Newpark Resources, Inc. History
Metairie, Louisiana 70002
Telephone: (504) 838-8222
Fax: (504) 833-9506
Incorporated: 1932 as New Park Mining Company
Sales: $373.2 million (2003)
Stock Exchanges: New York
Ticker Symbol: NR
NAIC: 333132 Oil and Gas Field Machinery and Equipment; 213112 Support Activities for Oil and Gas Operations; 562211 Hazardous Waste Treatment and Disposal
Newpark Resources is a niche provider of high performance, environmentally focused services and products to the explorations and production industry. Newpark seeks to differentiate itself from competitors through the application of unique products and technology to its customers' projects.
- New Park Mining Company incorporates.
- The company changes its name to Newpark Resources, Inc. and moves its corporate headquarters to New Orleans, Louisiana.
- The company lists on the New York Stock Exchange; founds Newpark Drilling Fluids.
- Newpark Resources, Inc. consolidates its Drilling Fluids division with Milchem, Inc. to form Milpark Drilling Fluids, Inc.
- Newpark divests its interest in Milpark and is delisted from the New York Stock Exchange.
- Company reincorporates in Delaware.
- Company acquires George R. Brown services; completes its initial public offering on NASDAQ.
- Newpark moves to the New York Stock Exchange.
- Company acquires the marine-related nonhazardous oilfield waste collection operations for Campbell Wells, Ltd.
- Company purchases SBM Drilling Fluids Management and reenters the drilling fluids business as Newpark Drilling Fluids.
- Company purchases Ava Drilling Fluids.
Newpark Resources, Inc. provides integrated environmental and drilling fluid services to oil and gas drillers, including fluid processing and recycling on site at rigs. The company supplies prefabricated work sites and temporary access roads made of interlocking hardwood or composite mats for use in oil and gas exploration and commercial, industrial, and military applications, and sells these mats to commercial concerns. It also sells lumber and wood byproducts. Newpark processes and disposes of oilfield waste by injecting this waste underground, and processes and disposes of nonhazardous industrial waste in similar fashion.
From Old-Line Metal Mining to Oilfield Waste Servicing: 1932-70s
In 1932, New Park Mining Company formed as the consolidation of three mining companies: Star of Utah Mining Company, Mayflower Mines Corporation, and Park Galena Mining Company. For the next three decades, the publicly owned, old-line mining company expanded through acquisitions of similar companies, until, by the late 1960s, the mining of metals as an industry fell on hard times.
To survive, Newpark bought two Louisiana companies in 1968 and got into the oil service business. The first of these, SOLOCO Inc., built roads to swampy well sites. The second company, Louisiana Oilfield Rentals, or LOR, was an oilfield tool manufacturing and rental company that later spun off as Triumph LOR in the 1986 restructuring of the company. The SOLOCO acquisition provided Newpark with the foundation for its Mat and Integrated Services segment. In 1972, the company changed its name to Newpark Resources, Inc. to reflect the change in its core business and moved its corporate headquarters to New Orleans, Louisiana.
In 1976, James Cole joined the company as its chief executive officer, and, in 1977, Newpark listed on the New York Stock Exchange. Cole brought with him a California-based oil service company, called ELPAC Inc., that he had helped to found. The following year, Newpark created a new operating unit, Newpark Drilling Fluids, to develop its oilfield waste business, an industry it helped to pioneer. The company participated in the drilling fluids business from 1977 to 1985, during which time it became the third largest drilling fluids company in the United States. From 1982 to 1984, capitalizing on the oil boom of the early 1980s, it added ten drilling fluids supply locations on the Gulf of Mexico to provide drilling fluids to the offshore petroleum exploration industry. During this period, its stock sold for as much as $33 a share.
Industry Downturn Leading to New Directions in Site Construction and Cleanup: 1980s to Early 1990s
The oil industry downturn of the early to mid-1980s led to overcapacity, price-cutting, and consolidation among oil companies, and to difficult times for Newpark. From 1982 to 1987, Newpark did not turn a profit. As a result, in 1986, the company, which had traded on the New York Stock Exchange since 1977, was delisted and moved to the NASDAQ.
Others in the industry were having difficulties as well. From the end of 1983 to the end of 1985, there were more than a dozen oil patch mergers among former competitors to save individual companies from going under. In 1985, Newpark merged its Drilling Fluids segment into a joint venture with a subsidiary of Baker Hughes International Corp., Milchem, to form Milpark. In 1985, it combined its Louisiana Oilfield Rentals (LOR) with Triumph Drilling Tools, jointly owned by Galveston-Houston and National Lead to form Triumph LOR, Inc. It exited the drilling fluids business when it traded its ownership of Milpark to its banks in exchange for the majority of its outstanding indebtedness. Baker Hughes later acquired all of Milpark.
Newpark also began a process of restructuring in 1986, after being delisted from the New York Stock Exchange. That process culminated in a private financing transaction in 1987, after which only a small public shareholder base remained. Newpark also reincorporated in Delaware in 1987, and began trading on the NASDAQ in 1991. It conducted a secondary stock offering in 1996.
Facilitated by its financing transaction and improving operations, Newpark expanded its oilfield construction operations into Texas with the acquisition of Mallard & Mallard in 1990 and the purchase of George R. Brown Services, Inc. in 1991. Also in 1991, Newpark invested in its environmental cleanup operations. It relocated its principal oilfield waste transfer facility to a site near Port Arthur, Texas, and increased its capacity to process and dispose of nonhazardous oilfield waste (NOW) by 50 percent. Oilfield waste comes from the cuttings removed from the wellbore during drilling, from drilling fluids, and from the pits that handle drilling muds during the drilling process. Newpark introduced a process whereby it could inject such wastes into secure geological formations underground, or process the waste to yield a material to cover landfills.
A pickup in gas drilling in south Louisiana in the early 1990s helped turn Newpark around. The company had 1990 revenues of $46.1 million and 1991 revenues of $60.1 million. But 1993 was another bad year for Newpark. With drilling by oil and gas companies way down, both of Newpark's oilfield service businesses, building drilling sites, and oilfield cleanup, were down as well.
The showpiece of the company's new services was its disposal of oilfield "naturally occurring radioactive materials," known as NORM, which were not suitable for recycling or reuse. NORM are not drilling-related, but accumulate during the productive life of a well and include some radioactive materials from deep in the earth's crust. Newpark extended its waste disposal technology to dispose of NORM underground in the same manner as NOW.
Building a Niche Market Position in North America: Late 1990s
Newpark's NOW and NORM disposal business kept steadily growing, and the company's revenues continued to increase. In 1994, sales reached $79.5 million, and, in 1996, $100 million. In 1995, the company completed two additional NOW injection wells in Texas and moved to the New York Stock Exchange. In 1996, assisted by a secondary equity offering, it purchased the nonhazardous oilfield waste collection operations of Campbell Wells Ltd., a subsidiary of Sanifill Inc. It also received a license to inject NORM-contaminated oilfield waste directly into disposal wells in east Texas. In 1997, it reentered the drilling fluids business as Newpark Drilling Fluids, an extension of its waste disposal business, when it purchased SBM Drilling Fluids Management of Houston. SBM was a supplier of drilling fluids for specialized wells, such as horizontal drilling and deepwater Gulf of Mexico drilling.
Newpark also sought to build a niche market position for itself within North America by marketing its water-based Deep-Drill system as an environmentally neutral substitute for conventional drilling fluids. This system of proprietary fluid products substitutes food-grade products for the salt and diesel or synthetic oils typically employed in oil-based systems, eliminating the need for the elements that can cause environmental damage.
The company's profits increased to $38 million in 1997. Then in 1998, oil patch drilling began to dry up, and Newpark suffered a loss of $64 million. In 1999, low oil prices resulted in a 50 percent cut in spending plans and the loss of 100 jobs at Newpark. The drilling market remained depressed through the first years of the next decade; yet Newpark continued to expand in new, but related directions. In 1999, it formed Newpark Performance Services Inc., a new operating unit to provide onsite processing, fluid recycling, and waste management as well as drilling fluids. In some cases, these services were provided in combination with site services. It also received a permit in 1999 to enter the industrial waste business.
By 2000, the company was receiving five million barrels of waste a year, and new EPA rules calling for reduced discharges into federal waters were boosting demand for Newpark's services. Declines in rig activity after July 2001 reduced Gulf Coast activity, however, and these volumes retreated to 3.6 million barrels per year shortly thereafter. Newpark also began selling its composite mats late in 2000 and shipped over 21,000 units in 2001. Sales slowed in 2002 and 2003 to approximately 5,000 units annually. The company also expanded geographically in 2001 and began serving the Mediterranean basin and North Africa with the purchase of Ava Drilling Fluids of Italy.
Although revenues took another 21.4 percent dip to $321 million in 2002, they rebounded in 2003 to $373 million. As the company looked to the future, it determined to continue to seek out niche markets in which to offer those products and services that distinguished it from its competitors. As the oil industry turned to focus on oil and gas exploration in foreign markets Newpark sought to position itself to make use of its expertise in working in difficult environmental conditions. In Canada, for example, where much of the primary exploration area has difficult soil conditions with drilling possible only when the soil is frozen from November to March, Newpark's mat system could enable a change to a year-round pattern of operation. Newpark also believed itself well positioned to benefit from expected increases in drilling activity in the Gulf Coast and from continuing regulatory pressure restricting discharges of drilling fluid waste into the surface waters of the United States.
Principal Subsidiaries: Newpark Drilling Fluids, LLC; Ava S.P.A. Drilling; Newpark Canada, Inc.; SOLOCO, LLC; Newpark Environmental Services, LLC.
Principal Competitors: Halliburton (Baroid division); Schlumberger and Smith International (MI Drilling Fluids); Varco International.
- Blouin, Keith, "A Muddy Future for Newpark," New Orleans City Business, May 13, 1985, p. 1.
- Hall, John, "Newpark's Changes Lead to Success As Mining Firm Evolves," Times-Picayune, May 21, 1995, p. 114.
- Hosch, Andrew, "Industry, DEQ Work to Resolve Differences on Cleanup Regulations," New Orleans City Business, July 12, 1993, p. 21.
- Judice, Mary, "Newpark Reborn: Oilfield Cleanup Company Sees Profit Below the Surface," Times-Picayune, August 24, 1994, p. C1.
- Norman, James R., "Matt Simmons: Doctor to the Oil Fields' Walking Wounded," Business Week, November 4, 1985, p. 82.
Source: International Directory of Company Histories, Vol.63. St. James Press, 2004.