Core Laboratories' CEO Discusses Q4 2011 Results - Earnings Call Transcript
Core Laboratories N.V. (
)
Q4 2011 Earnings Call
February 2, 2012 08:30 a.m. ET
Executives
David Demshur – Chairman, CEO, and President
Richard Bergmark – EVP and CFO
Monty Davis – COO
Analysts
Rob MacKenzie – FBR Capital Markets
James West – Barclays Capital
Veny Aleksandrov – Pritchard Capital Partners
Blake Hutchinson – Howard Weil, Inc.
John Daniels – Simmons & Company
Presentation
Operator
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Good morning. My name is Leah and I will be your conference operator today. At this time I would like to everyone to the Core Lab Q4 2011 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions] Thank you, David Demshur, you may begin your conference.
David Demshur
Thanks Leah. Greetings and good morning in North America, good afternoon in Europe, and good evening in Asia Pacific. We would like to welcome all of our shareholders, analysts, and most importantly, our employees to Core Laboratories fourth quarter 2011 earnings conference call. This morning as usual I am joined by Dick Bergmark, Core’s Executive Vice President and CFO. Also this morning we are again joined by Core’s COO Monty Davis who will present the detailed operational review.
The call would be divided into five segments. Dick will start by making remarks regarding forward-looking statements and will come back and give a brief investor update and highlight the three financial tenets by which Core’s executive management executes the company’s growth strategies.
We believe these three tenets have produced industry leading shareholder returns and returns on investment capital. We will also discuss Core’s long health philosophy of returning excess capital back to our shareholders.
Then Dick will follow with a detailed financial overview and additional comments regarding building shareholder value and Core’s first quarter and full year 2012 revenue and earnings guidance which confirm our confidence in the trends increasing of increasing activities in an unconventional oil reservoirs in North and South America and especially international and deep water activities tied to crude oil developments.
Then Monty will go over the Core’s three operating segments detailing our progress and discussing the continued successful introduction of new Core Lab technologies and services, and then highlighting some of Core’s operations and major projects. Then we will open the phones for a Q&A session.
We will turn it back to Dick now for comments regarding forward-looking statements. Dick?
Richard Bergmark
Before we start the conference this morning I’ll mention that some of the statements that we make during this call may include projections, estimates, and other forward-looking information. This would include any discussion of the company’s business outlook. These types of forward-looking statements are subject to a number of risks and uncertainties relating to the oil and gas industry, business conditions, international markets, international political climate, and other factors including those discussed in our ’34 Act filings that may affect our outcome.
Should one or more of these risks or uncertainties materialize or should any of our assumptions prove incorrect actual results may vary in material respects from those projected in the forward-looking statements. We undertake no obligation of publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise. For more detailed discussion of some of the foregoing risks and uncertainties see item 1A risk factors in our annual report on Form 10K for the fiscal year ended December 31, 2010, as well as the other reports in registration statements filed by us with the SEC.
Our comments include non-GAAP financial measures, reconciliation to the most directly comparable GAAP financial measures is included in the press release announcing the fourth quarter results and which also can be found on our website. With that I’ll pass the discussion back to Dave.
David Demshur
Okay, thanks Dick, a quick investor update. Core’s operations produced another record quarter and full year as the company continued to benefit from our continued focus on and the increase in international and deepwater offshore activities and the increase in activities in unconventional oil plays in response the higher oil prices and dwindling global oil spare capacity.
The focus on crude oil related projects continue to build through 2011 as we discussed the projected decrease in natural gas rig count on our conference calls during the first quarter, second quarter, and third quarter of 2011. Therefore, Core’s revenue mix is now closer to 80% oil and 20% natural gas, a shift from the previous 70-30 mix. Moreover, most of the natural gas related activity emanates from international projects in the international theater. This would be the Eastern Mediterranean, Eastern Africa, and Western Australia.
Also, when we look at our operations Core’s reservoir description results reflected this trend away from natural gas and the positive increases in both international and deepwater activities tied to crude oil developments. Also our fourth quarter 2011 results were bolstered by North American activity levels in oil shale reservoirs which drove incremental margins for our production enhancement unit.
Finally, reservoir management posted another strong quarter reflecting additional oil company support for its worldwide joint industry projects in oil shale reservoirs and international activities of interest like West Africa. Our growth strategies and the execution by our operating units continue to serve our clients, our employees and our shareholders well. Core’s continued focus on international crude oil related developments, especially those in deepwater environments, unconventional oil resource plays and the continued internal development of new technologies and services, has led to a multiple year of sustained growth and increased profitability.
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