Newpark Resources Inc. (NYSE:NR) Q3 2016 Earnings Conference Call Transcript

Oct 28, 2016 • 10:00 am ET

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Newpark Resources Inc. (NYSE:NR) Q3 2016 Earnings Conference Call Transcript

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Presentation
Operator
operator

Greetings and welcome to the Newpark Resources third quarter earnings conference call. At this time, all participants are in a listen-only mode and 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, Brian Feldott. Thank you, you may begin.

Executive
Brian Feldott

Thank you, operator, and good morning everyone. We appreciate you joining us for the Newpark Resources conference call and webcast to review our third quarter 2016 results. With me today are Paul Howes, our President and Chief Executive Officer; Bruce Smith, President of our Fluids Systems business; and Gregg Piontek, our Chief Financial Officer.

Following my remarks, Paul will provide a high-level commentary on the third quarter, Bruce will provide an update on our fluids business, and Greg will discuss the Mats business as well as the consolidated financial results for the quarter. Paul will then conclude the discussion before opening the call for Q&A.

(Forward-Looking Cautionary Statements).

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

Executive
Paul Howes

Thank you, Brian, and good morning, everyone. While market conditions remain challenging, we're encouraged by the early signs of recovery in North America, where we have seen for the first time in nearly two years a sequential rig count increase. And while these rig additions have tended to focus on less intensive wells, we've seen a steady increase in customer activity over the last four months following the trough in the second quarter.

Revenues in our North American fluids business improved by 22% in the second quarter, benefiting from the improving rig count and customer activity along with our first revenues from our upgraded deepwater facility in Fourchon, Louisiana. This revenue represents a major milestone in our long-term strategy to penetrate the deepwater Gulf of Mexico going head-to-head against the largest oilfield service companies in the world.

As we highlighted in the July call, the first phase of our facility upgrade came online early in the third quarter allowing us to begin servicing the international oil companies in this important market. Meanwhile, we're continuing the qualification process with other large IOCs that operate in the deepwater Gulf of Mexico.

On the international front, as expected, fluid revenues declined sequentially, driven primarily by the successful completion of the ultra deepwater exploratory well in Uruguay. As noted in yesterday's release, we recorded charges in the quarter with the wind-down of operations and asset demobilization in Uruguay. While we were naturally disappointed by the unfavorable findings from this record setting deepwater well, we are extremely proud of our contribution on a project that Total recognized as an operational success.

I'm also excited to announce that we have won a new international contract in the Latin American region with ENAP in Chile. Contract values estimated at $25 million over a five-year period and is expected to start in early 2017.

In our EMEA region, activity has remained relatively stable