Current CLB Stock Info

New Qatar facility will support Middle East activities

Core Laboratories (ticker: CLB) announced full year results today, showing net earnings of $21.7 million, or $0.49 per share. Core earned a net $83.1 million over the full year, or $1.88 per share. Each result compares favorably with 2016 results, when the company earned $15.5 million in Q4 and $63.9 million in the year.

Core reports its Reservoir Description service posted revenue of $104.6 million in Q4, up 3% sequentially. The company reports pressure-volume-temperature (PVT) projects are increasing, and such reservoir fluid analyses now contribute about 60% of Reservoir Description revenue.

Core is expanding its presence in the Middle East, and began several long-term projects that will “involve the integration of data from laboratory and geological analyses to assess reserve potential and benchmark reservoir performance.” These jobs have led Core to expand its lab network with a new facility in Qatar.

Core’s Production Enhancement division posted revenue of $67.3 million, up 51% year-over-year and 18% sequentially. The company reports its HEROPerFRAC system boosted results this quarter, as the perforating charge and gun system is seeing client acceptance among the highest of all new product lines introduced by Core over the past five years.

Shifting E&P priorities will support business

Core expects Q1 2018 international activity and U.S. rig counts will be flat from Q4 2017, while U.S. completion activity will continue to improve at a steady pace. Therefore, the company expects Q1 2018 revenue will be flat-to-slightly down from Q4 levels, as usually occurs in the industry. Overall, however, Core is optimistic. The downturn means international operations have seen significant under-investment for several consecutive years. This will lead to steepening legacy declines in many international areas, reinforcing fundamentals.

Core also believes the recent shift in E&P priorities away from “growth at any cost” to enhancing returns will help its business. According to Core, companies emphasizing metrics like ROIC, FCF and returning capital to shareholders are often more technologically sophisticated and are the core of Core’s client base.

Dick Bergmark to retire; Larry Bruno named president; Chris Hill will succeed Bergmark as CFO

Core also announced several changes in management today, shuffling the C-level. Richard Bergmark, Core’s EVP and CFO will retire at the end of 2018, and will not seek re-nomination to the company’s Board of Directors when his current term expires in May 2018.

Bergmark will be succeeded as CFO by Chris Hill, who has been with the company for the past 12 years. Hill was most recently Core’s Chief Accounting Officer, and has previously led the company’s IR effort, was Corporate Group Controller and was Controller of Financial Reporting.

In addition, the role of President, currently held by Chairman, CEO and President David Demshur, will be separated from Demshur’s other roles and filled by Lawrence Bruno, currently VP of Reservoir Description.

Bruno has been in the industry for 30 years and with Core Lab for 20 years. In addition to his duties leading the company’s global reservoir-based laboratories, for the past 10 years, Bruno has been a technical spokesperson for Core by leading technical presentations and panels for industry and shareholder conferences.

EnerCom Dallas conference presenter

Core Laboratories will be presenting at the EnerCom Dallas investment conference, Feb. 21-22 at the Tower Club in downtown Dallas. Institutional investors, portfolio managers, financial analysts, CIOs and other investment community professionals who invest in the energy space should register now.

Comments regarding the management changes and personnel from Core CEO David Demshur during the Q4 conference call

“Larry, a 20-year veteran at Core has been instrumental in creating the waves of new technologies and services that Core has rolled out over the past decade plus. Larry, who many of you have met at energy conferences and sponsor of our Houston facility tours, will work beside Monty Davis in guiding worldwide operations. Larry and Gwen will also take more of a leading role in future energy conferences and industry interactions.”

“It also gives us great pleasure to announce that Chris Hill will become Core’s Chief Financial Officer in May 2018 succeeding Dick Bergmark. Many of you also know Chris through investor interactions and energy conferences, and he is well regarded by analysts and investors worldwide. Chris has held various global roles for Core in both finance and accounting, including a three-year stint in Amsterdam and he is a welcome addition to Core’s executive team.”

“Dick Bergmark, the architect of Core’s three financial tenets will continue to serve as an Executive Vice President until his retirement at the end of 2018. Under Dick’s tutelage Core has grown from a $38 million management buyout to a company with a market cap now exceeding $5 billion creating shareholder value every step of the way. As has been stated on numerous occasions, Dick is the best wingman a CEO could ever be blessed with. He has made everybody on the executive management team of Core, especially, me, better at their jobs.”

“Dick is not getting away that quick though, as you will continue to see him at energy conferences and investor gatherings throughout the rest of 2018. Core has witnessed and is encouraged by the increasing focus of its major clients regarding capital management, return on invested capital, free cash flow and return of capital back to their shareholders as opposed to just growing production and destroying capital at any cost.”

“The oil companies adopting these metrics tend to be more technologically sophisticated operators and form the foundation of Core’s worldwide client base. Core will benefit from this shift in focus from pure production growth to employing higher technology solutions, such as EOR methods in unconventional reservoirs or employing Core’s exclusive HERO PerFRAC energetic systems.”

“These companies will drill fewer wells, but they will be better wells. The uptick in demand for these technologies is considered in the Company’s continued long-term increases in already industry-leading operating margins and expanding incremental margins.”

“Clients will pay for these technologies that boost their return on invested capital and free cash flow as opposed to a commoditized service, such as wireline, seismic and pressure pumping. Core will remain a technologically driven oilfield service meritocracy that will continue to grow and expand our service and product offerings.”


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