Newpark Resources, Inc. (NYSE:NR)

F4Phanatic (72.10) Submitted: 9/14/2006 4:35:50 PM : Start Price: $5.77 NR Score: -7.08

Newpark Resources is the parent company to a family of integrated operations focused on serving the energy sector. Newpark Resources provides drilling fluids systems, environmentally sound disposal and recycling techniques, site access systems for harsh or sensitive terrain and specialized construction services.

Newpark Resources consists of the following subsidiaries and divisions:

Newpark Drilling Fluids

One of the fastest growing fluids companies in America.It has grown since inception at an annual rate over 50%. NR specializes in water-based drilling fluid systems called DeepDrill, FlexDrill, and DeepDrill II and it's family of water-based products, it has performance applications for off-shore deepwater and shelf, as well as land based drilling.

Newpark Environmental Services offers solutions for managing exploration and production (E&P) oilfield wastes and nonhazardous industrial wastes, whether generated onshore, offshore or in coastal waters.

Newpark Mats and Integrated Services

Subsidiaries are Soloco LLC, Composites Mat Solutions LLC, International Mat of Canada, Dura-Base of Mexico, Dura-Base Nevada LLC, and Batson Mill. These companies provide high performance mat systems to the construction, entertainment, energy and oilfield and othe markets that require the durability and longevity of thermoplastic and wood mats for site access and vehcile operations in sensitive areas by distributing loads over large areas and dissipating impact to soil and subgrades.

NewPark Canada is comprised of NR Drilling fluids, NR Environmental, and International Mat.

Excaliber Materials is a processor and supplier of industrial minerals. These minerals are used for fillers/extenders in paint, plastic, ceramics and oil service end products.

AVA SpA

Ava is headquartered in Rome, Italy and provides waste recovery, water recycling and drilling fluids disposal, as well as providing NR Drilling Fluids. Ava serves the Mediterranean and North African markets. Ava joined NR Drilling Fluids, LLC in 2002.

Moody's Investor's Service downgraded debt of Newpark on July 7 2006 after NR stated it was restating financials on July 6 for years 01 - 05 to correct accounting errors at Soloco Texas, LP, a subsidiary. Moody's cut the company's corporate family rating to "B1" from "Ba3" and it's senior subordinated notes to "B3 from "B2".

The ratings agency changed its outlook on NR's credit to negative, first issued in April when Newpark disclosed it would conduct an internal accounting investigation. In July the CEO and CFO were fired.
Moody's is concerned that the restatements stem from weak corporate governance and internal controls, uncertainty regarding Newpark's integrity of financial information, the expectation that restatements and disruption of senior management will continue to create significant management distractions.

William T. Ballantine, CEO resigned on July 14 2006. NR's Board of Directors appointed Paul L. Howes as CEO on July 14 2006. CFO Matt Hardley was also let go.The internal investigation was done on June 29 2006. The aggregate impact of error correction over the restatement period will reduce previously reported pre-tax income by less than 10 million, the max amount previously disclosed by NR. All of the charges to be recorded as a result of the restates are non-cash charges.

NR is down 40% since October of 05. The P/E currently is 20.44. Revenue for 2005 as restated was $554.04 million, quarter revenue growth is 24.6%, quarter earnings are 822.2%. Total debt is listed as $209.52 million.

On August 30 2006 NR announced it plans to shutdown Newpark Environmental Water Solutions, LLC and disposed or reploy all assets.

Currently, Wall Street is bearish on NR, with new management in place NR should not be adversely affected. I'm bullish on NR.

My recommendation is: Get it while the gettin' is good!