CLB - Earnings call transcript Q4 2017

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Operator

Good morning, and welcome to the Core Laboratories Q4, 2017 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to David Demshur, Chairman, and Chief Executive Officer. Please go ahead.

David Demshur

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

to a pertains quarter shareholder follow and followed build Chris industry will We shareholder financial regarding on detailed And Core's long-term worldwide. outlook discussing the Monty Core's new detailing and first some XXXX tenets, and will progress then review employs to of three detailed value. then will with our and Core's and two Gwen commenting value, successful projects operating Core's as introduction of financial building technologies, a outlook additional overview give Core's major Core continued by of comments general Company which review it highlighting a the and segments, come Then Lab operations prospects.

Gwen? now We lines statements. a back it turn I'll Gwen will to the remarks session. open forward-looking then Q&A for regarding to

Gwen Schreffler

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

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

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

David Demshur

Thanks, Gwen.

comments on personnel some First Core. moves at

Core's analysts in instrumental services and and Larry, three-year including Chris to who both and Officer as take his Core to architect shareholder retirement executive will an Houston know to decade of in finance strengthen a way. tutelage the a you Chris promotion operations. stint management has global XX-year Hill now and conferences, energy in technologies continue been regarded Larry creating Chris of financial Core Bergmark, investor and accounting, held President at in worldwide the three facility become Lab. company continue rolled pleasure team. great creating energy role addition Gwen Under leading end through future a announce worldwide. of you energy that that step of beside he until also value of Many Financial serve veteran Core's a Bruneau Larry, $X past investors industry Core us interactions Chief by guiding Bergmark. and and grown and also It Amsterdam us waves interactions. Gives has great Vice to from of Executive Core tenets at in conference We XXXX sponsor executive in more the is Larry May roles pleasure he is Monty have met will every our XXXX. Core's cap conferences new to of of succeeding exceeding and various has the management President Core also out Dick will at Davis to a buyout to market tours gives $XX Dick expand welcome work many for has the of over plus. billion announce and well million of team. Dick's our the a will with

will product has these Core, by adopting As especially, incremental for uptick wells, has unconventional higher be solutions, reservoirs that EOR not ever be technologies production energetic from is such continued and for Clients operators this as technology quick to production me, and pay already oilfield from major will and capital capital more on in will considered technologies on boost a margins to remain to with. The everybody return fewer flow see any wireline, service, could capital continue or the they sophisticated opposed to a companies shift and as investor their been is margins. in at Company's will to will Dick the technologically that form as of conferences pumping. and the the opposed wingman at stated free will in rest is growing long-term of their destroying away team drill oil Core's technologically commoditized better cash at blessed increasing just and cost. these to meritocracy operating better in beneficial of These grow to invested the metrics to invested on return of wells. on be benefit is that flow expand successful Dick base. XXXX. to client capital, jobs. management demand its these return but increases has focus getting clients numerous our worldwide as and free will exploitation shareholders the industry-leading The return service reserves. regarding pure expanding Core service and though, pressure management, focus Core foundation back best such Core encouraged in is PerFRAC methods CEO tend driven capital growth other of a the Core's employing offerings. executive One of as HERO their is Core exploration seismic exclusive witnessed companies employing throughout him you and and trend occasions, systems. and deepwater He energy continue made gatherings cash that

Chevron over the benefit net Alaminos the discovery throughout prospect With appropriately from X,XXX and Mississippi Canyon, of of Canyon, discovery and activities Total which deepwater was Shell XXX XXXX. announced in the increased feet feet in cut net cutting offshore Core pay. recently pay. Ballymore potentially activity XXXX giant is in named and And This will prospect. Whale into

year over build review publicly we’ve company. value a of used Core's to shareholder for Now financial tenets, of traded history being XX-plus three the which a

over Free shareholders. of Once return cash revenue our all generated shareholders return Core Lab capital back industry-leading via on dividends over During back returned quarter. Core is to consecutive share to $XX in Core the future of XX% million XXXX, our into important Core Lab every quarterly via Core capital fourth capital dollar invested repurchases. cash, on flow for excess the quarter and High during service is to the quarter return important free of our highest again all converted repurchases. will and free million companies. quarterly fourth in quarters XXrd to produced cash $XX invested the share in oilfield Also, shareholders investors. Core continue for and these XXXX, dividend

of – our I put and to aptly wash, it financial Chris detailed now analyst Chris? a three rinse application financial will one repeat. review. Cores’ over tenets, As back application turn for continued

Chris Hill

David. Thanks,

the for XX-plus privilege It honored last Dick, assume I Demshur, financial a for and Dick’s has would with years. like feel Lab the the CFO the update, as successor. support Company Monty that Before Davis say I'm I working grateful and and from I role been Core development to over very Dick to the David provide

role, As or in the met at facility, tours mentioned to with on participating in I our the you those Investor of I have visits call forward many and look spoken relationships Dave my conferences or future. Relations and investor through continuing

the Now quarter fourth in Description quarter, improvements to and and contributed was from up Both looking Production last at $XXX Revenue almost Enhancement the income year quarter. this X.X% the XX% up sequentially. Reservoir the million statement. nicely fourth

U.S. attributable primarily Product sales, quarter revenue, our quarter international up Of which sequentially. the up activity to well $XXX million, were so strengthening up in completion this the American was The year, year-over-year. million, XX% are year-over-year continued diagnostic for $XXX and in the full revenue, the was up the this for and of over market. more growth is is service North more to X% For revenue million quarter XX% X% tied $XX which XXXX. about services

to XXXX published sales product activity the faster XX% compared in for over pace Our and U.S. completion growth grew XXXX by XX% EIA. as in the the than at a

the in Moving third of improvement earlier quarters. cost line and our and for on quarter, with of revenue XX% quarter the from to services service

the operating the higher revenue, under as million slight a for quarters For this revenue oilfield amongst from of of strongest for the with with averaged the operating service fourth few last absorption was service $XX Cost XX%, sales cost full levels little last but improvement quarter year quarter of a year, cost fixed with leverage line an at our margins of to year. XXXX in consistent of in million in in of full came the as continue and XX% some improved was G&A year. services our $XX quarter improvement the last be over companies. our the

is and to we was $XX to XXXX, amortization quarter comparable million. around quarters. for For $X.X $XX several expect which the the Depreciation million million, last G&A to be

$XX.X amortization the depreciation million, million For was prior down $XX.X year. year and in so from full XXXX, expense

associated an next our to capital of the and of last the call be tax gave impact and effective Looking FX quarter. forward assumed gains we on XX% fourth rate The expenditures to specifically, similar. year, would excluded expect and past expense we for guidance or calls, depreciation losses any

prior guided foreign periods So to is accordingly, for and and rate adjusted current loss the gain our tax of today any excludes XX%. discussion or exchange

conform XXXX guidance, over to million, and to year represent the for to quarter ex-items quarter EBIT full was of was for Full guidance EBIT income sequentially, the XX%. continues XX% rate and fourth quarter. XX% XX% effective XX% fourth year also last margins up year. margin our from expense the million, over tax ex-items $XX.X $XXX.X up was of $X.X EBIT for So On tax and income million creating for the over industry-leading generated quarter from fourth an up of tax, our XX%, XXXX best-in-class

$XX.X reform, ex-items rate tax expect Our XX% our GAAP up of Cuts XX%, the operations. tax deferred as U.S. initial GAAP impact income effective rate $XX.X of the in corporate XXXX in was reflects our effective to Based tax effective Act XX%. XX.X%. year beneficial U.S. and the for be to changes our XXXX tax was from tax of up quarter rate be Net and on U.S. XX% of tax fourth quarter. Jobs $XX.X and new which million the And was Tax our fourth the QX rate net from an at the position last quarter result is for the revaluing for to million, a expected quarter asset of analysis assessment the tax of income million current for U.S. our XX%. approximately the we

for up million, the over full the million ex-items, our up per $XX.X GAAP share in million XX% and net year. $XX.X line year-over-year guidance. Earnings prior $XX.X the for year diluted quarter, XXXX. was quarter from ex-items $X.XX income For income and XXXX, XX% was was for with net fourth the

GAAP full for While year was full $X.XX and year. the ex-items EPS for for the was $X. EPS the $X.XX fourth quarter

$X full as down balance throughout liability sequentially peak to strong $XX.X earlier million, balances. in Receivables the the business. this sheet, year. items up but have We're and be our XX% balance our last line finished at the the or Other changed to million going and turns year in at very the increase turns $X.X million and million are improvement XXXX. an from highlight operations at $XXX.X quarter $X.X slightly onto year for previously DSOs the down will of up As accrued million, due with quarter Inventory we continue unearned in from X% QX, sequentially, of up XXXX, days stood with which XX million, for we our payable over liabilities from of and I'm the reported materially improve the accounts our inventory to onto growth were move million revenue is only that its XXXX. pleased And anticipate days sheet, compensation. our $XX.X growth inventory to from the associated side $XX.X into with employee current now continue have revenue XX

at as of quarter million our end debt was from debt used to reduce $XXX last long-term year-end quarter. Our cash some million, $XXX excess we free flow this down

quarter $X.X quarter well to million, senior in slightly is return the prior at comparable primarily year million, facility. bank balance debt as our to notes as year-end with Our $XX million the our line $XXX.X comprised ended revolving activities. operational were the the $XXX under prior Capital capital of of and credit $XXX.X to due Shareholders' at shareholders. million for from equity down expenditures million of

For million with $XX strengthening anticipates million full of up will expenditure million, from in XXXX. has business and the reaching financial previously activities. ability were continue increases possibly XXXX, capital The its they in we program in these stated, to its Core level, activity, in that investments the $XX.X capital year, support in as to line have increase the $XX.X expand company

ex-items. which of the $XX.X cash million operating flow XXX% free at cash flow in income quarter, CapEx, net over and $XX.X for was flow, after our activities QX fourth our paying was Looking cash million, in $X.X million, in represents from

cash for the XXXX, paying operating full million. flow $XXX.X year cash activities million, free flow our while CapEx from was program after was $XXX.X For

income models for be discounted for been free in now highest XXXX. the was I'll flow higher this those utilize than believe for industry is to in outlook. on of particularly, years. has to who metric net Our an cash our financial cash and is cash Gwen free over evaluation. to divided income ratio, flow of In company's it guidance XXXX, XX our flow update XX comparing conversion almost the assess which flow when XXX% cash the important one continues our by free it as turn last an at We net shareholders results, for

Gwen Schreffler

ongoing be budgets. Thank you, the quarter XXXX development E&P the first largely fourth projects international from Chris. preceding We international with flat will be levels to from activity believe levels funded most operating quarter

international counts of in first we current XXXX average the expect We seven sequentially rig do of five case not completion activity similar with typical be level, to than quarter to quarter and change QX a QX the company. guidance XXXX at as the provided earnings QX last other fourth levels U.S. seasonal pattern revenue to lower in the preceding continue slightly to the been in recently has our Therefore, being improving see years by service pace. of similar the major oilfield flat to

million operating margins income to approximately As operating approximately approximately $XXX $X.XX. of this first be $XX a for is million yielding XXXX to XXXX quarter project EPS quarter million expected we $XXX of seasonal of $X.XX result revenue $XX,XXX,XXX approximately to pattern, to of XX%. first the typical and

midpoint and a gains quarter effective year-over-year improvement rate exchange XXXX by in revenue EPS tax XX%. first This and operating represents of in XX%. initial and by The X%, assumes includes foreign income first by XX% guidance quarter an losses guidance

to return production expect consecutive Union and international legacy expected the American, non-former lead and exceed levels. declines our all and in East is share to Soviet flow of underinvestment we cash free dividends non-Middle during Several years XXXX will to will quarter we shareholders crude repurchases. oil our continue significant quarter continuing non-North via to First net capital income excess steepening

we the an view following activity So oil for company's global performance crude industry fundamentals oil. price XXXX’s Crude number the global in reason. and financial oil and industry impact of increasing the falling optimistic fundamentals with inventories continue a meet on for may consumption of improve tightening have of inventories, to the demand; crude have crude held in the days these oil to

on opposed their focus to these operators encouraged back companies regarding have also free benefit clients to in markets production capital tend flow of The at base. returning as which of the capital company’s and any metrics foundation shareholders, adopting offshore in form to leverage and are early be recovery, cash by growth and increased the invested Core’s are the management, more the technologically markets, cost. half We especially stages of just major worldwide the International second sophisticated client will to capital, XXXX. both return the

of development Additionally, oil supply critical EURs, level efforts along industry’s to in Mexico turn Chevron’s reinvest due today's that field, in make oil at among as review. needs. field to Shell’s decisions capital of enabling client an global and in the reinvestment The is development reducing companies’ increasing Guyana, with and/or operational previously future call guidance, LLOG's announced Exxon's reinvest Appomattox announcements order Buckskin have is new Liza Gulf in projects actions taken price field ability the to oil Kazakhstan, meet in successful new per to offshore companies recovery, over a barrel. been crude the This there with part to deepwater their Monty align project others. The projects. oil to include Recent final positive with And we'll to is cost project investment their by of projects. Tengiz revamp for on

Monty Davis

started in employees Thanks, We and new to X-dimensional help America, through South strides Core. these acceptance of scale enthusiastic intervals services. completion the clients extremely successful of now introduction long-term in phase contributions in the from in-houses were contract Gwen. operating the measured around CT Lab's in services laboratory employed vast a the region unconventional high-quality allowing existing the Core produced this on solutions, Core with determine QX for data in analyzed Core technology production clients Reservoir Kuwait, superior large their reservoirs. Canadian relationships will north and help fluid cores database to Core's to and the services new as service. compare world in The its Core of time-sensitive designs. X-dimensional Digital These this such excellent log them samples density innovative reservoirs. and Alaska. with over optimizing service ILC of beneficial scans these opportunities Core petrophysical to margin. programs, two that against sandstone great and This maximum goals available to Core digital and made flow integrity assessment of PVT quick conventional CT create the U.S., generate on Computed Canada rock a received In the analysis Rock data testing high-resolution PVT conventional a an have micro their extend proven markets of reservoir. in millimeter benefits properties estimation calibrating quarter, offerings stream, of technology the for for physical behavior operator wells. in Kuwait rock new Dhabi, Core Asia expansion a amounts recovery re-examine of fluid operation that Lab technology of and volumetric client Reservoir along information and observations in Pacific, and DRC clients critical complex in this the with was proprietary the Core’s will Core's allowing will samples XXXX and Core through a Abu Atlantic Alaska image will when quality our employees with into visualization comprehensive clients’ select of clients technologies measurements. widely the our will This part all digitally-based their life These logs made assist technology by hydrocarbon been interpretations analysis Lab CT results combined to help the On reservoir along XXXX. analysis. samples with reach addition Core's thank Core confidence tomography comprehensive image-based with of Characterization, and achieved hydrocarbon reservoirs boost After continued test representative program and tomography, Lab's offerings characterization have and mechanically is proprietary flow regimes, properties, information also decisions advanced Description quickly Core's rock full delivery work provides accurate clients and CT lithology, for porosity, both of ongoing in competent and in on detailed hydrocarbons. analytical The fourth relevance by or along and with Description available

a and over predict of reservoir, be deliverable vertical in to return. lateral technology detailed DRC heterogeneities maximize Our shareholder build reservoir time client the will by the Calgary key project. understand utilized in for this results model, The performance and work this a more reservoir was

on Core complete are eliminated. for several to improving likely would tracers if then Core to and optimize Lab's be before have benefiting continuing more clients costs drill analysis in identifying stage team is showing Optimization increased wells, Lab's Production measurement In get analyses changes, can cost results Operators costs, as efficiency continues team Lab solely wait Montney Production technologies from of likely production Core's long-term or with EURs. on our perforating to with Canadian lowering said, “Without diagnostics clusters Core number all provide Recently, results XXXX. providing regional conjunction We and QX, optimize our implementation some client while XX services formations but gas diagnostic significant with complex to of Western best-in-class versus addition By had project, proving improving in unconventional growth production design. and and further contribution, up – may while when SpectraStim’s through PerFRAC systems these maximizing what direct tight likely such quarter. to – suboptimal engineering engineering XX% EUR. optimizing Core's their to an and complete guide we in before stimulated. to A and designs significant basins FLOWPROFILER had the profits. operating provide to by to optimal for compositional operating cluster fourth efficiency. reduce are formations ways we are Core's to plays, of in would high Core go density guidance Volume, clients trend the increased among continue guidance, our to QX this up a spectral that oil completions have behavior expedite both system barrel would various phase to the common to to studies of to drill their U.S. to sedimentary with are more were costs, clients is settling Core's SpectraScan revenues leverage design operators to wells pursuit volatile to a clusters see counts as stage XX among reduction to demand or and HERO precisely several Canadian the of onshore iterations in enhance only maintain completion provide and with large determining means such and production beginning together Enhancements in effective operating the SpectraScan's design. and XXx reservoirs. the on shale imaging Stimulated and improvements emerge overall the per cluster the Combined ray condensate in cluster – need value gamma Reservoir perforation individual optimization. of improving the advisers land-based Duvernay our PVT proppant how for Enhancement clients SpectraStim service the and quantify compared savings Lab's relied decisions." EURs,

rates the Volume perforating operators the size This Stimulated on increases size industry's provides Reservoir technology invested our placement. hole maximum designs. The pump customers consistent allows facilitating equal frac completion wellbore for resulting return hydraulic capital. Our around and optimize to most hole proppant

expenses of Core's strings plug significant XXXX as Africa a abandonment cost-effective abandonment wells. complete wellsite caused dollar and In utilized our provided By throughout stage, experienced toe by a customer confidently Core's systems. abandonment and significant to reduces milling. Plug experiencing HTD-BLAST, Sea, relied and using solutions stage increases the usage their operators well can and unique by systems Our for be HTD-BLAST multi-billion operators outer of section were the perforate HTD-BLAST the quarterly with market, plug XXXX broad PAC downtime a XXXX, needing combination and expense by technology technology of on without eliminating expensive perforating in proven Australia, operating horizontal their Greater rig industry-leading systems ballistics streams the performed completed the with a In customer name our expensive global multiple offering toe efficiency customers Thailand, increases few. operators failed growth sleeve providing cash solution flow profitability. this on in are three a QX, engineers for by penetrating Gulf casing to abandonments. of on PAC Throughout if North production Mexico, provided for casing. customer to drain difficult

possible while regulations Brandon, call the open Our of for of the we'll isolation to now PAC surface, the solution saving depleted dollars. for local allowed from to by reservoir our exposure customer provide required circumferential plugging permanent questions. cement millions

Operator

We’ll ahead. Sean Thank with now comes Meakim from first session. [Operator being question-and-answer question Instructions] the go you. Our Please JPMorgan.

Sean Meakim

good Thanks, morning.

David Demshur

Good morning, Sean.

Sean Meakim

the Honestly, Dick, And well-deserved. congrats retirement. on

Dick Bergmark

XX great years. Thanks, last the out been Sean. a hang to for It's place

David Demshur

getting not here be quick. he’s for another whole Sean, He’ll month. that away

Sean Meakim

for taking Right. my Well, thanks question.

your pretty you’ve you’ve may of infrastructure. some continuing some at cycle least to attractive, an some about a in level majors particularly economics from is it first Just, costs the customers, kind thinking going And to little talked shale within again higher the breakeven year. projects on half moved bit seems this service higher happen of last that's about offshore decline, year, of be

CapEx haven't long you much capital behavior? additions ranking incremental shift majors, you shale think We offshore? in the seen in given where way just budgets but even budgets their in versus similar has any relative when and the shifts to customer anticipate changing the about – gone cost Brent Just recently, for of way the of you perhaps how do

David Demshur

rapid client comments the that technology drill most example in our is better believe we've wells. is new we've uptakes technology last the technologically uptake sophisticated been like the we on or that planning but that over new We base, good the are we think has PerFRAC which that is will more Yes, decade that continue. found the offering, company Sean, And of so. made, the HERO the that. It offered the to fewer wells,

actually are in employ correct. what over respect wells The they is uptake Alaminos technology. more will the of their and some to will production feet amount example wells, So become far reserve better the drill are But X,XXX that costs With discovery the more great to down and to expensive. you go continue offshore, cost curve on this Shell of the new net a outweigh pay. prospect, of high-profile base to incremental cutting continues of Whale and Canyon, the

free So that new of we be well pay introduction are to going positions deepwater more looking and returns, more from going front operators well Core back technology that utilized flow some at that people as some to a returning that – will as back plays. of for of the attention balanced a are that offshore and and offshore looking cash the by and think portfolio

it's like into out into then that XXXX. going So to going and and work we balance XXXX how

Sean Meakim

through spot see your well prices spot do FIDs be will respect year-over-year but to when in eventually think, the redeploy is taking with to year talked that that the above thinking about the of about Thank as I we that. the up into together into of – the improve how spending how you how guidance, to consideration I flex rest How would for appreciated think that year with your rates the and we move first you FIDs, P&L? to quarter, upside well for enough about were think, year, $XX fall, to that. continue ultimately, the And the rest then then – looking to seasonality, to current time oil the going start we $XX forward

Gwen Schreffler

in We recently, Hi, XXXX. Sean. had report XX from is XX out a projecting that FIDs And came Mackenzie XXXX. another in Wood

long-term and So have financials. our progress of And half to and the we're developments second that the these XXXX the in investments very impact types hopeful about potential in will deepwater. that of offshore

Sean Meakim

Okay, congrats, and Dick. fair again, thanks, enough. Well,

Dick Bergmark

Thank you, Sean.

Operator

Pope Tudor, Please ahead. Holt. Our comes Byron with next from Pickering, question go

Byron Pope

Good morning.

David Demshur

Byron. morning, Good

Byron Pope

think strong the like flattery I you trying market I the growth? by to transactions would folks you? form tailwinds some line businesses in guys that growth of then are think there’s and have because Enhancement and to growth for of And into you seems perforating top it amortization fair did I’ll where of a Just the sincere to think ProTechnics XXXX, most have about question decidedly that Enhancement, there M&A one that it get business been that truth Owen that, got XXXX to and Production tracers preface couple the relates Production line XX% that saying systems cadence should saying is we or top of leaders. drove behind in still and But as established about some be how it think with

David Demshur

that. on good question Byron, Yes,

the systems HERO being then that a calls. And the to additional expand led our that of or some evaluating tracer now, think have impact right the product make We got by think actually lines energetic significant we've upcoming in a technology both perforating new the more continue technology, that technological PerFRAC, on we are gains standpoint. from to process we new in conference throughout we where of there can continued expansion XXXX, it acceptance

of thought So note incrementals thanks we I'd morning. was very still potential the use there, that for revenue that expanding the margins. clever like say to and this repeat. rinse in I growing strong like line the gain wash, a you'll and

Byron Pope

Thanks well guys. It’s deserved.

David Demshur

Okay, Byron.

Operator

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

Chase Mulvehill

and Dick, of be you'll Chris the know promotions. have but the you'll congrats be rest Larry will missed. be missed. I the year, definitely you there, on you And

Chris Hill

you. Thank

Dick Bergmark

Thanks, Chase.

Chase Mulvehill

right. It little quarter. to Reservoir on a the I became in I margins. fourth All guess, bit own hit want first, light Description

to And know maybe about XQ quarter XQ. through growing Description So impacted? the margins one-offs that there, for Reservoir throughout past the then once I talk in if with in and talk any quarter maybe I potentially get then you fourth XXXX some kind FIDs of we XXXX. have there’s guess, typically seasonality

Gwen Schreffler

are about for with service Chase, in spending parts completion then And timing assumptions the companies guidance related finalizing Europe. really capital regard related the QX and the oil quarter budgets mix. to the guidance, to and the their to the weather margin, so QX has primarily year. fourth that So, of our do to XX% And projects, of then in with

and about in go finishes in QX those the budgets spending So that then the they of year. rest typically

David Demshur

exit we're that of are looking FIDs in from believe, if really internally with you we of their deepwater the that indeed do two to and margins, at look Description, projects, front way at XXXX we And do revenue Reservoir some owing that sources additional kind of margins. those

Chase Mulvehill

know think Okay. overall, kind how kind XXXX, enough top I top of of kind for frame, Reservoir don't to about if XXXX? for line we to and you line visibility for be about Thanks, be Dave, the should have that’s Description If we thinking Reservoir yet of growth very helpful. may we go Description

David Demshur

points ball now performance, crystal higher basis into Yes, the probably to digits, the the on our our mid XXX it cloudy, you looking we're that that but at still right applying now. way single to little XXX gets right

Chase Mulvehill

Okay. And that’s correct? the Reservoir Description,

David Demshur

Correct.

Chase Mulvehill

turn Gwen. over. Thanks, it Thanks, back awesome. Okay, Dave. I’ll

David Demshur

Thanks Chase.

Operator

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

Stephen Gengaro

good morning. Thanks,

David Demshur

Stephen. morning, Good

Stephen Gengaro

you guidance XQ, XX% So, about things, that right, you the Is it XXXX? sustainable is basis. level look my think throughout a year-over-year companywide suggests two incrementals just I’ll math if start if for with, that at you on is gave a

David Demshur

Correct.

back You we just look Stephen, talked as about.

you in not you'll XXXX, a level into of much yet. okay, East, QX, probably a a we're recovery. of that in in just those look QX, input the the or XH really gains XXXX. at Outside XXXX, incrementals International, we're in seeing projects Middle higher front recovery. but the of those getting the from well at some see just XXXX it, under lot company history of project look of from not well incrementals last XXXX, yes, and six And performance the If standpoint, and U.S. in

Stephen Gengaro

Production Enhancement out alters Okay, the sort for someone some competitive then we growth of about the revenue any there. assumptions of thank about, forward, business competitors your mentioned business you. think that going And there and the that forward? landscape going earlier, as in think anything Is

David Demshur

And putting which to us out great certainly industry, adding skilled gives race. most in year, is side our invented some very different They in uses right thing, are And forms our certainly, on best ballistic clever looking a you the the technologies the and business. it when business. that are at the technologies engineers diagnostics look the they're Not same technology later PerFRAC. and HERO now. technology this be comfort, new at of that their will of advanced business, that that the you have And guys

the So impairment of no reason we should for any why continued Enhancement. Production growth have

Stephen Gengaro

you. thank Great

David Demshur

Okay, Stephen.

Operator

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

Marc Bianchi

story truly congrats Thank you everything over to accomplished, first, the been first remarkable And planning. and guess, the watch on Dave the have on Dick, you. succession has I years.

Dick Bergmark

Thanks, Marc.

Marc Bianchi

thing. this to Is thought the some what’s sure Dave, set time Yes, us, could? reports maybe if you quarterly taking the that's change you're expectations here change with timeline here, maybe or get this and your with that here in direction. step just XXX for

David Demshur

bad that say, more XXX several would I years, quarterly to not do goal would be reports. a

So you to me Marc the way are years. put I would going that to is for more answer have up several with guys

Marc Bianchi

single-digit If that is way offshore the we then, to FIDs, think the really everything think flat increment from high in I growth we forward those considerations you and offered a there FIDs have? that business these commentary some if the all other stays the business Reservoir else in Looking it. and about I guess about component the that of just of fair is or opportunities, is is growth. Description of coming to think it should terms the

David Demshur

going would a middle lot May because maintain we east are the expand outside in of the the or I to of able be is way come the for think it, to be East, them from interest seeing that’s Middle that. about No because incremental production. to

Gwen early are the incrementals the XXXX. FIDs So that going outside about will the come are announced has queue talked in and the those from Middle that East, that in to be

Marc Bianchi

thanks, back. I’ll Well, turn great. it Sure,

David Demshur

Marc. Okay

Operator

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

Scott Gruber

Yes, good morning.

David Demshur

morning, Good Scott.

Scott Gruber

has pleasure a at but Chris promos. point Dick, see you been and First best congrats sure future. working all again in I’m with the the some the you and it Larry I’ll And on

Dick Bergmark

Thank you.

Chris Hill

you. Thank

Scott Gruber

of think, I to would recent We've their you majors some that of touch sanctioning on, for is discussed Core potential to more some impact that Dave, within to in I during Core helpful analysis majors back offshore turn and how opportunity back the here, scaling the if Reservoir finds. Description? downturn the impressive again, want impacts it and capabilities be the with past, growth the the fluid in the regard bigger projects and the

David Demshur

Scott. like you’ve I that Yes, interesting gone question there.

major had their Kanako years because support companies. the actually being last the those We downsizing the have competitors, technical have major several drop had found the we less competition over our center. of with that facilities We've oil

more the out one the less think and So that think board. to other We is we've personnel hired we downsizing better. accretes only of from with gets facilities, so of the is there, that business competitor outsourcing across their And there. us

Scott Gruber

to there XXX grow above basis to In market confidence rate? partially underlies your continue points couple growth the

David Demshur

points additional And correct. addition get couple new well, services basis hold as that Yes, and you growth. of the XXX than of of on top a

Scott Gruber

of maybe EOR good the And test field on update an containment you're Got gas is there you whether seeing you're could, and testing? shale within if the it. the cycled within reservoirs

David Demshur

the the can give happens he architect an Bruneau and update. is he to in you Larry that our have room. EOR of do in be We And unconventionals

of we're behavior We what yet, he the an on can update have these not give laboratory. of gone to Larry? seeing the but a you in field test in

Larry Bruneau

Scott many laboratory in reservoirs. Dave. have the and in we’ve Yeah, for unconventional of the continued in these as our thanks of question of quarters. engage clients number And testing fluids we last To rocks

and understanding of the we've course oil And able into X%, with we'll reservoirs average, place. so get these can out the produce, been fluids types the rocks, the of on see in X%, we over the laboratory, in the an start to understanding of of in through And tests, that doing that middle these demonstrate that teens. behavior a XX% we've

accomplish laboratory. So, the there on they is in a uplift what nice can incremental

in the of early process doing of to that the laboratory as take through the we've in an some identified will apply they the the returns are They'll in Now and see and applications can gases stages injection get recipe field they'll and optimum if they that. the go and field. what

David Demshur

success the critical these to point is test. going be of to you gases But good make the on the you field are right containment absorbing Scott, a of

Scott Gruber

clear there the on studies just XXXX. for to field are Gotcha, and be calendar

David Demshur

in Yes field we XXXX. their activities these the be and to expect our clients expanding applying during

Scott Gruber

you. it thank Got

Operator

question from Stanley. Igor ahead. with Please Our Levi comes go next Morgan

Igor Levi

guys. mornings Good

David Demshur

morning Good Igor.

Igor Levi

are Core now some I market of number what’s the about to with So, share figure competitors for or And you facilities, historically you increased XX% analysis. mentioned that XX% talked have or has range back, your just that downsizing coming mean, this mid-XXs the expectation? FIDs

David Demshur

we in market normally in, work I all some would discoveries were Liza to great Guyana. would competitors example looking we gain IOCs, that are Deepwater of that of In other the in – big downsizing, at because our probably probably major run are the somewhere say have All been share house. in-house. get a probably mid-XX’s. they projects of that. lot Igor, Exxon competitors, to fortunate their which off do from The low yes, say the XXs from still is

Igor Levi

traction in Great, you're the has there? been that’s very making Wolfcamp, time, joint spoke, I helpful. remember, And last we any project for industry proposals there

David Demshur

got clients. verbal hearing in Yes, of coming we've got our you on front commitments the in be will that quarters. some and more about We've that

Igor Levi

I’ll turn that. for it you back. thank Great,

David Demshur

Igor. Thanks

Operator

Hallead Please ahead. with RBC. go Kurt next question Our comes from

Kurt Hallead

morning. good Hey,

David Demshur

morning, Good Kurt.

Kurt Hallead

everybody on yet a changes consistent here else's and performance. congrats comments echo to again want on internally all very I the

well So to well done, team. the done

David Demshur

Thanks Kurt.

Dick Bergmark

Kurt. Thanks

Kurt Hallead

You’re welcome.

little running the that call fourth So March. rig Dick, an apologize outlook end to going the the on this quarter, go infer the provided get the is the into color, progression the count bit I in rig that to the with comments you there's the of up guys is that at through lower on to from little something level missed a already it excess want on and is I bring point would the expectation here. count which effectively and of But just quarter, a will respect I count earlier, first if rig

looking guys in the more are So hoping activity was get a I you related here little for rig U.S.? to just at bit how feel

Dick Bergmark

at of we end quarter. averages Kurt, were the than dates looking endpoint at each rather

So up in yes, agree that We up. has picked I with agree picked with you you. certainly has XXXX. It do

the is up we're quarter, seeing thought flat, bit. So what so average far given a maybe fourth our little of

Kurt Hallead

some the production benchmark Could commentary, in think pace. for counts obviously, continuing by what follow-up And frac then quarter? activity more the be general activity, could your activity comments great. directly perspective completion stage based you in and terms you percentages? and completion at enhancement Okay completion guys of first kind business you of provided on is your And us on that up driven

David Demshur

drilling these we're they going talked their number owing some And completion and up take backlogs XXXX are ducts. their activity plan will a thinking to program, be to operators from out ducts drawn be they of higher in down. of We've on want to their but to

have tailwinds increased some about there. So X,XXX out completions. due we're going to got to duct we've Right now,

that for we'll duct So to also look population drop.

So more for us. closer good stages, completion net-net higher all levels, clusters, that's

Kurt Hallead

– Any you tease want think to us a do on you year-on-year? with percentage change

David Demshur

Gwen?

Gwen Schreffler

completions? For

Kurt Hallead

please Yes, yes?

Gwen Schreffler

XX% XXXX. were year-over-year up completions Well,

that. is slightly than So maybe it higher

Kurt Hallead

equipment is available? More

David Demshur

there. spreads upside to that out, hard Kurt, Yes, pinpoint probably there some but frac be more will so

Kurt Hallead

fantastic. color. lot. great that’s it. Okay, Thanks That’s a Appreciate

David Demshur

Brandon, we’ll take additional And question. one

Operator

you thank All very much. right,

Gregory go Our Please with ahead. Credit last from Suisse. comes question Lewis

Gregory Lewis

Hey, for and everybody. in. and good hey, sad me but Larry, fun. have for Chris you luck Thanks congratulations and going squeezing Dick man,

Dick Bergmark

Thanks.

Gregory Lewis

already of technologies think as seen is, production it last or still willing products looks up accepted the be we've a a here? on tailwind One were on run I guess, margins, specifically guess, mix as from we if new to steady quarters. XXXX shift, tailwind is I about rate kind customers kind have about questions. a Will that two like we couple think I products, to on of better enhancement, the this over and pay for customers the

David Demshur

kind penetration is rule say that not our still would I I them market out. satisfactory. No, of

sophisticated technologically that They middle see the We've away. the go out company. technology higher Now once other using they of they sophisticated march got join forth proved of road, their right are that well. clients our these as technologically more clients, coming statements to that usually

push some on HERO uptake on just technologies coming further So from I got like PerFRAC. still think incrementals we

Gregory Lewis

it you're months, like mean the terms seeing there any this in off And something and where be the drive from, catch-up side quickly overall, products being of short on been the I then those could at produced, seems real perf stuff kind least, may couple which still last on or is that was what over and pricing? in as with could plug from the was sticking solutions see quick, flying it of shortage we the Core the Okay. just markets on Has shelves. some still some Lab

Monty Davis

Greg, this Monty. is

well I'll into the are ongoing it, arena. it's in process perforating production to because call We process increase a an

do to there, expect we supply and increase We our have several that to initiatives market. underway ability

Gregory Lewis

Okay, okay.

David Demshur

to the more it's second going apparent be but significant. in to going be It's half,

Gregory Lewis

squeezing Hey, good, Have the a you me Sounds everybody. very at much day. for great end. in thank

Monty Davis

Greg. Okay,

David Demshur

to oilfield to The we and quarter and with the generation capital returns And its capital position levels sector. repurchases. share future the their challenges cash positions production in clients industry-leading to never most Core committed await, technologically remain to of focused shareholders free operationally help opportunistic services So advanced returned Core's have or reservoir dividends and know better invested in remains via activity company summary, being optimization continue company the maintain in and challenges This existing the for well uniquely to levels for on ahead. company our however, the XXXX. operations our we of base. positioned expand first are We technologically been

these worldwide closing, made results already possible. Monty as Core, our XX to our we by earnings mentioned of all So analysts follow our release, in quarterly the and that wish that have thank shareholders, especially, employees Davis,

their continuing We are proud to associated with achievements. be

forward for update. our – look thanks with to morning. time back spending next Goodbye we So this us we now. look for And

Operator

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

You may disconnect. now

Core Laboratories (CLB) 1 Feb 182017 Q4 Earnings call transcript