Core Laboratories will present at EnerCom’s The Oil & Gas Conference® on Mon. Aug. 15, 2016.
Core Laboratories (ticker: CLB) is a leading provider of proprietary and patented reservoir description, production enhancement, and reservoir management services used to optimize petroleum reservoir performance. The Company has 70 offices in more than 50 countries and operates in every major oil-producing region in the world.
Reservoir Description
The Reservoir Description operating segment focuses on reservoir fluid phase-behavior and crude-oil-characterization projects in international markets. Services are currently provided to projects in the deepwater GOM, Russia, the Middle East, the Asia-Pacific, and South America. Operating margins for the second quarter 2016 were 19%, up on a sequential quarterly basis.
Core has said that this segment “exhibited similar relative strength during the 2009 downturn, indicating the mission-critical nature and value of [its] cutting-edge technologies…when compared with lower-technology, commodity-related offerings, such as pressure pumping, seismic, wireline, drilling, and exploration-related services.”
Production Enhancement
The Production Enhancement operating segment primarily serves operators pursuing North American unconventional reservoirs and complex deep-water completions and simulations. The company’s KODIAK Enhanced Perforating System and HERO line of perforating charges have seen increasing use in shale plays to boost production, with utilization of the PerFRAC-HERO system increasing 23% in the past year.
Highlights for the segment in the first quarter include the use of its SPECTRASTIM™ tracer technology and SPECTRASCAN® and PACKSCAN® patented washpipe-conveyed diagnostic technologies to maximize completion and hydraulic fracture programs for a Lower Tertiary well in the deepwater GOM. The company is currently in discussions with several operators in the Lower Tertiary trend to implement their proprietary technologies to maximize completion efficiencies and returns on future completion and stimulation programs in Wilcox-type sandstone reservoirs.
Reservoir Management
The Reservoir Management operating segment reported operating margins of 7%, despite delayed spending commitments by participating companies. Highlights included the completion of the largest proprietary project ever awarded to the company. This “big data” project evaluated conventional and unconventional hydrocarbon opportunities in the Wolfcamp and related Southern Delaware sequences for a leading Permian operator.
As crude-oil and natural gas prices rallied during the second quarter, oil companies did respond with the purchases of studies in the Permian Basin and Marcellus and Haynesville plays. Outside of North America, clients continued to purchase data bases related to recent industry activity in offshore Surinam and Guyana and the Company’s Central Atlantic Margin Study, which encompasses offshore Senegal and Guinea Bissau.
Financial Overview
During the second quarter of 2016, Core Lab reported an operating margin of 14% on $148.1 million in revenue. Free cash flow for the first half of 2016 was $68.5 million, and the company was able to convert 23% of every revenue dollar into free cash flow.
The Company continues to anticipate a “V-shaped” worldwide commodity recovery beginning in the second half of 2016. One indication is that several U.S.-based operators have recently announced rig additions. Further, global demand for hydrocarbon-based energy continues to increase, while worldwide crude oil supply peaked in the second half of 2015 and began a decline that Core believes will continue through all of 2016 and 2017.
EnerCom’s The Oil & Gas Conference® Denver – August 14-18, 2016
Core Laboratories (ticker: CLB) will be presenting at EnerCom’s The Oil & Gas Conference® 21 in Denver on Monday, August 15, 2016 at 10:25pm EDT. Conference information and registration for this year’s EnerCom conference may be accessed here.
