tti10q111008

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-13455

TETRA Technologies, Inc.

(Exact name of registrant as specified in its charter)

Delaware	74-2148293
(State of incorporation)	(I.R.S. Employer Identification No.)

25025 Interstate 45 North, Suite 600
The Woodlands, Texas	77380
(Address of principal executive offices)	(zip code)

(281) 367-1983

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer [ X ]	Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)	Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]

As of November 1, 2008, there were 75,024,424 shares outstanding of the Company’s Common Stock, $.01 par value per share.

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

TETRA Technologies, Inc. and Subsidiaries

Consolidated Statements of Operations

(In Thousands, Except Per Share Amounts)

(Unaudited)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2008			2007		2008			2007

Revenues:
Product sales	$	103,801		$	106,084	$	373,796		$	344,715
Services and rentals		145,298			132,774		404,848			391,793
Total revenues		249,099			238,858		778,644			736,508

Cost of revenues:
Cost of product sales		60,230			65,784		214,448			212,992
Cost of services and rentals		94,768			96,967		266,822			271,074
Depreciation, depletion, amortization
and accretion		50,393			40,457		134,192			98,722
Total cost of revenues		205,391			203,208		615,462			582,788
Gross profit		43,708			35,650		163,182			153,720

General and administrative expense		25,641			26,138		78,762			74,397
Operating income		18,067			9,512		84,420			79,323

Interest expense, net		4,217			4,305		12,966			12,514
Other (income) expense, net		(5,316	)		857		(4,547	)		(3,166	)
Income before taxes and discontinued
operations		19,166			4,350		76,001			69,975
Provision for income taxes		7,048			1,304		26,372			24,417
Income before discontinued operations		12,118			3,046		49,629			45,558
Income (loss) from discontinued
operations, net of taxes		(461	)		816		(1,868	)		1,836

Net income	$	11,657		$	3,862	$	47,761		$	47,394

Basic net income per common share:
Income before discontinued operations	$	0.16		$	0.04	$	0.67		$	0.62
Income (loss) from discontinued
operations		(0.01	)		0.01		(0.03	)		0.03
Net income	$	0.15		$	0.05	$	0.64		$	0.65

Average shares outstanding		74,613			73,969		74,388			73,401

Diluted net income per common share:
Income before discontinued operations	$	0.16		$	0.04	$	0.65		$	0.60
Income (loss) from discontinued
operations		(0.01	)		0.01		(0.02	)		0.02
Net income	$	0.15		$	0.05	$	0.63		$	0.62

Average diluted shares outstanding		76,316			76,351		75,874			75,957

See Notes to Consolidated Financial Statements

TETRA Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands)

	September 30, 2008			December 31, 2007
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	21,937		$	21,833
Restricted cash		4,277			4,218
Trade accounts receivable, net of allowances for doubtful
accounts of $1,693 in 2008 and $1,293 in 2007		204,589			215,284
Inventories		124,997			118,502
Deferred tax assets		27,052			26,247
Derivative assets		10,252			1,299
Prepaid expenses and other current assets		28,284			32,066
Assets of discontinued operations		537			4,042
Total current assets		421,925			423,491

Property, plant and equipment
Land and building		23,035			21,359
Machinery and equipment		448,793			404,647
Automobiles and trucks		43,895			37,483
Chemical plants		46,425			46,267
Oil and gas producing assets (successful efforts method)		675,692			564,493
Construction in progress		81,739			19,595
		1,319,579			1,093,844
Less accumulated depreciation and depletion		(514,310	)		(397,453	)
Net property, plant and equipment		805,269			696,391

Other assets:
Goodwill		130,039			130,335
Patents, trademarks and other intangible assets, net of
accumulated amortization of $14,688 in 2008 and $14,489 in 2007		17,133			19,884
Other assets		36,166			25,435
Total other assets		183,338			175,654
	$	1,410,532		$	1,295,536

See Notes to Consolidated Financial Statements

TETRA Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands)

	September 30, 2008			December 31, 2007
LIABILITIES AND STOCKHOLDERS' EQUITY	(Unaudited)
Current liabilities:
Trade accounts payable	$	73,115		$	108,101
Accrued liabilities		75,956			63,609
Decommissioning liabilities		51,094			37,400
Derivative liabilities		36,848			32,516
Liabilities of discontinued operations		138			424
Total current liabilities		237,151			242,050

Long-term debt, net		380,572			358,024
Deferred income taxes		65,958			46,263
Decommissioning and other asset retirement obligations, net		187,914			162,106
Derivative liabilities		7,839			20,853
Other liabilities		12,947			18,321
		655,230			605,567

Commitments and contingencies

Stockholders' equity:
Common stock, par value $0.01 per share; 100,000,000 shares
authorized; 76,584,172 shares issued at September 30, 2008
and 75,921,727 shares issued at December 31, 2007		766			759
Additional paid-in capital		183,994			174,738
Treasury stock, at cost; 1,563,210 shares held at September 30,
2008 and 1,550,962 shares held at December 31, 2007		(8,838	)		(8,405	)
Accumulated other comprehensive income (loss)		(12,358	)		(25,999	)
Retained earnings		354,587			306,826
Total stockholders' equity		518,151			447,919
	$	1,410,532		$	1,295,536

See Notes to Consolidated Financial Statements

TETRA Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

	Nine Months Ended September 30,
	2008			2007

Operating activities:
Net income	$	47,761		$	47,394
Reconciliation of net income to cash provided by operating activities:
Depreciation, depletion, accretion and amortization		118,113			91,589
Impairments of oil and gas properties and other long-lived assets		9,952			5,433
Dry hole costs		6,127			1,699
Provision for deferred income taxes		10,284			4,595
Stock compensation expense		4,190			3,313
Other non-cash charges and credits		5,047			7,151
Gain on sale of property, plant and equipment, net		(3,412	)		(3,146	)
Excess tax benefit from exercise of stock options		(1,598	)		(12,850	)
Equity in earnings of unconsolidated subsidiary		(356	)		(693	)
Changes in operating assets and liabilities, net of assets acquired:
Trade accounts receivable		24,643			(7,011	)
Inventories		(6,837	)		993
Prepaid expenses and other current assets		(4,408	)		(4,220	)
Trade accounts payable and accrued expenses		(15,699	)		37,932
Decommissioning liabilities		(15,519	)		(28,557	)
Operating activities of discontinued operations		3,216			288
Other		(1,762	)		307
Net cash provided by operating activities		179,742			144,217

Investing activities:
Purchases of property, plant and equipment		(204,916	)		(159,431	)
Business combinations, net of cash acquired		-			(14,506	)
Proceeds from sale of property, plant and equipment		180			2,781
Change in restricted cash		(59	)		(19	)
Other investing activities		(1,937	)		1,030
Investing activities of discontinued operations		-			327
Net cash used in investing activities		(206,732	)		(169,818	)

Financing activities:
Proceeds from long-term debt obligations		151,450			34,079
Principal payments on long-term debt obligations		(127,928	)		(38,087	)
Proceeds from exercise of stock options		3,045			11,520
Excess tax benefit from exercise of stock options		1,598			12,850
Net cash provided by financing activities		28,165			20,362
Effect of exchange rate changes on cash		(1,071	)		961

Increase (decrease) in cash and cash equivalents		104			(4,278	)
Cash and cash equivalents at beginning of period		21,833			5,535
Cash and cash equivalents at end of period	$	21,937		$	1,257

Supplemental cash flow information:
Interest paid	$	12,036	$	13,250
Income taxes paid		9,192		10,485

Supplemental disclosure of non-cash investing and financing activities:
Oil and gas properties acquired through assumption of
decommissioning liabilities	$	22,236	$	-

Adjustment of fair value of decommissioning liabilities
capitalized to oil and gas properties		21,150		8,483

See Notes to Consolidated Financial Statements

TETRA Technologies, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

NOTE A – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

TETRA Technologies, Inc. is an oil and gas services and production company with an integrated calcium chloride and brominated products manufacturing operation that supplies feedstocks to energy markets, as well as to other markets. Unless the context requires otherwise, when we refer to “we,” “us,” or “our,” we are describing TETRA Technologies, Inc. and its consolidated subsidiaries on a consolidated basis.

The consolidated financial statements include the accounts of our wholly owned subsidiaries. Investments in unconsolidated joint ventures in which we participate are accounted for using the equity method. Our interests in oil and gas properties are proportionately consolidated. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission (SEC) and do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, the information furnished reflects all normal recurring adjustments, which are, in the opinion of management, necessary to provide a fair statement of the results for the interim periods. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2007.

Certain previously reported financial information has been reclassified to conform to the current year period’s presentation. The impact of such reclassifications was not significant to the prior year period’s overall presentation.

Cash Equivalents

We consider all highly liquid cash investments with a maturity of three months or less when purchased to be cash equivalents.

Restricted Cash

Restricted cash reflected on our balance sheets as of September 30, 2008 includes approximately $3.6 million of funds held in escrow that are associated with the 2007 sale of our process services operation, which will be available to us later during 2008, assuming no breach in the terms of the sales contract affecting the allocation of such restricted funds is identified by the buyer. In addition, restricted cash as of September 30, 2008 includes funds related to a third party’s proportionate obligation in the plugging and abandonment of a particular oil and gas property operated by our Maritech Resources, Inc. subsidiary (Maritech). This cash will remain restricted until such time as the associated plugging and abandonment project is completed, which we expect to occur during the next twelve months.

Inventories

Inventories are stated at the lower of cost or market value and consist primarily of finished goods. Cost is determined using the weighted average method.

Net Income per Share

The following is a reconciliation of the weighted average number of common shares outstanding with the number of shares used in the computations of net income per common and common equivalent share:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2008		2007		2008		2007

Number of weighted average common
shares outstanding		74,613,233		73,968,544		74,388,369		73,400,784
Assumed exercise of stock options		1,702,724		2,382,521		1,485,660		2,556,653

Average diluted shares outstanding		76,315,957		76,351,065		75,874,029		75,957,437

In applying the treasury stock method to determine the dilutive effect of the stock options outstanding during the first nine months of 2008, we used the average market price of our common stock of $18.47. For the three months ended September 30, 2008 and 2007, the calculations of the average diluted shares outstanding excludes the impact of 2,147,118 and 575,816 outstanding stock options, respectively, that have exercise prices in excess of the average market price, as the inclusion of these shares would have been antidilutive. For the nine months ended September 30, 2008 and 2007, the calculations of the average diluted shares outstanding excludes the impact of 1,738,552 and 558,602 outstanding stock options, respectively, that have exercise prices in excess of the average market price, as the inclusion of these shares would have been antidilutive.

Environmental Liabilities

Environmental expenditures which result in additions to property and equipment are capitalized, while other environmental expenditures are expensed. Environmental remediation liabilities are recorded on an undiscounted basis when environmental assessments or cleanups are probable and the costs can be reasonably estimated. Estimates of future environmental remediation expenditures often consist of a range of possible expenditure amounts, a portion of which may be in excess of amounts of liabilities recorded. In this instance, we disclose the full range of amounts reasonably possible of being incurred. Any changes or developments in environmental remediation efforts are accounted for and disclosed each quarter as they occur. Any recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable.

Complexities involving environmental remediation efforts can cause the estimates of the associated liability to be imprecise. Factors which cause uncertainties regarding the estimation of future expenditures include, but are not limited to, the effectiveness of the anticipated work plans in achieving targeted results and changes in the desired remediation methods and outcomes as prescribed by regulatory agencies. Uncertainties associated with environmental remediation contingencies are pervasive and often result in wide ranges of reasonably possible outcomes. Estimates developed in the early stages of remediation can vary significantly. Normally, a finite estimate of cost does not become fixed and determinable at a specific point in time. Rather, the costs associated with environmental remediation become estimable as the work is performed and the range of ultimate cost becomes more defined. It is possible that cash flows and results of operations could be materially affected by the impact of the ultimate resolution of these contingencies.

Hurricane Repair Costs and Recoveries

We incurred significant damage to certain of our onshore and offshore operating equipment and facilities as a result of Hurricanes Gustav and Ike during the third quarter of 2008. The damage primarily affected our Maritech subsidiary, which suffered varying levels of damage to the majority of its offshore oil and gas producing platforms, and three platforms were toppled and destroyed. Maritech is the operator for two of the destroyed platforms, and owns a 10% working interest in the third platform, which is operated by a third party. In addition, certain of our fluids facilities also suffered damage. A majority of our damaged onshore facilities and equipment and offshore platforms are currently being repaired, and we estimate that our share of the repairs of these assets will cost from $24 to $28 million to be incurred over the next several months. With

regard to the destroyed offshore platforms, however, the full assessment of the extent of the damage will take several months and we currently estimate that our share of the required well intervention and removal of debris efforts could cost from $32 to $42 million, to be incurred over the next several years. In addition, we are currently considering reconstructing the destroyed platforms and redrilling certain of the associated wells, which would result in significant additional cost, which we believe is covered pursuant to our insurance policies.

We maintain customary insurance protection which we believe will cover a majority of the damages incurred as well as the expected cost to reconstruct the destroyed platforms and redrill the associated wells. Such insurance coverage is subject to certain coverage limits, however, and it is possible we could exceed these coverage limits. In addition, the relevant insurance policies provide for deductibles up to $5 million per hurricane. Repair costs up to the amount of deductibles are charged to earnings as they are incurred. We do not expect that the Maritech repair costs associated with Hurricane Gustav will exceed this deductible. With regard to repair costs incurred which we believe are covered under our various insurance policies, we recognize anticipated insurance recoveries when collection is deemed probable. Any recognition of anticipated insurance recoveries is used to offset the original charge to which the insurance relates. The amount of anticipated insurance recoveries is included either in accounts receivable, or as a reduction of Maritech’s decommissioning liabilities in the accompanying consolidated balance sheets. As of September 30, 2008, as a result of the estimated future well intervention and debris removal work to be performed as a result of hurricanes, we increased Maritech’s decommissioning liabilities by approximately $11.7 million. As discussed further in Note I Commitments and Contingencies, Insurance Contingencies, Maritech incurred well intervention costs related to hurricane damage suffered in 2005, and certain of those costs have not yet been reimbursed by its insurers. We have reviewed the types of estimated well intervention costs to be incurred related to the current year hurricanes. Despite our belief that substantially all of these costs will be covered under our current insurance policies, any costs that are similar to the costs that have not yet been reimbursed following the 2005 storms are excluded from anticipated insurance recoveries.

Impairment of Long-Lived Assets

During the third quarter of 2008, our Maritech subsidiary recorded approximately $8.6 million of impairments of certain oil and gas properties in accordance with the successful efforts method of accounting. These impairments were caused by increased well intervention and decommissioning work expected following the September 2008 hurricanes, changes in development plans, as well as decreased oil and natural gas prices and expected future production cash flows. In addition, during the third quarter of 2008, our WA&D Services segment recorded approximately $1.4 million of impairments of certain well abandonment assets.

Fair Value Measurements

Effective January 1, 2008, we adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements. SFAS No. 157 establishes a fair value hierarchy and requires disclosure of fair value measurements within that hierarchy.

Under SFAS No. 157, fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” within an entity’s principal market, if any. The principal market is the market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity, regardless of whether it is the market in which the entity will ultimately transact for a particular asset or liability or if a different market is potentially more advantageous. Accordingly, this exit price concept may result in a fair value that may differ from the transaction price or market price of the asset or liability.

The fair value hierarchy prioritizes inputs to valuation techniques used to measure fair value. Fair value measurements should maximize the use of observable inputs and minimize the use of unobservable inputs, where possible. Observable inputs are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs may be needed to measure fair value in situations where there is little or no market activity for the asset or liability at the measurement date and are developed based on the best information available in the circumstances, which could include the reporting entity’s own judgments about the assumptions market participants would utilize in pricing the asset or liability.

We utilize fair value measurements to account for certain items and account balances within our consolidated financial statements. Fair value measurements are utilized in the allocation of purchase consideration for acquisition transactions to the assets and liabilities acquired, including intangible assets and goodwill. In addition, we utilize fair value measurements in the initial recording of our decommissioning and other asset retirement obligations. Fair value measurements may also be utilized on a nonrecurring basis, such as for the impairment of long-lived assets, including goodwill.

We also utilize fair value measurements on a recurring basis in the accounting for our derivative contracts used to hedge a portion of our oil and natural gas production cash flows. For these fair value measurements, we compare forward oil and natural gas pricing data from published sources over the remaining derivative contract term to the contract swap price and calculate a fair value using market discount rates. A summary of these fair value measurements as of September 30, 2008, using the fair value hierarchy as prescribed by SFAS No. 157, is as follows:

				Fair Value Measurements as of September 30, 2008 Using
				Quoted Prices in
				Active Markets for		Significant Other			Significant
				Identical Assets		Observable			Unobservable
	Total as of			or Liabilities		Inputs			Inputs
Description	September 30, 2008			(Level 1)		(Level 2)			(Level 3)
	(In Thousands)
Asset for natural gas
swap contracts	$	17,555		$	-	$	17,555		$	-
Liability for oil swap contracts		(44,688	)		-		(44,688	)		-
Total	$	(27,133	)

New Accounting Pronouncements

In March 2008, the Financial Accounting Standards Board (FASB) published SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133,” which requires entities to provide greater transparency about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, results of operations, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after November 1, 2008. We anticipate that the issuance of SFAS No. 161 will not have a significant impact on our financial position or results of operations.

In December 2007, the FASB published SFAS No. 141R, “Business Combinations,” which established principles and requirements for how an acquirer of a business (1) recognizes and measures, in its financial statements, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; (2) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (3) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141R changes many aspects of the accounting for business combinations and is expected to significantly impact how we account for and disclose future acquisition transactions. SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.

In December 2007, the FASB published SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51,” which establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We are currently evaluating the impact, if any, the adoption of SFAS No. 160 will have on our financial position and results of operations.

NOTE B – DISCONTINUED OPERATIONS

During the fourth quarter of 2007, we disposed of our process services operations through a sale of the associated assets and operations for total cash proceeds of approximately $58.9 million. Our process services operation provided the technology and services required for the separation and reuse of oil bearing materials generated from petroleum refining operations. Our process services operation was not considered to be a strategic part of our core business. We reflected a gain on the sale of our process services business of approximately $25.8 million, net of tax, for the difference between the sales proceeds and the net carrying value of the disposed net assets. The calculation of this gain included $2.7 million of goodwill related to the process services operation. Our process services operation was previously included as a component of our Production Enhancement Division.

During the fourth quarter of 2006, we made the decision to dispose of our fluids and production testing operations in Venezuela, due to several factors, including the country’s changing political climate. Our Venezuelan fluids operation was previously part of our Fluids Division and the production testing operation was previously part of our Production Enhancement Division. A significant majority of the Venezuelan property assets have been sold or transferred to other market locations, and the remaining closure efforts are expected to be finalized during 2008.

We have accounted for our process services business, our Venezuelan fluids and production testing businesses, and our other discontinued businesses as discontinued operations and have reclassified prior period financial statements to exclude these businesses from continuing operations. A summary of financial information related to our discontinued operations for each of the periods presented is as follows:

	Three Months Ended September 30,
	2008			2007
	(In Thousands)

Revenues
Process services operations	$	-		$	4,223
Venezuelan fluids and testing operations		-			38
	$	-		$	4,261

Income (loss), net of taxes
Process services operations, net of taxes of
$(11) and $468, respectively	$	(22	)	$	760
Venezuelan fluids and testing operations, net of
taxes of $0 and $48, respectively		(395	)		56
Other discontinued operations		(44	)		-
	$	(461	)	$	816

	Nine Months Ended September 30,
	2008			2007
	(In Thousands)

Revenues
Process services operations	$	-		$	12,365
Venezuelan fluids and testing operations		-			608
	$	-		$	12,973

Income (loss), net of taxes
Process services operations, net of taxes of
$(134) and $1,055, respectively	$	(250	)	$	1,687
Venezuelan fluids and testing operations, net of
taxes of $1 and $152, respectively		(1,420	)		149
Other discontinued operations		(198	)		-
	$	(1,868	)	$	1,836

Assets and liabilities of discontinued operations consist of the following as of September 30, 2008 and December 31, 2007:

	September 30, 2008		December 31, 2007
	(In Thousands)

Current assets:
Process services	$	65	$	705
Venezuelan fluids and testing		359		3,146
		424		3,851
Property, plant and equipment, net:
Process services		-		-
Venezuelan fluids and testing		45		48
		45		48
Other long-term assets:
Process services		-		-
Venezuelan fluids and testing		68		143
		68		143
Total assets:
Process services		65		705
Venezuelan fluids and testing		472		3,337
	$	537	$	4,042

Current liabilities:
Process services	$	5	$	223
Venezuelan fluids and testing		133		201
	$	138	$	424

NOTE C – ACQUISITIONS AND DISPOSITIONS

In January 2008, our Maritech subsidiary acquired oil and gas producing properties located in the offshore Gulf of Mexico from Stone Energy Corporation in exchange for the assumption of the associated decommissioning liabilities with a fair value of approximately $20.2 million, and the payment of $15.8 million (subject to further adjustment) of cash, $2.3 million of which had been paid on deposit in November 2007. The acquired properties were recorded at their cost of approximately $36.0 million. The acquisition has been accounted for as a purchase, and results of operations from the acquired properties have been included in our accompanying consolidated financial statements from the date of acquisition.

During the third quarter of 2008, Maritech sold certain oil and gas properties and assets in which the buyers assumed an aggregate of approximately $4.7 million of Maritech’s associated decommissioning liabilities. Maritech paid total net cash of approximately $0.2 million in these transactions and recognized gains totaling approximately $4.5 million. The amount of oil and gas reserve volumes associated with the sold properties was immaterial.

NOTE D – OIL AND GAS OPERATIONS

Our Maritech subsidiary participated in an exploratory well that commenced drilling during the second quarter of 2008. In July 2008, the operator of the well determined that the well was unproductive and would be plugged and abandoned. During the nine months ended September 30, 2008, we have charged to earnings approximately $6.1 million of the dry hole costs related to Maritech’s 30% working interest in this well.

NOTE E – LONG-TERM DEBT AND OTHER BORROWINGS

Long-term debt consists of the following:

		September 30,		December 31,
		2008		2007
		(In Thousands)
	Scheduled
	Maturity

Bank revolving line of credit facility	June 26, 2011	$	70,114	$	171,783
5.07% Senior Notes, Series 2004-A	September 30, 2011		55,000		55,000
4.79% Senior Notes, Series 2004-B	September 30, 2011		40,458		41,241
5.90% Senior Notes, Series 2006-A	April 30, 2016		90,000		90,000
6.30% Senior Notes, Series 2008-A	April 30, 2013		35,000		-
6.56% Senior Notes, Series 2008-B	April 30, 2015		90,000		-
European Credit Facility			-		-
			380,572		358,024
Less current portion			-		-