On February 1, 2012, Core Laboratories (NYSE: CLB) reported fourth quarter 2011 and full-year earnings results. Core Lab reported Q4’11 net income of $53,076,000, an increase of 29% from Q4’10. Earnings per share during Q4’11 were $1.11 per share, an increase of 32% from Q4’10. Total Q4’11 revenues totaled $243,786,000, an increase of 17% when compared to Q4’10 total revenues. Operating income increased 18% from Q4’10 to $72,888,000 and operating margins were during Q4’11 were 30%. All of the above were all time company quarterly records except for operating margins.
Net income for the full-year 2011 increased 27% from 2010 to $184,684,000. Earnings per share during full-year 2011 were $3.82 per share, an increase of 27% from 2010. Revenues for 2011 totaled $907,648,000, an increase of 14% from 2010 revenue totals. Operating income margins for the full year 2011 were 29%.
CLB returned approximately $18,000,000 during Q4’11 through its regular quarterly dividend and by repurchasing 64,677 shares of stock. Since CLB initiated its share repurchase program in October 2002, Core has returned almost $1.2 billion to its shareholders via quarterly and special dividends, the repurchase of shares, and settlements of warrants.
OAG360 Comments:
When thinking about Core, use the Rule of “70” – 70% of Core’s revenues come from National Oil Companies and Majors, 70% of Core’s revenues come from international projects and 70% of Core’s revenues come from oil projects. Key questions from analysts and money managers during the Q4’11 earnings season will be how curtailments in natural gas will affect the OilService business. Without splitting hairs between segments, according to Core Lab, only 20% of its business is focused towards natural gas, and the majority of those projects are overseas. CLB has significantly increased its focus on international operations in South America and West/East Africa to meet growing demand for its services in these onshore and deepwater natural gas and oil plays. OAG360 believes that the decrease in natural gas operations in the U.S. will not impede CLB as operators begin to allocate more capital to liquids projects since numerous segments, most notably CLB’s Production Enhancement, will be utilized during the liquids transition. The Rule of 70 is kickin’ at CLB.
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Reservoir Description – Record Quarterly Revenue and Operating Income
- Q4’11 revenues for this segment increased 14% to $123,543,000 from Q4’10.
- Q4’11 operating income increased 23% to $34,397,000 from Q4’10.
- Q4’11 operating margins increased to 28%.
As previously reported by OAG360, operations in South America (Vaca Muerta Shale), West/East Africa, and the Middle East, are driving the Reservoir Description segment. We believe Reservoir Description will be the biggest driver of growth in the future for CLB as its international exposure continues to grow. The company said in the news release that it believes worldwide activity will increase 10% in 2012. In North and South America, CLB is benefiting from increased unconventional drilling exploration in oil-shale reservoirs. OAG360 notes that the Gulf of Mexico is drawing a lot of attention for CLB’s Reservoir Description segment and we are excited to see how the Gulf of Mexico will have an impact on this segment in 2012.
Production Enhancement – Record Quarterly Revenue and Operating Income
- Q4’11 revenues increased 19% to $103,157,000 from Q4’10
- Q4’11 operating income increased 22% to $34,086,000 from Q4’10
- Q4’11 operating margins increased to 33% from Q4’10
With E&P operator in the U.S. concentrating on oil reservoirs, CLB’s Production Enhancement operations continue to benefit through the use of its HTD-Blast™ perforating systems which helps companies enable longer horizontal laterals and perform better perforations. Overseas, CLB’s SpectraFlood™ technology continues to be applied to monitor field flood efficiencies in Oman and Kuwait and in offshore fields in Ghana, Equatorial Guinea, and the Eastern Mediterranean.
Reservoir Management
- Q4’11 revenues increased 31% to $17,086,000 from Q4’10
- Q4’11 operating income decreased 11% to $4,414,000 from Q4’10
- Q4’11 operating margins were 26%, lower than the year-earlier quarter because of sales mix and project timing
While the company’s quarter was slightly offset by this segment, shale studies are growing around the world thus representing an additional tally mark for positive growth on the international front. While Reservoir Management operations are growing worldwide in Argentina, North Africa, the Middle East and China, U.S. operators focused on the oil reservoirs in South Texas (Eagle Ford) and West Texas (Wolfcamp, etc) are utilizing CLB’s Reservoir Management segment also.
