Ken Dennard - Managing Partner of Dennard Rupp Gray & Easterly, LLC Paul Howes - President and Chief Executive Officer Gregg Piontek - Vice President and Chief Financial Officer Matthew Lanigan - Corporate Vice President and President of Mats and Integrated Services Phil Vollands - President, Fluids Systems.

Praveen Nara - Raymond James & Associates John Hunter - Cowen and Company Terry Starling - SunTrust Robinson Humphrey Stephen Gengaro - Loop Capital Bill Dezellem - Tieton Capital Management Ken Sill - SunTrust Robinson Humphrey.

Greetings, and welcome to Newpark Resources Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Ken Dennard.

Thank you. You may begin..

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Newpark Resources conference call and webcast to review second quarter 2017 results. With me today are Paul Howes, Newpark’s President and Chief Executive Officer; and Gregg Piontek, Newpark’s Chief Financial Officer.

Following my remarks, Paul will provide a high-level commentary on the second quarter, and Gregg will discuss the financial details and outlook. Paul will then conclude the discussion before opening the call for Q&A. Before I turn over the call over to management, I have a few normal housekeeping details to run through.

There will be a replay of today’s call, and it will be available by webcast on our website at newpark.com. There will also be a telephonic replay available until August 11, and instructions on how to access those replay features were included in yesterday’s press release.

Please note that the information reported on this call speaks only as of today, July 28, 2017. And therefore, you’re advised that time-sensitive information may no longer be accurate as of the time of the replay or transcript reading.

In addition, the comments made by management 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 Newpark’s management However, various risks, uncertainties and contingencies could cause actual results, performance or achievements to differ materially from those expressed in the statements made by management.

The listener is encouraged to read the annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K to understand certain of those risks, uncertainties and contingencies.

Also comment today made by management may include certain non-GAAP financial measures, additional details of reconciliation to the most directly comparable GAAP financial measures are included in the quarterly press release, which can be found on the company’s website.

And now, with that said, I’d like to turn the call over to Newpark’s President and CEO, Mr. Paul Howes..

Thank you, Ken, and good morning to, everyone. Before I comment on the specifics of the quarter, I’d like to take a moment to address the recent leadership changes in our Fluids business. As we announced previously, effective July 1, Phil Vollands has been promoted to President of our Fluids business succeeding Bruce Smith.

As Bruce transitioned into his new role as Chief Technology Officer for Fluid, I would like to personally thank him for his outstanding leadership and significant contribution over the past 19 years. For the change in the organization, we are also taking this opportunity to modify the structure of our quarterly earnings call.

Specifically, Gregg Piontek and I will provide the quarterly updates, including progress on our strategy, overview of the operating performance, financial results and outlook.

For the Q&A portion of the call, Phil Vollands, President of our Fluids business, and Matthew Lanigan, President of our Mats business will also join us as we answer your questions. With that, I’d now like to turn to the second quarter results.

Building upon the positive momentum from the first quarter, I’m pleased to report another period of strong sequential gains with consolidated revenues increasing 15% to $183 million in the second quarter, generating EBITDA of $17 million and net income of $0.02 per diluted share.

The Mats segment had an exceptionally strong second quarter, posting the highest revenue and operating income level in two years benefiting from our diversification strategy.

The sequential revenue gains are driven by broad-based improvements across targeted market sectors, including the impact of a few large utilities, transmission and distribution projects in the Gulf Coast region.

The quarter further benefited from weather events, where our scale and rapid service response uniquely positioned us to support our customers, following a string of storms that impacted areas within Texas and Louisiana.

With a meaningful lift in demand, rental and service revenues increased to $25 million in the quarter, with two-thirds of that coming from non-exploration markets. The surge in rental demand also provided meaningful lift in segment operating margins, which came in at 35% for the second quarter. In Fluids, revenue gains are once again led by our U.S.

operations, where revenues improved by 34% over Q1 and outperformed the sequential increase in rig count for the third consecutive quarter. Building on our strong market share position, this relative outperformance is largely attributable to improvements in revenue generation per well, reflecting increased drilling complexity.

As operators continue to push the boundaries of unconventional drilling, including increases in total measured depth and longer laterals, it’s not uncommon for us to drill 10,000-foot laterals and have done so across most of the major producing basins.

Extended reach drilling increases the need for a range of new technologies, including our family of lubricants and wellbore strengthening products. In addition to our progress in North American land, we also continue to advance our efforts to penetrate the deep water Gulf of Mexico.

During the quarter, we delivered fluids to a second IOC from our recently completed Fourchon shore base. Although the sale was relatively modest in terms of revenue contribution to the quarter, that reflects yet another important milestone in our progress towards customer qualification and the ultimate penetration of this important market.

Outside of North America, customer activities continue to remain fairly stable. International fluid revenues increased by 8% sequentially, benefiting from a rebound in activity in North Africa and Eastern Europe. With a strong revenue contribution from the U.S.

and EMEA regions, the Fluids segment profitability remain relatively stable posting a 4% operating margin, despite the expected seasonal decline in Canada. I’d also like to touch on the two recent contract awards in the Fluids business.

As we announced in May, we entered into an agreement with Baker Hughes to provide drilling fluids and related services as part of their integrated service offering to Woodside Energy in support of the greater infield project located offshore in Western Australia.

Work under this contract is expected to begin early next year and generate total revenues approximately $20 million over a two-year period. We believe that our selection both by Woodside and Baker Hughes to partner on this integrated contract reflects Newpark’s unique technical capabilities and service quality.

Separately, we also announced the award of a three-year contract with Cairn Oil & Gas to provide drilling and completion fluids in support of their onshore drilling in India. The contract also contains an option for the customer to extend the term for one additional year.

Work under this contract is currently starting up and we expect to generate total revenues of approximately $50 million over the initial three-year period based on the customer anticipated drilling program.

This contract award builds upon our relationship established with Cairn Karen prior to the industry downturn and expands our offering to include completion in fluids. With that, let me now turn the call over to Gregg Piontek, who will review the detailed financials for the quarter.

Gregg?.

Thanks, Paul, and good morning, everyone I’ll begin by discussing our Fluids and Mats segment before finishing with our consolidated results. The Fluid Systems segment generated total revenues of $151 million, reflecting an 11% improvement from the first quarter and a 57% increase year-over-year.

In the U.S., revenues were $88 million, up 34% sequentially, which significantly outpaced the 21% rig count increase. Consistent with last quarter, revenues improved sequentially across all U.S. regions.

As Paul mentioned, we continue to see the benefit from the strengthening activity levels along with an increase in customer well complexity, which result in higher revenue generation per well. On a year-over-year basis, U.S. revenues have increased 187% from Q2 2016, significantly outpacing the 112% improvement in average rig count over this period.

In Canada, revenues follow the typical seasonal pattern through break-up declining by $12 million from the prior quarter in line with the seasonal decline in rig count.

On a year-over-year basis, revenues improved by $5 million, also in line with the rig count and benefiting from our second-half 2016 acquisition of Pragmatic, which is expanding our presence in completion and stimulation markets.

Turning to our international regions, revenues in the Eastern Hemisphere were $46 million in the second quarter, reflecting an 11% improvement from Q1. The sequential improvement is primarily attributable to the timing of projects in Algeria and Eastern Europe, along with a modest lift from currency rates.

On a year-over-year basis, revenues from the Eastern Hemisphere were relatively flat, as an increase in activity in Algeria and Albania was largely offset by declines in Romania, offshore Libya, Egypt and Tunisia. Latin America posted revenues of $9 million in the second quarter, down modestly from Q1, reflecting lower Petrobras activity in Brazil.

On a year-over-year basis, the Latin America regions is down $9 million, reflecting an $11 million decline in Uruguay, following the completion of last year’s deepwater project, partially offset by higher Petrobras activity levels in Brazil and a modest benefit from currency rates.

Despite the 11% sequential improvement in revenues, the Fluids segment operating income declined modestly to $5.9 million, reflecting a 4% operating margin for the second quarter.

As we highlighted in April’s call, the first quarter benefited from an unusually strong sales mix in our EMEA region, and we saw the mix return to a more typical level in the second quarter. In addition, the sequential comparison was unfavorably impacted by elevated inventory transportation costs in the U.S.

as we continue our efforts to utilize slow-moving inventories and right-size our working capital investments. Also, with the improving market conditions, we lifted the austerity measures we put in place during the first-half of 2016, impacting U.S. salaries and 401(k) contributions.

Turning to the Mats business, as Paul mentioned, we experienced extremely strong rental demand in the second quarter, reflecting improvements across all industry sectors.

The quarter particularly benefited from a few large utility projects, as well as wet weather conditions, which provide a meaningful lift to our rental operations in the Gulf Coast region. The Mats segment reported total second quarter revenues of $32 million, which reflects a 43% sequential improvement and a 69% improvement year-over-year.

Rental and service revenues improved by $6 million sequentially, while mat sales improved by $4 million. Total rental and service revenues came in at $25 million for the second quarter, reflecting a 31% increase from the first quarter.

As Paul mentioned, non-exploration markets and most notably the utilities transmission and distribution sector contributed the vast majority of the revenue increase. Meanwhile, activity in oil and gas exploration continued to modestly improve.

Although, the sequential comparison was negatively impacted by a $2 million benefit last quarter related to rental mat destroyed at a well site. Comparing to the second quarter of last year, segment revenues improved by $30 million, including an $11 million improvement in rental and service revenues and a $2 million increase in mat sales.

With the strong improvement in revenues, the segment operating margin improved to 35% in the second quarter, compared to 28% last quarter and 21% in the second quarter of last year. Now turning to our consolidated results. Second quarter 2017 revenues were $183 million, representing a 15% sequential improvement and a 59% improvement year-over-year.

SG&A costs were $26.6 million, reflecting a 5% sequential increase and a 24% increase year-over-year. Total corporate office expenses were $9.3 million in the second quarter, compared to $9 million in the first quarter and $7.2 million in the prior year.

The sequential increase for both SG&A and the corporate office, primarily reflect higher performance-based incentive compensation, driven by the stronger financial results, along with higher U.S. salaries and 401(k) contributions as we lifted the austerity measures put in place during the first-half of 2016.

Comparing to the second quarter of last year, the increase is primarily attributable to higher performance-based incentives, along with elevated spending related to strategic planning efforts and legal matters.

Consolidated operating income was $8 million in the second quarter, compared to $3.7 million in the first quarter, and an operating loss of $15.1 million in the second quarter of last year, which included $8.3 million of asset impairments and other charges.

Foreign currency exchange netted to $500,000 loss in the second quarter, compared to $400,000 loss in the first quarter and $700,000 gain in the second quarter of last year. The currency losses in the second quarter were primarily attributable to the impact of the weakening U.S. dollar in the period.

Second quarter interest expense netted to $3.4 million, which compares to $3.2 million in the first quarter and $3 million in the second quarter of last year.

As discussed previously, the year-over-year increase is primarily due to the interesting expense associated with the new convertible notes issued in December, which contribute $1 million of non-cash expense per quarter beginning in Q1 of 2017.

The provision for income taxes in the second quarter of 2017 was $2.4 million, reflecting an effective tax rate of 59%. The elevated tax rate primarily reflects the impact of losses in certain foreign jurisdictions for which an income tax benefit is not recorded.

Net income for the second quarter was $0.02 per diluted share, compared to a net loss of $0.01 per share in the previous quarter and a net loss of $0.17 per share in the second quarter of last year, which included an $0.11 per share net impact from the asset impairments and other charges. Now, let me discuss our balance sheet and liquidity.

During the second quarter, we received $37 million associated with our election to carry back our 2016 U.S. operating losses. With the benefit of the carry back, operating activities generated cash of $34 million in the quarter.

Increases in working capital used $19 million, primarily reflecting the increase in receivables associated with revenue growth.

We used $9 million to fund capital investments in the second quarter, which included $3 million spent on the Gulf of Mexico deepwater project in the port of Fourchon, along with $3 million of investments in rental mats timed in part to help address the strong rental demand experienced in the second quarter.

Also, as highlighted in yesterday’s press release, our restricted cash balance increased by $30 million during the second quarter, reflecting funds that have been set aside in preparation for the maturity of our convertible bonds in October.

As of the end of June, total debt was $161 million, substantially all of which relates to our outstanding convertible bonds, including the $83 million in bonds that mature in October, resulting in a total debt to capitalization ratio of 23.8%.

As I mentioned a moment ago, $30 million has already been set aside for settlement of the upcoming $83 million maturity, and we currently have no borrowings outstanding under our $90 million AVL credit facility. Turning to our near-term outlook. In the Fluids business, we expect seasonal recovery in Canada and improvements in U.S.

revenues to continue to track with the overall rig count, as North America rig count currently stands more than 10% above the average second quarter levels. Outside of North America, while we expect activity levels will remain fairly stable in the near-term, we are seeing pricing pressure on certain international contracts.

With the anticipated improvement in total segment revenues, we will likely see segment margin also improve modestly from Q2 levels, but likely remain in the mid single-digit range.

In the Mats business, while we are encouraged by the progress in penetrating markets outside of the oilfield and diversifying the customer base, we expect revenues will normalize following the exceptionally strong Q2. Further, as we experienced in the third quarter of last year, the hot summer months in the southern U.S.

are susceptible to short-term dips in demand for power line maintenance projects and utility companies typically suspend activities during periods of peak power demand. That said, we expect third quarter revenues to return to the mid-20s range, while segment margins will likely return to the upper 20s range.

We also expect corporate office expenses will remain relatively flat in the near-term.

With regard to CapEx, our full-year 2017 expectation has increased to the $20 million to $25 million range, with the increase largely driven by the additional investments in the Mats business, including some pre-investment in rental fleet to support new market opportunities.

And with that, I’d like to call – turn the call back over to Paul for his concluding remarks..

Thanks, Gregg. We’re extremely pleased with our second quarter results, but we can’t forget that a fair amount of uncertainty remains. And as such, we need to maintain focus on our prudent management of our cost structure and balance sheet.

But with that said and even in a flattening rig count environment, we see meaningful growth opportunities for both segments as we continue to enlarge our geographical footprint, enter new markets and expand our product offerings.

In fluids, we announced two new international contracts in the second quarter, which serve to expand our global drilling fluids market share. In addition, the Cairn contract also expands our presence in completions fluids serving as yet another step in extending our product line offering, while leveraging our global footprint.

As part of our strategy to become the recognized technology leader in drilling fluids, we’re also continuing to make meaningful progress in penetrating the deep water Gulf of Mexico, which remains an extremely important market.

While activity level in the Gulf continues to be impacted by the low commodity prices, we remain optimistic that we will see meaningful deep water revenues in the second-half of 2017. Also, we’re very pleased that our new deep water technology Kronos has passed all testing criteria for multiple deep water customers.

In our Mats business, the benefit of our diversification strategy continues to play out with two-thirds of our rental revenue is coming from non-exploration markets in the most recent quarter.

With our industry leading product and service quality, R&D capabilities and low-cost manufacturing position, we’re well placed to expand our share both in North America and internationally.

Our innovation pipeline continues to grow as we look to expand and enhance our product offering and complimentary services across several industries, which should ultimately provide a larger and more diversified revenue stream.

In closing, I’d like to thank all of the Newpark employees for the dedication and hard work, along with keeping safety their highest priority. With that, we’ll now take your questions.

Operator?.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Praveen Nara with Raymond James. Please proceed with your question..

Hey, good morning, guys. Congratulation on a strong quarter..

Thank you..

I guess, in terms of the growth of acceptance in the P&D market -- in the utility side, can you guys talk about where the growth is coming from? Is it from a wider base of customers are we seeing existing customers just adapted in a larger scale?.

I’ll take this one. Hi Praveen, it’s Matthew on again. Look, I think I described it’s broad-based. I think, we’ve done a great job at expanding our sales team and getting our value proposition in front of a lot more customers. So as a result of that, I think we’re seeing a broad acceptance of the product..

Okay, perfect. And then I guess as we kind of look forward, especially after this quarter, it looks like you guys have the potential to generate some pretty solid free cash flow. Capital needs, you mentioned still pretty low into the CapEx going forward.

So can you talk about the growth opportunities that are out there in terms of allocating that free cash flow either organically or inorganically?.

Yes, this is Gregg. I’ll take that. Yes, as we’ve talked about in the past in terms of our maintenance capital needs, they tend to be fairly limited roughly at $15 million a year range.

But as we look for the opportunities to grow, the opportunities in the Fluids business if you would have growth, it would generally be in the form of additional contract wins, where you’d have to make some investments locally in blending capacity and assets there to support it.

In the mat side of the business, there – even as we did here in this quarter as we saw the surge in the P&D space, we will continue to build out the mat fleet as needed to support the various growth opportunities, which may include some level of pre-investment as we’re looking to enter markets in order to have the assets in place readily available..

Okay, perfect. Thanks very much, guys..

Thank you..

Our next question comes from John Hunter with Cowen and Company. Please proceed with your questions..

Hey, guys. Thanks for taking my question.

So first one being, how much of the mats revenue and margin impact were attributable to the weather events? And separately, I guess, the transmission in utilities work that you did in the quarter?.

Yes, I’ll say that, again. It’s Matthew, again. Look, roughly in terms of the P&D space, let’s say around about a third – a third quarter to a third of that revenue would be weather-related..

And as we said in terms of the overall growth, while we did see growth across all of the targeted market sectors, the vast majority was P&D was the largest driver..

Yes. Okay, great. Thanks. And kind of a second one here, thinking about international, you got a nice bump in North Africa and Eastern Europe.

Does that fall off in the third quarter, or is that kind of sustainable looking into the second-half of this year?.

Hi, John, this is Phil Vollands here. No, we believe that – excuse me. The international market is proving to be less volatile than the U.S. market. It’s a lot more stable longer contracts, for example. So we would expect that to sustain itself through Q3..

Yes, and the only thing that we’re seeing in the international market as we look to the second-half, as we mentioned in the script, is that we do expect some price compression – some pressure a little bit on some of our NOC contracts..

Right.

So thinking about the fluids guidance, I guess, for revenue in the third quarter, it sounded like, you’re going to be kind of up in North America and then you mentioned that pricing pressure internationally, so net is it fair to think about it as kind of flat to up slightly?.

So in terms of the revenue line, you go back to the North American piece is clearly tied to the overall activity levels is what will drive that, which is been moving in the right direction. Internationally, we do expect flattish revenues. And in terms of the overall operating margin, I think, you’ve got it right.

You’ll see some lift from the incremental revenues, but then that’s offset a little bit by the pricing pressures and that will keep this kind of in that mid single-digit mark with the overall margin expectation..

Our next question comes from Ken Sill with SunTrust Robinson Humphrey. Please proceed with your question..

Hi, good morning. This is Terry Starling for Ken Sill. I just – my question was – is in regards to the – your Fourchon shore base and the progress that’s going on there.

What exactly are the catalysts to get more throughput and to get contracts to deliver drilling fluids in the Gulf of Mexico? Is it right now you said you recognize some revenue from that, I assume that’s maybe call out work, and you’re seeing some potential in the second-half.

And then you guys have been qualified with the IOCs, which is not an easy process.

So I was just wondering what are the triggers to see some throughput through that facility?.

Okay, thanks, Terry. Phil here again. There are several elements to this. Firstly, the Fourchon shore base is now fully operational with regards to our water base side from the riseless fluid and the synthetic oil.

The automation is all in place and the salt handling system, the rapid deployment system has been already thoroughly tested with some work in Q2. With regards to outlook, the customer conversations are increasingly meaningful and are increasing in frequency. So I think, we’ve got cause to be optimistic for the future..

Okay. That was helpful. Thank you. And then, I guess, one follow-up. In terms of completions fluid and expanding into that realm with the contract in India, which is land base and it’s completions, it’s not shale. But could you – could that technology that you’re using there could that be applied to the U.S. shale plays.

Do you have the, I guess, the chemistry to expand that business?.

I think, broadly speaking, we’re being pulled more and more into adjacent technologies. For example, we’re already providing completion fluids into a number of countries, particularly in the Eastern Hemisphere and yes..

Yes, this thing – the other thing I would just mention in terms of the U.S. land shale, stimulation chemicals obvious is an area that we’re very interested in. And as we mentioned in the script read that with Pragmatic is a company that we acquired last year, that really focuses on that stimulation market.

And initially, we’ve been focusing on the Canadian market, that’s housed up in Alberta. But certainly, we’ll look to move that south of the border into the U.S. shale as we start to get our arms more around that business..

Okay, great. Thanks, guys. I appreciate the infield..

You bet. Thank you..

The next question comes from Stephen Gengaro with Loop Capital. Please proceed with your question..

Thanks. Good morning, guys. Really two main questions. The first has to do with fluids, particularly in the U.S. market. What do you – so the growth that you’ve seen, I think, it’s been three straight quarters you’ve outpaced the rig count. I know you mentioned kind of more complex wells.

Are there – what’s going on there from a – both a pricing perspective and then from your perspective what are you thinking in terms of where your share has gone? I’m assuming it’s rising, but I’m just trying to get some more color from you?.

Yes. Firstly, on the pricing side, U.S. land, of course, remains a very competitive environment. But we have seen some modest improvements in pricing. With regards to share, we grew share exiting the downturn I think, primarily for two reasons, our regional teams do a fabulous job, and that is very much a strength of focus on drilling fluids.

And then secondly, it’s the deployment of new technology, which is very much part of our DNA.

So there are – in addition to evolution that’s played very well, the individual components of any system, such as lubricants, viscosifiers, et cetera, we continually develop new products for these individual components and they’re all playing very well in the U.S..

I think the other point I would make too on the revenue increase is that, due to this well complexity, we’re seeing much longer laterals for the customers as their drilling. And again, with drilling fluids, it’s volumetric. Longer laterals means large revenues. So we’re seeing uplift due to the well complexity as well..

Okay, that’s helpful color. And then as I think about the margin – the margins in that business going forward, I realize you’re not going to and you don’t provide sort of margin guidance by geography.

But as I think about it in the second quarter with Canadian break-up and then in the third quarter going forward, and I know you gave us some rough estimates. But are the U.S.

incrementals in the quarter and then going forward, I assume, they continue to be strong and it’s just the international flatness and then I’d imagine you have pretty strong incremental in Canada in the next quarter. Is that a reasonable way to think about, as it kind of think about leaving into the next several quarters that U.S.

incremental should remain healthy and international because of some pricing kind of flattish? Is that reasonable?.

Yes, Stephen, this is Gregg. In terms of the incrementals and as we’ve stated previously, the incrementals and decrementals in the Fluid business, it come back to that, call it, mid-20s as your normalized level and that that’s a pretty consistent number across regions. Now you’re absolutely right.

As we progress into Q3, the international you’d expect to be a weaker contributor because of the pricing headwind that we described. In terms of the Q2 performance, really the challenge we have there was not only did we have the mix of return to be in the more normal levels in the EMEA region, but we also have the additional costs on the U.S.

side, which causes the incrementals in the U.S. to be lower than that typical range. And we called out the inventory transportation costs, which was ballpark $1 million of cost in the quarter, as well as the austerity measures, the – putting the salary restoration and benefits restoration back in place..

Okay. Very good. That’s helpful color Thank you, gentlemen..

Our next question comes from Bill Dezellem with Tieton Capital. Please proceed with your question..

Thank you. I have a couple of questions here. First of all, would you discuss the deep water and just the fact that you said it was going to be more material in the second-half, or become material in the second-half. I believe that’s the first time you’ve made such a statement.

And then also in the comments you made referenced to the fact that the conversations with customers are becoming increasingly more meaningful, more frequent.

I’m hoping, you’ll add some more color around all those comments please?.

Well, I think, firstly, there are a number of new opportunities starting to be discussed, and for existing customers that are out there, the level of engagement with regards to Kronos is really deepening in terms of testing and the amount of testing that’s being undergone and this fluid system has handled everything that’s been thrown at it quite frankly..

You know the transition early on we were working with the riserless fluids which is kind of the salt based systems that Phil was mentioning.

If you get down into the deeper well part of the well, then you start running our synthetic new product of flat rheology system called Kronos and that’s really what the expectation is, we expect the Kronos down hole deepwater in the second half..

Great, thank you.

And then also you referenced in the comments that your innovation pipeline where you just make reference to it, and I’m hoping again you can add more color both in terms of the scope of what you are referring to and the timeline at which that may lead to revenue?.

Yes, in the innovation pipeline, obviously we’re trying to drive technology in both of our operating businesses, in the fluid side we talked about Kronos, that is our new deepwater flat rheology technology. And so again we feel very good about that and all the testing that a large IOCs we’ve been working with.

We also have an innovation pipeline in our Mats business, we’ve talked about some of those in the past, the Equi-Potential Zone, matting technology for the T&D market, we continue to understand more about how that market behaves and how that technology can be used, so we’re really pushing on two fronts in both Mats and in the fluids business of new technology..

Thank you.

And would you be willing to take one more question?.

Sure..

Acquisitions, given that you did one last year, small in Canada and the point that we appear to be in the cycle where things have bottomed, what’s your appetite and your thoughts relative to acquisitions today?.

This is Gregg, I’ll take that. You know I think it’s fair to say our approach has been consistent throughout the cycle in terms of we are always evaluating opportunities there and particularly identifying opportunities to add something that builds out the strategic value and fits in with our two segments, so that appetite is definitely there.

That said, as our history has shown, we’re also very choosey, it’s not a matter of just building out the magnitude and the size of the organization, but again it comes back to that strategic value and we identify opportunity pragmatic to great example of something where it’s added to our chemistry family and built out the overall portfolio of products..

You know, Bill, the other side too is, we’ve spent the last 10 years building out our international footprint and so we can find some complementary fluid products we call it concentric rings around drilling fluids that we could acquire and then pull that through this global footprint that we’ve established, obviously that’s – the incremental cost of doing that is significantly lower than continue to enter new countries with just one product line.

So, we’ll continue to look for those kind of opportunities as we move forward..

Great. Thank you, all..

Our next question comes from Ken Sill with SunTrust Robinson Humphrey, please proceed with your question..

Thank you. It really is Ken this time from –.

I just have one follow-up question on the deepwater stuff, because it’s been pretty – you guys have been gaining share and I wanted to kind of clarify, when you are talking to people about these new projects is this, people actually starting up new developments or is this replacing people or basically summing in for another competitor on rigs for some of your customers?.

It’s all of the above, frankly it’s new projects, their instances of replacing current vendors. We range from introductory meetings for the new technology presentation to the new technology qualification to actually programming well.

I mean, if you look at the deepwater, the current market share is really concentrated by two of the large integrated service companies and when we put Fushan in place, we really put a facility there, we believe could help drive operating efficiency for our operators in terms of OSVs and other things, so there’s elements of the technology that we think is differentiated against the large integrated service company, as well as the efficiency of our facility we believe is the best in the port currently..

So I guess you know if are going to kind of quantify between the two points, it’s still probably more heavily weighted to you gaining share than the overall market is growing?.

Yes, indeed, the market is still challenged, but it is absolutely the share gain issue..

Okay, alright, thank you..

Thank you..

That concludes our question-and-answer session. I’d like to turn the floor back over to management for closing comments..

Thanks everyone for joining us on our call and for your interest in Newpark and we look forward to talking to again after the next quarter..

Thank you..

Ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines and have a wonderful day.