AMSTERDAM, Oct. 21 /PRNewswire-FirstCall/ -- Core Laboratories N.V.
(NYSE: CLB) reported third quarter 2009 earnings per diluted share
of $1.33, down 13% from third quarter 2008 totals, on revenues of
$167,802,000, down 17% from the year-earlier quarter. Net income in
the quarter decreased to $30,988,000 from $36,834,000 while
operating income decreased 20% to $44,199,000 from year-earlier
third quarter totals. Foreign currency exchange gains and a lower
effective tax rate accounted for $0.18 of the quarterly earnings.
Therefore, excluding the impact of these items, Core Lab operations
generated $1.15 per diluted share in third quarter 2009 earnings.
Third quarter operating margins, defined as operating income
divided by revenue, were 26%. The Company has established an
internal performance target of achieving, every quarter, a return
on invested capital (ROIC) in the top decile of the 35 companies
listed as its Bloomberg Peers. Based on Bloomberg's calculations
for the second quarter of 2009, which is the latest comparable data
available, Core's returns were the highest of its top 35 peer
oilfield services companies and more than three times the Peer
group average ROIC . For the third quarter of 2009, Core's
Reservoir Description operations, which focus on international
crude-oil-related projects, posted modestly lower year-over-year
quarterly revenue while operating income totals increased. Project
mix and expense reductions generated higher year-over-year
quarterly operating margins. Large-scale core analyses and
reservoir fluids projects continued in Asia-Pacific, the Middle
East, and the deepwater areas offshore West Africa and Brazil.
Production Enhancement operations had higher revenues and operating
income in the third quarter than in the second quarter of 2009.
Increased North American activity and increased penetration of
international markets bolstered results. Reservoir Management
operations, also internationally focused, reported slightly higher
quarterly revenue and increased operating income and margins
compared with the third quarter of 2008. The Company received the
first set of gas-shale cores from recent drilling in central Europe
and performed additional work on potential lower Tertiary
reservoirs in the deepwater Gulf of Mexico. For the first nine
months of 2009, Core reported revenue of $513,940,000, down 11%
from the first three quarters of 2008, and net income of
$89,987,000, down 6% year-over-year for the period. The Company
earned $3.88 per diluted share for the first three quarters of 2009
compared with $3.97 per diluted share for the same period last
year. Cash at the close of the first nine months of 2009 totaled a
record high of $137,225,000, or approximately $5.90 per diluted
share, up 33% from second quarter 2009 levels and up from third
quarter 2008 totals by $78,950,000. During the quarter, the Company
also paid out almost $20,000,000 in regular and special dividends.
Year-to-date free cash flow, defined as cash from operations minus
capital expenditures, reached a record $134,900,000, or $5.81 per
diluted share. This compares with free cash flow of $124,000,000,
or $5.19 per diluted share, that Core generated during the entire
year of 2008. Segment Highlights Core Laboratories reports results
under three operating segments: Reservoir Description, Production
Enhancement, and Reservoir Management. Reservoir Description
Reservoir Description operations reported quarterly revenue of
$101,475,000, down 9% from last year's third quarter, and operating
income of $26,792,000, up 5% from the year-earlier quarter.
Operating margins were 26%, up 300 basis points from last year's
third quarter margins. Reservoir Description margins continued to
benefit from expense reductions and the downsizing of its
Venezuelan and Nigerian operations over the past three years. The
Company has focused on international development and
production-related crude-oil projects almost to the exclusion of
more cyclical, exploration-related activities. Moreover, as Company
policy precludes direct participation in risk-inherent,
lower-margin, integrated management projects, the Reservoir
Description segment has no exposure to Chicontepec projects in
Mexico. Large-scale core analyses, reservoir fluids phase-behavior,
and crude-oil testing, inspection, distillation, fractionation and
characterization studies continued in the international markets.
Specifically, in the Asia-Pacific region, large projects continued
in Malaysia, Indonesia, Australia, and in India, where the Company
initiated a multimillion-dollar waterflood study. Middle East
operations in the United Arab Emirates, Qatar and Kuwait realized
large increases in demand for Reservoir Description services.
Numerous major projects, one of which included more than 5,000 feet
of carbonate cores, continued in both southern and northern Iraq,
as international oil companies built the databases needed to
evaluate fields for an upcoming licensing round. Iraqi reservoirs
are very complex and will require extensive data sets to evaluate
projected production rates and ultimate hydrocarbon recovery
factors. Critical to the successful redevelopment of Iraqi fields
will be increasing the ultimate hydrocarbon recovery rates as many
fields are currently projected to yield relatively low recovery
rates. Recent high-profile discoveries and developments in the
deepwater offshore West Africa resulted in higher work loads for
Reservoir Description operations, especially for post-salt projects
in offshore Angola blocks 1, 10, 14, 15, 18, and 31, and offshore
Gabon. Core also is active in the recently announced potential
Cretaceous turbidite and submarine fan plays offshore Ghana and the
Ivory Coast. These plays could extend westwards, then northwards,
into sedimentary basins offshore Liberia, Sierra Leone, and
Equatorial Guinea. Statistically, turbidite and submarine fan
reservoirs make up some of the most prolific petroleum reservoirs
worldwide. Production Enhancement Production Enhancement operations
posted third quarter 2009 revenue of $54,398,000, down 31% from the
year-earlier quarter but up 5% sequentially from the second
quarter. Operating income also increased sequentially by 1% to
$14,627,000, and operating margins were 27%. Given that North
American drilling activity was estimated to be down approximately
50% from the third quarter of 2008, Production Enhancement
outperformed its focus market. Increasing market penetration by the
Company's HERO(TM), SuperHERO(TM), and SuperHERO Plus+(TM) lines of
perforating charges and concentrated focus on the Haynesville,
Marcellus, and Eagle Ford Shale developments were the primary
contributors to the segment's relatively strong performance. Core's
recently introduced SpectraChem Plus+(TM) service also continues to
gain market acceptance, especially in multi-stage completions in
the Bakken oil-shale play. Outside North America, Production
Enhancement operations are providing perforating charges and gun
systems to numerous international and national oil companies for
use in the completion of oil-producing and potential oil-producing
zones throughout Asia-Pacific. Core's unique line of perforating
charges and gun systems has proved very effective in the various
types of clastic and carbonate reservoirs that are prevalent
throughout the Asia-Pacific region. Reservoir Management Reservoir
Management operations posted modest year-over-year third quarter
increases in revenue, operating income, and operating margins,
reflecting Core's emphasis on potentially high-return developments
and international-related projects. Revenue increased to
$11,929,000, and operating income reached $3,498,000. Operating
margins for the third quarter of 2009 were 29%. During the quarter,
the Company began to receive shale cores from potential gas-shale
developments from central Europe. Basins to be evaluated range from
the United Kingdom to the Ukraine and south to Turkey. Reservoir
Management operations initiated its Global Gas Shale Study to
examine gas shale potential in central and southern Europe, North
Africa, India, China, South America, and Australia, among other
regions. Currently eight international oil companies are
participating in the Global Study, and many other companies are
reviewing the technical proposal. Early participants include Esso,
Total, Marathon Oil, Hess Corporation, Statoil, and ConocoPhillips.
The Company also continues to expand its Eocene (Lower Tertiary)
Provenance Study of the Gulf of Mexico, first referenced in Core's
third quarter 2004 earnings release. Core is building
petrophysical, sedimentological, and mineralogical databases from
cores and cuttings samples that are being used to evaluate
reservoir quality and project reservoir locations and thicknesses
for future drilling. Recent deepwater discoveries in the
Mississippi fan complexes and Perdido fold belts, from Alaminos
Canyon, eastward through Keathley Canyon -- which contains the
recently announced BP Tiber discovery -- and Walker Ridge, provide
evidence of prolific lower Tertiary potential in a wide area of the
ultra-deepwater Gulf of Mexico. The study currently has 23
participants, including BP, ConocoPhillips, ExxonMobil, Chevron,
Anadarko, and Devon. Return On Invested Capital The Company has
established an internal performance target of achieving an ROIC,
every quarter, in the top decile of the 35 companies listed as its
Bloomberg Peers. The Company believes that ROIC is a leading
performance metric used by shareholders in determining the relative
valuation of publicly traded companies. Further, the Company
believes its shareholders will benefit if it consistently performs
at the highest ROIC levels among its Bloomberg Peers. According to
financial information from Bloomberg, Core Laboratories' returns
were the highest for any of the 35 peer oilfield service companies
listed by Bloomberg. Moreover, Core's ROIC was more than three
times the oilfield services industry Peer group average according
to Bloomberg. Second quarter 2009 results were the most recent
available from Bloomberg for the entire oilfield sector. Peer
companies listed by Bloomberg include Halliburton, Dril-Quip,
Superior Energy Services, Schlumberger, Tidewater, Carbo Ceramics,
Oil States International, Baker Hughes, BJ Services, Tesco,
Weatherford and Key Energy Services among others. Core will compare
oilfield services sector returns for the third quarter in its
fourth quarter earnings release. Free Cash Flow, Cash, Quarterly
Dividend, and Special Dividend For the third quarter of 2009, Core
generated approximately $58,600,000 in cash from operations and had
$4,700,000 in capital expenditures, yielding a free cash flow of
almost $54,000,000, an all-time quarterly high. Even as the Company
continues to work in over 50 countries, Core saw sequential
quarterly improvements in receivables, inventories and payables
that added to the record quarterly free cash flow levels. Free cash
flow for the first nine months of 2009 reached approximately
$134,900,000, or $5.81 per diluted share, both all-time highs over
any full year of cash generation. In contrast, Core's average
outstanding diluted share count of 23,250,000 is at its third
lowest level since the third quarter of 1997. The Company continues
to project 2009 capital expenditures of $15,000,000 to $17,000,000,
down from prior guidance of $20,000,000, and down from
approximately $31,000,000 in 2008. Cash balances reached
$137,225,000, or $5.90 per diluted share, the highest
quarter-ending level ever reported by Core. In addition,
indebtedness, net of cash, was reduced to $101,000,000 from the
year-ago total of $242,000,000, a decrease of $141,000,000, or
nearly 60%. Net debt-to-capitalization now stands at approximately
16%. On 24 August 2009, the Company paid another quarterly cash
dividend of $0.10 per share and a special cash dividend of $0.75
per share. Total cash dividends paid by Core in the quarter were
nearly $20,000,000. Dutch withholding tax was deducted from each
dividend at a rate of 15%. Any determination to declare a future
quarterly or special cash dividend, as well as the amount of any
such cash dividend that may be declared, will be based on the
Company's financial position, earnings, earnings outlook, capital
expenditure plans, ongoing share repurchases, potential acquisition
opportunities, and other relevant factors at the time. In addition
to dividend payments, Core could use its free cash flow and cash
balances to repurchase shares or debt, fund internal growth, or
make strategic acquisitions. Core intends to allocate cash to those
activities that the Company believes will yield the highest overall
return for its shareholders. Q4 2009 Earnings Guidance For the
fourth quarter of 2009, Core expects revenue to range between
$165,000,000 and $170,000,000 and EPS to range between $1.15 and
$1.20. The midpoint of this guidance would result in operating
margins of approximately 26%. In general, the Company believes that
activities, workflows, and operating margins outside North America
will remain essentially constant and that North American activity
levels will increase slightly in response to moderately increasing
natural gas prices. Recent natural gas production data indicate
that North American supply is now decreasing and will continue to
decrease over the next several quarters. In addition, the North
American rig count is increasing slightly. This fourth quarter 2009
guidance excludes any gains or losses that may originate from the
repurchase of outstanding debt, any effects of foreign currency
translations, and assumes an effective tax rate of approximately
31% to 32%. In addition, fourth quarter EPS guidance does not
consider shares that may be repurchased by the Company or shares
that may be added to the share count as related to amounts
outstanding on Core's $300 million Senior Exchangeable Notes. The
Company is unable, at this time, to provide 2010 first quarter
guidance with a high degree of confidence. Adjustment to Senior
Exchangeable Notes Exchange Rate The dividends described herein
will result in an adjustment to the Exchange Rate on our Senior
Exchangeable Notes. The new exchange rate will be 10.8012 per
$1,000 principal amount of the outstanding notes and is effective
26 October 2009. The Company has scheduled a conference call to
discuss this quarter's earnings announcement. The call will begin
at 7:30 a.m. CDT on Thursday, 22 October 2009. To listen to the
call, please go to Core's website at http://www.corelab.com/. Core
Laboratories N.V. (http://www.corelab.com/) 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 over 70 offices in
more than 50 countries and is located in every major oil-producing
province in the world. This release includes forward-looking
statements regarding the future revenues, profitability, business
strategies and developments of the Company made in reliance upon
the safe harbor provisions of Federal securities law. The Company's
outlook is subject to various important cautionary factors,
including risks and uncertainties related to the oil and natural
gas industry, business conditions, international markets,
international political climates and other factors as more fully
described in the Company's 2008 Form 10-K filed on 20 February
2009, and in other securities filings. These important factors
could cause the Company's actual results to differ materially from
those described in these forward-looking statements. Such
statements are based on current expectations of the Company's
performance and are subject to a variety of factors, some of which
are not under the control of the Company. Because the information
herein is based solely on data currently available, and because it
is subject to change as a result of changes in conditions over
which the Company has no control or influence, such forward-looking
statements should not be viewed as assurance regarding the
Company's future performance. The Company undertakes no obligation
to publicly update any forward looking statement to reflect events
or circumstances that may arise after the date of this press
release. CORE LABORATORIES N.V. & SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (amounts in thousands, except per
share data) (UNAUDITED) Three Months Ended Nine Months Ended 30
September 30 September 30 September 30 September 2009 2008 2009
2008 ---- ---- ---- ---- REVENUES $167,802 $202,523 $513,940
$579,648 OPERATING EXPENSES: Costs of services and sales 112,175
134,205 337,204 384,588 General and administrative expenses 6,637
6,857 22,595 22,305 Depreciation and amortization 6,023 5,562
17,637 16,077 Other expense (income), net (1,232) 726 (6,002) 2,038
------ --- ------ ----- OPERATING INCOME 44,199 55,173 142,506
154,640 Interest expense 3,895 4,593 11,535 17,375 ----- -----
------ ------ INCOME BEFORE INCOME TAX EXPENSE 40,304 50,580
130,971 137,265 Income tax expense 9,189 13,643 40,653 41,034 -----
------ ------ ------ NET INCOME 31,115 36,937 90,318 96,231 NET
INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST 127 103 331 283 ---
--- --- --- NET INCOME ATTRIBUTABLE TO CORE LABORATORIES N.V.
$30,988 $36,834 $89,987 $95,948 ======= ======= ======= =======
Diluted Earnings Per Share: $1.33 $1.53 $3.88 $3.97 ===== =====
===== ===== WEIGHTED AVERAGE DILUTED COMMON SHARES OUTSTANDING
23,250 24,082 23,211 24,164 ====== ====== ====== ====== SEGMENT
INFORMATION: Revenues: Reservoir Description $101,475 $112,037
$307,477 $326,695 Production Enhancement 54,398 78,848 169,512
217,578 Reservoir Management 11,929 11,638 36,951 35,375 ------
------ ------ ------ Total $167,802 $202,523 $513,940 $579,648
======== ======== ======== ======== Operating income (loss):
Reservoir Description $26,792 $25,531 $83,006 $77,608 Production
Enhancement 14,627 26,649 47,370 71,758 Reservoir Management 3,498
3,089 10,460 10,278 ----- ----- ------ ------ Subtotal 44,917
55,269 140,836 159,644 Corporate and other (718) (96) 1,670 (5,004)
---- --- ----- ----- Total $44,199 $55,173 $142,506 $154,640
======= ======= ======== ======== CORE LABORATORIES N.V. &
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in
thousands) ASSETS: 30 September 31 December 2009 2008 ---- ----
(Unaudited) Cash and Cash Equivalents $137,225 $36,138 Accounts
Receivable, net 117,981 144,293 Inventories, net 34,317 34,838
Other Current Assets 18,759 20,376 ------ ------ Total Current
Assets 308,282 235,645 Property, Plant and Equipment, net 97,966
103,463 Intangibles, Goodwill and Other Long Term Assets, net
184,551 182,427 ------- ------- Total Assets $590,799 $521,535
======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY: Accounts
Payable $27,981 $41,588 Other Current Liabilities 57,633 54,102
------ ------ Total Current Liabilities 85,614 95,690 Long-Term
Debt and Lease Obligations 205,377 194,568 Other Long-Term
Liabilities 49,749 42,992 Shareholders' Equity 250,059 188,285
------- ------- Total Liabilities and Shareholders' Equity $590,799
$521,535 ======== ======== CORE LABORATORIES N.V. &
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW (amounts
in thousands) (Unaudited) Nine Months Ended 30 September 2009
----------------- CASH FLOWS FROM OPERATING ACTIVITIES $144,914
CASH FLOWS FROM INVESTING ACTIVITIES (10,846) CASH FLOWS FROM
FINANCING ACTIVITIES (32,981) ------- NET CHANGE IN CASH AND CASH
EQUIVALENTS 101,087 CASH AND CASH EQUIVALENTS, beginning of period
36,138 ------ CASH AND CASH EQUIVALENTS, end of period $137,225
======== Non-GAAP Information Management believes that the
exclusion of certain income and expenses enables it to evaluate
more effectively the Company's operations period-over-period and to
identify operating trends that could otherwise be masked by the
excluded items. For this reason, we used certain non-GAAP measures
that exclude these items; we felt that presentation provides the
public a clearer comparison with the numbers reported in prior
periods. Reconciliation of Earnings Per Diluted Share Three Months
Ended 30 September 2009 ----------------- Earnings per diluted
share $1.33 Foreign exchange gain (net of tax) (0.02) Adjust to 32%
tax rate (0.16) ----- Earnings per diluted share excluding specific
items $1.15 ===== Computation of Cash per Diluted Share (amounts in
thousands, except per share data) (Unaudited) 30 September 2009
----------------- Cash and cash equivalents $137,225 ========
Weighted average diluted common shares 23,250 ====== Cash per
diluted share $5.90 ===== Free Cash Flow Core uses the non-GAAP
measure of free cash flow and free cash flow per diluted share to
evaluate its cash flows and results of operations. Free cash flow
and free cash flow per diluted share are important measurements
because it represents the cash from operations, in excess of
capital expenditures, available to operate the business and fund
non-discretionary obligations. Free cash flow and free cash flow
per diluted share are not measures of operating performance under
GAAP, and should not be considered in isolation nor construed as an
alternative to operating income, net income, earnings per share, or
cash flows from operating, investing, or financing activities, each
as determined in accordance with GAAP. You should also not consider
free cash flow and free cash flow per diluted share as a measure of
liquidity. Moreover, since free cash flow and free cash flow per
diluted share are not measures determined in accordance with GAAP
and thus are susceptible to varying interpretations and
calculations, free cash flow and free cash flow per diluted share
as presented may not be comparable to similarly titled measures
presented by other companies. Computation of Free Cash Flow
(amounts in thousands, except per share data) (Unaudited) Three
Months Nine Months Twelve Months Ended Ended Ended 30 September 30
September 31 December 2009 2009 2008 ------------ ------------
----------- Net cash provided by operating activities $58,647
$144,914 $155,207 Less: capital expenditures (4,674) (9,994)
(30,950) ------ ------ ------- Free cash flow $53,973 $134,920
$124,257 ======= ======== ======== Weighted average diluted common
shares 23,250 23,211 23,944 ====== ====== ====== Free cash flow per
diluted share $2.32 $5.81 $5.19 ===== ===== ===== DATASOURCE: Core
Laboratories N.V. CONTACT: Richard L. Bergmark of Core Laboratories
N.V., +1-713-328-2101, Fax, +1-713-328-2151 Web Site:
http://www.corelab.com/
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