Business Overview

The impact of the global economic downturn continues to adversely affect the oil and gas industry and the demand for many of our products and services. Energy commodity prices during the first quarter of 2009 averaged significantly below the levels from the prior year period, and natural gas prices have continued to drop during the first four months of 2009. This decrease in commodity prices has resulted in decreased cash flows for many of our customers, which, along with continuing tight capital markets, has resulted in decreased spending within the industry. This impact has particularly been reflected in the domestic rig count, which showed a 42.5% decrease in total domestic rigs at the end of March 2009 compared to the same date from the prior year. The current environment has particularly affected our Maritech exploration, exploitation, and production segment, our Production Testing and Compressco segments, and certain of our Offshore Services segment businesses. Most of these affected businesses reported declining revenues during the first quarter of 2009. While the impact on Maritech from decreased commodity prices is currently largely offset by our hedging activity, production volumes remain adversely affected by shut-in properties following the 2008 hurricanes, more than offsetting new production from wells drilled during 2008. In addition, Maritech's current exploitation and development activities have been slowed by our efforts to conserve capital, and this could reduce our ability to replace depleting reserve volumes. Certain activities within our Offshore Services segment have benefitted, and may continue to benefit, from repair activities resulting from damages caused by Hurricane Ike in September 2008. In addition, deepwater projects in the Gulf of Mexico and certain international markets, generally performed by major oil and gas companies, may have been affected less severely by the current economic conditions.

We have continued to respond to the current market environment by conserving operating cash flows and reducing discretionary capital expenditures. During the first quarter of 2009, we increased our efforts to improve efficiencies and reduce costs, including taking steps to reduce operating and administrative staff, reduce salaries, consolidate operating locations, and temporarily suspend the utilization of certain equipment assets. Despite decreased revenues compared to the first quarter of 2008, overall profitability during the first quarter of 2009 improved compared to the prior year period. Our Fluids and Offshore Services segments reported increased earnings on lower revenues, while Maritech recorded higher earnings primarily due to insurance reimbursements and a gain from the sale of assets during the current year period. Capital expenditure activity during the first quarter of 2009 was significantly reduced compared to the prior year period, despite the ongoing construction of our new Arkansas calcium chloride plant facility and the completion of our new corporate headquarters building. Our efforts to reduce capital expenditures and conserve operating cash flows are expected to allow us to contain additional long-term debt borrowings and, particularly following the completion of the Arkansas plant, allow us to reduce our outstanding debt balance prior to the end of 2009. As of March 31, 2009, our outstanding long-term debt balance increased to $426.2 million and our debt to total capital ratio was 44.5%, a slight increase from 44.1% as of December 31, 2008. Our bank credit facility is scheduled to mature in June 2011, and our Senior Notes are scheduled to mature at various dates from September 2011 through April 2016.

Critical Accounting Policies

There have been no material changes or developments in the evaluation of the accounting estimates and the underlying assumptions or methodologies pertaining to our Critical Accounting Policies and Estimates disclosed in our Form 10-K for the year ended December 31, 2008. In preparing our consolidated financial statements, we make assumptions, estimates, and judgments that affect the amounts reported. We periodically evaluate our estimates and judgments, including those related to potential impairments of long-lived assets (including goodwill), the collectibility of accounts receivable (including insurance receivables), and the current cost of future abandonment and decommissioning obligations. Our judgments and estimates are based on historical

experience and on future expectations that are believed to be reasonable. The combination of these factors forms the basis for judgments made about the carrying values of assets and liabilities that are not readily apparent from other sources. These judgments and estimates may change as new events occur, as new information is acquired, and as our operating environment changes. Actual results are likely to differ from our current estimates, and those differences may be material.

Results of Operations

                                                     Three Months Ended March 31,
                                                       2009                 2008
                                                            (In Thousands)
Revenues
Fluids Division                                   $       63,689       $       67,184
Offshore Division
  Offshore Services                                       48,044               51,166
  Maritech                                                41,212               57,519
  Intersegment eliminations                               (7,643 )             (3,145 )
   Total Offshore Division                                81,613              105,540
Production Enhancement Division
  Production Testing                                      24,619               29,524
  Compressco                                              25,387               23,053
   Total Production Enhancement Division                  50,006               52,577
Intersegment eliminations                                    (57 )               (145 )
                                                         195,251              225,156
Gross Profit
Fluids Division                                           17,021               13,257
Offshore Division
  Offshore Services                                        2,901                   (7 )
  Maritech                                                 7,652                9,045
  Intersegment eliminations                                 (311 )                243
   Total Offshore Division                                10,242                9,281
Production Enhancement Division
  Production Testing                                       7,687               10,616
  Compressco                                               9,121                9,503
   Total Production Enhancement Division                  16,808               20,119
Other                                                       (701 )               (610 )
                                                          43,370               42,047
Income before taxes and discontinued operations
Fluids Division                                           12,153                6,841
Offshore Division
  Offshore Services                                         (644 )             (4,103 )
  Maritech                                                 9,186                7,374
  Intersegment eliminations                                 (311 )                243
   Total Offshore Division                                 8,231                3,514
Production Enhancement Division
  Production Testing                                       5,699                8,422
  Compressco                                               6,669                6,950
   Total Production Enhancement Division                  12,368               15,372
Corporate overhead                                       (14,617 )            (14,395 )
                                                          18,135               11,332

The above information excludes the results of our Venezuelan and process services businesses, which have been accounted for as discontinued operations.

Three months ended March 31, 2009 compared with three months ended March 31, 2008.

Consolidated Comparisons

Revenues and Gross Profit - Our total consolidated revenues for the quarter ended March 31, 2009 were $195.3 million compared to $225.2 million for the first quarter of the prior year, a decrease of 13.3%. Our consolidated gross profit increased to $43.4 million during the first quarter of 2009 compared to $42.0 million in the prior year quarter, an increase of 3.1%. Consolidated gross profit as a percentage of revenue was 22.2% during the first quarter of 2009 compared to 18.7% during the prior year period.

General and Administrative Expenses - General and administrative expenses were $24.6 million during the first quarter of 2009 compared to $25.1 million during the first quarter of 2008, a decrease of $0.5 million or 2.1%. This decrease was primarily due to approximately $0.9 million of decreased salary, benefits, contract labor costs, and other associated employee expenses, and approximately $0.8 million of decreased professional fees, partially offset by approximately $0.3 million of increased bad debt expenses and approximately $0.9 million of increased insurance, taxes, and other general expenses. General and administrative expenses as a percentage of revenue were 12.6% during the first quarter of 2009 compared to 11.1% during the prior year period.

Other Income and Expense - Other income and expense was $2.5 million of income during the first quarter of 2009 compared to $1.2 million of expense during the first quarter of 2008, primarily due to approximately $3.2 million of increased gains on sales of assets in the current period and approximately $0.5 million of increased other income, primarily from increased foreign currency gains.

Interest Expense and Income Taxes - Net interest expense decreased to $3.2 million during the first quarter of 2009 compared to $4.4 million during the first quarter of 2008, despite increased borrowings of long-term debt which were used to fund our capital expenditure and working capital requirements since the beginning of 2008. The decrease was due to lower interest rates on the outstanding revolving credit facility and due to increased capitalized interest, primarily associated with our Arkansas calcium chloride plant and corporate headquarters construction projects. The corporate headquarters building was completed during the first quarter of 2009 and we anticipate that our new calcium chloride facility in El Dorado, Arkansas will be completed later this year. Our provision for income taxes during the first quarter of 2009 increased to $6.8 million compared to $4.0 million during the prior year period, due to increased earnings.

Net Income - Net income before discontinued operations was $11.4 million during the first quarter of 2009 compared to $7.4 million in the prior year first quarter, an increase of $4.0 million. Net income per diluted share before discontinued operations was $0.15 on 74,996,784 average diluted shares outstanding during the first quarter of 2009 compared to $0.10 on 75,462,828 average diluted shares outstanding in the prior year period.

During the fourth quarter of 2007, we sold our process services operation for approximately $58.7 million, net of certain adjustments. During the fourth quarter of 2006, we made the decision to discontinue our Venezuelan fluids and production testing businesses due to several factors, including the changing political climate in that country. Net loss from discontinued operations was $0.2 million during the first quarter of 2009 compared to $0.7 million of net income from discontinued operations during the first quarter of 2008.

Net income was $11.2 million during the first quarter of 2009 compared to $6.7 million in the prior year first quarter, an increase of $4.5 million. Net income per diluted share was $0.15 on 74,996,784 average diluted shares outstanding during the first quarter of 2009 compared to $0.09 on 75,462,828 average diluted shares outstanding in the prior year quarter.

Divisional Comparisons

Fluids Division - Our Fluids Division revenues decreased $3.5 million to $63.7 million during the first quarter of 2009 compared to $67.2 million during the first quarter of 2008, a 5.2% decrease. This decrease was primarily due to reduced sales volumes for brine products and domestic chemicals. These decreases were partially offset by approximately $2.4 million from increased international product sales. In addition, the Division also reflected $0.6 million of increased service revenues.

Our Fluids Division gross profit increased to $17.0 million during the first quarter of 2009, compared to $13.3 million during the prior year period, an increase of $3.8 million or 28.4%. Gross profit as a percentage of

revenue increased to 26.7% during the current year period compared to 19.7% during the prior year period. This increase was primarily due to a more favorable product mix for our manufactured products, increased international brine sales activity, and increased services margins. During March 2009, a major contractual supplier of feedstock raw materials for our Fluids Division, Chemtura Corporation (Chemtura), announced that it had filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy code. Although it is impossible to predict the outcome of our contractual arrangements as a result of the bankruptcy filings, we do not believe that Chemtura's filing will have a material impact on our operations. However, we have contingency plans for the procurement of alternative feedstock supplies.

Fluids Division income before taxes during the first quarter of 2009 totaled $12.2 million compared to $6.8 million in the corresponding prior year period, an increase of $5.3 million or 77.6%. This increase was generated by the $3.8 million increase in gross profit discussed above, plus approximately $0.8 million of decreased administrative expenses and approximately $0.7 million of increased other income, primarily from foreign currency gains.

Offshore Division - Revenues from our Offshore Division, which was previously known as the Well Abandonment and Decommissioning (WA&D) Division, decreased from $105.5 million during the first quarter of 2008 to $81.6 million during the first quarter of 2009, a decrease of $23.9 million or 22.7%. Offshore Division gross profit during the first quarter of 2009 totaled $10.2 million compared to $9.3 million during the prior year first quarter, an increase of $1.0 million or 10.4%. Offshore Division income before taxes was $8.2 million during the first quarter of 2009 compared to $3.5 million during the prior year period, an increase of $4.7 million or 134.2%.

The Division's Offshore Services operations revenues decreased to $48.0 million during the first quarter of 2009 compared to $51.2 million in the prior year quarter, a decrease of $3.1 million or 6.1%. This decrease was due to the reduced offshore activity and vessel utilization during the current year quarter. Partially offsetting these decreases was the increased activity for the segment's contract diving and cutting services businesses, which continue to enjoy increased demand following the 2008 hurricanes. The Division aims to capitalize on the current demand for well abandonment and decommissioning services in the Gulf of Mexico, including the demand for work to be performed over the next several years on offshore properties which were damaged or destroyed by hurricanes during 2005 and 2008. In addition, the segment is planning to perform significant work for Maritech during the next eighteen months.

The Offshore Services segment of the Division reported gross profit of $2.9 million during the first quarter of 2009, compared to negligible negative gross profit during the first quarter of 2008, a $2.9 million increase. The Offshore Services segment's gross profit as a percentage of revenues was 6.0% during the first quarter of 2009. This increase was primarily due to the increased gross profit of the segment's contract diving and cutting services businesses, which generated significant efficiencies from increased utilization during the current year period. It is anticipated that the segment's gross profit margin will increase during the seasonally strong second and third quarters of the year, as the segment has historically incurred the greatest weather risks associated with offshore operations during the first and fourth quarters. In addition, the segment has consolidated certain office and administrative functions, reduced crews, and temporarily idled selected equipment in order to increase efficiencies for certain of its operations.

Offshore Services segment loss before taxes decreased from $4.1 million during the first quarter of 2008 to $0.6 million during the current year quarter, an increase in earnings of $3.5 million or 84.3%. This increase was due to the $2.9 million increase in gross profit described above, plus approximately $0.3 million of decreased administrative expenses and $0.3 million of decreased other expense.

The Division's Maritech operations reported revenues of $41.2 million during the first quarter of 2009 compared to $57.5 million during the prior year period, a decrease of $16.3 million, or 28.4%. Decreased production volumes resulted in decreased revenues of approximately $11.7 million, primarily due to certain properties which continue to be shut-in following Hurricane Ike. The decreased production from the shut-in properties more than offset newly added production during the quarter from wells drilled in 2008. In particular, one of Maritech's key oil producing fields, East Cameron 328, will continue to have a portion of its production shut-in until a new platform can be constructed to replace a platform which was toppled during the storm. However, operations are underway to install production equipment on the remaining platform in the field to restore approximately half of the field's production prior to the end of 2009. Much of Maritech's daily production is processed through neighboring platforms, pipelines, and processing facilities of other operators and third parties, many of which were also damaged during the storm. As a result, a portion of Maritech's production remains shut-

in. During 2008, Maritech expended cash of approximately $85.0 million on acquisition and development activities, and the level of such activity is expected to significantly decrease during 2009, as this activity is now subject to constraints as a result of our efforts to conserve capital. In addition to the decreased production, revenues decreased by approximately $5.0 million as a result of decreased realized commodity prices. Maritech has hedged a portion of its expected future production levels by entering into derivative hedge contracts, with certain contracts extending through 2010. Including the impact of these hedge contracts, Maritech reflected average realized oil and natural gas prices during the first quarter of 2009 of $63.41/barrel and $8.19/MMBtu, respectively, each of which were decreased from 2008 levels. In addition, Maritech reported $0.4 million of increased processing revenue during the current year quarter.

Maritech reported gross profit of $7.7 million during the first quarter of 2009 compared to $9.0 million of gross profit during the first quarter of 2008, a decrease of $1.4 million or 15.4%. Maritech's gross profit as a percentage of revenues increased during the quarter to 18.6% from 15.7% during the prior year period. Largely offsetting the impact of decreased revenues was the impact of decreased lease operating and depreciation expenses, primarily associated with the decreased production. In addition, Maritech credited operating expenses during 2009 upon the receipt of $5.4 million of insurance proceeds from 2005 hurricane damages. The decreased operating expenses were despite approximately $1.6 million of increased repair expenses recorded during the current year period, primarily related to the 2008 hurricanes.

The Division's Maritech operations reported income before taxes of $9.2 million during the first quarter of 2009 compared to $7.4 million during the prior year period, an increase of $1.8 million or 24.6%. This increase was despite the $1.4 million decrease in gross profit discussed above, due to approximately $0.6 million of decreased administrative costs and approximately $2.6 million of increased gains on sales of properties recorded compared to the prior year period.

Production Enhancement Division - Beginning in the fourth quarter of 2008, our Production Enhancement Division consists of two separate reporting segments: the Production Testing segment and the Compressco segment. Production Enhancement Division revenues decreased from $52.6 million during the first quarter of 2008 to $50.0 million during the current year quarter, a decrease of $2.6 million or 4.9%. Production Enhancement Division gross profit decreased from $20.1 million during the first quarter of 2008 to $16.8 million during the current year period, a decrease of 16.5%. Production Enhancement Division gross profit as a percentage of revenue also decreased from 38.3% during the first quarter of 2008 to 33.6% during the first quarter of 2009. Production Enhancement Division income before taxes decreased during the first quarter of 2009 to $12.4 million, compared to $15.4 million during the first quarter of 2008, a decrease of $3.0 million.

Production Testing revenues decreased during the first quarter of 2009 to $24.6 million, a $4.9 million decrease compared to $29.5 million during the first quarter of 2008. This 16.6% decrease was primarily due to a $5.0 million decrease in domestic operations, primarily due to the decreased drilling activity, as reflected in the domestic rig count. This decrease was partially offset by slightly increased international revenues, primarily from Mexico and Brazil.

Production Testing gross profit also decreased during the first quarter of 2009 from $10.6 million during the prior year period to $7.7 million during the current year period. Gross profit as a percentage of revenues also decreased from 36.0% during the first quarter of 2008 to 31.2% during the first quarter of 2009. This decrease was due to the weaker demand and decreased activity domestically.

Production Testing income before taxes decreased from $8.4 million during the first quarter of 2008 to $5.7 million during the first quarter of 2009, a decrease of $2.7 million or 32.3%. This decrease was due to the $2.9 million decrease in gross profit discussed above and approximately $0.1 million of increased administrative costs, which were partially offset by approximately $0.3 million of increased other income, primarily due to increased foreign currency gains.

Compressco revenues increased by approximately $2.3 million during the first quarter of 2009 compared to the prior year period, increasing from $23.1 million during the first quarter of 2008 to $25.4 million during the current year period. This increase was due to Compressco's overall growth domestically, as well as in Mexico, reflecting the growth of its compressor fleet during 2008. Compressco has significantly decreased the fabrication of new compressor units during early 2009 to rationalize its fleet to the expected demand of the current environment.

Compressco gross profit decreased from $9.5 million during the first quarter of 2008 to $9.1 million during the first quarter of 2009, a decrease of $0.4 million or 4.0%. Gross profit as a percentage of revenues also decreased from 41.2% during the first quarter of 2008 to 35.9% during the current year period. This decrease was primarily due to unabsorbed fabrication overhead as a result of the decreased production of new compressor units, along with other increased operating expenses for Compressco's domestic operations.

Income before taxes for Compressco decreased 4.0%, from $7.0 million during the prior year first quarter to $6.7 million during the first quarter of 2009, a decrease of $0.3 million. This decrease was primarily due to the $0.4 million of decreased gross profit discussed above, partially offset by approximately $0.1 million of decreased administrative costs.

Corporate Overhead - Corporate Overhead includes corporate general and administrative expense, interest income and expense, and other income and expense. Such expenses and income are not allocated to our operating divisions, as they relate to our general corporate activities. Corporate overhead increased from $14.4 million during the first quarter of 2008 to $14.6 million during the first quarter of 2009, primarily due to increased administrative and depreciation expense. Corporate administrative costs increased approximately $1.2 million due to approximately $1.3 million of increased salaries and other general employee expenses, primarily due to increased equity compensation expense. Approximately $0.4 million of increased office and other general expenses was largely offset by approximately $0.4 million of decreased professional fee expense. Corporate interest expense decreased by approximately $1.2 million during the first quarter of 2009 due to lower interest rates on the outstanding balance of our bank credit facility, as well as from an increase in the amount of interest capitalized on construction projects during the period.

Liquidity and Capital Resources

Given the current economic environment, we are balancing our long-term growth objectives with an attention to conserving cash and reducing long-term debt. Our management's focus includes maximizing operating cash flows by reducing operating and administrative expenses, while preserving liquidity through reduced capital expenditures. This focus has not interrupted two of our most significant capital projects: the construction of our new headquarters building, which was completed during the first quarter of 2009, and our new El Dorado, Arkansas calcium chloride plant facility, which is scheduled to be completed later this year. Particularly following the completion of the Arkansas plant, we intend to apply discretionary cash flows to the reduction of our outstanding long-term debt balances.

Operating Activities - Cash flows generated by operating activities totaled approximately $39.9 million during the first quarter of 2009 compared to approximately $46.6 million during the prior year quarter. Despite increased earnings during the current year period, changes in working capital items contributed to much of this decrease in operating cash flows from the prior year period. Future operating cash flows for many of our businesses are largely dependent upon the level of oil and gas industry activity, particularly in the Gulf of Mexico region of the U.S. Such demand has decreased due to current economic conditions, and we expect that this current decreased demand for many of our products and services may continue indefinitely. In addition, the currently shut-in production following Hurricane Ike has significantly affected Maritech's operating cash flows. Decreased Maritech cash flows as a result of currently decreasing oil and natural gas prices are largely offset by the impact of commodity derivative contracts, some of which extend through the end of 2010. We also expect the reduced operating cash flows from the currently decreased demand to be partially offset by our efforts to decrease our operating and administrative costs and by the current demand for hurricane repair activities that benefits certain of our Offshore Services businesses.

Following the 2005 and 2008 hurricanes, Maritech has six offshore platforms and one remaining inland water production facility which have been toppled and destroyed. The estimated cost to perform well intervention, decommissioning, and debris removal efforts on these platforms is particularly imprecise due to the . . .