Core Labs EPS Meet Ests, Up Y-Y

Zacks

Oilfield service company, Core Laboratories NV (CLB) reported second quarter 2013 adjusted earnings per share (EPS) of $1.32. The figure is in-line with the Zacks Consensus Estimate, but comparing year over year, EPS increased 13.8%. 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 year over year results.

Total revenue was $263.1 million, up 6.5% from $247.0 million in the prior-year quarter buoyed by growth across all segments. However, the top line missed the Zacks Consensus Estimate of $265.0 million.

Reservoir Description Segment

Revenues from the Reservoir Description segment (which focuses on international crude oil related projects) increased 2.2% year over year to $129.2 million in the second quarter. Operating income for the unit however, decreased 3.0% year over year to $36.9 million. Operating margin was 28.6%. The operating result was hurt by some transitory events during the quarter.

Production Enhancement Segment

Core Labs’ Production Enhancement revenues grew 10.7% year over year to $110.2 million in the quarter and operating income increased 26.0% year over year to $37.2 million. Operating margin was 33.8%.  Gulf of Mexico and West Africa based deepwater developments aided the result. The result was also buoyed by the greater market share of the HTD-Blast perforating systems and the fracture diagnostic technologies of the company.

Reservoir Management Segment

Quarterly revenues from Reservoir Management operations were $23.7 million, up 13.0% year over year, while operating income moved up 5.1% year over year to $7.5 million. Operating margin was 31.7%. The primary catalysts for the segment were high-quality study results that have attracted many projects. Core Labs 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 Jun 30, 2013, Core Labs had cash and cash equivalents of $23.2 million. Capital expenditures for the second quarter were $9.5 million. The company generated free cash flow of $58.8 million.

Quarterly Dividend

On Jul 9, 2013, Core Labs’ 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 Aug 19, to shareholders of record as of Jul 19.

Outlook

Amsterdam, the Netherlands-based Core Labs 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 Labs also plans to use advanced technologies and add services aimed at boosting the daily production and hydrocarbon recovery rates.

For the third quarter, Core Labs forecasts total revenue in the $263.0 million to $268.0 million range. Earnings per share will likely be between $1.33 and $1.34. For the fourth quarter, the total revenue is expected to be between $268.0 million and $270.0 million. While, earnings per share will likely be between $1.37 and $1.38..

Zacks Rating

Core Labs currently retains a Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next one to three months.

Core Labs’ deep portfolio of proprietary products and services positions it to operate successfully in the current environment of low commodity prices and growing maturity in the global hydrocarbon reserve base. Additionally, the company’s strong presence in the emerging shale plays and its global footprint – including markets in the Middle East, Asia Pacific, and East and West Africa – provide for steady growth rates going forward.

Other energy firms besides Core Labs that are worth buying now include Atwood Oceanics Inc. (ATW), Ocean Rig UDW Inc. (ORIG) and Parker Drilling Co. (PKD). All the firms sport a Zacks Rank #2 (Buy).
 

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Read the Full Research Report on ORIG

Read the Full Research Report on PKD

Read the Full Research Report on ATW

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