Core Labs reported strong second-quarter results, thanks to deep-water growth. Revenue increased 7% year over year to $263 million while operating income increased 10% to $83.5 million. On a segment level, the reservoir description segment was a bit weak.
Reservoir description reported 2% year-over year revenue growth and revenue of $129 million, while operating income fell slightly from last year’s levels to $38 million due to an unusually harsh breakup period in Canada and weather issues in the Bakken. Core highlighted growth in reservoir fluid phase behavior studies, which are taking place in the Gulf of Mexico, Brazil, and West Africa.
Core’s techniques can be used to stimulate reservoir changes over time in these complex, high-pressure and high-temperature fields, providing critical information to oil and gas companies. For example, Core believes that its highpressure enhanced oil recovery technology could boost recovery rates in the Gulf of Mexico to closer to 20% from today’s 8%-13% range.
Performance at Core’s production enhancement and reservoir management segments was very strong. Production enhancement revenue increased 11% over last year’s levels to $110 million, while operating income jumped 26% to $38 million. Deep-water work in the Gulf of Mexico and West Africa, as well as continued market penetration of Core’s fracture diagnostic technologies and HTD-Blast perforating systems were key drivers.
Analysts are intrigued by Core’s introduction of the FlowProfiler this quarter, which provides data sets to oil companies that enable them to see which specific fracturing stage or group of stages contributed the greatest amount of oil. Oil and gas companies can then re-fracture the well to maximize production.
The reservoir management segment reported revenue of $24 million and operating income of $8 million, which represents growth of 13% and 7% from the prior year. The company benefited from ongoing work in the deepwater Gulf of Mexico and Africa, while it has proposed one of the largest geological studies of its kind for the Western Siberian Bazhenov shale to several Russian companies.
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