M-I SWACO Announces Acquisition of Epcon Offshore AS.

HOUSTON -- M-I SWACO today announced the acquisition of Epcon Offshore AS, providing access to industry-leading produced water treatment technology. The acquired operations, based in Porsgrunn, Norway, generated annual sales of approximately $26.5 million for the fiscal year ended December 31, 2005.

Epcon Offshore's proprietary treatment technology is designed to optimize the removal of hydrocarbons from produced water. Today, produced water represents about three-times the volume of worldwide oil production which makes produced water the largest waste stream for oil and gas operators. Epcon's Compact Flotation Unit (CFU) is currently being used by a number of major operators in the North Sea, Latin America and the Middle East market to optimize the separation of produced water. Compared to conventional separation units, the patented CFU has a smaller footprint and weight, making it ideal for upgrading existing water treatment facilities facing challenges meeting increased waste volumes and more-stringent discharge regulations.

"The acquisition of Epcon Offshore provides us an avenue into the produced water treatment business, which we recognize as one of the industry's most promising markets. This is a natural extension of our Drilling Waste Management business, and we are confident that the highly talented personnel and the innovative, cost-effective technology Epcon Offshore delivers, will position us for significant growth opportunities," said M-I SWACO Senior Vice President of Drilling Waste Management Larry Barker.

On behalf of the previous owners of Epcon Offshore, former chairman, Torben Moltke-Leth, said, "It has been of major importance for the owners to find a well-regarded international buyer that is able to develop the potential of the company to the benefit of the industry and the employees."

M-I SWACO, a leading supplier of drilling and completion fluids, production chemicals and solids control and waste management services to the worldwide petroleum industry, is owned 60 percent by Smith International, Inc. (NYSE:SII) and 40 percent by Schlumberger Limited (NYSE:SLB).