Company Press Release

LUFKIN Industries Announce $5 Million Stock Repurchase and Quarterly Dividend of $ 0.18 Per Share

LUFKIN, Texas--(BUSINESS WIRE)--Aug. 6, 1998--LUFKIN Industries, Inc. (Nasdaq/NM:LUFK) today announced that the Board of Directors has authorized the use of up to $5.0 million for the repurchase of shares of Lufkin's common stock. Based on the current market value of the common stock, this will allow the Company to repurchase approximately 2.6% of the 6.6 million shares outstanding. The purchases are to be made from time to time in the open market at prevailing market prices. The shares repurchased will be available for use under the Company's Stock Option Plans to minimize dilution to existing shareholders.

Douglas V. Smith, president and chief executive officer, said, "The Board's decision affirms LUFKIN's strong financial position and our belief that the common stock of LUFKIN represents an attractive use of a portion of available cash. This is the fourth share repurchase program approved by the Board. Under the prior repurchase programs a total of approximately 368,000 shares ($9.1 million) have been purchased. As of June 30, 1998, LUFKIN had cash and short-term investments of $11.8 million and shareholders' equity of $161.1 million."

The Board of Directors also declared a quarterly cash dividend of $0.18 per share on its common stock. The dividend will be paid on September 10, 1998, to shareholders of record on September 1, 1998.

LUFKIN Industries, Inc. sells power transmission products, oil field pumping units, foundry castings, and highway trailers throughout the world. The Company has vertically integrated all vital technologies required to design, manufacture, and market its products.

This release may contain certain forward-looking statements, including by way of illustration and not of limitation, statements relating to liquidity, revenues, expenses and margins. The Company strongly encourages readers to note that some or all of the assumptions, upon which such forward-looking statements are based, are beyond the Company's ability to control or estimate precisely and may in some cases be subject to rapid and material changes.