Core Labs 1Q13 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“three key investment tenets that have lead to industry-leading returns…one, maximizing free cash flow through fiscal discipline….second financial tenet is to maximize return on invested capital…third financial tenet is to return excess capital to our shareholders.”

“we continue to anticipate 2013 North America activity levels to stabilize at first quarter 2013 levels, and international activity levels to increase approximately 7%, yielding a worldwide activity increase of approximately 5%.”

“when we looked at a lot of the unconventional plays, you’ve got now WTI that has slipped below $90. For us, that’s kind of a benchmark where we feel outside of the sweet spot in the Bakken, in the Eagle Ford, and then the Niobrara. It’s very difficult to reach a reasonable return on investment for our clients. And so, once we have WTI elevate above $90. Okay, maybe we’re little bit conservative. But with this dip down into the $80, even in West Texas, it does give us some pause that we still we’ll see a flattish stable level activity from Q1 hoping that we do get a rebound in WTI.”

“Yeah, well. I don’t know how long it’s going to stay there, but the $90 WTI, the level that is necessary for reasonable return is not our view, it’s our client’s view.”

“With respect to our business, 30% of all oil is produced offshore, slightly more than 40% of our revenue emanates from offshore. Slightly more than 7% of all oil is produced from deepwater, slightly more than 20% of our revenue now emanates from deepwater.”

“most people concentrate on the rocks. Remember there’s only so much we can do to the rocks. We can fracture the rocks and that’s about all we can do. On the fluid side, we’ve got a whole spectrum of cocktails and technologies that we can add to get out additional recovery.”

“This is a very large shale deposit over Western Siberia, where even Exelon has talked about teaming with Lukoil to drill some scientific holes down through the Bazhenov Shale…The other area we’re actually we’re starting to see some movement now is in North Africa. We’ve talked about the Silurian Gotlandian Shale that underlies the main basins in Algeria stretching over into Libya, the Ghadames basin, the Illizi basin…Vaca Muerta, a shale in the Neuquen Basin, in Argentina…It does appear to have the high potential…but we just think the geopolitical risks there are too high.”

[is the recent oil move going to change anything?] “Absolutely not. Absolutely not, we need, come on we need months below that before you get any change in behavior”