Core Laboratories(NYSE: CLB) – Day One Breakout Notes

August 20, 2018

TOGC 2018

Core Lab presents at EnerCom’s The Oil & Gas Conference®

Core Laboratories (ticker: CLB), known by the trademarked slogan, The Reservoir Optimization Company™, is an 80-year-old reservoir science laboratory and service provider with more than 70 offices in more than 50 countries. Core Lab is focused on providing the majors, NOCs and independent E&Ps with two key functions: reservoir description services and production enhancement products and services.

Core Lab is the only global provider of services that characterize the porous reservoir rock and all three reservoir fluids. Core Laboratories’ reservoir optimization technologies are used to increase total recovery from existing fields.

Q2 highlights

Revenue $175.5 million, up 11% year-over-year
Operating margins of 19%, up more than 190 BPS YOY
GAAP EPS OF $0.57; $0.59 ex-items, up 23% YOY
Production Enhancement U.S. LAND up 48% YOY vs. U.S. Completions Up 30% YOY
Oilfield Service-Leading ROIC OF 28%

Breakout session at the EnerCom conference

During Core Lab’s breakout session at the 2018 EnerCom conference, management was asked the following questions:

For core properties, we’ve been moving towards tier 1 properties; ultimately companies will step out of 2-3 tier properties. How much impact is this for Core Labs, to move from the easiest targets to more difficult targets?
Please provide some insight on overall production on a country specific basis for the next 5 years.
How does Core Lab’s price services work in general? If the productivity increases, how are clients charged? Do you use billable hours?
In California, there’s an unbelievable margin on the upside – lots of environmental concerns though. Do you see future developments there?
As an investor, “experimenting” sounds too academic, why don’t you use “testing”, or some other term?
In the past, we’ve asked questions about investments in international markets. You defined China as a declining market – what about Russia? What do you see there now?
Can you talk a bit about Brazil? Offshore is key component of your business – what does that look like for production numbers? As people recognize that countries decline, does production accelerate or slump further on?
What is the rate of adoption for finer mesh sand in next few years? Which basins more successfully accept that for reservoirs?
You mentioned Northern White Sand – would E&Ps rather use that than Texas sand?
If delivery costs were the same, do we have enough information to say Northern White performs just as well or better?
There’s been a trend towards develop non-conventional fields and a shift in client base, Do you see new companies trying new things. Or is the client base consistent?
As a strategy for your company, do you work with investment banks to finance growth and incorporation of new companies?
In terms of onshore US companies, they use virtually 100% unconventional methods; however, what do you think the global trend is in conventional vs unconventional?
How do you view the competitive situation in your industry, especially compared to Schlumberger?