Used water-in-oil emulsified drilling muds are prepared for reuse by removing excess water. The excess water is removed by passing the used mud through a cavitation device, under controlled conditions, along with injected air. While the emulsion is heated in the cavitation device, the air is finely dispersed in it, so is able to absorb water evaporated from the discrete, discontinuous phase aqueous droplets in the emulsion. A mixture of incoming and aerated emulsion is maintained at an optimal temperature in a process tank while a steady state continuous process is controlled to utilize the heat input, after compensating for radiant heat losses and other system losses, substantially exclusively for the evaporation of water in the emulsion. The process is applicable to any water-in-oil emulsion.