Oilfield service company
Core Laboratories N.V.
) reported excellent fourth quarter 2012 results, highlighting
robust business unit results.
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Quarterly earnings per share (EPS) came in at $1.17, surpassing
the Zacks Consensus Estimate of $1.13. Comparing year over year,
EPS increased 7.0% excluding one-time items.
The company's consistent emphasis on international crude-oil
developments (mainly in deepwater) and its operations in North
America with high-grading unconventional opportunities globally
complemented the results.
Total revenue for the quarter was $254.5 million, up 4.4% from
$243.8 million in the prior-year quarter on the back of strong
growth across all segments. The result surpassed the Zacks
Consensus Estimate of $247.0 million.
For its fiscal year ended Dec 31, 2012, Core Lab reported per
share profits of $4.54, above the Zacks Consensus Estimate of
$4.47 and also higher than the 2011 earnings of $3.82 per share.
Revenues of $981.1 million were 8.1% above the prior year figure
and Zacks Consensus Estimate of $974.0 million.
Reservoir Description Segment
Revenues at the Reservoir Description segment (which focuses on
international crude oil related projects) increased 4.3% year
over year to $128.8 million in the fourth quarter. Operating
income for the unit grew 8.2% year over year to $37.2 million.
The improvement is attributed to the company's increased
activities in various offshore field development projects across
North Sea, Iraq, Africa, Gabon, Angola, as well as the Middle
East, Asia Pacific and the Gulf of Mexico. Use of superior
quality technologies also boosted the segment's performance.
Production Enhancement Segment
Core Laboratories' Production Enhancement revenues leaped 3.4%
year over year to $106.6 million in the quarter but operating
income declined 2.7% year over year to $33.3 million. Even with a
decline in North American rig count, the result was buoyed by the
greater market share of the HTD-Blast and HTD-BlastXL perforating
system and high demand for the company's field-flood and
fracture-stimulation diagnostic services.
Reservoir Management Segment
Quarterly revenues from Reservoir Management operations stood at
$19.0 million, up 11.2% year over year, while operating income
moved up 21.7% year over year to $5.4 million. Operating margin
for the quarter was 28%. The primary catalysts for the segment
were high-quality study results that have attracted many projects
in unconventional reservoirs in North America, in particular the
liquids-rich plays in the Duvernay, Cardium, Bakken, Niobrara,
Eagle Ford, and Mississippi Lime formations, and unconventional
stacked reservoirs in the Permian Basin.
Balance Sheet & Free Cash Flow
As of Dec 31, 2012, Core Laboratories had cash and cash
equivalents of $19.2 million. Capital expenditures for the fourth
quarter were $7.0 million. The company generated free cash flow
of $78.1 million.
On Jan 11, 2013, Core's board of directors increased its
quarterly common stock dividend by 14.2% to 32 cents per share
($1.28 per share annualized). The new dividend will be paid on
Feb 22, to shareholders of record as of Jan 22.
Amsterdam, 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 first quarter, Core Lab forecasts total revenue in the
$240 million to $250 million range. Earnings per share will
likely be between $1.12 and $1.18 per share.
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/or
expropriation of assets, exchange rate risks, terrorism and
political/civil sentiment in critical countries like Iran, Iraq,
Nigeria and Venezuela.
Additionally, the company relies on its ability to develop and
acquire essential products and technologies that drive its
operational performance and growth. If these technologies and/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.
But there are certain other companies in the oilfield service
industry that are expected to perform well in the coming one to
three months. These include
Compressco Partners, L.P.
) with a Zacks Rank #1 (Strong Buy) and
Hornbeck Offshore Services Inc.
) - both with Zacks Rank #2 (Buy).