Core Laboratories presents at EnerCom’s The Oil & Gas Conference®
During the Core Laboratories breakout session, management was asked the following questions:
- Can you talk about what you see in world supply and demand curves? Specifically how do you see the balance of the demand?
- World production hovers around the low to mid 90’s you use 85, why?
- Is miscible gas technology focused only on shale or are there other applications?
- Please discuss what you think will happen with Iraqi production considering the drop in investment.
- How long does a well need to be in service before you can apply your technologies?
- What is happening with the US decline curve as companies are claiming to be increasing production?
- Can you add some color to refracturing treatments in the Barnett and Haynesville is that new technology?
- How do clients use and reuse your miscible technology? Do they have to come back to you or can they do it themselves?
- Nano technology fluids, what are your thoughts on their usage?
- What has happened with your market penetration as the market has come down? What product line in production enhancement has gotten the most traction?
- Can you talk about expectations for the production and decline in Russia?
- How are prospects changing offshore?
- Are you mainly doing core or fluids work offshore?
- With the pace of US onshore adoption of technology do companies want to do more work in house? Why would they use Core as opposed to Schlumberger?
- Have you looked into using your technology in water wells?
- Is Saudi able to further increase oil production?
- How did you decide to issue your recent equity offering and its pricing? How much time growth does that give you?
- Will there be hesitance to doing a share buyback or increasing dividends on the way back up?
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.
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.”
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.
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 databases related to recent industry activity in offshore Suriname and Guyana and the Company’s Central Atlantic Margin Study, which encompasses offshore Senegal and Guinea Bissau.
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.