Oilfield service company,
Core Laboratories N.V.
) reported excellent firstquarter 2013 results, highlighting
global deepwater hydrocarbon developments.
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Quarterly earnings per share (EPS) came in at $1.22, surpassing
the Zacks Consensus Estimate of $1.15. Comparing year over year,
EPS increased 8.0% excluding one-time items.
The company's consistent emphasis on international crude-oil
developments (mainly in deepwater), its global high-grading
unconventional crude oil and natural gas opportunities and
improvements in operations in North America complemented the
Total revenue was $260.9 million, up 11.4% from $234.2 million in
the prior-year quarter buoyed by strong growth across all
segments. The top line also breezed past the Zacks Consensus
Estimate of $245.0 million.
Reservoir Description Segment
Revenues from the Reservoir Description segment (which focuses on
international crude oil related projects) increased 7.9% year
over year to $125.2 million in the first quarter. Operating
income for the unit grew 7.5% year over year to $34.9 million.
Operating margin was 28%. The improvement was attributed to Core
Lab's focus on global deepwater developments, mainly Lower
Tertiary in the Gulf of Mexico. The use of superior quality
technologies also boosted the segment's performance.
Production Enhancement Segment
Core Labs' Production Enhancement revenues grew 11.1% year over
year to $107.4 million in the quarter and operating income
increased 2.1% year over year to $34.2 million. Operating margin
was 32%. Even with a decline in North American rig count,
the results were buoyed by the greater market share of the
HTD-Blast and HTD-BlastXL perforating systems and high demand for
the company's fracture-stimulation diagnostic services.
Reservoir Management Segment
Quarterly revenues from Reservoir Management operations were
$28.3 million, up 32.3% year over year, while operating income
moved up 24.4% year over year to $9.8 million. Operating margin
was 35%. The primary catalysts for the segment were high-quality
study results that have attracted many projects. Core Lab has
undertaken a number of reservoir analysis ventures in onshore and
offshore plays, which boosted the segment's results.
Balance Sheet & Free Cash Flow
As of Mar 31, 2013, Core Lab had cash and cash equivalents of
$22.9 million. Capital expenditures for the first quarter were
$8.4 million. The company generated free cash flow of $59.8
On Apr 15, 2013, Core Lab's board of directors declared a
quarterly common stock dividend of 32 cents per share ($1.28 per
share annualized). The dividend will be paid on May 24, to
shareholders of record as of Apr 26.
Amsterdam, the Netherlands-based Core Lab provided a positive
outlook for 2013, reflecting the favorable Brent crude pricing
along with the arrival of additional deepwater drilling rigs.
These will enable the company to walk into more new projects and
operate in other rich oil and gas acreages. Core Lab also plans
to use advanced technologies and add services aimed at boosting
the daily production and hydrocarbon recovery rates.
For the second quarter, Core Lab forecasts total revenue in the
$264 million to $269 million range. Earnings per share will
likely be between $1.29 and $1.36. For 2013, total revenue is
expected in the $1,060 million to $1,075 million bracket and
earnings per share will likely be between $5.06 and $5.26.
The company currently retains a Zacks Rank #4 (Sell), implying
that it is expected to underperform the broader U.S. equity
market over the next one to three months.
Core Lab has operations in over 50 countries, with approximately
50% of its total revenue coming from international markets. As
such, the company is exposed to risks associated with doing
business abroad. Such risks include embargoes and expropriation
of assets, exchange rate risks, terrorism as well as
political/civil sentiment in critical countries like Iran, Iraq,
Nigeria and Venezuela.
Additionally, Core Lab relies on its ability to develop and
acquire essential products and technologies that drive its
operational performance and growth. If these technologies or
products become obsolete or cannot be brought to market in a
timely and competitive manner, the company might face severe
operational and financial dilemmas.
However, certain other companies in the oilfield service industry
are expected to perform well in the coming one to three months.
Compressco Partners L.P.
Exterran Partners L.P.
) with a Zacks Rank #1 (Strong Buy) as well as
Exterran Holdings Inc.
) with a Zacks Rank #2 (Buy).