our Fluids business has grown over recent years with our products and services are been accepted by independent major IOCs and NOCs around the world. Spears & Associates reported that worldwide drilling and completion fluids market in 2011 to be approximately $10 billion. Our share of that market is 8.1% in 2011, up from 4.3% in 2000 and up from 7% in 2010.

We attribute this growth to our technology and the knowledge and service commitment of our people. Over the past several years, Newpark has become recognized as one of the leading drilling fluids companies, expanding our presence around the world. So, how do we compete and win against some of the largest and most respected oil field service companies. We do it by differentiating ourselves with leading technology and superior customer service.

While some may see Drilling Fluids as a commodity business, we have a different view with our focus on innovation, we think to consistently provide our customers with superior customized solution to improve the performance on the well. Our flexible approach to addressing a drilling program benefits the client by telling a solution to a specific need.

Our proprietary and patented technology which cover water, synthetic and oil-based drilling fluids, work in all types of formations and conditions from the conventional formations in West Texas to the developing shale plays across North America, to the deepwater offshore markets of the Gulf of Mexico and Brazil.

Our deep drill water-based system is now gaining acceptance in Brazil deepwater market. Evolution, our latest high performance water-based system was developed two years ago for the Haynesville shale in response to the challenges that our customers were experiencing in this region.

Our systematic approach to solving customer problems continues as that part of the leader in our industry. One good example of our technology capabilities is our work in Brazil where we provide the fluid solution for an offshore well in over 7,000 feet of water, half a mile deeper than the Macondo well in the Gulf of Mexico with one of the world’s largest and most respected oil companies.

When phased with the decision of selecting the best-in-class fluids company to use in this one of the most, if not the most severe and challenging environments anywhere in the world, this Supermajor shows Newpark over the largest integrated service companies in the world.

To us, this speaks volumes about our technical capabilities and the reputation that we have developed in the oil and gas industry. In support of our technology program, and our continued leadership in the fluids industry, we are currently constructing a new $30 million worldwide technology center which is expected to open by mid 2013.

This new facility will be located in the Houston area, close to our existing workforce and the customers we serve. It will also include a training center that will be utilized to train the next generation of fluid technicians. To our belief that this technology center will act as a catalyst to accelerate the development of new technology.

Now I’d like to provide a little more color around Evolution, our game-changing technology introduced in 2010. So why is Evolution a game-changing technology? Bottom-line, it outperforms oil-based systems. Water-based systems have long been recognized for their environmental benefit including lower waste to pull the cost recurring.

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