Core Laboratories (CLB) 24 Oct 172017 Q3 Earnings call transcript

Company Profile

Participants

Gwen Schreffler	IR
David Demshur	CEO
Dick Bergmark	CFO
Monty Davis	COO
Chris Hill	Chief Accounting Officer
Scott Gruber	Citigroup
Ole Slorer	Morgan Stanley
Rob MacKenzie	Iberia Capital
Chase Mulvehill	Wolfe Research
Greg Lewis	Credit Suisse
Sean Meakim	J.P. Morgan
Marc Bianchi	Cowen
Stephen Gengaro	Loop Capital Markets
William Alpaugh	Simmons and Company

Call transcript

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Operator

Good morning. And welcome to the Core Laboratories Quarter Three 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to David Demshur, Chairman, President and CEO. ahead. go Please

David Demshur

and to This afternoon Like Executive by Pacific. President morning North release. XXXX I shareholders, Davis, in like will Core Core’s morning, employees segments. Officer, Thanks, will that third macro This our current present back Monty Laboratories’ Europe, IR. say operational COO, remarks Chris Bergmark, Hill, XXth and Dick industry Vice good Accounting into quarter updating detailed Gwen analysts, our of in welcome conference environment, Asia joined importantly, call Core’s Chief review; by good America, come making Core’s our and to and regarding to to CFO; call. Rachel. earnings all good and review five most be is evening am who We’d earnings start in be should trends beneficial divided The Head forward-looking the the will we’ll Core. Core’s statements. Schreffler, Gwen of Then quarterly

will remarks will and statements. then it Core’s by outlook Core major technologies, tenets, detailing Q&A outlook we’ll to segments, and build Gwen. I shareholder Chris a comments now discussing Monty Then, the followed Lab review building value. successful highlighting Core’s operating forward-looking the commenting detailed of Bergmark for it over shareholder as back our to progress open long-term and Company XXXX will to employs will new to two regarding turn We a three worldwide. with Then Gwen Core’s overview pertains go which the and continued Core’s some session. value, regarding projects introduction phones operations then financial fourth additional industry a quarter prospects. Dick on follow financial and then general Core’s of

Gwen Schreffler

that Company’s forward-looking the discussion respect the This this number other material and make statements. those our include outlook. this climate or any in subject new uncertainties result May projections, outcome. These We to of publicly in we a more statements international in or to XX may the of a as business or from statements industry, that other of and Before some forward-looking risks future oil obligation call discussed would markets, our and information, forward-looking political of forward-looking gas mention morning, conditions, vary prove results any and undertake otherwise. Act or are the during uncertainties risks information. statements, of to the I’ll should conference include of filings those business incorrect, types start we projected factors, update or estimates no of relating whether may may these affect including one our assumptions actual any revise events materialize international

risks Factors SEC the some the year see Risk by XA our detailed and foregoing and Form and Item ended a Annual of XXXX, discussion us XX, in For well statements filed reports AFM. of registration as up Report fiscal as December other for on with the more the uncertainties, XX-K

comparable financial Dave. said, directly included results. our release I’ll found comments website. quarter our Our announcing measures discussion can on third be that back measures most pass Reconciliation non-GAAP to the measures. non-GAAP the in financial also the to With include press Those

David Demshur

regarding methods solutions fuel worldwide foundation increasing shareholders opposed the benefit production flow back Thanks invested more cash oil boost Core that seismic company free as will of on In EOR in major Gwen. and that and witnessed technologically as We’ll at encouraged focus already in considered technology field industry for Core’s clients this for commoditize exclusive and Core any do their continue to these Laboratories cash and technologically as the continued PerFRAC the from free company’s are grow invested is will its margins. increase will in a pumping., the such expand reservoirs to the such operating capital our return growing demand in or has our in wireline, these to capital pay focus that technologies remain production return just seeing. the addition, offering. oil return base. as at and shift operators pressure to guidance form The for of expansion HERO leading higher on Core technologies margin little this growing unconventional management, industry metrics the client these tend Core’s is of flow trends and and from energetic capital. incremental look adopting opposed cost The a we companies and services uptick Clients driven in and will to of systems. by sophisticated our capital service capital, continued employing product be service

streams. We plans have position production start clients with no acreage to and for competing our

segment studies to increased is determine produce to reservoir and the recoveries fluids unconventional behaviour plans sophisticated for reservoirs. and ultimate studies used the demand volume reservoir unconventional PVT of Pressure, estimated or technologically favourable Core trend sets by performance temperature up use is description phase Laboratories fluids these Another of predict XX% of some reservoir. maximize Core data in streams to from than the data less XX on years now sets from revenue invested characterization capital Reservoir reservoir XX% free and Core the generated and optimize cash is ago. return their production flow. in

our to currently shareholder of of the review by which as three company tenets a Core XXst company. technological history year XX publicly being financial over year Core build to our traded Incidentally, innovation. used is value celebrating Now a

I over and Chris? XXXX quarter, for the and again detailed now the quarterly our leading on to to quarterly invested flow $XX Chris quarter million will return repurchases. cash over will Core the back future financial XXnd capital $XX dividend. all of the produced our our generated capital million once to Also review. free quarter. over return share for back call industry Core during in its the in returned During consecutive shareholders continue via a third excess via Core turn shareholders quarters dividends to third

Chris Hill

Thanks David.

third statement, estimated closures were and reservoir effect quarter. the our our the million an for from $XXX.X There facilities negative was the segment the quarter, our several our to income enhancement the the in by client looking there at segment. and during Gulf to regions. hurricanes announcement hurricane production released business with Harvey, in third both revenue disrupted and earnings Caribbean quarter led Coast we facilities primarily significant be and for would revenues which our description temporary have were regarding the X, growth in $X impact Now September On which a million

revenue hurricanes enhancement impact the we a stronger for revenue the and for production had from affected to was this our which actually segment less Of projected revenue quarter, However the showed service is in million $X revenue, from segment. to our our service originally hurricanes description quarter. $XXX.X million last primarily comparable The growth was the reservoir affected quarter. than the

the offset U.S. EIA’s sequentially. negative the quarter, more from our by the published completion by growth hurricanes up or the outside U.S. sales growth the are activity, to the offset with were inline expected regions in Product we however lower million from stronger was completion The than $X for product production However, sales X.X% $XX.X sales than impact while were million diagnostic services. enhancement

in our last for XX% XX% the from in cost quarter million year. the to $XX.X for quarter from see primarily quarter last the of absorption service the last related leverage last on $XX.X and Despite services, quarter our XX% increased revenue, the sales the from of is the due quarter revenue which impact hurricane, from of affects during primarily improvements a and of the operating and levels revenue. were continue Moving cost of quarter nice XX% third G&A million, we to and the on XX% employee and hurricanes compensation. up higher headcount are to from product quarter was improvement up same to the fixed

quarters. capital G&A recent expect expect million, full $XX growth to would has the Depreciation activities. around expense million for depreciation minor be of more our expenditures the increase in the last several and year. slightly amortization We We was growth to decreasing quarter for support some million been reflecting in $X.X over which $XX in the

$XX and third be For gave FX specifically to XXXX, or losses gains on expected and calls call rate to effectiveness of quarter. depreciation guidance $XX past we our The an last for assumed million million. approximately the tax expense excluded XX% any is the impact of

For the FX the is third XX% rate quarter minimal. our effective was impact and tax from

was GAAP U.S. million was XX%. As for EBIT, such represent quarter at rate million to XX%. reported results. margins of of only best-in-class and the $X.X tax the quarter EBIT expense Income continues $XX.X tax effective have an for we

million, and the U.S. impact the the between other of per the the share be income down to was continue million mix will earnings was quarter quarter it negative last somewhat to Earnings world. from the for for to diluted hurricanes. due quarter. the $X.XX of $XX.X $XX.X geographic sensitive regions from However, Net

on down significant at days. XX from expand. million are stood demand have Inventory June for highlight which that balances. a the improve at continue materially turns we to changed strong million is sequentially at and our reported sheet, items As million, the to only going of the aspect move balance I'm comparable Receivables to previously $XXX.X to DSOs $XX.X about balance to inventory products remained at as continues XX our while $X.X

now improvement showing on remainder of the inventory liability the our sheet. side year. turns expect throughout balance to We the And continue of the to

Our down balance XX. to million accounts million December balance payable from XX, at about but at were June $X.X comparable our the $XX.X

and quarter. and the for year-to-date. at expenditures remained last long-term ended level Our Capital the $X.X million, debt quarter quarter same $XXX $XX.X from million were the at million

the our $XX discipline year. year expect capital to capital the to evaluate we'll the for to expenditures of We the million the adhere we expenditure $XX remainder million opportunities range. continue for to And in as be strict capital

the million cash CapEx, $XX.X cash the from after cash free in at our flow million. our $XX activities operating In and paying quarter, $X.X million third quarter Looking was flow in flow. was

cash at free over net believe comparing flow on free this outlook. companies' when models shareholders highest ratio of financial We our is cash utilize those continues guidance update turn for be XXX% discounted the an and it for particularly cash valuations. flow who results, for Dick for industry shareholders by in assess will I conversion an one the Our quarter. to flow divided important is income which the now metric to

Dick Bergmark

Thank you, Chris. nice. Very

just increasing be return client operators are our the encouraged The of capital, of as to foundation capital major to their form the base. back these management, worldwide clients tend and opposed sophisticated technologically metrics company to on more shareholders returning our goals. focus capital adopting free cash invested flow the and growth by is production regarding We

of use We increases operating expect their operating in production during FIDs, that of solutions quarter. incremental oil technology Clients increased growth growth maximize ROIC for companies. the to employing considered for our shift a been in Internationally, our EURs. has technological free production and the gas that guidance flow. we from fourth hired economic and boost focus will the in number been margins announced and to will by benefit Investment cash The and higher from continued have solutions Decisions quarter Final technologies pay client’s into

those count operators are as underway year activities developing remains relating operators. However, the limited to international by plans due Further this project to projects Core not capital FIDs XXXX. early to international for expected implement in should rig those their are begin Lab plans to currently flat and materially increase

fields. from continuing maximizing producing However, spend their on budget operators operating existing to from recovery are their

from activity fourth to to approximately drilled current slightly reductions up be quarter will expect to largely million. activity And to as quarter budgets. supplemented by be but from XXXX we international fourth ducts be continue projects inventories. third and with levels ongoing We revenue of in completion expect uncompleted quarter We levels project the fourth most operators funded quarter operating levels $XXX.X America flat to North completion levels expand

$XX.X approximately expect during EPS be Operating of phase expected As quarter fourth quarter. prior we operating XX% our to incremental to the releases, to XX%. XX%. also continue projected operating yielding $X.XX all earnings shareholders exceed cash discussed flow per income approximately is followed million operating excess we XX% quarterly expected margins net to as to Fourth fourth margins is return again income quarter our to approximately free in approximately is the for continue be to margins the exceed to of quarter incremental to for continues expect capital recovery the historical share. and by

we review. guidance will over to that operational call Monty Now with turn an the for

Monty Davis

velocity produced. activity well, HERO for to showed In and in showing and hurricanes enhancement insight The another stimulation quality is fields. that log deep wash cluster the less a of these was early into unknown consistent reported size them design or completion the consistent were clusters led perforated very efficiency whole screen [Ph] impact ray – charge. segment to operator XX.X%. various on as enhance and degenerating How conventional gas therefore Why being of COX, is perforated sand Revenues generated composition zones they first things. impacted analysis multiple to stable determine is PerFRAC unstimulated as chromatography, America the HERO reservoir been and clients proppants. primarily characterise million third problems less our for operating design in ten as provide location quarter stimulating COX clients of offshore standard gain of migration and of the handling isotope to automated third to impacted they Dick. that source analysis the with formations them Core effective to our After in products core solve Core completion within asked South thermal our experiencing a the and stable reached and stage part Permian several service technology having million from vendor the Core completion stages of of given the and natural serve Fluid production samples Basin and compartmentalization, wellbore Core Reservoir and to The flow stimulate issues to a QX and by the quarter zero stage, and are to for A getting penetrating post-frac under pump. million the origin, and help the as hurricanes. and services fluid negatively well and exploitation measuring has extreme the operations. Labs play clusters most laboratory tools. the reserves of for and South be conventional the and and been We determine depth, clusters amount for Thanks hydrocarbon operating needs. both in stage keep did Continuous Core’s encountered. third implement the to our allow the ongoing a continue proppants to through U.S. growing outs our continues and XX%. within was operator. horizontal demand In evaluated within the all sale rocks. further site [Indiscernible] hydrocarbon gama in CO continuing maturity of early for all while response employees development demand. was will and $XXX were thank Production the Core exploration, core of continued charge precision, results multiple and of hole the to the our operating analysis by results our commencement at acceptance were analysis in they all Core the wet and quarter, region of description other additional this the of and and Lab by were and the impacted with not perforated that the charge in million continued diagnostically has and of of is is insight the such Reservoir screening employees million diverters and earnings active they utilizing help PerFRAC The region develop SpectraScan to SpectraScan potential are PerFRAC generating quarter. of our of performed suffer clients unconventional Revenues stimulated them isotope non-invasive help the earnings gas history hurricane in to results into them HERO size clients of Ford operators Texas. By was used gas renewed preventing basin. well commonly for HERO PerFRAC compared with during each and has well to login laboratory XX-stage third currently Laboratories focussed three to test the SpectraScan well client Gulf all recommended left gas all and wells onshore ready data site allow three $XX.X remaining with their $XX much testing operator The in of HERO acquisitions fracing independent development An affecting hydrocarbon technology importance clusters the million formation enhanced the the the found origin continue – testing and generation frac. near methane with Core’s time Eagle of stage. have resource Tomography were signatures newest meet from completed earnings cluster acoustic Mexico after on both ratio, for PerFRAC Revenue Recently be gama, frac gas CT the evaluate close industry around Caribbean few of XXX% Marcellus revenue technique Core margins to optimize to to as of operating of mass real base. is in technology the measurements and reservoir third and demonstrating continued $XX isotope margins with the reduction. deposits. of of one and in ran generating of through operating charge Core worked a XX%. in Core’s difficulties $XX such quarter the done have evaluation [Indiscernible] technologies stimulated and operating spectrometry grow login margins were globe. $XXX and followed prior

increase eliminated for stimulated reservoir of volume an for diagnostic coverage ensuring diverters. the has primary of and through out cost more With early being frac a cost screen the diverter effective quite consistent since applied the that ineffective completion the from was it diversion. employ infact was the performance for diverter completion evaluating that reservoir. methods was The ensure diagnostic accessing and uniform other was treated treatment in need these that application volume reservoir of that of two call all and the effected eliminate the benefit not new to of cost were to of The clusters more has several optimization reserves in diverted the of After and the saved and – efforts stages other ranging technologies, design EUR significant they that ruled operator improvements methods wells. now to Core could uniform diverge employed number $XXX,XXX effectively open stimulated more minimal results the increase the is forward. the estimated to through per determined they questions. it $XXX,XXX cluster methods well going particular determine we’ll Moreover, a were in frac per to no in to of with able for in leading their operator their changes particular the coverage and diversion design that depth their Rachel, of the frac completion effective provided the data, out. The the there more the was diversion resulting

Operator

comes Greg Please The from Instructions] Credit you.[Operator Thank with go ahead. Lewis question first Suisse.

Greg Lewis

good and you morning. Yes, thank

David Demshur

Greg. morning, Good

Greg Lewis

we description little over talk trends as but going margin the for share last of percentage think it what XX% mentioned or that become fluid that is about over really next bigger reservoir reservoir fluid that years? reverse years, doubled a is XX do that a couple could next description is a to reservoir or more and forward analysis over think Dave, the of where we the does could years, as something trajectory in couple of mean of going guess that now that’s forward description bit you I analysis you

David Demshur

we doing see that good will unconventional. Yes, the owing all this in work in fluid amounts are in we climate work questions, EUR of we reservoir that do increased expect to current

the towards So fluid fluids phase understanding and through that’s a how those reservoir. very move that three unconventional heavily weighted

start to that saying come and the of sheer XXXX so in weight, no more over activity you come international international owing just get from [Ph] in will to However, a rock ramps to in in, into lot pun we’ll some the intended when up laboratories balance theatre. there projects that rock XXXX expect will

to of we overtime, some margins all us would in fluid most work trend side. which up to sophisticated amount expect all operating favorable So, testing that PVT of the on our because is one

For can Fahrenheit instance fluids pounds the pressure. degrees analyze We're XX,XXX do guys at per that to on inch square in able the that. being XXX planet only

increasing margins for also impacting looking amount being the we're to positively by done. fluids the So, of

you or up XX. So, description, XXs, last those and peak reservoir let's XXXX, at all 'XX, could say in of the if over in somewhere margins all high 'XX, creep look margins the at peak

Gregory Lewis

then they're great. guess over EMPs, little like Okay, And and looks just we're I you more it from mentioned volume. shipped maybe value on it bit focused seeing the a

has that benefit curious had like start, more of just guys just of starting now are see that just labs get and how, seems that a trends. the pay already you core already are conversations it kind have how its some more is your or is the to started reasoning customers of going? thinking I'm this is from it about this Now kind it been of

David Demshur

more I would We're our technology. of cases that benefit from some the most and higher but that technological had of say seeing have starting. use are in applications we conversations these

So, buck. they're for bang getting a bigger the

BP, see using companies clients, returned EOR to higher starting Pioneer mid-teens incremental leading investment, Resources, EOG, A Chevron, Natural be to involved to efficiency to and of name in would unconventionals. which on most free this. invested. Oxy, the to and much EORs and their But be return the shareholders. higher go of if your great cash they've you're couple recovery Apache for some going can take a you into advanced of of would effectiveness from technology to some the Certainly, Anadarko increase X active a get like a Marathon Shell, mainly those expenditure, of the highest few. million flow, factor our ahead technologically in the you are So, of unconventionals that that are this can Conoco, and and Companies example that has, be capital out employ X% up that there

Gregory Lewis

Okay, thank you very it much I the for time. appreciate as always.

David Demshur

Greg. Okay,

Operator

The Morgan Ole comes go Slorer next with question Stanley. from ahead. Please

Ole Slorer

thank little again Yes, you to on much snuff guys that good and you after see last very quarter. through back track

David Demshur

Ole, Yes. yes we got the ship righted.

Ole Slorer

Good to see you, Dave.

kind last bit bit next we you're update more that last gas that traction it specifics as context what's concept. to very a before would to call little as growth that of of little comes out? particularly that more sized sort and folk Several all give when getting bit is gas with, how secondary a So, the on component that mesh, you as playing time happen on the to we of is are cycling this fine at met, out base from and a of cycling customers well certainly shale what about and about that a XX XX% you things where your Could on taking you're fracs, an it? I tertiary talked will of presume XX% bit. most what And conference months least a comes assume probably even seeing frac, over that is revenue your this how

David Demshur

yes. Okay,

EOR for cycling and gas the with unconventionals. start Let's

project off continuing. industry is kicked joint Ford. have That in Eagle a the We

project industry continues now following making the because to approaching are Permian the it we're a proprietary grow. up proposals being joint projects of the be Wolfcamp right in companies will number where that do said, to in the That industry Basin. We

to at their interested mentioned, and I looking try this to them that. number idea So, best it's return get invested of and that dollars of the in just doing clients to of be all certainly

Tied the we've in later to testing field So, year -- amount and we we year, fluids in if would still unconventional think the ahead? from I this. the field next or a in that either rock expect go for we in the can be of work function this belong that, that days early achieved reservoirs. lab step results early revenue begin, to But and achieved the generate to

Ole Slorer

should the Permian to time, this, a have take when understand David, Wolfcamp have be -- I absorbed. Yes. I'd There's and terms getting you're helping just into in people going the in access general. of, timeline that to But really very timeline I the I gas industry, the could probably just sorry into and around you, talk be that. as to of what's some waiting in interrupted exciting issues about

David Demshur

Yes.

certainly are number of On last in now. usually the the These clients on being kicked is off the timeline, depending projects involved that project them.

requiring are We ever them actually as growing it's core projects timeline. the and expands, to submit and samples its fluid in

kicked case XX If our XX quarters. off we've early being second had where you the in look the here just third here be where shale studies years. they're participants, at and some of studies and now, those actually lasted And could this

on number is So, to that the ultimately it going at. look growth what of the of program clients all depends work

think certainly client tough community. that from answer it's We can So, we projects to years increased the actually last for underway. it's but question a hope interest and with these

Monty Davis

The that throughout giving us. results JIP. In important we is are of each time life we opportunity the aspect pretty Core data for distribute those studies revenue Lab the for much and of a information

benefit. it's before we have So, we the economic to get recognize complete to the in likely not JIP

lasting them gives years us several years So, with revenue of that opportunity. over many

Ole Slorer

Okay.

translate. to just Sorry

does kind to you come contracts when kick do you individual their as and As participants and get that do, results back of in? give these they studies in

David Demshur

of that's these the Often That's what times beauty happens. studies.

of approach let then operator the us that that the do certainly the and the those You now we're who is get with say just JIP will property. in is our protocols outcome an they comfortable a member of become using testing and testing. the And things our

then it a that right, of So, work. does you're Ole, JIP our traditional a that's proprietary model

Ole Slorer

can final them you Well, this give Okay. little if color.

And -- when couple of growth all something opposed shift sort in your of this take this engine. could a for could for all I So, be as gears that just think it. we're of looking

at longer how just about the you more we expect even think on it So, or when back given half are measurable is we an should impact do term, a estimates any 'XX, it?

David Demshur

certainly of half the number some do I that. will you No, depending from think the this contribution on in indeed see 'XX back join clients of to

forward I at we guidance those. start just see our be from significant think would to contributions best will the going and look

You see operating margins, incremental expanding will margins. expanding

Ole Slorer

thanks for that, Well, Dave. Okay.

David Demshur

I And tie an made Okay. want because you point into on important leave you, micro before I to proppants.

Ole Slorer

Yes.

David Demshur

systems, requested to be with tertiary, proppants. we've that's joint successful, why fracture along to all industry studies our that secondary, projects by found in been these almost primary some have participants we evaluate of the For the to participants the open. And the remain

they've asked mesh in network. for along magnitude. study implement now to fracture XX, our leads prop what us that reservoirs. up area, XXX these network. fracture to that mesh XXX along XXX, mesh we open The from XXX the to ultra-tight flow that proppant XX with studies may increase proppant we're recoveries the a open in with and used XX, reservoir the of proppants. a can our amount XXX an now, be of right and of order if of surface the would But these the more we proppants XXX common And Right main While that's show calculation XXX the be would place and to by expose used and larger mesh the secondary mesh XX, now the thinking network XXX tertiary

the that's going tandem. along EOR both of discussion in piece are why important an projects well is as that So, and

Ole Slorer

source in proppants Those quantity. are difficult to

So, good luck.

David Demshur

you, thank Ole. good, Very Yes.

Operator

with next Please Iberia question The from MacKenzie Capital. go comes Rob ahead.

Rob MacKenzie

Can little hands Good guys. PerFRAC penetrate to PerFRAC us you deep and of charge I handle, you some I how Monty correction can. on into wanted in to percentage the a go EOR. shift HERO your HERO and success to comments the your result of or perforating in a have recap if terms digging today can give and Dave in the of Thanks, of there I bit mind? here -- where

Monty Davis

is fastest in is area. this charge HERO a Rob, lot the is or perforating Monty. to part business that there The not growing It is grow the in PerFRAC largest business. a room of our of

seems an best and had the perforating that are operator the, our done. I to some systems numerous different of There show to I PerFRAC HERO study one trying think results. test mentioned the out

talked everybody free as on completion PerFRAC is PerFRAC. that shown of the their HERO the common frac the up so much cash jobs, when from And study, their stages various particular HERO flow. we believe opens use that's client insures side, in So, better I the were very to you future a result

seeing system. we're that so, operators and more big And that adopt growth as quarter-after-quarter

Now, but a the flow long generate a perforating system should more expensive a more it's for results time. little cash lot

part this of So, as we big perforating family. growing and our ever see a

Rob MacKenzie

Would you non-commoditized of XX% kind terms would today? the be where that's XX% a it's it half, percentage sold say of in being charges of your

Monty Davis

Currently, to we're around X% XX%. a probably at

for lot a of So, this. room in growth there is

Rob MacKenzie

terms not your shifting then and in different you, year gone FIDs this you might how announced that prepared year-over-year too guess, time late. Dave give of in be major a contrast of comment looking of particularly the have here we it's that in about what the or feel mentioned guess Can the far, forward. saw Thank gears have that early what it been beyond if a I I for of FIDs might expected XXXX David. this end question way, forward level trajectory last activity to number so us relative and impact how in put does year your from you

David Demshur

of a to I'm on Gwen's this work Yes good Rob, her. lot going this. done to over question turn

Gwen Schreffler

Good morning, Rob.

Rob MacKenzie

morning. Good

Gwen Schreffler

XXXX. XX the probably maybe year. of XX are Flip of forward FIDs in We what And those to in double that probably think potential there's and there's of XXXX, the that last half another quarter probably in approximately FIDs list. we've the that's announced saw announced we seen on XX

number discoveries and are being additional you announced see that the operators. of from a so, also And

that they've You've discoveries Deepwater so Guyana. Project BHP, additional got that got and you've the the of announced Mexico. positive. offshore And that's from is block south LMS

announced the So, Turbo October ExxonMobil. with in that last one was they

David Demshur

those X/Xrd So, generating Rob, of we're out probably out those. of right revenue, now that of maybe

right that we're projects XX now, under now. are from So, right the Africa, Caspian some Exxon generating also largest of five But stands revenue ramp the with coming let's it contribution say offshore the Guyana from Northern Sea. West of as out projects the

next engaged be some mid-year year. projects probably by we'll in those fully time So, all

Rob MacKenzie

that, single of hard? early high revenue a put double of too for of growth a digits kind digits, it to description Is render kind out more that target too is low or

David Demshur

Rob you levels, more that. I'm to reservoir XXX accurately any I can that probably the we on because algorithm still, points points for good at don’t specific still description do that looking basis and gives activity I use add think to would I guidance. industry XXX basis a give pretty don’t want

Rob MacKenzie

it turn enough. back. guys, Thanks I'll Fair

David Demshur

Rob. Okay,

Operator

comes The Research. with Chase next Mulvehill go ahead. question Wolfe Please from

Chase Mulvehill

Hi, good morning.

David Demshur

Chase. morning, Good

Chase Mulvehill

Hi, Dave.

on kind description? EBITDA reservoir a model get guess we can XQ. question do you growth to the of that think revenue you much think XQ, for in range then quick do we I should And How description? reservoir kind back XX% that So, of

Dick Bergmark

Yes.

hit production EBIT two would increase so or margins win margins, not I those as I EBITDA hands revenue XX% think well. to segments. in the between margin. spread evenly just the it those bathe are remember actually And

Chase Mulvehill

of the And the okay. Correct, hitting think description? do Correct. in then timing reservoir what is mark you XX%

Dick Bergmark

next that you're top the are going to to expand come see Incremental those quarters what's this really on the few I incremental think underlying be up margin. base. in the on that's with going stacked strong revenues and of margins going to

Chase Mulvehill

you turn certain are, A determine area reservoir which play back characteristics key what are a a unconventional whether to for for EORs? Thanks, Okay. candidate to a of is you Dick. show good sit look that the

David Demshur

Core critical. define Tier primarily And which remember are now to we're Yes again, that property right XX got Chase, looking at algorithm what internal uses X parameters here properties an we've Tier X is. at

successful endeavor not. going So, or that's a to whether the be this our check is box first

fluid the would that detailed those issue absorb a be use of in composition what reservoir. long and a with followed determining hydrocarbon, are best of be by are So, that's the the reservoir what additional chain analysis fluids that way to critical amounts gases the of already

number more capture number the of So, of longer recovery to of are reservoir ton reservoir gases certainly viability that rock, of in that. the And parameters two using is one. Quality is involved a chain hydrocarbons.

Chase Mulvehill

of Is that need ethane for when mix we have be there to these a a or good think about reservoirs certain candidate? methane amount to

David Demshur

on composition the depends is constituent reservoir. fluid All the in and what

But "yes." rocks in the is specifically and answer each reservoir. to be is to the separately going for one have the engineered So,

that. it make And So, some one for Eagle one already done cookie the in the just cookie we've we it know there. of cutter for Wolfcamp that cutter all make the won't won't Ford, already proprietary work

Chase Mulvehill

follow-up. unconventional opportunities drive term the growth are medium there whether are to quick to any One at a inorganic growth order longer in be organic going other over years? accretive few or If obviously Okay. to over the accelerated but next think we EORs big returns

David Demshur

Yes.

two maybe We are our EOR working Works on than about so would be even hope three to unconventionals. over the quarters, in we next some or exciting that from Skunk projects or to prove more as talk

Chase Mulvehill

thanks Awesome. All over. back it Dave, I'll turn right,

David Demshur

Chase. Okay,

Operator

comes The next Meakim go JP Sean Please ahead. question from with Morgan.

Sean Meakim

Hi, good morning.

David Demshur

Sean. morning, Good

Sean Meakim

we So, these delays recognizing work in you talked some high Can is that quarter of on quarter? from us the how last on timing of diagnostic pad. progressing scene about associated with an revenue third the well the give update

Dick Bergmark

Yes.

on others for just recall call. the you if So,

last system. that complete all, that and saw drill then from moved come that a as more them and them out, impact we quarter prevalence pad, complete all us of has just the really and work the played industry and single As well through drill in

are our on of completions now most so, And really pad. already

Sean Meakim

you you In said steady more a to had state that. words, other

Dick Bergmark

correct. is That

Sean Meakim

U.S.? Got it, about shale large trying Thank can a resources to next compare of couple you I just just addressable for like more looking unconventional conventional to and for contrast global think just basis, the the mean market the And you then EOR, Middle okay. then that. East of and maybe compared thinking years, at about

Dick Bergmark

those EOR appropriate. reservoir information growing EOR laboratory looking been the for some at. of point we're need do as Well, with reservoirs EOR the that unconventional. for is We different more to providing the on where the engineered isn’t time it's in we're that. of here. in of for some is Middle gas doing East short market We've from Middle a It's different doing course they every engineered East the The studies get unconventional our the test EOR them and gas even that

where said, either out need to different gas that's composition going we So, from. gas and you're that test it's engineered just as Dave the a comes blend

have way. that have the even rock on of You them to necessary the in the segment that and or what's to it stimulate depending particular for reservoir reservoir fluids best

it's what going of in bit different East the the we're in both Middle work doing unconventionals to areas. on So, from but a EOR a quite

Monty Davis

are either queue the for have EOR are East, say in some they under or that. Sean, suggestion Yes I'd type fields to venture already that the in Middle of study a system to

East the recovery Middle fields. see on enhanced of can you So, importance ore mounted out

If ago, unsustainable got East you Well, levels. the ago, Middle production that the we was the remember in year-and-a-half that we back open a year at cut. consistently big said

seeing that generation. thinking growing we're certainly the For we East. their revenue work a certainly that's to it's an theater seeing in at of that Middle EOR play international we're is these EOR we're production our where to be going are doing in is why large only levels, Probably uptick sustainable role in activity and the and amount the in

Sean Meakim

little today a than in about and that send potentially other the a things bigger underway. size of give picking rate say which potential will is and substantially profitability a and would they there U.S. revenue the Would of not opportunity bit, from you do it's faster clearly but different you the summarize say to Just perspective, margin anything that is more terms to just highlight? change,

Monty Davis

up The Well, certainly up those of projects Middle a East, in there unknown ramping are is now. that unconventionals EOR gearing in the yet. of is right parameters lot and

hypothesis we're I work. think going this to still how is on theories testing and

slower. a little stage be bit ramp that might So,

Sean Meakim

enough. Okay, for feedback. Thank fair you the

Monty Davis

thanks. Okay Sean,

Operator

Bianchi with The next go question Please ahead. Cowen. Marc comes from

Marc Bianchi

the associated of or all kind us to a back guess you working discussion. might quarterly I sense five you. so that thank with on. Can Those be of together? FID you're that give revenue projects five's Hi, the

Dick Bergmark

somewhere of but order varies double like every probably quarter probably lower that. in the it something Now, digits,

Marc Bianchi

revenue. something double $XX like million is $XX in of right digits way. Lower million That's the Okay.

Dick Bergmark

project flow. Yes. But quarter remember every depending varies it on

Monty Davis

that. in to generate couple a historically So, said that us to of Marc earn we we've we It between core get material somewhere million of if $X a could quarters $X did revenue. takes size, million

these turn how the into fluid. on in that core FIDs depends it pulls activity So,

get there total to have program rig a and have to So, FID their to an say that depth is in got core. right place, to The now for they get under they has contract. get a let's operator has to rig taking announcement an

months. least So, is nine, takes XX that? six, That at when

Marc Bianchi

range you Right. per cores there. remind mean And I can widely give how I us don’t, if just typically us Dick, FID of many a sure varies it the but sense I'm

Dick Bergmark

zero from pretty ranges wide. XX. It is to It

Marc Bianchi

Okay to well, something me work with. that gives

Dick Bergmark

about say that, if it of hasn’t publicly. what want want in Think understood. of probably means data, layer data so more It us. it's that on the good top maybe a That would thing they will province well be been probably or think may complexity for about more operators the reservoir a for

So, layer some of that in.

Marc Bianchi

more I related that's about misinterpreted. the but pretty quarter, have very Okay. you became guys to industry EMP maybe be Last good over guess seemed one insight. much shifting to conversation EOR a that

for issue we a there about anything we're you hearing being quarters into couple that discussion EMP kind as of something this of could become as topic? relevant a Now see quarter the Is and productivity frac an go problem. next efficiency over crew reporting emerging EMP of

Dick Bergmark

of new issues. no We know

Marc Bianchi

Thanks turn enough. back. it that, fair Okay, for I'll

Dick Bergmark

Okay, Marc.

Operator

next comes Please ahead. Citigroup. Gruber go question from Scott with The

Scott Gruber

Yes, good morning.

David Demshur

morning, Good Scott.

Scott Gruber

on your to the Trying press same of question. a line I continue interestingly. found comment in release

by using deployed achieved the can your tortuosity the popping one's of on when amount horsepower assessment. actually HERO reduce Can reduce This charges, the discussing that site reduction actually the operators pressures? PerFRAC how were You charges?

David Demshur

That's the idea. whole

Dick Bergmark

Absolutely.

Scott Gruber

the what are And magnitude?

David Demshur

on Somewhere And horsepower the a money on return expensive between these these at can you need save surface. depending investment deployed to much total look as because end be X% their on are that of type. more they rock the better they the and but systems, at get said day if at, XX% Monty

Monty Davis

flow better a get to And rate.

Dick Bergmark

stimulated they'll key. more And segment, is completion in the yes, every

Scott Gruber

small on rate? the going has to And trying operators it this, and is accrues, requested save the ask on they pumpers to

Monty Davis

at of requesting they're pay you just going big for a more level but it's frac Well, to that less all to course the bit one to pay that that's going job. surface. core less, your pitches are our And you're little you're the over sales

Scott Gruber

you. Got

David Demshur

the horsepower compressive Core and crews Lab. of thing amounts at lower for surface, In that's a good

Scott Gruber

I guides, guide end is original couple quick earnings guide, XQ higher Definitely. just the was actually What's both notice the of and of the the on pennies question to is a help very the assumed ETR guidance. XQ And high The in at then, EBIT. couldn’t a reviewing similar model? XX. the I then but previous revenues

Dick Bergmark

It's the same XX%.

Scott Gruber

below And XX% Is the there and same. the one? interest anything net

Dick Bergmark

$X.XX Yes, interest on $X.X expense. million, million

were as the still So, a because stronger it's same, might that the some it's of little be embedded be our thought the incremental gone. cost margins hurricanes from could

Scott Gruber

Got you.

Okay, that's it thanks. me, from

Dick Bergmark

Okay, great.

Operator

Please with Stephen The question Gengaro from go ahead. comes Loop Capital. next

Stephen Gengaro

Thanks, good morning.

David Demshur

Stephen. morning, Good

Stephen Gengaro

to in A the couple quick with or clarification. response RD of there in you Did fourth margins Chase's things just the Did to to guide start question. XX% with. you soon? get A do quarter you

Dick Bergmark

company operating XX%. We be while will margins for set QX, our

segment We guidance, XX%. companywide but haven’t any given

Stephen Gengaro

relative XXX% kind hurricane recovery reservoir of of incrementals by description, outsides chunk basically is in driven fair? that Okay. the But incremental. that A

Dick Bergmark

description Till well. to see improve as you reservoir margins are going

Monty Davis

did without commentary around that the description reservoir we XX%. that so, in say been would the hurricane have And

that shall we as from we base see the So, grow. which

Stephen Gengaro

more as And fair. That's okay. just a it, Got comment. a general of

which get are kind actually there core. in portion How of now. actually that many the sustain about any that potential you of just give of completed? sort a to Kind current that But relative wells look you of inventory Are protected long sort these inventory help those solid useless? kind sense drilled importantly growth. can two right of piece you of really the of of One uncompleted think you of growth wells of of Is you will think reconnectivity. of and As at prices uncompleted mix questions. is kind hanging how more those

Monty Davis

Yes, taking a shot.

inventory going to We maybe ducts, over Let's so wells bolster or to the the can to due ducts to have to will certainly able is a half. drill next is, into year. going surrounding XXXs. for feel about next certainly we probably a wells number completed you, going the XX,XXX don’t of it's see year Right XXXX good over year even got say agree duct but a that the economics you be we're with now completions the We the them. we're be and for never are that that some do what going

Stephen Gengaro

sense look see And Okay, thank Would you massive international. and under final. start look just that at bigger when Any of impact of you non- at world on sort to the this one on you. a production? investment then OPEC you global

David Demshur

crew. the look on think international and production. see good I ties to international global you're in of production at Gwen's We some continue non-OPEC about the bullish global with got right inventories inventories. we certainly actually why this be for And screaming investment. 'XX, information Talk to by global Well, XXXX, on certainly going that end just

Gwen Schreffler

in July continue out consistently the we even that's So, been terms those we've the ago. of over last levels more year to think global fall put falling. since inventory inventory XX consistency data seen weeks, And some in a

monitoring item we whenever XXXX. the think other of the get near crude us QX tells in at we're that price. Today The days are in history oil see to XX what we're inventory XX that And days is on for We consumption. approximately XX reaches XX we days. pressure days

Stephen Gengaro

Okay, thank folks. good. That's very you helpful color,

David Demshur

Thanks, Stephen.

Operator

go Iberia from follow-up A Rob Capital. with MacKenzie ahead. Please question

Rob MacKenzie

Monty Hey, the may a you follow-up on I HERO if for PerFRAC.

crop by it's yet probably seeing I success and competitive capture the as would offerings come up market? with there. same the operators, that Given think that the try such time of in competition We're

Monty Davis

for all consistent successful. of the supposedly charge study if size not another study they part in was that think was there mentioned, were and I used I that

but know don’t we're we're imitate people if how system. So, exactly doing what doing, our they to try

successful going been have so. they're to doing but not in they here to imitate try So,

Rob MacKenzie

thanks. Great,

David Demshur

I'll take one additional question.

Operator

comes and Alpaugh Okay. from William with Please Company. Simmons The final question go ahead.

William Alpaugh

Hey, good my Thanks taking for question. everyone. morning

David Demshur

William. morning, Good

William Alpaugh

quick a Just one.

shortages. a you So, last just update can not and an that? you see Do on of called that give any and that you labor this quarter equipment quarter

Monty Davis

What was equipment, completion the shortage of pumping the talking Yes. primarily about aperture we are equipment.

QX. certainly heart their the out I QX equipment's had all positive cold and news, in will storage had theirs out stacked think in say a all they they we -- of by of Halliburton, So, and or end of be so

that alleviating. the in were hitting I last So, were to goes the couple industry way quarters. storages a of long that There think

David Demshur

And behind hopefully William, everyone. that's

William Alpaugh

seen if want in That's all to it to same check just I you me. from see thing. Okay. the

Monty Davis

Yes, okay.

David Demshur

Okay, good. very

So, fourth of in summary for in XXXX? challenges significant for company course levels activity And operations continue the quarter the we know position away.

our and leading field expand one our of and company to opportunistic or positions free We operationally all advanced to the Core The sector. industry positioned cash generation uniquely for well capital in we company their service returns have a committed remain technologically on better shareholder base. optimization never challenges the clients it be This capital. production repurchases. remains been maintain levels, focused most share dividend ahead. technologically excess reservoir returned existing However, being and help oil the invested With to

these our Davis, give results of quarterly release, thank in our and all thanks noted made possible. So, all Monty of employees as Board and Executive the Core Management have analysts XXth that of our already follow of to shareholders closing the the we Core earnings by that worldwide special and of Core Directors

with associated be achievements. to proud are their continuing We

spending with next So, thanks for your update. time we and for bye morning this our to look Good us now. forward

Operator

The presentation, Thank conference concluded. now is today's now for disconnect. attending you may you

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