**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

**FORM      10-Q**

**LUFKIN      INDUSTRIES, INC.**

| **TEXAS**                                                                     | **75-0404410**                                      |
|-------------------------------------------------------------------------------|-----------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization) | (I.R.S.                Employer Identification No.) |
|                                                                          |                                                |
| **601                SOUTH RAGUET, LUFKIN, TEXAS**                            | **75904**                                           |
| (Address                of principal executive offices)                       | (Zip                Code)                           |

**(936)      634-2211**

**PART      I - FINANCIAL INFORMATION**

**Item      1.**
**Financial      Statements.**

| **LUFKIN                  INDUSTRIES, INC.**                                                                  |
|---------------------------------------------------------------------------------------------------------------|
| **CONDENSED                  CONSOLIDATED BALANCE SHEETS (UNAUDITED)**                                        |
|  (Thousands                  of dollars, except share and per share data)                                |   |
|                                                                                                          |   |   |   |   |   |
|                                                                                                          |   | September                  30, |   | December                  31, |   |
| Assets                                                                                                        |   | 2007 |   | 2006 |   |
| Current                  Assets:                                                                              |   |   |   |   |   |
| Cash                  and cash equivalents                                                                    |   | $ | 82,943 |   | $ | 57,797 |   |
| Receivables,                  net                                                                             |   |   | 83,366 |   |   | 90,585 |   |
| Inventories                                                                                                   |   |   | 102,357 |   |   | 85,630 |   |
| Deferred                  income tax assets                                                                   |   |   | 9,363 |   |   | 7,919 |   |
| Other                  current assets                                                                         |   |   | 3,752 |   |   | 1,521 |   |
|  Total                  current assets                                                                   |   |   | 281,781 |   |   | 243,452 |   |
|                                                                                                          |   |   |   |   |   |   |   |
| Property,                  plant and equipment, net                                                           |   |   | 119,564 |   |   | 113,081 |   |
| Prepaid                  pension costs                                                                        |   |   | 57,280 |   |   | 56,856 |   |
| Goodwill,                  net                                                                                |   |   | 11,931 |   |   | 11,732 |   |
| Other                  assets net                                                                             |   |   | 4,226 |   |   | 3,948 |   |
|  Total                  assets                                                                           |   | $ | 474,782 |   | $ | 429,069 |   |
|                                                                                                          |   |   |   |   |   |   |   |
| Liabilities                  and Shareholders' Equity                                                         |   |   |   |   |   |   |   |
|                                                                                                          |   |   |   |   |   |   |   |
| Current                  liabilities:                                                                         |   |   |   |   |   |   |   |
| Accounts                  payable                                                                             |   | $ | 22,675 |   | $ | 24,375 |   |
| Accrued                  liabilities:                                                                         |   |   |   |   |   |   |   |
| Payroll                  and benefits                                                                    |   |   | 10,619 |   |   | 9,810 |   |
| Warranty                  expenses                                                                       |   |   | 4,101 |   |   | 3,668 |   |
| Taxes                  payable                                                                           |   |   | 7,920 |   |   | 7,665 |   |
| Other                                                                                                    |   |   | 19,614 |   |   | 15,977 |   |
|  Total                  current liabilities                                                              |   |   | 64,929 |   |   | 61,495 |   |
|                                                                                                          |   |   |   |   |   |   |   |
| Deferred                  income tax liabilities                                                              |   |   | 33,987 |   |   | 28,022 |   |
| Postretirement                  benefits                                                                      |   |   | 7,187 |   |   | 8,475 |   |
| Other                  liabilities                                                                            |   |   | 5,889 |   |   | 2,937 |   |
|                                                                                                          |   |   |   |   |   |   |   |
| Shareholders'                  equity:                                                                        |   |   |   |   |   |   |   |
|                                                                                                          |   |   |   |   |   |   |   |
| Common                  stock, $1.00 par value per share; 60,000,000 shares                  authorized;      |   |   |   |   |   |   |   |
| 15,500,472                  and 15,322,903 shares issued and outstanding,                  respectively  |   |   | 15,500 |   |   | 15,323 |   |
| Capital                  in excess par                                                                        |   |   | 46,550 |   |   | 38,173 |   |
| Retained                  earnings                                                                            |   |   | 324,856 |   |   | 280,198 |   |
| Treasury                  stock, 795,278 and 395,278 shares, respectively, at cost                            |   |   | (26,120 | ) |   | (4,083 | ) |
| Accumulated                  other comprehensive income/(loss)                                                |   |   | 2,004 |   |   | (1,471 | ) |
|  Total                  shareholders' equity                                                             |   |   | 362,790 |   |   | 328,140 |   |
|  Total                  liabilities and shareholders' equity                                             |   | $ | 474,782 |   | $ | 429,069 |   |
|                                                                                                          |   |   |   |   |   |   |   |

| **LUFKIN                  INDUSTRIES, INC.**                                                    |
|-------------------------------------------------------------------------------------------------|
| **CONDENSED                  CONSOLIDATED STATEMENTS OF EARNINGS                  (UNAUDITED)** |
| (In                  thousands of dollars, except per share and share data)                     |
|                                                                                            |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |
|                                                                                            |   | Three                  Months Ended |   | Nine                  Months Ended |   |
|                                                                                            |   | September                  30, |   | September                  30, |   |
|                                                                                            |   | 2007 |   | 2006 |   | 2007 |   | 2006 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |
| Sales                                                                                           |   | $ | 146,880 |   | $ | 158,802 |   | $ | 439,466 |   | $ | 439,882 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost                  of Sales                                                                  |   |   | 105,864 |   |   | 120,115 |   |   | 318,074 |   |   | 326,604 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross                  Profit                                                              |   |   | 41,016 |   |   | 38,687 |   |   | 121,392 |   |   | 113,278 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,                  general and administrative expenses                                   |   |   | 13,999 |   |   | 12,966 |   |   | 43,243 |   |   | 38,202 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  income                                                          |   |   | 27,017 |   |   | 25,721 |   |   | 78,149 |   |   | 75,076 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  income                                                                |   |   | 975 |   |   | 427 |   |   | 2,806 |   |   | 1,284 |   |
| Interest                  expense                                                               |   |   | (30 | ) |   | (55 | ) |   | (101 | ) |   | (118 | ) |
| Other                  income, net                                                              |   |   | 1,154 |   |   | 80 |   |   | 1,883 |   |   | 119 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                  before income tax provision                                      |   |   | 29,116 |   |   | 26,173 |   |   | 82,737 |   |   | 76,361 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  tax provision                                                           |   |   | 10,045 |   |   | 8,779 |   |   | 28,376 |   |   | 26,345 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  earnings                                                              |   |   | 19,071 |   |   | 17,394 |   |   | 54,361 |   |   | 50,016 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  earnings per share                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                      |   | $ | 1.28 |   | $ | 1.17 |   | $ | 3.63 |   | $ | 3.37 |   |
| Diluted                                                                                    |   | $ | 1.26 |   | $ | 1.15 |   | $ | 3.58 |   | $ | 3.31 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends                  per share                                                            |   | $ | 0.23 |   | $ | 0.18 |   | $ | 0.65 |   | $ | 0.44 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                  average number of shares outstanding:                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                      |   |   | 14,921,594 |   |   | 14,885,395 |   |   | 14,967,894 |   |   | 14,822,904 |   |
| Diluted                                                                                    |   |   | 15,084,317 |   |   | 15,145,128 |   |   | 15,168,205 |   |   | 15,110,807 |   |

| **LUFKIN                  INDUSTRIES INC.**                                      |   |
|----------------------------------------------------------------------------------|--------|
| **CONDENSED                  CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)** |   |
| (In                  thousands of dollars)                                       |   |
|                                                                             |   |   |   |   |   |
|                                                                             |   | Nine                  Months Ended |   |
|                                                                             |   | September                  30, |   |
|                                                                             |   | 2007 |   | 2006 |   |
| Cash                  flows from operating activities:                           |   |   |   |   |   |
| Net                  earnings                                                    |   | $ | 54,361 |   | $ | 50,016 |   |
| Adjustments                  to reconcile net earnings to cash                   |   |   |   |   |   |   |   |
| provided                  by operating activities:                               |   |   |   |   |   |   |   |
| Depreciation                  and amortization                              |   |   | 10,544 |   |   | 8,633 |   |
| Deferred                  income tax provision/(benefit)                    |   |   | (558 | ) |   | (1,211 | ) |
| Excess                  tax benefit from share-based compensation           |   |   | (2,706 | ) |   | (2,810 | ) |
| Share-based                  compensation expense                           |   |   | 2,596 |   |   | 2,004 |   |
| Pension                  income                                             |   |   | (2,443 | ) |   | (2,175 | ) |
| Postretirement                  benefits                                    |   |   | (464 | ) |   | 106 |   |
| Gain                  on disposition of property, plant and equipment       |   |   | (627 | ) |   | (63 | ) |
| Changes                  in:                                                |   |   |   |   |   |   |   |
|  Receivables,                  net                                          |   |   | 8,645 |   |   | (1,384 | ) |
|  Inventories                                                                |   |   | (14,239 | ) |   | (14,330 | ) |
|  Other                  current assets                                      |   |   | (909 | ) |   | 2,869 |   |
|  Accounts                  payable                                          |   |   | (3,551 | ) |   | 3,736 |   |
|  Accrued                  liabilities                                       |   |   | 14,010 |   |   | (4,686 | ) |
| Net                  cash provided by operating activities                  |   |   | 64,659 |   |   | 40,705 |   |
|                                                                             |   |   |   |   |   |   |   |
| Cash                  flows from investing activites:                            |   |   |   |   |   |   |   |
| Additions                  to property, plant and equipment                      |   |   | (14,649 | ) |   | (20,755 | ) |
| Proceeds                  from disposition of property, plant and equipment      |   |   | 1,188 |   |   | 140 |   |
| Increase                  in other assets                                        |   |   | (339 | ) |   | (366 | ) |
| Net                  cash used in investing activities                           |   |   | (13,800 | ) |   | (20,981 | ) |
|                                                                             |   |   |   |   |   |   |   |
| Cash                  flows from financing activites:                            |   |   |   |   |   |   |   |
| Payments                  on short-term notes payable                            |   |   | - |   |   | (285 | ) |
| Dividends                  paid                                                  |   |   | (9,704 | ) |   | (6,536 | ) |
| Excess                  tax benefit from share-based compensation                |   |   | 2,706 |   |   | 2,810 |   |
| Proceeds                  from exercise of stock options                         |   |   | 2,792 |   |   | 2,301 |   |
| Purchases                  of treasury stock                                     |   |   | (22,037 | ) |   | - |   |
| Net                  cash used in financing activities                           |   |   | (26,243 | ) |   | (1,710 | ) |
|                                                                             |   |   |   |   |   |   |   |
| Effect                  of translation on cash and cash equivalents              |   |   | 530 |   |   | 54 |   |
|                                                                             |   |   |   |   |   |   |   |
| Net                  increase in cash and cash equivalents                       |   |   | 25,146 |   |   | 18,068 |   |
|                                                                             |   |   |   |   |   |   |   |
| Cash                  and cash equivalents at beginning of period                |   |   | 57,797 |   |   | 25,822 |   |
|                                                                             |   |   |   |   |   |   |   |
| Cash                  and cash equivalents at end of period                      |   | $ | 82,943 |   | $ | 43,890 |   |
|                                                                             |   |   |   |   |   |   |   |

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**1.      Basis of Presentation**

**2.      Receivables**

|                                                        |   | September                  30, |   | December                  31, |   |
|-------------------------------------------------------------|--------|--------------------------------|--------|-------------------------------|--------|
|                                                        |   | 2007                           |   | 2006                          |   |
|                                                        |   |                           |   |                          |   |
| Accounts                  receivable                        |   | $                              | 82,850 |                          | $      | 90,508 |   |
| Notes                  receivable                           |   |                           | 455    |                          |   | 472 |   |
| Other                  receivables                          |   |                           | 714    |                          |   | 292 |   |
| Gross                  receivables                          |   |                           | 84,019 |                          |   | 91,272 |   |
|                                                        |   |                           |   |                          |   |   |   |
| Allowance                  for doubtful accounts receivable |   |                           | (266   | )                             |   | (215 | ) |
| Allowance                  for doubtful notes receivable    |   |                           | (387   | )                             |   | (472 | ) |
| Net                  receivables                            |   | $                              | 83,366 |                          | $      | 90,585 |   |
|                                                        |   |                           |   |                          |   |   |   |

**3.      Other Current Accrued Liabilities**

|                                                     |   | September                  30, |   | December                  31, |   |
|----------------------------------------------------------|--------|--------------------------------|--------|-------------------------------|--------|
|                                                     |   | 2007                           |   | 2006                          |   |
|                                                     |   |                           |   |                          |   |
| Customer                  prepayments                    |   | $                              | 13,416 |                          | $      | 9,411 |   |
| Deferred                  compensation plans             |   |                           | 4,601  |                          |   | 4,069 |   |
| Accrued                  professional services           |   |                           | 695    |                          |   | 1,057 |   |
| Other                  accrued liabilities               |   |                           | 902    |                          |   | 1,440 |   |
| Total                  other current accrued liabilities |   | $                              | 19,614 |                          | $      | 15,977 |   |
|                                                     |   |                           |   |                          |   |   |   |

**4.      Property, Plant & Equipment**

|                                                      |   | September                  30, |     | December                  31, |   |
|-----------------------------------------------------------|--------|--------------------------------|----------|-------------------------------|--------|
|                                                      |   | 2007                           |     | 2006                          |   |
|                                                      |   |                           |     |                          |   |
| Land                                                      |   | $                              | 3,505    |                          | $      | 3,482 |   |
| Land                  improvements                        |   |                           | 9,368    |                          |   | 8,543 |   |
| Buildings                                                 |   |                           | 77,814   |                          |   | 75,082 |   |
| Machinery                  and equipment                  |   |                           | 231,073  |                          |   | 219,783 |   |
| Furniture                  and fixtures                   |   |                           | 5,159    |                          |   | 5,007 |   |
| Computer                  equipment and software          |   |                           | 14,280   |                          |   | 14,027 |   |
| Total                  property, plant and equipment      |   |                           | 341,199  |                          |   | 325,924 |   |
| Less                  accumulated depreciation            |   |                           | (221,635 | )                             |   | (212,843 | ) |
| Total                  property, plant and equipment, net |   | $                              | 119,564  |                          | $      | 113,081 |   |
|                                                      |   |                           |     |                          |   |   |   |

**5.      Inventories**

|                                                 |   | September                  30, |    | December                  31, |   |
|------------------------------------------------------|--------|--------------------------------|---------|-------------------------------|--------|
|                                                 |   | 2007                           |    | 2006                          |   |
| Gross                  inventories @ FIFO:           |   |                           |    |                          |   |
| Finished                  goods                      |   | $                              | 8,288   |                          | $      | 6,903 |   |
| Work                  in progress                    |   |                           | 23,667  |                          |   | 20,977 |   |
| Raw                  materials & component parts |   |                           | 101,241 |                          |   | 88,882 |   |
| Total                  gross inventories @ FIFO      |   |                           | 133,196 |                          |   | 116,762 |   |
| Less                  reserves:                      |   |                           |    |                          |   |   |   |
| LIFO                                                 |   |                           | 29,210  |                          |   | 28,888 |   |
| Valuation                                            |   |                           | 1,629   |                          |   | 2,244 |   |
| Total                  inventories as reported       |   | $                              | 102,357 |                          | $      | 85,630 |   |
|                                                 |   |                           |    |                          |   |   |   |

**6.      Net Earnings Per Share**

|                                                            |   | Three                  Months Ended |       | Nine                  Months Ended |   |
|-----------------------------------------------------------------|--------|-------------------------------------|------------|------------------------------------|--------|
|                                                            |   | September                  30,      |       | September                  30,     |   |
|                                                            |   | 2007                                |       | 2006                               |   | 2007 |   | 2006 |   |
| Numerator:                                                      |   |                                |       |                               |   |   |   |   |   |
| Numerator                  for basic and diluted earnings per   |   |                                |       |                               |   |   |   |   |   |
| share-net                  earnings                             |   | $                                   | 19,071     |                               | $      | 17,394 |   | $ | 54,361 |   | $ | 50,016 |   |
|                                                            |   |                                |       |                               |   |   |   |   |   |   |   |   |   |
| Denominator:                                                    |   |                                |       |                               |   |   |   |   |   |   |   |   |   |
| Denominator                  for basic net earnings per share   |   |                                |       |                               |   |   |   |   |   |   |   |   |   |
| weighted-average                  shares                        |   |                                | 14,921,594 |                               |   | 14,885,395 |   |   | 14,967,894 |   |   | 14,822,904 |   |
| Effect                  of dilutive securities: employee stock  |   |                                |       |                               |   |   |   |   |   |   |   |   |   |
| options                                                         |   |                                | 162,723    |                               |   | 259,733 |   |   | 200,311 |   |   | 287,903 |   |
| Denominator                  for diluted net earnings per share |   |                                |       |                               |   |   |   |   |   |   |   |   |   |
| adjusted                  weighted-average shares               |   |                                |       |                               |   |   |   |   |   |   |   |   |   |
| assumed                  conversions                            |   |                                | 15,084,317 |                               |   | 15,145,128 |   |   | 15,168,205 |   |   | 15,110,807 |   |
|                                                            |   |                                |       |                               |   |   |   |   |   |   |   |   |   |
| Basic                  net earnings per share                   |   | $                                   | 1.28       |                               | $      | 1.17 |   | $ | 3.63 |   | $ | 3.37 |   |
| Diluted                  net earnings per share                 |   | $                                   | 1.26       |                               | $      | 1.15 |   | $ | 3.58 |   | $ | 3.31 |   |
|                                                            |   |                                |       |                               |   |   |   |   |   |   |   |   |   |

**7.      Legal Proceedings**

**8.      Comprehensive Income**

|                                                                 |   | Three                  Months Ended |   | Nine                  Months Ended |   |
|----------------------------------------------------------------------|--------|-------------------------------------|--------|------------------------------------|--------|
|                                                                 |   | September                  30,      |   | September                  30,     |   |
|                                                                 |   | 2007                                |   | 2006                               |   | 2007 |   | 2006 |   |
|                                                                 |   |                                |   |                               |   |   |   |   |   |
| Net                  earnings                                        |   |                                | 19,071 |                               |   | 17,394 |   |   | 54,361 |   |   | 50,016 |   |
|                                                                 |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Other                  comprehensive income, before tax:             |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
|                                                                 |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Change                  in foreign currency translation              |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
|                                                                 |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Foreign                  currency translation adjustments            |   |                                | 2,433  |                               |   | (127 | ) |   | 4,621 |   |   | 1,316 |   |
|                                                                 |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Defined                  benefit pension plans:                      |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
|                                                                 |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Amortization                  of prior service cost included    |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
|  in                  net periodic benefit cost                  |   |                                | 141    |                               |   | - |   |   | 424 |   |   | - |   |
| Amortization                  of unrecognized transition        |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
|  asset                  included in net periodic benefit cost   |   |                                | (232   | )                                  |   | - |   |   | (695 | ) |   | - |   |
| Amortization                  of unrecognized net loss          |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
|  included                  in net periodic benefit cost         |   |                                | 25     |                               |   | - |   |   | 76 |   |   | - |   |
| Net                  loss arising during period                 |   |                                | (31    | )                                  |   | - |   |   | (2,385 | ) |   | - |   |
|                                                                 |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Total                  defined benefit pension plans                 |   |                                | (97    | )                                  |   | - |   |   | (2,580 | ) |   | - |   |
|                                                                 |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Defined                  benefit postretirement plans:               |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
|                                                                 |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Amortization                  of unrecognized net gain          |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
|  included                  in net periodic benefit cost         |   |                                | (57    | )                                  |   | - |   |   | (170 | ) |   | - |   |
| Net                  gain arising during period                 |   |                                | -      |                               |   | - |   |   | 987 |   |   | - |   |
|                                                                 |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Total                  defined benefit postretirement plans          |   |                                | (57    | )                                  |   | - |   |   | 817 |   |   | - |   |
|                                                                 |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Total                  other comprehensive income, before tax        |   |                                | 2,279  |                               |   | (127 | ) |   | 2,858 |   |   | 1,316 |   |
|                                                                 |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Income                  tax benefit related to items of other        |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| comprehensive                  income                                |   |                                | 54     |                               |   | - |   |   | 617 |   |   | - |   |
|                                                                 |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Total                  other comprehensive income/(loss), net of tax |   |                                | 2,333  |                               |   | (127 | ) |   | 3,475 |   |   | 1,316 |   |
|                                                                 |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Total                  comprehensive income                          |   | $                                   | 21,404 |                               | $      | 17,267 |   | $ | 57,836 |   | $ | 51,332 |   |
|                                                                 |   |                                |   |                               |   |   |   |   |   |   |   |   |   |

|                                         |   |        |   | Defined |   | Defined        |   | Accumulated   |   |
|----------------------------------------------|--------|-------------|--------|---------|--------|----------------|--------|---------------|--------|
|                                         |   | Foreign     |   | Benefit |   | Benefit        |   | Other         |   |
|                                         |   | Currency    |   | Pension |   | Postretirement |   | Comprehensive |   |
|                                         |   | Translation |   | Plans   |   | Plans          |   | Income/(Loss) |   |
|                                         |   |        |   |    |   |           |   |          |   |
| Balance,                  Dec. 31, 2006      |   | $           | 2,958  |    | $      | (5,758         | )      | $             | 1,329  |   | $ | (1,471 | ) |
|                                         |   |        |   |    |   |           |   |          |   |   |   |   |   |
| Current-period                  change       |   |        | 4,621  |    |   | (1,677         | )      |          | 531    |   |   | 3,475 |   |
|                                         |   |        |   |    |   |           |   |          |   |   |   |   |   |
| Balance,                  September 30, 2007 |   |        | 7,579  |    |   | (7,435         | )      |          | 1,860  |   |   | 2,004 |   |
|                                         |   |        |   |    |   |           |   |          |   |   |   |   |   |

**9.      Stock Repurchase Plans**

**10.      Segment Data**

| Three                  Months Ended September 30, 2007 |   |
|--------------------------------------------------------|--------|
|                                                   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   |   |   | Power |   |   |   |   |   |   |   |
|                                                   |   | Oil                  Field |   | Transmission |   | Trailer |   | Corporate |   | Total |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Gross                  sales                           |   | $ | 97,081 |   | $ | 41,533 |   | $ | 9,441 |   | $ | - |   | $ | 148,055 |   |
| Inter-segment                  sales                   |   |   | (479 | ) |   | (646 | ) |   | (50 | ) |   | - |   |   | (1,175 | ) |
| Net                  sales                             |   | $ | 96,602 |   | $ | 40,887 |   | $ | 9,391 |   | $ | - |   | $ | 146,880 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  income (loss)               |   | $ | 19,652 |   | $ | 8,061 |   | $ | (696 | ) | $ | - |   | $ | 27,017 |   |
| Other                  income (expense), net           |   |   | 589 |   |   | (98 | ) |   | 621 |   |   | 987 |   |   | 2,099 |   |
| Earnings                  (loss) before                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| income                  tax provision                  |   | $ | 20,241 |   | $ | 7,963 |   | $ | (75 | ) | $ | 987 |   | $ | 29,116 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Three                Months Ended September 30, 2006 |   |
|------------------------------------------------------|--------|
|                                                 |   |   |   |   |   |   |   |   |   |   |   |
|                                                 |   |   |   | Power |   |   |   |   |   |   |   |
|                                                 |   | Oil                Field |   | Transmission |   | Trailer |   | Corporate |   | Total |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Gross                sales                           |   | $ | 110,264 |   | $ | 32,172 |   | $ | 19,537 |   | $ | - |   | $ | 161,973 |   |
| Inter-segment                sales                   |   |   | (681 | ) |   | (2,490 | ) |   | - |   |   | - |   |   | (3,171 | ) |
| Net                sales                             |   | $ | 109,583 |   | $ | 29,682 |   | $ | 19,537 |   | $ | - |   | $ | 158,802 |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                income (loss)               |   | $ | 22,957 |   | $ | 2,712 |   | $ | 52 |   | $ | - |   | $ | 25,721 |   |
| Other                income (expense), net           |   |   | 14 |   |   | (17 | ) |   | 10 |   |   | 445 |   |   | 452 |   |
| Earnings                (loss) before                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| income                tax provision                  |   | $ | 22,971 |   | $ | 2,695 |   | $ | 62 |   | $ | 445 |   | $ | 26,173 |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Nine                  Months Ended September 30, 2007 |   |
|-------------------------------------------------------|--------|
|                                                  |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |   |   | Power |   |   |   |   |   |   |   |
|                                                  |   | Oil                  Field |   | Transmission |   | Trailer |   | Corporate |   | Total |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |
| Gross                  sales                          |   | $ | 293,247 |   | $ | 117,931 |   | $ | 33,547 |   | $ | - |   | $ | 444,725 |   |
| Inter-segment                  sales                  |   |   | (2,186 | ) |   | (2,944 | ) |   | (129 | ) |   | - |   |   | (5,259 | ) |
| Net                  sales                            |   | $ | 291,061 |   | $ | 114,987 |   | $ | 33,418 |   | $ | - |   | $ | 439,466 |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  income (loss)              |   | $ | 60,023 |   | $ | 20,553 |   | $ | (2,427 | ) | $ | - |   | $ | 78,149 |   |
| Other                  income (expense), net          |   |   | 1,167 |   |   | (33 | ) |   | 618 |   |   | 2,836 |   |   | 4,588 |   |
| Earnings                  (loss) before               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| income                  tax provision                 |   | $ | 61,190 |   | $ | 20,520 |   | $ | (1,809 | ) | $ | 2,836 |   | $ | 82,737 |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Nine                  Months Ended September 30, 2006 |   |
|-------------------------------------------------------|--------|
|                                                  |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |   |   | Power |   |   |   |   |   |   |   |
|                                                  |   | Oil                  Field |   | Transmission |   | Trailer |   | Corporate |   | Total |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |
| Gross                  sales                          |   | $ | 295,439 |   | $ | 97,381 |   | $ | 56,761 |   | $ | - |   | $ | 449,581 |   |
| Inter-segment                  sales                  |   |   | (2,547 | ) |   | (7,150 | ) |   | (2 | ) |   | - |   |   | (9,699 | ) |
| Net                  sales                            |   | $ | 292,892 |   | $ | 90,231 |   | $ | 56,759 |   | $ | - |   | $ | 439,882 |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  income (loss)              |   | $ | 62,580 |   | $ | 13,051 |   | $ | (555 | ) | $ | - |   | $ | 75,076 |   |
| Other                  income (expense), net          |   |   | (16 | ) |   | (97 | ) |   | 9 |   |   | 1,389 |   |   | 1,285 |   |
| Earnings                  (loss) before               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| income                  tax provision                 |   | $ | 62,564 |   | $ | 12,954 |   | $ | (546 | ) | $ | 1,389 |   | $ | 76,361 |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

**11.      Goodwill and Intangible Assets**

|                                          |   |                       |   | Power        |   |    |   |   |   |
|-----------------------------------------------|--------|----------------------------|--------|--------------|--------|---------|--------|--------|--------|
|                                          |   | Oil                  Field |   | Transmission |   | Trailer |   | Total  |   |
|                                          |   |                       |   |         |   |    |   |   |   |
| Balance                  as of 12/31/06       |   | $                          | 9,432  |         | $      | 2,300   |   | $      | -      |   | $ | 11,732 |   |
|                                          |   |                       |   |         |   |    |   |   |   |   |   |   |   |
| Foreign                  currency translation |   |                       | 15     |         |   | 184     |   |   | -      |   |   | 199 |   |
| Balance                  as of 9/30/07        |   | $                          | 9,447  |         | $      | 2,484   |   | $      | -      |   | $ | 11,931 |   |
|                                          |   |                       |   |         |   |    |   |   |   |   |   |   |   |

|                                                        |   | September                  30, |   | December                  31, |   |
|-------------------------------------------------------------|--------|--------------------------------|--------|-------------------------------|--------|
|                                                        |   | 2007                           |   | 2006                          |   |
| Intangible                  assets subject to amortization: |   |                           |   |                          |   |
| Non-compete                  agreements                     |   |                           |   |                          |   |   |   |
| Original                  balance                      |   | $                              | 463    |                          | $      | 463 |   |
|  Foreign                  currency translation         |   |                           | 33     |                          |   | 20 |   |
|  Accumulated                  amortization             |   |                           | (355   | )                             |   | (285 | ) |
|                                                        |   |                           |   |                          |   |   |   |
| Ending                  balance                        |   | $                              | 141    |                          | $      | 198 |   |
|                                                        |   |                           |   |                          |   |   |   |

**12.      Stock Option Plans**

|                                                          |   | Three                  Months Ended |   | Nine                  Months Ended |
|---------------------------------------------------------------|--------|-------------------------------------|--------|------------------------------------|
|                                                          |   | September                  30,      |   | September                  30,     |
|                                                          |   | 2007                                |   | 2006                               |   | 2007 |   | 2006 |
|                                                          |   |                                |   |                               |   |   |   |   |
| Stock-based                  compensation expense             |   | $                  326              |   | $                  410             |   | $                  2,596 |   | $                  2,004 |
| Tax                  benefit                                  |   | (121)                               |   | (156)                              |   | (961) |   | (761) |
| Stock-based                  compensation expense, net of tax |   | $                  205              |   | $                  254             |   | $                  1,635 |   | $                  1,243 |
|                                                          |   |                                |   |                               |   |   |   |   |

|                                                                 |   | 2007   |                            | 2006   |   |
|----------------------------------------------------------------------|--------|--------|---------------------------------|--------|--------|
|                                                                 |   |   |                            |   |   |
| Expected                  dividend yield                             |   |   | 1.30%                  - 1.38   | %      |   | 0.69%                  - 0.91 | % |
| Expected                  stock price volatility                     |   |   | 42.00%                  - 45.00 | %      |   | 44.12%                  - 45.35 | % |
| Risk                  free interest rate                             |   |   | 4.56%                  - 4.85   | %      |   | 4.52%                  - 5.01 | % |
| Expected                  life options                               |   |   | 3                  - 6 years    |   |   | 6                  - 8 years |   |
| Weighted-average                  fair value per share at grant date |   | $      | 23.28                           |   | $      | 28.16 |   |

|                                               |   |   |     |      |   | Weighted-   |   |      |   |
|----------------------------------------------------|--------|--------|----------|-----------|--------|-------------|--------|-----------|--------|
|                                               |   |   |     | Weighted- |   | Average     |   | Aggregate |   |
|                                               |   |   |     | Average   |   | Remaining   |   | Intrinsic |   |
|                                               |   |   |     | Exercise  |   | Contractual |   | Value     |   |
| Options                                            |   | Shares |     | Price     |   | Term        |   | ($000's)  |   |
|                                               |   |   |     |      |   |        |   |      |   |
| Outstanding                  at January 1, 2007    |   |   | 743,761  |      | $      | 29.06       |   |      |   |   |   |   |   |
| Granted                                            |   |   | 51,000   |      |   | 62.05       |   |      |   |   |   |   |   |
| Exercised                                          |   |   | (177,569 | )         |   | 15.72       |   |      |   |   |   |   |   |
| Forfeited                  or expired              |   |   | (8,187   | )         |   | 38.67       |   |      |   |   |   |   |   |
| Outstanding                  at September 30, 2007 |   |   | 609,005  |      | $      | 35.58       |   |      | 7.2    |   | $ | 13,220 |   |
| Exercisable                  at September 30, 2007 |   |   | 294,226  |      | $      | 31.16       |   |      | 6.5    |   | $ | 7,657 |   |
|                                               |   |   |     |      |   |        |   |      |   |   |   |   |   |

**13.      Recently Issued Accounting Pronouncements**

**14.      Retirement Benefits**

**Components      of Net Periodic Benefit Cost (in thousands of dollars)**

|                                                           |   | Pension                  Benefits |   | Other                  Benefits |   |
|----------------------------------------------------------------|--------|-----------------------------------|--------|---------------------------------|--------|
| Three                  Months Ended September 30,              |   | 2007                              |   | 2006                            |   | 2007 |   | 2006 |   |
|                                                           |   |                              |   |                            |   |   |   |   |   |
| Service                  cost                                  |   | $                                 | 1,363  |                            | $      | 1,295 |   | $ | 44 |   | $ | 43 |   |
| Interest                  cost                                 |   |                              | 2,433  |                            |   | 2,276 |   |   | 114 |   |   | 126 |   |
| Expected                  return on plan assets                |   |                              | (4,411 | )                               |   | (4,115 | ) |   | - |   |   | - |   |
| Amortization                  of prior service cost            |   |                              | 141    |                            |   | 142 |   |   | - |   |   | - |   |
| Amortization                  of unrecognized net (gain) loss  |   |                              | 25     |                            |   | 15 |   |   | (57 | ) |   | (39 | ) |
| Amortization                  of unrecognized transition asset |   |                              | (232   | )                               |   | (232 | ) |   | - |   |   | - |   |
| Net                  periodic benefit cost (income)            |   | $                                 | (681   | )                               | $      | (619 | ) | $ | 101 |   | $ | 130 |   |
|                                                           |   |                              |   |                            |   |   |   |   |   |   |   |   |   |

|                                                           |   | Pension                  Benefits |    | Other                  Benefits |   |
|----------------------------------------------------------------|--------|-----------------------------------|---------|---------------------------------|--------|
| Nine                  Months Ended September 30,               |   | 2007                              |    | 2006                            |   | 2007 |   | 2006 |   |
|                                                           |   |                              |    |                            |   |   |   |   |   |
| Service                  cost                                  |   | $                                 | 4,089   |                            | $      | 3,884 |   | $ | 131 |   | $ | 205 |   |
| Interest                  cost                                 |   |                              | 7,294   |                            |   | 6,827 |   |   | 343 |   |   | 525 |   |
| Expected                  return on plan assets                |   |                              | (13,234 | )                               |   | (12,344 | ) |   | - |   |   | - |   |
| Amortization                  of prior service cost            |   |                              | 424     |                            |   | 425 |   |   | - |   |   | - |   |
| Amortization                  of unrecognized net (gain) loss  |   |                              | 76      |                            |   | 46 |   |   | (170 | ) |   | 35 |   |
| Amortization                  of unrecognized transition asset |   |                              | (695    | )                               |   | (695 | ) |   | - |   |   | - |   |
| Net                  periodic benefit cost (income)            |   | $                                 | (2,046  | )                               | $      | (1,857 | ) | $ | 304 |   | $ | 765 |   |
|                                                           |   |                              |    |                            |   |   |   |   |   |   |   |   |   |

**Employer      Contributions**

**15.      Adoption of FIN 48**

** **

**Item      2. **
**Management’s      Discussion and Analysis of Financial Condition and Results of      Operations.**

**Overview**

**General**

**Trends/Outlook**

**Oilfield**

**Power      Transmission**

**Trailer**

**Summary      of Results**

**Three      Months Ended September 30, 2007, Compared to Three Months Ended September 30,      2006**

|                                |   | Three                  Months Ended |    |      |   |                         |   |
|-------------------------------------|--------|-------------------------------------|---------|-----------|--------|------------------------------|--------|
|                                |   | September                  30,      |    | Increase/ |   | %                  Increase/ |   |
|                                |   | 2007                                |    | 2006      |   | (Decrease)                   |   | (Decrease) |   |
| Sales                               |   |                                |    |      |   |                         |   |   |   |
| Oil                  Field          |   | $                                   | 96,602  |      | $      | 109,583                      |   | $ | (12,981 | ) |   | (11.8 | ) |
| Power                  Transmission |   |                                | 40,887  |      |   | 29,682                       |   |   | 11,205 |   |   | 37.8 |   |
| Trailer                             |   |                                | 9,391   |      |   | 19,537                       |   |   | (10,146 | ) |   | (51.9 | ) |
| Total                               |   | $                                   | 146,880 |      | $      | 158,802                      |   | $ | (11,922 | ) |   | (7.5 | ) |
|                                |   |                                |    |      |   |                         |   |   |   |   |   |   |   |
| Gross                  Profit       |   |                                |    |      |   |                         |   |   |   |   |   |   |   |
| Oil                  Field          |   | $                                   | 25,981  |      | $      | 28,810                       |   | $ | (2,829 | ) |   | (9.8 | ) |
| Power                  Transmission |   |                                | 13,996  |      |   | 8,143                        |   |   | 5,853 |   |   | 71.9 |   |
| Trailer                             |   |                                | 1,039   |      |   | 1,734                        |   |   | (695 | ) |   | (40.1 | ) |
| Total                               |   | $                                   | 41,016  |      | $      | 38,687                       |   | $ | 2,329 |   |   | 6.0 |   |
|                                |   |                                |    |      |   |                         |   |   |   |   |   |   |   |

**Oil      Field**

**Power      Transmission**

**Trailer**

**Corporate/Other**

**Nine      Months Ended September 30, 2007, Compared to Nine Months Ended September 30,      2006**

|                                |   | Nine                  Months Ended |    |      |   |                         |   |
|-------------------------------------|--------|------------------------------------|---------|-----------|--------|------------------------------|--------|
|                                |   | September                  30,     |    | Increase/ |   | %                  Increase/ |   |
|                                |   | 2007                               |    | 2006      |   | (Decrease)                   |   | (Decrease) |   |
| Sales                               |   |                               |    |      |   |                         |   |   |   |
| Oil                  Field          |   | $                                  | 291,061 |      | $      | 292,892                      |   | $ | (1,831 | ) |   | (0.6 | ) |
| Power                  Transmission |   |                               | 114,987 |      |   | 90,231                       |   |   | 24,756 |   |   | 27.4 |   |
| Trailer                             |   |                               | 33,418  |      |   | 56,759                       |   |   | (23,341 | ) |   | (41.1 | ) |
| Total                               |   | $                                  | 439,466 |      | $      | 439,882                      |   | $ | (416 | ) |   | (0.1 | ) |
|                                |   |                               |    |      |   |                         |   |   |   |   |   |   |   |
| Gross                  Profit       |   |                               |    |      |   |                         |   |   |   |   |   |   |   |
| Oil                  Field          |   | $                                  | 79,587  |      | $      | 79,664                       |   | $ | (77 | ) |   | (0.1 | ) |
| Power                  Transmission |   |                               | 38,823  |      |   | 28,774                       |   |   | 10,049 |   |   | 34.9 |   |
| Trailer                             |   |                               | 2,982   |      |   | 4,840                        |   |   | (1,858 | ) |   | (38.4 | ) |
| Total                               |   | $                                  | 121,392 |      | $      | 113,278                      |   | $ | 8,114 |   |   | 7.2 |   |
|                                |   |                               |    |      |   |                         |   |   |   |   |   |   |   |

**Oil      Field**

**Power      Transmission**

**Trailer**

**Corporate/Other**

**Liquidity      and Capital Resources**

**Recently      Issued Accounting Pronouncements**

**Critical      Accounting Policies and Estimates**

| l | The                customer has accepted title and risk of loss;                                                                                                                                                                                                                |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| l | The                customer has provided a written purchase order for the                product;                                                                                                                                                                               |
| l | The                customer, not the Company, requested the product to be stored and                to be                invoiced under a Bill-and-Hold arrangement. The customer must also                provide                the business purpose for the storage request; |
| l | The                customer must provide a storage period and future shipping                date;                                                                                                                                                                              |
| l | The                Company must not have retained any future performance obligations                on the                product;                                                                                                                                              |
| l | The                Company must segregate the stored product and not make it available                to use                on other orders; and                                                                                                                                |
| l | The                product must be completed and ready for                shipment.                                                                                                                                                                                             |

**Forward-Looking      Statements and Assumptions**

| l | oil                    price volatility;                                                                                                                                         |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| l | declines                    in domestic and worldwide oil and gas drilling;                                                                                                      |
| l | capital                    spending levels of oil producers;                                                                                                                     |
| l | the                    cyclicality of the trailer industry;                                                                                                                      |
| l | availability                    and prices for raw materials;                                                                                                                    |
| l | the                    inherent dangers and complexities of our operations;                                                                                                      |
| l | uninsured                    judgments or a rise in insurance premiums;                                                                                                          |
| l | the                    inability to effectively integrate acquisitions;                                                                                                          |
| l | labor                    disruptions and increasing labor costs;                                                                                                                 |
| l | the                    availability of qualified and skilled labor;                                                                                                              |
| l | disruption                    of our operating facilities or management information                    systems;                                                                  |
| l | the                    impact on foreign operations of war, political disruption, civil                    disturbance, economic and legal sanctions and                         |
| l | changes                    in global trade policies;                                                                                                                             |
| l | currency                    exchange rate fluctuations in the markets in which the Company                    operates;                                                          |
| l | changes                    in the laws, regulations, policies or other activities of governments,                    agencies and similar organizations                          |
| l | where                    such actions may affect the production, licensing, distribution                    or sale of                    the Company’s products, the cost |
| l | thereof                    or applicable tax rates;                                                                                                                              |
| l | costs                    related to legal and administrative proceedings, including adverse                    judgments against the Company if the                              |
| l | Company                    fails to prevail in reversing such judgments; and                                                                                                     |
| l | general                    industry, political and economic conditions in the markets where                    the                    Company procures material,                 |
| l | components                    and supplies for the production of the Company’s principal products or                    where the Company’s                          |
| l | products                    are produced, distributed or sold.                                                                                                                   |

**Item      3. **
**Quantitative      and Qualitative Disclosures About Market Risk.**

**Item      4. **
**Controls      and Procedures.**

**PART      II- OTHER INFORMATION**

**Item      1. **
**Legal      Proceedings**

**Item      1A.   Risks Factors.**

**Item      2.   Unregistered Sales of Equity Securities and Use of      Proceeds.**

| Issuers                  Purchases of Equity Securities |   |
|---------------------------------------------------------|--------|
|                                                    |   |   |   |   |   |   |   |   |   |
|                                                    |   |   |   |   |   | Total                  Number of |   | Approximate                  Dollar |   |
|                                                    |   | Total                  Number |   | Average |   | Shares                  Purchased as |   | Value                  of Shares That |   |
|                                                    |   | of                  Shares |   | Price                  Paid |   | Part                  of Publicly |   | May                  Yet Be Purchased |   |
| Period                                                  |   | Purchased                  (1) |   | per                  Share |   | Announced                  Plans |   | Under                  the Plans |   |
|                                                    |   |   |   |   |   |   |   |   |   |
| July                  1 - July 31                       |   |   | - |   | $ | - |   |   | - |   | $ | 32,121,001 |   |
| August                  1 - August 31                   |   |   | 350,000 |   |   | 54.85 |   |   | 350,000 |   |   | 12,923,565 |   |
| September                  1 - September 30             |   |   | 50,000 |   |   | 56.78 |   |   | 50,000 |   |   | 10,084,369 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                   |   |   | 400,000 |   | $ | 55.09 |   |   | 400,000 |   | $ | 10,084,369 |   |

**Item      6. Exhibits.**

| Exhibit                  Number |   | Description                                                                                                                                                                                                                                                                                                                 |
|---------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                            |   |                                                                                                                                                                                                                                                                                                                        |
| 3.1                             |   | Amended                  and Restated Bylaws of Lufkin Industries, Inc., included as Exhibit                  3.1 to                  Form 8-K filed October 9, 2007 (File No. 0-02612), which exhibit                  is                  incorporated herein by reference.                                               |
|                            |   |                                                                                                                                                                                                                                                                                                                        |
| 10.1                            |   | Amended                  and Restated Lufkin Industries, Inc. Incentive Stock Compensation                  Plan                  2000, included as Exhibit 10.1 to Form 8-K filed August 7, 2007                  (File No.                  0-02612), which exhibit is incorporated herein by                  reference. |
|                            |   |                                                                                                                                                                                                                                                                                                                        |
| *31.1                           |   | Rule                  13a-14(a)/15d-14(a) Certification of Chief Executive                  Officer.                                                                                                                                                                                                                        |
|                            |   |                                                                                                                                                                                                                                                                                                                        |
| *31.2                           |   | Rule                  13a-14(a)/15d-14(a) Certification of Chief Financial                  Officer.                                                                                                                                                                                                                        |
|                            |   |                                                                                                                                                                                                                                                                                                                        |
| *32.1                           |   | Section                  1350 Certification of Chief Executive Officer.                                                                                                                                                                                                                                                     |
|                            |   |                                                                                                                                                                                                                                                                                                                        |
| *32.2                           |   | Section                  1350 Certification of Chief Financial                  Officer.                                                                                                                                                                                                                                    |

**SIGNATURES**

**INDEX      TO EXHIBITS**

| Exhibit                  Number |   | Description                                                                                                                                                                                                                                                                                                                 |
|---------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                            |   |                                                                                                                                                                                                                                                                                                                        |
| 3.1                             |   | Amended                  and Restated Bylaws of Lufkin Industries, Inc., included as Exhibit                  3.1 to                  Form 8-K filed October 9, 2007 (File No. 0-02612), which exhibit                  is                  incorporated herein by reference.                                               |
|                            |   |                                                                                                                                                                                                                                                                                                                        |
| 10.1                            |   | Amended                  and Restated Lufkin Industries, Inc. Incentive Stock Compensation                  Plan                  2000, included as Exhibit 10.1 to Form 8-K filed August 7, 2007                  (File No.                  0-02612), which exhibit is incorporated herein by                  reference. |
|                            |   |                                                                                                                                                                                                                                                                                                                        |
| *31.1                           |   | Rule                  13a-14(a)/15d-14(a) Certification of Chief Executive                  Officer.                                                                                                                                                                                                                        |
|                            |   |                                                                                                                                                                                                                                                                                                                        |
| *31.2                           |   | Rule                  13a-14(a)/15d-14(a) Certification of Chief Financial                  Officer.                                                                                                                                                                                                                        |
|                            |   |                                                                                                                                                                                                                                                                                                                        |
| *32.1                           |   | Section                  1350 Certification of Chief Executive Officer.                                                                                                                                                                                                                                                     |
|                            |   |                                                                                                                                                                                                                                                                                                                        |
| *32.2                           |   | Section                  1350 Certification of Chief Financial                  Officer.                                                                                                                                                                                                                                    |

** **