Abstract: An apparatus and method for processing oil well fluids has two pressure vessels. A first vessel has hydrocyclones for separating the fluids into water and oil phases. The oil phase is retained in an overflow chamber to provide residence time for further separation of residual water phase, which is recycled again through the hydrocyclones. A second inclined vessel has a processing chamber for receiving the water phase from the first vessel, and provides residence time to urge separation of residual oil phase. Coalescing media in the processing chamber enhance this separation. The residual oil phase is fed into a heated treating chamber along with the oil phase from the first vessel to provide a second residence time for further separation of residual water phase. Clarified processed water and oil exit in dedicated steams from the second vessel.