Core Laboratories Q4 2025 Core Laboratories Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Core Laboratories Inc Earnings Call
Operator: Good day, and welcome to the Core Laboratories Q4 and fiscal year 2025 earnings webcast and call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star and then two. Please note, this event is being recorded. I would now like to turn the conference over to Larry Bruno, Chairman and CEO. Please go ahead.
Operator: Good day, and welcome to the Core Laboratories Q4 and Fiscal Year 2025 Earnings Webcast and Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star and then two. Please note, this event is being recorded. I would now like to turn the conference over to Larry Bruno, Chairman and CEO. Please go ahead.
Speaker #1: Good day, and welcome to the CORE LABORATORIES, fourth quarter and fiscal year 2025 earnings webcast and call. All participants will be in listen-only mode.
Speaker #1: Should you need assistance, please signal a conference specialist by pressing the star key followed presentation, there will be an opportunity to by zero. ask questions.
Speaker #1: After today's To ask a question, you may press star, then one on the touch-tone phone. To withdraw your question, please press star and then two.
Speaker #1: Please note this event is being recorded. I would now like to turn the conference over to Larry Bruno, Chairman and CEO. Please go ahead.
Speaker #2: Thanks, Dave. Good morning in the Americas. Good afternoon in Europe, Africa, and the Middle East, and good evening in Asia Pacific. We'd like to welcome all of our shareholders, analysts, and most importantly, our employees to CORE LABORATORIES, fourth quarter 2025 earnings call.
Larry Bruno: Thanks, Dave. Good morning in the Americas, good afternoon in Europe, Africa, and the Middle East, and good evening in Asia Pacific. We'd like to welcome all of our shareholders, analysts, and most importantly, our employees, to Core Laboratories' Q4 2025 earnings call. This morning, I'm joined by Chris Hill, Core's Chief Financial Officer, and Gwen Gresham, Core's Senior Vice President and Head of Investor Relations. The call will be divided into 6 segments. Gwen will start by making remarks regarding forward-looking statements. We'll then have some opening comments, including a high-level review of important factors in Core's Q4 performance. In addition, we'll review Core's strategies and the three financial tenets that Core Lab employs to build long-term shareholder value. Chris will then give a detailed financial overview and have additional comments regarding shareholder value. Following Chris, Gwen will provide some comments on the company's outlook and guidance.
Larry Bruno: Thanks, Dave. Good morning in the Americas, good afternoon in Europe, Africa, and the Middle East, and good evening in Asia Pacific. We'd like to welcome all of our shareholders, analysts, and most importantly, our employees, to Core Laboratories' Q4 2025 earnings call. This morning, I'm joined by Chris Hill, Core's Chief Financial Officer, and Gwen Gresham, Core's Senior Vice President and Head of Investor Relations. The call will be divided into 6 segments. Gwen will start by making remarks regarding forward-looking statements.
Speaker #2: This morning, I'm joined by Chris Hill, CORE's Chief Financial Officer, and Gwendolyn Gresham, CORE Senior Vice President and Head of Investor Relations. The call will be divided into six segments.
Speaker #2: Gwen will start by making remarks regarding forward-looking statements. We'll then have some opening comments, including a high-level review of important factors in CORE's Q4 performance.
Larry Bruno: We'll then have some opening comments, including a high-level review of important factors in Core's Q4 performance. In addition, we'll review Core's strategies and the three financial tenets that Core Lab employs to build long-term shareholder value. Chris will then give a detailed financial overview and have additional comments regarding shareholder value. Following Chris, Gwen will provide some comments on the company's outlook and guidance.
Speaker #2: In addition, we'll review CORE's strategies and the three financial tenets that CORE LAB employees to build long-term shareholder value. Chris will then give a detailed financial overview and have additional comments regarding shareholder value.
Speaker #2: Following Chris, Gwen will provide some comments on the company's outlook and guidance. I'll then review CORE's two operating segments, detailing our progress and discussing the continued successful introduction and deployment of CORE LAB's technologies, as well as highlighting some of CORE's operations and major projects worldwide.
Larry Bruno: I'll then review Core's two operating segments, detailing our progress and discussing the continued successful introduction and deployment of Core Lab's technologies, as well as highlighting some of Core's operations and major projects worldwide. Then we'll open the phones for a Q&A session. I'll now turn the call over to Gwen for remarks on forward-looking statements.
Larry Bruno: I'll then review Core's two operating segments, detailing our progress and discussing the continued successful introduction and deployment of Core Lab's technologies, as well as highlighting some of Core's operations and major projects worldwide. Then we'll open the phones for a Q&A session. I'll now turn the call over to Gwen for remarks on forward-looking statements.
Speaker #2: Then we'll open the phones for Q&A session. I'll now turn the call over to Gwen for remarks on
Speaker #2: Then we'll open the phones for Q&A session. I'll now turn the call over to Gwen for remarks on forward-looking statements. Thank you,
Gwen Gresham: Thank you, Larry. Before we start the conference this morning, I'll mention that some of our statements that we make during the 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 that could cause actual results to materially differ from our forward-looking statements. These risks and uncertainties are discussed in our most recent annual report on Form 10-K, as well as other reports and registration statements filed by us with the SEC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Our comments also include non-GAAP financial measures. Reconciliation to the most directly comparable GAAP financial measures is included in the press release announcing our fourth quarter results.
Gwen Gresham: Thank you, Larry. Before we start the conference this morning, I'll mention that some of our statements that we make during the 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 that could cause actual results to materially differ from our forward-looking statements.
Speaker #3: Larry. Before we start the conference this morning, I'll mention that some of our statements that we make during the call may include projections as estimates and other forward-looking discussion of the company's business information.
Speaker #3: outlook. These types of forward-looking statements are subject to a number of risk and uncertainties that could This would include any materially differ from our forward-looking cause actual results to statements.
Gwen Gresham: These risks and uncertainties are discussed in our most recent annual report on Form 10-K, as well as other reports and registration statements filed by us with the SEC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Our comments also include non-GAAP financial measures. Reconciliation to the most directly comparable GAAP financial measures is included in the press release announcing our fourth quarter results.
Speaker #3: annual report on Form 10-K, as registration statements filed by us These risk and uncertainties well as other reports and with the SEC. We update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Speaker #3: Our comments also include non-GAAP financial measures. Reconciliation to the most directly the press release announcing comparable GAAP financial measures is included in Those non-GAAP measures can also be found on our website.
Gwen Gresham: Those non-GAAP measures can also be found on our website. With that, I'll pass the discussion back to Larry.
Gwen Gresham: Those non-GAAP measures can also be found on our website. With that, I'll pass the discussion back to Larry.
Speaker #3: With that, I'll pass the discussion back to Larry.
Speaker #2: Thanks, Gwen. Moving now to some high-level comments about our fourth quarter and full year 2025 results. CORE continued to execute its strategic plan of technology investments targeted to both solve client problems and capitalize on CORE's technical and geographic opportunities.
Larry Bruno: Thanks, Gwen. Moving now to some high-level comments about our fourth quarter and full year 2025 results. Core continued to execute its strategic plan of technology investments targeted to both solve client problems and capitalize on Core's technical and geographic opportunities. Fourth quarter 2025 revenue was up 3% compared to Q3 of 2025. Full year revenue for the company increased slightly compared to 2024. Fourth quarter performance was driven by strong international demand for Core's proprietary technologies, which helped offset a seasonally soft US land market. Looking at reservoir description, fourth quarter revenue was up 5% compared to Q3 of 2025 and up 6% from Q4 of last year, reflecting the continued demand for rock and fluid analysis across the company's global laboratory network.
Larry Bruno: Thanks, Gwen. Moving now to some high-level comments about our fourth quarter and full year 2025 results. Core continued to execute its strategic plan of technology investments targeted to both solve client problems and capitalize on Core's technical and geographic opportunities. Fourth quarter 2025 revenue was up 3% compared to Q3 of 2025. Full year revenue for the company increased slightly compared to 2024. Fourth quarter performance was driven by strong international demand for Core's proprietary technologies, which helped offset a seasonally soft US land market.
Speaker #2: Fourth quarter 2025 revenue was up 3% compared to Q3 of 2025. Full year revenue for the company increased slightly compared to 2024. Fourth quarter performance was driven by strong international demand for CORE's proprietary technologies, which helped offset a seasonally soft US land market.
Speaker #2: Looking at reservoir description, fourth 5% compared to Q3 of 2025 and up 6% from quarter revenue was up Q4 of last year, reflecting the continued demand for rock and fluid analysis across the company's global laboratory network.
Larry Bruno: Looking at reservoir description, fourth quarter revenue was up 5% compared to Q3 of 2025 and up 6% from Q4 of last year, reflecting the continued demand for rock and fluid analysis across the company's global laboratory network.
Larry Bruno: Demand for laboratory services tied to the assay of crude oil and derived products was negatively impacted by ongoing geopolitical conflicts and evolving sanctions, which were further expanded during Q4. These geopolitical tensions, along with supply-demand balance concerns, contributed to commodity price volatility during the quarter. Despite these headwinds, fourth quarter operating margins in reservoir description, ex items, remained strong at 14%, expanding sequentially by 60 basis points. The company's 2025 performance reflects Core's continued focus on operational efficiency and strong utilization across Core Lab's international laboratory network. In production enhancement, fourth quarter revenue was relatively flat compared to Q3, but meaningfully higher year-over-year, up over 8%. Ex items, fourth quarter 2025 operating margins in production enhancement were 7%, down from 11% in Q3, but up from 4% in Q4 of 2024.
Larry Bruno: Demand for laboratory services tied to the assay of crude oil and derived products was negatively impacted by ongoing geopolitical conflicts and evolving sanctions, which were further expanded during Q4. These geopolitical tensions, along with supply-demand balance concerns, contributed to commodity price volatility during the quarter. Despite these headwinds, fourth quarter operating margins in reservoir description, ex items, remained strong at 14%, expanding sequentially by 60 basis points.
Speaker #2: crude oil and derived products was Demand for negatively impacted by ongoing geopolitical conflicts and evolving sanctions, which were further expanded during Q4. These geopolitical tensions along with supply-demand balance concerns contributed to commodity price volatility during the quarter.
Speaker #2: Despite these headwinds, fourth quarter operating margins in reservoir description, ex items, remained strong at 14%, expanding sequentially by 60 basis points. The company's 2025 performance reflects CORE's continued focus on operational efficiency and strong utilization across CORE LAB's international laboratory network.
Larry Bruno: The company's 2025 performance reflects Core's continued focus on operational efficiency and strong utilization across Core Lab's international laboratory network. In production enhancement, fourth quarter revenue was relatively flat compared to Q3, but meaningfully higher year-over-year, up over 8%. Ex items, fourth quarter 2025 operating margins in production enhancement were 7%, down from 11% in Q3, but up from 4% in Q4 of 2024.
Speaker #2: In production enhancement, fourth quarter revenue was relatively flat compared to Q3, but meaningfully higher year over year up over 8%. Ex items, fourth quarter 2025 operating margins in production enhancement were 7%, down from 11% in Q3, but up from 4% in Q4 of 2024.
Speaker #2: Sequential results were negatively impacted by a provision for potentially uncollectible receivable in Asia Pacific. This was partially offset by continued strong demand for CORE LAB's proprietary completion diagnostic services across both onshore and offshore markets.
Larry Bruno: Sequential results were negatively impacted by a provision for a potentially uncollectible receivable in Asia Pacific. This was partially offset by continued strong demand for Core Laboratories' proprietary completion diagnostic services across both onshore and offshore markets. Turning now to some fourth quarter highlights regarding capital allocation. The company continued its long-standing commitment to shareholder returns during the quarter, returning free cash to our shareholders through our quarterly dividend and by repurchasing more than 363,000 shares of company stock, representing a value of $5.7 million. For the full year, Core repurchased 1.2 million shares at a value of $15.5 million. Q4 marked the fifth consecutive quarter of share buybacks. Core intends to continue to use free cash to fund our quarterly dividend, pursue growth opportunities, and improve shareholder value through opportunistic share repurchases.
Larry Bruno: Sequential results were negatively impacted by a provision for a potentially uncollectible receivable in Asia Pacific. This was partially offset by continued strong demand for Core Laboratories' proprietary completion diagnostic services across both onshore and offshore markets. Turning now to some fourth quarter highlights regarding capital allocation.
Speaker #2: Turning now to some fourth quarter highlights regarding capital allocation, the company continued its longstanding commitment to shareholder returns during the quarter, returning free cash to our shareholders through our quarterly dividend of more than 363,000 and by repurchasing more shares of company stock, representing a value of $5.7 million.
Larry Bruno: The company continued its long-standing commitment to shareholder returns during the quarter, returning free cash to our shareholders through our quarterly dividend and by repurchasing more than 363,000 shares of company stock, representing a value of $5.7 million. For the full year, Core repurchased 1.2 million shares at a value of $15.5 million. Q4 marked the fifth consecutive quarter of share buybacks. Core intends to continue to use free cash to fund our quarterly dividend, pursue growth opportunities, and improve shareholder value through opportunistic share repurchases.
Speaker #2: For the full year, CORE repurchased $1.2 million shares at a value of $15.5 million. Q4 marked the fifth consecutive quarter of share buybacks. CORE intends to continue to use free cash to fund our quarterly dividend, pursue growth opportunities, and improve shareholder value through opportunistic share repurchases.
Speaker #2: As CORE celebrates its 90th anniversary, the company's long-term success continues to reflect the strength of its asset-light business model, its global technology leadership, and CORE's unmatched client focus.
Larry Bruno: As Core Lab celebrates its 90th anniversary, the company's long-term success continues to reflect the strength of its asset-light business model, its global technology leadership, and Core's unmatched client focus. These strengths, combined with disciplined capital deployment, continue to drive long-term value creation for our shareholders. Looking ahead, Core will continue to execute on its key strategic objectives by, one, introducing new product and service offerings in key geographic markets. Two, running a lean and focused organization. And three, holding to our commitments to return excess free cash to our shareholders while maintaining a strong balance sheet. The interest of our shareholders, clients, and employees will always be well served by Core Lab's resilient culture, which emphasizes innovation, the application of technology to de-risk our clients' decisions and solve their complex problems, along with dedicated client service.
Larry Bruno: As Core Lab celebrates its 90th anniversary, the company's long-term success continues to reflect the strength of its asset-light business model, its global technology leadership, and Core's unmatched client focus. These strengths, combined with disciplined capital deployment, continue to drive long-term value creation for our shareholders. Looking ahead, Core will continue to execute on its key strategic objectives by, one, introducing new product and service offerings in key geographic markets. Two, running a lean and focused organization.
Speaker #2: These strengths, combined with disciplined capital deployment, continue to drive long-term value creation for our shareholders. Looking ahead, CORE will continue to execute on its key strategic objectives by: one, introducing new product and service offerings in key geographic markets; two, running a lean and focused organization; and three, holding to our commitments to return excess free cash to our shareholders while maintaining a strong balance sheet.
Larry Bruno: And three, holding to our commitments to return excess free cash to our shareholders while maintaining a strong balance sheet. The interest of our shareholders, clients, and employees will always be well served by Core Lab's resilient culture, which emphasizes innovation, the application of technology to de-risk our clients' decisions and solve their complex problems, along with dedicated client service.
Speaker #2: The interest of our shareholders, clients, and employees will always be well served by CORE LAB's resilient culture, which emphasizes innovation, the application of technology to de-risk our clients' decisions, and solve their complex problems, along with dedicated client service.
Speaker #2: I'll talk more about some of our latest innovations in the operational review section of this call. Now to review CORE LAB strategies and the financial tenets that have guided the company's shareholder value creation through our more than 30-year history company.
Speaker #2: I'll talk more about some of our latest innovations in the operational review section of this call. Now, to review Core Lab strategies and the financial tenets that have guided the company's shareholder value creation through our more than 30-year history as a publicly traded company. While we continue to pursue growth opportunities, the company will remain focused on its three longstanding, long-term financial tenets: those being to maximize free cash flow, maximize return on invested capital, and return excess free cash to our shareholders.
Larry Bruno: I'll talk more about some of our latest innovations in the operational review section of this call. Now to review Core Lab's strategies and the financial tenets that have guided the company's shareholder value creation through our more than 30-year history as a publicly traded company. While we continue to pursue growth opportunities, the company will remain focused on its three long-standing, long-term financial tenets. Those being to maximize free cash flow, maximize return on invested capital, and returning excess free cash to our shareholders. I'll now turn it over to Chris for the detailed financial review.
Larry Bruno: I'll talk more about some of our latest innovations in the operational review section of this call. Now to review Core Lab's strategies and the financial tenets that have guided the company's shareholder value creation through our more than 30-year history as a publicly traded company. While we continue to pursue growth opportunities, the company will remain focused on its three long-standing, long-term financial tenets. Those being to maximize free cash flow, maximize return on invested capital, and returning excess free cash to our shareholders.
Speaker #2: I'll now turn it over to Chris for the detailed financial review.
Larry Bruno: I'll now turn it over to Chris for the detailed financial review.
Speaker #3: Thanks. Thanks, Larry. Before we review the financial performance for the quarter, the guidance we gave on our last call and past calls specifically excluded the impact of any FX gains or losses, and assumed an effective tax rate of 25%.
Chris Hill: Thanks. Thanks, Larry. Before we review the financial performance for the quarter, the guidance we gave on our last call and past calls specifically excluded the impact of any FX gains or losses and assumes an effective tax rate of 25%. So accordingly, our discussion today excludes any foreign exchange gain or loss for current and prior periods. The comparison periods for the Q3 2025 and Q4 2024 also include items that were discussed in those calls and highlighted in our earnings release for those periods. These items have also been excluded from our discussion of the financial results today. You can find a summary of those items in the tables attached to our press release for the Q4 and full year of 2025.
Chris Hill: Thanks. Thanks, Larry. Before we review the financial performance for the quarter, the guidance we gave on our last call and past calls specifically excluded the impact of any FX gains or losses and assumes an effective tax rate of 25%. So accordingly, our discussion today excludes any foreign exchange gain or loss for current and prior periods. The comparison periods for the Q3 2025 and Q4 2024 also include items that were discussed in those calls and highlighted in our earnings release for those periods. These items have also been excluded from our discussion of the financial results today.
Speaker #3: So accordingly, our discussion today excludes any foreign exchange gain or loss for current and prior periods. The comparison periods for the third quarter of 2025 and fourth quarter of 2024 also include items that were discussed in those calls, and highlighted in our earnings release for those periods.
Speaker #3: These items have also been excluded from our discussion of the financial results today. You can find a summary of those items in the tables attached to our press release for the fourth quarter and full year of 2025.
Chris Hill: You can find a summary of those items in the tables attached to our press release for the Q4 and full year of 2025.
Speaker #3: So now, looking at the income statement, revenue was $138.3 million in the fourth quarter, up 3% compared to the prior quarter. Year-over-year revenue also increased improvement was primarily associated with increased demand for our reservoir rock and fluid analysis, as well as completion diagnostic services in the US and several international 7%. regions.
Speaker #3: So now, looking at the income statement, revenue was $138.3 million in the fourth quarter, up 3% compared to the prior quarter. Year-over-year revenue also increased improvement was primarily associated with increased demand for our reservoir rock and fluid analysis, as well as completion diagnostic services in the US and several international 7%.
Chris Hill: So now, looking at the income statement, revenue was $138.3 million in Q4, up 3% compared to the prior quarter. Year-over-year revenue also increased 7%. The sequential improvement was primarily associated with increased demand for our reservoir rock and fluid analysis, as well as completion diagnostic services in the US and several international regions. For the full year of 2025, revenue was $526.5 million, up slightly year-over-year, again, driven by growth in our service revenue. However, substantially offset by a decline in US onshore completion activity and associated product sales. Of this revenue, service revenue, which is more international, was $107 million for the quarter, up 6% sequentially and 11% year-over-year.
Chris Hill: So now, looking at the income statement, revenue was $138.3 million in Q4, up 3% compared to the prior quarter. Year-over-year revenue also increased 7%. The sequential improvement was primarily associated with increased demand for our reservoir rock and fluid analysis, as well as completion diagnostic services in the US and several international regions. For the full year of 2025, revenue was $526.5 million, up slightly year-over-year, again, driven by growth in our service revenue. However, substantially offset by a decline in US onshore completion activity and associated product sales.
Speaker #3: 2025, revenue was up slightly year-over-year, again driven by growth in our service revenue. $526.5 million, The sequential decline in US onshore completion activity and associated product sales.
Chris Hill: Of this revenue, service revenue, which is more international, was $107 million for the quarter, up 6% sequentially and 11% year-over-year.
Speaker #3: Of this revenue, service revenue, which is more international, was $107 million for the quarter, up 6% sequentially, and 11% year-over-year. Sequentially, we continue to see growth for our reservoir rock and fluid analysis services in the US and several international regions as well as demand for our completion diagnostic services in the US.
Chris Hill: Sequentially, we continue to see growth for our reservoir rock and fluid analysis services in the US and several international regions, as well as demand for our completion diagnostic services in the US. Year-over-year, the increase was driven by growth in our reservoir rock and fluid analysis, as well as our completion diagnostic services. For the full year of 2025, service revenue was $399.4 million, and was up 3% compared to $388.2 million in 2024. Product sales, which is more equally tied to North America and international activity, were $31.3 million for the quarter, which is down 6% from last quarter and down 4% year-over-year.
Chris Hill: Sequentially, we continue to see growth for our reservoir rock and fluid analysis services in the US and several international regions, as well as demand for our completion diagnostic services in the US. Year-over-year, the increase was driven by growth in our reservoir rock and fluid analysis, as well as our completion diagnostic services.
Speaker #3: growth in our reservoir rock and fluid analysis as services. For the full year Year-over-year, the increase was driven by of 2025, service revenue well as our completion diagnostic was $399.4 million, and was up 3% compared to $388.2 million in 2024.
Chris Hill: For the full year of 2025, service revenue was $399.4 million, and was up 3% compared to $388.2 million in 2024. Product sales, which is more equally tied to North America and international activity, were $31.3 million for the quarter, which is down 6% from last quarter and down 4% year-over-year.
Speaker #3: Product sales, which is more equally tied to North America, and international activity, were $31.3 million for the quarter, which is down 6% from last year-over-year.
Speaker #3: Our international quarter, and down 4% product sales are typically larger bulk orders and can vary from one quarter to another, and were down in the fourth quarter when compared to the third quarter.
Chris Hill: Our international product sales are typically larger bulk orders and can vary from one quarter to another, and were down in Q4 when compared to Q3. Additionally, US onshore completion activity continued to decline sequentially. Looking at year-over-year, the decrease in product sales was primarily driven by lower completion activity in the US onshore market. For the full year of 2025, product sales of $127.1 million were down 6% from $135.6 million in 2024, which again, is primarily associated with lower levels of completion activity in the US.
Chris Hill: Our international product sales are typically larger bulk orders and can vary from one quarter to another, and were down in Q4 when compared to Q3. Additionally, US onshore completion activity continued to decline sequentially. Looking at year-over-year, the decrease in product sales was primarily driven by lower completion activity in the US onshore market. For the full year of 2025, product sales of $127.1 million were down 6% from $135.6 million in 2024, which again, is primarily associated with lower levels of completion activity in the US.
Speaker #3: Additionally, US onshore completion activity continued to decline sequentially. Looking at year-over-year, the decrease in product sales was primarily driven by lower completion activity in the US onshore market.
Speaker #3: For the full year of 2025, product sales of $127.1 million were down 6% from $135.6 million in 2024, which again is primarily associated with lower levels of completion activity in the US.
Speaker #3: Moving on to cost of services, X items for the quarter was 75% of service revenue, which increased slightly from 74% in the prior quarter, but improved from 76% in the same quarter in the prior year.
Chris Hill: Moving on to cost of services, ex items for the quarter was 75% of service revenue, which increased slightly from 74% in the prior quarter, but improved from 76% in the same quarter in the prior year. The sequential increase was primarily due to increased labor costs and pass-through revenue during the quarter. The year-over-year improvement in cost of services was due to improved absorption of costs on a higher level of revenue in 2025. As discussed in our previous calls, the service side of our business has been more impacted by the geopolitical conflicts and associated sanctions. The volatility in crude oil prices, and more recently, expanded sanctions, continue to cause disruptions to the trading and maritime movement of crude oil and derived products, and the associated crude assay laboratory services we provide.
Chris Hill: Moving on to cost of services, ex items for the quarter was 75% of service revenue, which increased slightly from 74% in the prior quarter, but improved from 76% in the same quarter in the prior year. The sequential increase was primarily due to increased labor costs and pass-through revenue during the quarter. The year-over-year improvement in cost of services was due to improved absorption of costs on a higher level of revenue in 2025. As discussed in our previous calls, the service side of our business has been more impacted by the geopolitical conflicts and associated sanctions.
Speaker #3: The sequential increase was primarily due to increased labor costs and pass-through revenue during the quarter. Year-over-year improvement in cost of services was due to improved absorption of costs on a higher level of revenue in 2025.
Speaker #3: As discussed in our previous calls, the the geopolitical conflicts and service side of our business has been more impacted by associated sanctions. The volatility in crude oil prices and more recently expanded sanctions continue to cause disruptions to the trading derived products.
Chris Hill: The volatility in crude oil prices, and more recently, expanded sanctions, continue to cause disruptions to the trading and maritime movement of crude oil and derived products, and the associated crude assay laboratory services we provide.
Speaker #3: And the associated crude assay laboratory services and maritime movement of crude oil and we provide. The company will continue to manage its cost structure as effectively as we can through these temporary disruptions and certain regions.
Chris Hill: The company will continue to manage its cost structure as effectively as we can through these temporary disruptions in certain regions. Full year 2025 cost of services, ex items, was 76% of service revenue, compared to 77% in 2024. Cost of sales ex items in Q4 was 94% of revenue, compared to 88% last quarter and 90% in Q4 of last year. The sequential increase was due to higher absorption of fixed costs on a slightly lower revenue base in the quarter and a higher level of bad debt expense. As we continue to focus on cost efficiencies, we anticipate the manufacturing absorption rate in future quarters to be in line with projected product sales.
Chris Hill: The company will continue to manage its cost structure as effectively as we can through these temporary disruptions in certain regions. Full year 2025 cost of services, ex items, was 76% of service revenue, compared to 77% in 2024. Cost of sales ex items in Q4 was 94% of revenue, compared to 88% last quarter and 90% in Q4 of last year. The sequential increase was due to higher absorption of fixed costs on a slightly lower revenue base in the quarter and a higher level of bad debt expense.
Speaker #3: Full year 2025 cost of services, X items was $76% of service revenue compared to $77% in 2024. Cost of sales, X items in the fourth quarter was $94% of revenue, compared to 88% last quarter and 90% in the fourth quarter of last year.
Speaker #3: The sequential increase was due to higher absorption of fixed costs on a slightly lower revenue base in the quarter, and a higher level of bad debt expense.
Speaker #3: As we continue to focus on cost efficiencies, we anticipate the manufacturing absorption rate in future quarters to be in line with projected product sales.
Chris Hill: As we continue to focus on cost efficiencies, we anticipate the manufacturing absorption rate in future quarters to be in line with projected product sales.
Speaker #3: For the full year 2025, cost of sales, X items, was approximately 98% of sales revenue, compared to 2024. G&A, X items for the quarter, was down slightly to 88%, from $10.7 million in the prior quarter.
Chris Hill: For full year 2025, cost of sales, ex items, was approximately 89% of sales revenue, compared to 88% in 2024. GNA ex items for the quarter was $10.6 million, down slightly from $10.7 million in the prior quarter. Full year 2025, GNA ex items was $41.9 million, compared to $38.4 million in 2024. For 2026, we expect GNA ex items to be approximately $42 to 45 million. It is also important to note that 100% of our corporate GNA expenses are allocated and absorbed into the financial performance of the reported segments.
Chris Hill: For full year 2025, cost of sales, ex items, was approximately 89% of sales revenue, compared to 88% in 2024. GNA ex items for the quarter was $10.6 million, down slightly from $10.7 million in the prior quarter. Full year 2025, GNA ex items was $41.9 million, compared to $38.4 million in 2024. For 2026, we expect GNA ex items to be approximately $42 to 45 million. It is also important to note that 100% of our corporate GNA expenses are allocated and absorbed into the financial performance of the reported segments.
Speaker #3: Full year 2025 G&A, ex items, was $41.9 million compared to $38.4 million in 2024. For 2026, we expect G&A, ex items, to be approximately $42 to $45 million.
Speaker #3: It is also important to note that 100% of our corporate G&A expenses are allocated and absorbed into the financial performance of the reported segments.
Speaker #3: Depreciation and amortization for the quarter was $3.7 million, and increased slightly compared to $3.6 million in the last quarter, but remained relatively flat compared to the same quarter last year.
Chris Hill: Depreciation and amortization for the quarter was $3.7 million, and increased slightly compared to $3.6 million in the last quarter, but remained relatively flat compared to, compared to the same quarter last year. EBIT ex items for the quarter was $15.7 million, down from $16.6 million last quarter, and yielding an EBIT margin of over 11%. Year-over-year, EBIT ex items for the fourth quarter was flat compared to the fourth quarter of last year. Our EBIT for the quarter on a GAAP basis was $15.8 million. Full year 2025 EBIT ex items was $58.7 million, down 10% from $65.3 million in 2024. On a GAAP basis, EBIT was $56.5 million for 2025, compared to $58.6 million in 2024.
Chris Hill: Depreciation and amortization for the quarter was $3.7 million, and increased slightly compared to $3.6 million in the last quarter, but remained relatively flat compared to, compared to the same quarter last year. EBIT ex items for the quarter was $15.7 million, down from $16.6 million last quarter, and yielding an EBIT margin of over 11%. Year-over-year, EBIT ex items for the fourth quarter was flat compared to the fourth quarter of last year. Our EBIT for the quarter on a GAAP basis was $15.8 million.
Speaker #3: EBIT, X items for the quarter was $15.7 million, down from $16.6 million last quarter and yielding an EBIT margin of over 11%. X items for the fourth quarter was flat compared Year-over-year, EBIT, to the fourth quarter of last year.
Speaker #3: Our EBIT for the quarter on a gap basis was $15.8 million. Full year 2025 EBIT, X items was $58.7 million, down 10% from $65.3 million in 2024.
Chris Hill: Full year 2025 EBIT ex items was $58.7 million, down 10% from $65.3 million in 2024. On a GAAP basis, EBIT was $56.5 million for 2025, compared to $58.6 million in 2024.
Speaker #3: On a gap basis, EBIT was $56.5 million for 2025, compared to $58.6 million in 2024. Interest expense of $2.6 million for the fourth quarter decreased slightly when compared to the prior quarter, and comparable to the fourth quarter of last year.
Chris Hill: Interest expense of $2.6 million for Q4 decreased slightly when compared to the prior quarter and comparable to Q4 of last year. For the full year, interest expense was $10.6 million in 2025, and was down from $12.4 million in 2024. The decrease in interest expense for 2025 is primarily attributable to lower average borrowings on the credit facility. In January 2026, we funded the retirement of our 2021 $45 million senior notes by drawing $50 million against a term loan under our credit facility. The interest rate on our term loan is variable and tied to the SOFR, which will be approximately 200 basis points higher than the fixed rate on the retired notes, which was a little over 4%.
Chris Hill: Interest expense of $2.6 million for Q4 decreased slightly when compared to the prior quarter and comparable to Q4 of last year. For the full year, interest expense was $10.6 million in 2025, and was down from $12.4 million in 2024. The decrease in interest expense for 2025 is primarily attributable to lower average borrowings on the credit facility. In January 2026, we funded the retirement of our 2021 $45 million senior notes by drawing $50 million against a term loan under our credit facility.
Speaker #3: For the full year, interest expense was $10.6 million in 2025 and was down from $12.4 million in 2024. The decrease in interest expense for 2025 is primarily attributable to lower average borrowings on the credit facility.
Speaker #3: In January 2026, we funded the retirement of our 2021 $45 million senior notes by drawing $50 million against a term loan under our credit facility.
Speaker #3: The interest rate on our term loan is variable and tied to the SOFR. Which will be approximately 200 basis points higher than the fixed rate on the retired notes, which was a little over 4%.
Chris Hill: The interest rate on our term loan is variable and tied to the SOFR, which will be approximately 200 basis points higher than the fixed rate on the retired notes, which was a little over 4%.
Speaker #3: As such, we expect a slight increase in our interest expense starting with the first quarter of 2026. Income tax expense at an effective tax rate of 25% and X items was $3.3 million for the recorded a tax expense of $6 million for the quarter.
Chris Hill: As such, we expect a slight increase in our interest expense, starting with Q1 2026. Income tax expense at an effective tax rate of 25% ex items was $3.3 million for the quarter. On a GAAP basis, we recorded a tax expense of $6 million for the quarter. For the full year 2025, income tax expense on a GAAP basis was $13.4 million, with an effective tax rate of 29%. While the effective tax rate will continue to be somewhat sensitive to the geographic mix of earnings across the globe and the impact of items discrete to each quarter, we project the company's effective tax rate will be approximately 25% for 2026.
Chris Hill: As such, we expect a slight increase in our interest expense, starting with Q1 2026. Income tax expense at an effective tax rate of 25% ex items was $3.3 million for the quarter. On a GAAP basis, we recorded a tax expense of $6 million for the quarter. For the full year 2025, income tax expense on a GAAP basis was $13.4 million, with an effective tax rate of 29%. While the effective tax rate will continue to be somewhat sensitive to the geographic mix of earnings across the globe and the impact of items discrete to each quarter, we project the company's effective tax rate will be approximately 25% for 2026.
Speaker #3: For the full year 2025, income tax expense on a gap basis was $13.4 million, with an effective tax rate of 29%. While the sensitive to the geographic mix of earnings across effective tax rate will continue to be somewhat the globe and the impact of items discrete to each quarter, we project the company's effective tax rate will be approximately 25% for 2026.
Speaker #3: Net income, X items for the quarter, was $9.7 million, down 5% sequentially and down 7% from the same quarter last year. On a gap basis, we had net income of $7.1 million for the quarter.
Chris Hill: Net income, ex items for the quarter, was $9.7 million, down 5% sequentially and down 7% from the same quarter last year. On a GAAP basis, we had net income of $7.1 million for the quarter. For the full year 2025, net income, ex items, was $35.4 million, down 15% from $41.6 million in 2024. GAAP net income for the full year 2025 was $31.8 million. Earnings per diluted share, ex items, was $0.21 for the quarter, compared to $0.22 in both the prior quarter and the fourth quarter of last year. On a GAAP basis, EPS was $0.15 for the fourth quarter of 2025.
Chris Hill: Net income, ex items for the quarter, was $9.7 million, down 5% sequentially and down 7% from the same quarter last year. On a GAAP basis, we had net income of $7.1 million for the quarter. For the full year 2025, net income, ex items, was $35.4 million, down 15% from $41.6 million in 2024. GAAP net income for the full year 2025 was $31.8 million. Earnings per diluted share, ex items, was $0.21 for the quarter, compared to $0.22 in both the prior quarter and the fourth quarter of last year. On a GAAP basis, EPS was $0.15 for the fourth quarter of 2025.
Speaker #3: For the full year 2025, net income, X items was $35.4 million, down 15% from $41.6 million in 2024. Gap net income for the million.
Speaker #3: Earnings per diluted full year 2025 was $31.8 share, X items was $0.21 for the quarter, compared to $0.22 in both the prior quarter and the fourth quarter of last year.
Speaker #3: On a gap basis, EPS was $0.15 for the fourth quarter of 2025. Full year 2025 earnings per diluted share, X items was $0.75 and down 14% 2024.
Chris Hill: Full year 2025, earnings per diluted share, ex items, was $0.75 and down 14% from 2024, and on a GAAP basis, EPS for the full year 2025 was $0.68. Turning to the balance sheet, receivables was $113.5 million and increased approximately $3.3 million from the prior quarter. Our DSOs improved in Q4 to 69 days from 71 days last quarter. Inventory at December 31, 2025, was $54.5 million, down $3.7 million from last quarter end. Inventory turns for the quarter improved to 2.1 from 2.0 in the prior quarter. Our team will continue to focus on managing our inventory with anticipation inventory turns will improve over time... Now to the liability side of the balance sheet.
Chris Hill: Full year 2025, earnings per diluted share, ex items, was $0.75 and down 14% from 2024, and on a GAAP basis, EPS for the full year 2025 was $0.68. Turning to the balance sheet, receivables was $113.5 million and increased approximately $3.3 million from the prior quarter. Our DSOs improved in Q4 to 69 days from 71 days last quarter. Inventory at December 31, 2025, was $54.5 million, down $3.7 million from last quarter end. Inventory turns for the quarter improved to 2.1 from 2.0 in the prior quarter.
Speaker #3: from And on a gap basis, EPS for the full year 2025 was $0.68. Turning to the balance sheet, receivables was $113.5 million and increased approximately 3.3 million from the prior quarter.
Speaker #3: Our DSOs improved in the fourth quarter to 69 days from 71 days last quarter. Inventory at December 31, 2025, was $54.5 million, down in.
Speaker #3: Inventory turns for the 3.7 million from last quarter quarter improved to $2.1 from $2.0 in the prior quarter. Our team will continue to focus on managing our inventory, with anticipation inventory turns will improve over time.
Chris Hill: Our team will continue to focus on managing our inventory with anticipation inventory turns will improve over time... Now to the liability side of the balance sheet.
Speaker #3: And now to the liability side of the balance sheet. Our long-term debt was $113 million as of December 31, 2025, and considering cash of $22.8 million.
Chris Hill: Our long-term debt was $113 million as of December 31, 2025, and considering cash of $22.8 million, net debt was $90.2 million. During 2025, net debt was reduced by $18.7 million from the end of last year. Additionally, our leverage ratio continued to improve throughout 2025 and ended the year at 1.09. Since announcing the company's commitment and focus on reducing debt in Q4 of 2019, we have reduced net debt by $205.8 million, or 70%. At December 31, 2025, our debt was comprised of $110 million in senior notes and $3 million outstanding under our bank credit facility.
Chris Hill: Our long-term debt was $113 million as of December 31, 2025, and considering cash of $22.8 million, net debt was $90.2 million. During 2025, net debt was reduced by $18.7 million from the end of last year. Additionally, our leverage ratio continued to improve throughout 2025 and ended the year at 1.09. Since announcing the company's commitment and focus on reducing debt in Q4 of 2019, we have reduced net debt by $205.8 million, or 70%. At December 31, 2025, our debt was comprised of $110 million in senior notes and $3 million outstanding under our bank credit facility.
Speaker #3: million, net debt was $90.2 During 2025, net debt was reduced by $18.7 million from the end of last year. Additionally, our leverage ratio continued to improve throughout 2025 and end of the year at 1.09.
Speaker #3: Since announcing the company's commitment and focus on reducing debt in the fourth quarter of 2019, we have reduced net debt by $205.8 million, or 70%.
Speaker #3: At December 31, 2025, our debt was comprised of $110 million in senior notes and $3 million outstanding under our bank credit facility. However, as I stated earlier, on January 12, 2026, we made a single draw of $50 million on a term loan under our credit facility.
Chris Hill: However, as I stated earlier, on 12 January 2026, we made a single draw of $50 million on a term loan under our credit facility and repaid the 2021 senior notes, which had a principal amount of $45 million. Looking at cash flow for Q4 2025, cash flow from operating activities was approximately $8.1 million, and after paying $2.9 million of CapEx for operations, our free cash flow for the quarter was $5.1 million. As discussed in prior quarters, the capital expenditures associated with rebuilding our UK facility, which was damaged by fire in February 2024, are covered by the company's property and casualty insurance and have been excluded from the calculation of free cash flow.
Chris Hill: However, as I stated earlier, on 12 January 2026, we made a single draw of $50 million on a term loan under our credit facility and repaid the 2021 senior notes, which had a principal amount of $45 million. Looking at cash flow for Q4 2025, cash flow from operating activities was approximately $8.1 million, and after paying $2.9 million of CapEx for operations, our free cash flow for the quarter was $5.1 million.
Speaker #3: And repaid the 2021 senior notes, which had a principal amount of $45 million. Looking at cash flow for the fourth quarter of 2025, cash flow from operating activities was approximately $8.1 million, and after paying $2.9 million of CapEx for operations, our free cash flow for the quarter was $5.1 million.
Speaker #3: As discussed in prior quarters, the capital expenditures associated with rebuilding our UK facility which was damaged by fire in February 2024 are covered by the company's property and casualty insurance and have been excluded from the calculation of free cash flow.
Chris Hill: As discussed in prior quarters, the capital expenditures associated with rebuilding our UK facility, which was damaged by fire in February 2024, are covered by the company's property and casualty insurance and have been excluded from the calculation of free cash flow.
Speaker #3: For the full year, capital expenditures for operations excluding the CapEx associated with rebuilding the UK facility was $11.2 million. Looking ahead to 2026, we will continue to manage investment and working capital and continue our strict capital discipline and asset-light business model with capital expenditures primarily targeted at growth opportunities.
Chris Hill: For the full year, capital expenditures for operations, excluding the CapEx associated with rebuilding the UK facility, was $11.2 million. Looking ahead to 2026, we will continue to manage investment and working capital and continue our strict capital discipline and asset-light business model with capital expenditures primarily targeted at growth opportunities. Excluding the CapEx associated with rebuilding the UK facility, we expect capital expenditures in 2026 to be in the range of $15 to 18 million. Core Lab's operational leverage continues to provide the ability to grow revenue and profitability with minimal capital requirements. Capital expenditures for operations has historically ranged from 2% to 4% of revenue, even during periods of significant growth. That same level of laboratory infrastructure, intellectual property, and leverage exists in the business today.
Chris Hill: For the full year, capital expenditures for operations, excluding the CapEx associated with rebuilding the UK facility, was $11.2 million. Looking ahead to 2026, we will continue to manage investment and working capital and continue our strict capital discipline and asset-light business model with capital expenditures primarily targeted at growth opportunities. Excluding the CapEx associated with rebuilding the UK facility, we expect capital expenditures in 2026 to be in the range of $15 to 18 million.
Speaker #3: Excluding the CapEx associated with rebuilding the UK facility, we expect capital expenditures in 2026 to be in the range of $15 million to $18 million.
Speaker #3: CORE LABS operational leverage continues to provide the ability to grow revenue and profitability with minimal capital requirements. Capital expenditures for operations have historically ranged from 2 to 4% of revenue even during periods of significant growth.
Chris Hill: Core Lab's operational leverage continues to provide the ability to grow revenue and profitability with minimal capital requirements. Capital expenditures for operations has historically ranged from 2% to 4% of revenue, even during periods of significant growth. That same level of laboratory infrastructure, intellectual property, and leverage exists in the business today.
Speaker #3: That same level of laboratory infrastructure intellectual property and leverage exists in the business today. We believe evaluating a company's ability to generate free cash flow and free cash flow yield is an important metric for shareholders when comparing and projecting companies' financial results.
Chris Hill: We believe evaluating a company's ability to generate free cash flow and free cash flow yield is an important metric for shareholders when comparing and projecting companies' financial results, particularly for those shareholders who utilize discounted cash flow models to assess valuations. We'll now turn it over to Gwen for an update on our guidance and outlook.
Chris Hill: We believe evaluating a company's ability to generate free cash flow and free cash flow yield is an important metric for shareholders when comparing and projecting companies' financial results, particularly for those shareholders who utilize discounted cash flow models to assess valuations. We'll now turn it over to Gwen for an update on our guidance and outlook.
Speaker #3: Particularly for those shareholders who utilize discounted cash flow models to assess valuations. I will now turn it over to Gwen for an update on our guidance and outlook.
Speaker #2: Thank you, Chris. Turning to Core Labs' outlook for the first quarter of 2026, the IEA, the EIA, and OPEC+ forecast global crude oil demand growth of approximately 900,000 to 1.4 million barrels per day in 2026, a slight increase from their previous forecast.
Gwen Gresham: Thank you, Chris. Turning to Core Lab's outlook for Q1 2026, the IEA, the EIA, and OPEC+ forecast global crude oil demand growth of approximately 900,000 to 1.4 million barrels per day in 2026, a slight increase from their previous forecast. As discussed in our Q3 2025 release, the IEA published a report in September 2025, which noted accelerating natural decline rates in existing producing fields, which pose a significant risk to long-term supply. This analysis underpins the need for sustained investment in oil and gas development to maintain energy security and market stability. In the US, oil production growth is moderating as capital discipline, maturing shale plays, and natural decline rates increasingly offset efficiency gains.
Gwen Gresham: Thank you, Chris. Turning to Core Lab's outlook for Q1 2026, the IEA, the EIA, and OPEC+ forecast global crude oil demand growth of approximately 900,000 to 1.4 million barrels per day in 2026, a slight increase from their previous forecast. As discussed in our Q3 2025 release, the IEA published a report in September 2025, which noted accelerating natural decline rates in existing producing fields, which pose a significant risk to long-term supply. This analysis underpins the need for sustained investment in oil and gas development to maintain energy security and market stability.
Speaker #2: As discussed in our third quarter 2025 release, the IEA published a report in September 2025 which noted accelerated natural decline rates in existing producing fields which pose a significant risk to long-term supply.
Speaker #2: This analysis underpins the need for sustained investment in oil and gas development. To maintain energy security and market stability. In the US, oil production growth is moderating, as capital discipline, maturing shale plays, and natural decline rates increasingly offset efficiency gains.
Gwen Gresham: In the US, oil production growth is moderating as capital discipline, maturing shale plays, and natural decline rates increasingly offset efficiency gains.
Speaker #2: As efficiency gains become less increase to maintain or expand US land production. These factors support the services and CORE LAB is seeing operators prioritize production sustainment well optimization and recovery enhancement.
Gwen Gresham: As efficiency gains become less impactful, activity levels must increase to maintain or expand US land production. These factors support the ongoing demand for oil field services, and Core Lab is seeing operators prioritize production sustainment, well optimization, and recovery enhancement. International markets continue to exhibit resilient activity levels of a multiyear offshore development and long-cycle investments across key global basins. The company's reservoir description and production enhancement technologies are well positioned to support these ongoing investments. In the near term, tariff pressures and OPEC+ production policy decisions continue to contribute to market volatility and softer commodity prices. Despite these headwinds, longer-term crude oil demand fundamentals remain strong. Core Lab maintains a constructive multiyear outlook and continues to see steady activity across committed long-cycle projects, including deepwater developments in the South Atlantic margin, North and West Africa, Norway, the Middle East, and select Asia Pacific markets.
Gwen Gresham: As efficiency gains become less impactful, activity levels must increase to maintain or expand US land production. These factors support the ongoing demand for oil field services, and Core Lab is seeing operators prioritize production sustainment, well optimization, and recovery enhancement. International markets continue to exhibit resilient activity levels of a multiyear offshore development and long-cycle investments across key global basins. The company's reservoir description and production enhancement technologies are well positioned to support these ongoing investments.
Speaker #2: International resilient activity levels. Of a multi-year offshore development. And long cycle investments across key global basins. The company's technologies are well positioned to support these ongoing investments.
Speaker #2: In the near term, tariff pressures and OPEC+ production policy decisions continue to contribute to market volatility and softer commodity prices. Despite these headwinds, longer-term crude oil demand fundamentals remain strong.
Gwen Gresham: In the near term, tariff pressures and OPEC+ production policy decisions continue to contribute to market volatility and softer commodity prices. Despite these headwinds, longer-term crude oil demand fundamentals remain strong. Core Lab maintains a constructive multiyear outlook and continues to see steady activity across committed long-cycle projects, including deepwater developments in the South Atlantic margin, North and West Africa, Norway, the Middle East, and select Asia Pacific markets.
Speaker #2: CORE LAB maintains a constructive multi-year outlook and continues to see steady activity across committed long-cycle projects, including deepwater developments in the South Atlantic margin, North and West Africa, Norway, and the Middle East markets.
Speaker #2: Revenue and select Asia Pacific realization from these projects remains partially dependent on the geologic success rates achieved by CORE's clients. Short cycle activities particularly in the US onshore environment will remain sensitive to changes in commodity prices.
Gwen Gresham: Revenue realization from these projects remains partially dependent on the geologic success rates achieved by Core's clients. Short cycle activities, particularly in the US onshore environment, will remain sensitive to changes in commodity prices. Geopolitical conflicts and associated sanctions, evolving trade and tariff dynamics, and commodity price volatility continue to create uncertainty in demand for Core Lab's products and services. Core also expects seasonal patterns to result in the typical sequential decline in activity during Q1 2026. Severe weather events in North America caused freezing conditions in early January that disrupted both reservoir description and production enhancement client activities and Core Lab operations. In addition, adverse weather in Europe and the Mediterranean Sea also suspended client crude assay work and damaged one of Core Lab's facilities.
Gwen Gresham: Revenue realization from these projects remains partially dependent on the geologic success rates achieved by Core's clients. Short cycle activities, particularly in the US onshore environment, will remain sensitive to changes in commodity prices. Geopolitical conflicts and associated sanctions, evolving trade and tariff dynamics, and commodity price volatility continue to create uncertainty in demand for Core Lab's products and services. Core also expects seasonal patterns to result in the typical sequential decline in activity during Q1 2026.
Speaker #2: Geopolitical conflicts and associated sanctions evolving trade and tariff dynamics and commodity price volatility continue to create uncertainty in demand for CORE LAB's products and services.
Speaker #2: CORE also expects seasonal patterns to result in the typical sequential decline in activity during the first quarter of 2026. Severe weather events in North America caused freezing conditions in early January that disrupted both reservoir description and production enhancement client activities and CORE LAB operations.
Gwen Gresham: Severe weather events in North America caused freezing conditions in early January that disrupted both reservoir description and production enhancement client activities and Core Lab operations. In addition, adverse weather in Europe and the Mediterranean Sea also suspended client crude assay work and damaged one of Core Lab's facilities.
Speaker #2: In addition, adverse weather in Europe and the Mediterranean Sea also suspended client crude assay work and damaged one of Core Lab's facilities. While client operations have begun to recover, these weather-related disruptions have created additional revenue and margin headwinds for the first quarter.
Gwen Gresham: While client operations have begun to recover, these weather-related disruptions have created additional revenue and margin headwinds for the first quarter. Turning to the US, for the first half of 2026, Core Lab anticipates US land completion activity will be down compared to the first half of 2025. However, the company projects completion activity to improve from current levels. Growth in demand for Core's diagnostic services and technological innovations in the company's prior energetic systems may partially offset softer US onshore activity during the year. To date, tariffs have not had a significant impact to Core's reservoir description segment. However, for production enhancement operations, certain imported raw materials are subject to tariffs. While tariffs are increasing supply costs and affecting margins, the company continues to take steps to mitigate their impact.
Gwen Gresham: While client operations have begun to recover, these weather-related disruptions have created additional revenue and margin headwinds for the first quarter. Turning to the US, for the first half of 2026, Core Lab anticipates US land completion activity will be down compared to the first half of 2025. However, the company projects completion activity to improve from current levels. Growth in demand for Core's diagnostic services and technological innovations in the company's prior energetic systems may partially offset softer US onshore activity during the year.
Speaker #2: Turning to the US for the first half of 2026, CORE LAB anticipates US land completion activity will be down compared to the first half of 2025.
Speaker #2: However, the company projects completion activity to improve from current levels. Growth in demand for CORE's diagnostic services and technological innovations in the company's energetic systems may partially offset softer US onshore activity during the year.
Speaker #2: date, tariffs have not had a significant To impact to CORE's reservoir description segment. However, for production enhancement operations, certain imported raw materials are subject to tariffs.
Gwen Gresham: To date, tariffs have not had a significant impact to Core's reservoir description segment. However, for production enhancement operations, certain imported raw materials are subject to tariffs. While tariffs are increasing supply costs and affecting margins, the company continues to take steps to mitigate their impact.
Speaker #2: While tariffs are increasing supply costs and affecting margins, the company continues to take steps to mitigate their impact. In summary, reservoir descriptions first quarter 2026 revenue is projected to range from $82 million to $86 million with operating income of $6.8 million to $8.2 million.
Gwen Gresham: In summary, reservoir description Q1 2026 revenue is projected to range from $82 million to $86 million, with operating income of $6.8 million to $8.2 million. Production enhancement Q1 2026 revenue is estimated to range from $42 million to $44 million, with operating income of $2.8 million to $3.8 million. Core's full company Q1 2026 revenue is projected to range from $124 million to $130 million, with operating income of $9.7 million to $12.2 million, yielding operating margins of approximately 9%. EPS for Q1 2026 is expected to be $0.11 to $0.15.
Gwen Gresham: In summary, reservoir description Q1 2026 revenue is projected to range from $82 million to $86 million, with operating income of $6.8 million to $8.2 million. Production enhancement Q1 2026 revenue is estimated to range from $42 million to $44 million, with operating income of $2.8 million to $3.8 million. Core's full company Q1 2026 revenue is projected to range from $124 million to $130 million, with operating income of $9.7 million to $12.2 million, yielding operating margins of approximately 9%. EPS for Q1 2026 is expected to be $0.11 to $0.15.
Speaker #2: Production enhancements first quarter 2026 revenue is estimated to range from $42 million to $44 million with operating income of $2.8 million to $3.8 million.
Speaker #2: CORE's full company first quarter 2026 revenue is projected to range from $124 million to $130 million, with operating income of $9.7 million to $12.2 million.
Speaker #2: Yielding operating margins of approximately 9%. EPS for the first quarter of 2026 is expected to be $11 to $15. The company's first quarter 2026 guidance is based on projections for underlying operations and excludes gains and losses in foreign exchange.
Gwen Gresham: The company's Q1 2026 guidance is based on projections for underlying operations and excludes gains and losses in foreign exchange. The first quarter guidance also reflects a higher interest rate related to a term loan drawn upon on 12 January 2026, in the amount of $50 million. The term loan was used to repay the 2021 senior note, Series A, in the amount of $45 million. This term loan is subject to a variable interest rate in line with our revolving credit facility, which is approximately 200 basis points higher than the fixed-rate debt that was retired. Our first quarter guidance assumes an effective tax rate of 25%. With that said, I'll turn the call back over to Larry.
Gwen Gresham: The company's Q1 2026 guidance is based on projections for underlying operations and excludes gains and losses in foreign exchange. The first quarter guidance also reflects a higher interest rate related to a term loan drawn upon on 12 January 2026, in the amount of $50 million. The term loan was used to repay the 2021 senior note, Series A, in the amount of $45 million. This term loan is subject to a variable interest rate in line with our revolving credit facility, which is approximately 200 basis points higher than the fixed-rate debt that was retired. Our first quarter guidance assumes an effective tax rate of 25%.
Speaker #2: The first quarter guidance also reflects a higher interest rate related to a term loan drawn upon on January 12, 2026, in the amount of $50 million.
Speaker #2: The term loan was used to repay the 2021 senior note series A in the amount of $45 million. This term loan is subject to a variable interest rate in line with our revolving credit facility which is approximately 200 basis points higher than the fixed rate debt that was retired.
Speaker #2: Our first quarter guidance assumes an effective tax rate of 25%. With that said, I'll turn the call back over to Larry. Thanks, Gwen. First, I'd like to thank our global team of employees for providing innovative solutions, integrity, and exceptional service to our clients.
Gwen Gresham: With that said, I'll turn the call back over to Larry.
Larry Bruno: Thanks, Gwen. First, I'd like to thank our global team of employees for providing innovative solutions, integrity, and exceptional service to our clients. As we celebrate our 90th year, the company's granite anniversary, our staff's collective expertise and their dedication to servicing our clients continues to be the foundation of the company's success. Looking at the macro, even as global energy markets work through near-term economic headwinds and volatile commodity prices, the IEA, EIA, and OPEC all continue to forecast growth in global crude oil demand. These agencies are now projecting demand growth to range between 0.9 and 1.4 million barrels per day for 2026 compared to 2025, a slight increase from their prior guidance. In addition to the forecasted growth in demand, new production will need to be brought online to offset the natural decline from existing producing fields.
Larry Bruno: Thanks, Gwen. First, I'd like to thank our global team of employees for providing innovative solutions, integrity, and exceptional service to our clients. As we celebrate our 90th year, the company's granite anniversary, our staff's collective expertise and their dedication to servicing our clients continues to be the foundation of the company's success. Looking at the macro, even as global energy markets work through near-term economic headwinds and volatile commodity prices, the IEA, EIA, and OPEC all continue to forecast growth in global crude oil demand.
Speaker #2: As we celebrate our 90th year the company's granite anniversary, our staff's collective expertise and their dedication to servicing our clients continues to be the foundation of the company's success.
Speaker #2: Looking at the macro, even as global energy markets work through near-term economic headwinds and volatile commodity prices, the IEA, EIA, and OPEC all continue to forecast growth in global crude oil demand.
Speaker #2: These agencies are now projecting demand growth to range between 0.9 and 1.4 million barrels per day for 2026 compared to 2025, a slight increase from their prior guidance.
Larry Bruno: These agencies are now projecting demand growth to range between 0.9 and 1.4 million barrels per day for 2026 compared to 2025, a slight increase from their prior guidance. In addition to the forecasted growth in demand, new production will need to be brought online to offset the natural decline from existing producing fields.
Speaker #2: In addition to the forecasted growth in demand, new production will need to be brought online to offset the natural decline from existing producing fields.
Speaker #2: Combined, these trends will require continued investment in the long-term development of new onshore and offshore crude oil fields. US tight oil production has been by far the largest component of non-OPEC oil production growth since 2010.
Larry Bruno: Combined, these trends will require continued investment in the long-term development of new onshore and offshore crude oil fields. US tight oil production has been, by far, the largest component of non-OPEC oil production growth since 2010. However, the most recent EIA short-term energy outlook for US oil production projects approximately 13.6 million barrels of crude oil production per day in 2026, essentially flat to 2025, with little or no year-over-year growth. This forecast reinforces the view that incremental US production growth is flattening. Continued growth in global oil demand, combined with constrained incremental US production growth, supports the thesis that the balance of future supply growth must increasingly rely on discoveries and field developments outside the continental US.
Larry Bruno: Combined, these trends will require continued investment in the long-term development of new onshore and offshore crude oil fields. US tight oil production has been, by far, the largest component of non-OPEC oil production growth since 2010. However, the most recent EIA short-term energy outlook for US oil production projects approximately 13.6 million barrels of crude oil production per day in 2026, essentially flat to 2025, with little or no year-over-year growth. This forecast reinforces the view that incremental US production growth is flattening.
Speaker #2: However, the most recent EIA short-term energy outlook for US oil production projects approximately 13.6 million barrels of crude oil production per day in 2026, essentially flat to 2025, with little or no year-over-year growth.
Speaker #2: that incremental US production growth is This forecast reinforces the view flattening. Continued growth in global oil demand combined with the constrained incremental US oil production growth supports the thesis that the balance of future supply growth must increasingly rely on discoveries and field developments outside the continental US.
Larry Bruno: Continued growth in global oil demand, combined with constrained incremental US production growth, supports the thesis that the balance of future supply growth must increasingly rely on discoveries and field developments outside the continental US.
Speaker #2: Of particular note, during the fourth quarter, the IEA continued to pivot from earlier projections on the need for investment in new oil and gas production.
Larry Bruno: Of particular note, during the fourth quarter, the IEA continued to pivot from earlier projections on the need for investment in new oil and gas production. The most recent IEA forecast shows oil demand rising to 113 million barrels per day by 2050, using its current policy scenario. As highlighted in the IEA's September 2025 analysis, global field-by-field data show that the natural decline in existing producing fields is accelerating and has become a dominant long-term supply risk. The IEA estimates that absent reinvestment, global oil production would decline by approximately 8% per year due to natural field depletion. As a result, the majority of upstream capital spending globally is now required to just offset decline, not to meet incremental demand growth.
Larry Bruno: Of particular note, during the fourth quarter, the IEA continued to pivot from earlier projections on the need for investment in new oil and gas production. The most recent IEA forecast shows oil demand rising to 113 million barrels per day by 2050, using its current policy scenario. As highlighted in the IEA's September 2025 analysis, global field-by-field data show that the natural decline in existing producing fields is accelerating and has become a dominant long-term supply risk.
Speaker #2: The most recent IEA forecast shows oil demand rising to 113 million barrels per day by 2050 using its current policy scenario. As highlighted in the IEA September 2025 analysis, global field-by-field data show that the natural decline in existing producing fields is accelerating and has become a dominant long-term supply risk.
Speaker #2: estimates that The IEA absent reinvestment, global oil production would decline by approximately 8% per year due to natural field depletion. As a result, the majority of upstream capital spending globally is now required to just offset decline, not to meet incremental demand growth.
Larry Bruno: The IEA estimates that absent reinvestment, global oil production would decline by approximately 8% per year due to natural field depletion. As a result, the majority of upstream capital spending globally is now required to just offset decline, not to meet incremental demand growth.
Speaker #2: The IEA also noted that nearly 90% of upstream investment since 2019 has gone towards sustaining existing production rather than expanding supply. The IEA now states that significant annual investment in oil and gas resource development will be required for many years to come and to ensure energy security and US energy information agency's market stability.
Larry Bruno: The IEA also noted that nearly 90% of upstream investment since 2019 has gone towards sustaining existing production rather than expanding supply. The IEA now states that significant annual investment in oil and gas resource development will be required for many years to come and to ensure energy security and market stability. The US Energy Information Administration's reference case forecast shows even higher crude oil demand by 2050, rising to approximately 120 million barrels per day, suggesting even more investment in new oil production will be required. In summary, the current forecast suggests a multi-year cycle in which US onshore production growth slows, and future growth in global supply will be driven by capital investment in international, conventional fields, and unconventional opportunities in the Middle East, all trends that support increasing demand for Core Lab services across the globe, particularly for reservoir description.
Larry Bruno: The IEA also noted that nearly 90% of upstream investment since 2019 has gone towards sustaining existing production rather than expanding supply. The IEA now states that significant annual investment in oil and gas resource development will be required for many years to come and to ensure energy security and market stability. The US Energy Information Administration's reference case forecast shows even higher crude oil demand by 2050, rising to approximately 120 million barrels per day, suggesting even more investment in new oil production will be required.
Speaker #2: reference case forecast shows even higher crude oil demand by The 2050, rising to approximately 120 million barrels per day suggesting even more investment in new oil production will be required.
Speaker #2: In summary, the current forecast suggests a multi-year cycle in which US onshore production growth slows and future growth in global supply will be driven by conventional fields and unconventional opportunities in the Middle East, capital investment in international all trends that support increasing demand for CORE LAB services across the globe, particularly for reservoir reservoir description and production enhancement description.
Larry Bruno: In summary, the current forecast suggests a multi-year cycle in which US onshore production growth slows, and future growth in global supply will be driven by capital investment in international, conventional fields, and unconventional opportunities in the Middle East, all trends that support increasing demand for Core Lab services across the globe, particularly for reservoir description.
Speaker #2: CORE's technologies are directly aligned with the investment imperatives required to find and develop new oil and gas fields and to improve recovery from existing fields.
Larry Bruno: Core's reservoir description and production enhancement technologies are directly aligned with the investment imperatives required to find and develop new oil and gas fields, and to improve recovery from existing fields. Now, let's review the fourth quarter performance of our two business segments. Turning first to reservoir description. For the fourth quarter of 2025, revenue came in at $92.3 million, up over 5% compared to Q3. Operating income for reservoir description, ex items, was $12.7 million, up from $11.6 million in Q3, yielding operating margins of 14%, with incremental margins of 27%. Incremental margins were negatively impacted by three factors: enhanced geopolitical sanctions enacted during Q4, pass-through revenue on a collaborative analytical program that was conducted with another oil field service company, and increased labor costs.
Larry Bruno: Core's reservoir description and production enhancement technologies are directly aligned with the investment imperatives required to find and develop new oil and gas fields, and to improve recovery from existing fields. Now, let's review the fourth quarter performance of our two business segments. Turning first to reservoir description. For the fourth quarter of 2025, revenue came in at $92.3 million, up over 5% compared to Q3. Operating income for reservoir description, ex items, was $12.7 million, up from $11.6 million in Q3, yielding operating margins of 14%, with incremental margins of 27%.
Speaker #2: Now let's review the fourth quarter performance of our two business segments. Turning first to Reservoir Description, for the fourth quarter of 2025, revenue came in at $92.3 million, up over 5% compared to Q3.
Speaker #2: Operating income for reservoir description X items was 12.7 million, up from 11.6 million in Q3, yielding operating margins of 14% with incremental margins of 27%.
Speaker #2: Incremental margins were negatively impacted by three factors: enhanced geopolitical sanctions enacted during Q4, pass-through revenue on a collaborative analytical program that was conducted with another oil field service company, and increased labor costs.
Larry Bruno: Incremental margins were negatively impacted by three factors: enhanced geopolitical sanctions enacted during Q4, pass-through revenue on a collaborative analytical program that was conducted with another oil field service company, and increased labor costs.
Speaker #2: While demand for reservoir description lab services remained strong in several regions across our global network, ongoing international geopolitical sanctions along with conflicts along with sanctions that were enacted in early Q1 of 2025 and which were further expanded in Q4 of last year continue to produce headwinds that negatively impact the demand for laboratory services tied to the trade and transportation of crude oil and derived products.
Larry Bruno: While demand for reservoir description lab services remained strong in several regions across our global network, ongoing international geopolitical sanctions, along with such conflicts, along with sanctions that were enacted in early Q1 of 2025, and which were further expanded in Q4 of last year, continue to produce headwinds that negatively impact the demand for laboratory services tied to the trade and transportation of crude oil and derived products. Now for some operational highlights from reservoir description. In the fourth quarter of 2025, Core Lab advanced multiple high-value projects across South America, reflecting the company's expanding regional footprint and the growing demand for integrated reservoir characterization services. In Colombia, Core was engaged by a client to conduct an advanced geomechanics and reservoir characterization study within the Palagua Field in the Middle Magdalena Valley.
Larry Bruno: While demand for reservoir description lab services remained strong in several regions across our global network, ongoing international geopolitical sanctions, along with such conflicts, along with sanctions that were enacted in early Q1 of 2025, and which were further expanded in Q4 of last year, continue to produce headwinds that negatively impact the demand for laboratory services tied to the trade and transportation of crude oil and derived products. Now for some operational highlights from reservoir description.
Speaker #2: Now for some operational highlights from reservoir description. In the fourth quarter of 2025, CORE LAB advanced multiple high-value projects across South America reflecting the company's expanding regional footprint and the growing demand for integrated reservoir characterization services.
Larry Bruno: In the fourth quarter of 2025, Core Lab advanced multiple high-value projects across South America, reflecting the company's expanding regional footprint and the growing demand for integrated reservoir characterization services. In Colombia, Core was engaged by a client to conduct an advanced geomechanics and reservoir characterization study within the Palagua Field in the Middle Magdalena Valley.
Speaker #2: In Colombia, CORE was engaged by a client to conduct an advanced geomechanics and reservoir characterization study within the Palagua field in the middle Magdalena Valley.
Speaker #2: The project focused on improving reservoir performance across multiple vertical wells in a complex low-resistivity contrast reservoir. The study addressed critical subsurface challenges including mitigating sand production flooding operations for enhanced risks, associated with planned water oil recovery.
Larry Bruno: The project focused on improving reservoir performance across multiple vertical wells in a complex, low-resistivity contrast reservoir. The study addressed critical subsurface challenges, including mitigating sand production risks associated with planned water flooding operations for enhanced oil recovery. By integrating existing core and petrophysical data with well logs, along with the newly acquired geomechanical laboratory measurements, Core Lab's multidisciplinary team delivered core calibrated models that provided actionable insights to optimize completions and enable a more efficient water flood program. Also, in South America, and leveraging Core's expanding in-country capabilities in Brazil, following the recent acquisition of Solintec, Core conducted laboratory services in support of a major carbon capture and storage initiative in the region. For this project, an ethanol producer is working to reduce CO2 emissions.
Larry Bruno: The project focused on improving reservoir performance across multiple vertical wells in a complex, low-resistivity contrast reservoir. The study addressed critical subsurface challenges, including mitigating sand production risks associated with planned water flooding operations for enhanced oil recovery.
Speaker #2: By integrating existing core and petrophysical data with well logs, along with the newly acquired geomechanical laboratory measurements, CORE Lab's multidisciplinary team delivered core-calibrated models that provided actionable insights to optimize completions and enable a more efficient waterflood program.
Larry Bruno: By integrating existing core and petrophysical data with well logs, along with the newly acquired geomechanical laboratory measurements, Core Lab's multidisciplinary team delivered core calibrated models that provided actionable insights to optimize completions and enable a more efficient water flood program. Also, in South America, and leveraging Core's expanding in-country capabilities in Brazil, following the recent acquisition of Solintec, Core conducted laboratory services in support of a major carbon capture and storage initiative in the region.
Speaker #2: Also in South America, and leveraging CORE's expanding in-country capabilities in Brazil following the recent acquisition of Solintech, CORE conducted laboratory services in support of a major carbon capture and storage initiative in the region.
Speaker #2: For this reduce CO2 emissions. Approximately 100 meters of CORE from an injector well were evaluated with CORE's Nitro Digital Rock Tomography technology, which quickly delivered interactive three-dimensional visualizations of the strata along with petrophysical insights into the rock properties.
Larry Bruno: For this project, an ethanol producer is working to reduce CO2 emissions.
Larry Bruno: Approximately 100 meters of core from an injector well were evaluated with Core's NITRO Digital Rock Tomography technology, which quickly delivered interactive, three-dimensional visualizations of the strata, along with petrophysical insights into the rock properties. The program also evaluated seal rock capacity and geomechanical attributes of the rocks, and determined how CO2 would react with both the rocks and the pore fluids. This work is ongoing, and the company's full array of analytical services are being employed, reinforcing Core Lab's role in enabling energy transition projects. Moving now to production enhancement, where Core Lab's technologies continue to help our clients optimize their well completions and improve production. Revenue for production enhancement for Q4 came in at $46 million, up over 8% year-over-year.
Larry Bruno: Approximately 100 meters of core from an injector well were evaluated with Core's NITRO Digital Rock Tomography technology, which quickly delivered interactive, three-dimensional visualizations of the strata, along with petrophysical insights into the rock properties. The program also evaluated seal rock capacity and geomechanical attributes of the rocks, and determined how CO2 would react with both the rocks and the pore fluids. This work is ongoing, and the company's full array of analytical services are being employed, reinforcing Core Lab's role in enabling energy transition projects.
Speaker #2: The program also evaluated steel rock capacity and geomechanical attributes of the rocks, and determined how CO2 would react with both the rocks and the pore fluids.
Speaker #2: This work is ongoing, and the company's full array of analytical services are being employed reinforcing CORE LAB's role in enabling energy transition projects. Moving now to production enhancement, where CORE LAB's technologies continue to help our clients optimize their well completions and improve production.
Larry Bruno: Moving now to production enhancement, where Core Lab's technologies continue to help our clients optimize their well completions and improve production. Revenue for production enhancement for Q4 came in at $46 million, up over 8% year-over-year.
Speaker #2: Revenue for Production Enhancement for Q4 came in at $46 million, up over 8% year over year. Fourth-quarter operating income for Production Enhancement, ex-items, was $3 million, yielding operating margins of 7%, down from 11% in Q3, but up from 4% in Q4 of 2024.
Larry Bruno: Fourth quarter operating income for production enhancement, ex items, was $3 million, yielding operating margins of 7%, down from 11% in Q3, but up from 4% in Q4 of 2024. Margins were negatively impacted by a provision for a potentially uncollectible receivable in Asia Pacific. There are no further receivables at risk with this contract. Margins were also impacted by raw material costs that have risen due to tariffs. In the US, diagnostic services benefited from strong demand as complex US land completion designs, like Trimul-fracs and extended lateral length horizontal wells, become more and more common. Now for some operational highlights from production enhancement. In the fourth quarter of 2025, Core Lab supported a plug and abandonment operation for a national oil company in the Middle East through the deployment of its proprietary Pulverizer system.
Larry Bruno: Fourth quarter operating income for production enhancement, ex items, was $3 million, yielding operating margins of 7%, down from 11% in Q3, but up from 4% in Q4 of 2024. Margins were negatively impacted by a provision for a potentially uncollectible receivable in Asia Pacific. There are no further receivables at risk with this contract. Margins were also impacted by raw material costs that have risen due to tariffs. In the US, diagnostic services benefited from strong demand as complex US land completion designs, like Trimul-fracs and extended lateral length horizontal wells,
Speaker #2: Margins were negatively impacted by a provision for a potentially uncollectible Pacific. receivable in Asia There are no further receivables at risk with this contract.
Speaker #2: Margins were also impacted by raw material costs that have risen due to tariffs. In the US, diagnostic services benefited from strong demand as complex US land completion designs like TRIMOFRAX and extended lateral length horizontal wells become more and more common.
Larry Bruno: become more and more common. Now for some operational highlights from production enhancement. In the fourth quarter of 2025, Core Lab supported a plug and abandonment operation for a national oil company in the Middle East through the deployment of its proprietary Pulverizer system.
Speaker #2: operational highlights from production enhancement. In the fourth quarter of Now for some 2025, CORE LAB supported a plug-in abandonment operation for a national oil company in the Middle East.
Speaker #2: Through the deployment of its proprietary pulverizer system, the operation used a tubing conveyed perforating configuration to support a multi-zone well abandonment program. During the operation, approximately 100 feet of CORE LAB's pulverizer technology were deployed, to rubbelize the annular cement as a prelude to a perf wash job and the placement of a permanent cement barrier.
Larry Bruno: The operation used a tubing-conveyed perforating configuration to support a multi-zone well abandonment program. During the operation, approximately 100 feet of Core Lab's pulverizer technology were deployed to rubblize the annulus cement as a prelude to a perf wash job and the placement of a permanent cement barrier. Following the successful deployment of pulverizer and the installation of the cement barrier, a second deployment of an additional 100 feet of pulverizer was executed uphole. In both of these intervals, the pulverizer system provided a reliable alternative to conventional section milling and plug and abandonment applications that would have been much more time-consuming and expensive. Core Lab is proud to announce that the company's pulverizer system received the 2025 Offshore Well Intervention Global Award for Plug and Abandonment Innovation, presented by The Offshore Network, an independent and globally respected industry forum.
Larry Bruno: The operation used a tubing-conveyed perforating configuration to support a multi-zone well abandonment program. During the operation, approximately 100 feet of Core Lab's pulverizer technology were deployed to rubblize the annulus cement as a prelude to a perf wash job and the placement of a permanent cement barrier. Following the successful deployment of pulverizer and the installation of the cement barrier, a second deployment of an additional 100 feet of pulverizer was executed uphole. In both of these intervals,
Speaker #2: Following the successful deployment of the pulverizer and the installation of the cement barrier, a second deployment of an additional 100 feet of pulverizer was executed uphole.
Speaker #2: In both of these intervals, the pulverizer system provided a reliable alternative to conventional section milling and plug-in abandonment applications, which would have been much more time-consuming and expensive.
Larry Bruno: the pulverizer system provided a reliable alternative to conventional section milling and plug and abandonment applications that would have been much more time-consuming and expensive. Core Lab is proud to announce that the company's pulverizer system received the 2025 Offshore Well Intervention Global Award for Plug and Abandonment Innovation, presented by The Offshore Network, an independent and globally respected industry forum.
Speaker #2: CORE LAB is proud to announce that the company's pulverizer system received the 2025 Offshore Well Intervention Global Award for plug-in abandonment innovation, presented by the Offshore Network, an independent and forum.
Speaker #2: globally respected industry The award highlights pulverizer's technical merit, successful field application, and its role in advancing plug-in abandonment operations. Commercial adoption continues to expand with multiple international pulverizer deployments scheduled for early 2026.
Larry Bruno: The award highlights Pulverizer's technical merit, successful field application, and its role in advancing plug and abandonment operations. Commercial adoption continues to expand, with multiple international Pulverizer deployments scheduled for early 2026. Also, in Q4, multiple US unconventional operators engaged Core Lab to employ diagnostic technologies to evaluate emerging plugless completion designs on their land wells. Plugless completion designs are aimed at reducing cost and improving operational efficiency. Core deployed its proprietary SpectraStim proppant tracer diagnostics to assess diverter-based stage isolation and to verify stimulation effectiveness across the multiple stage laterals. Core Lab's diagnostic technology delivered clear insight into the proppant placement and confirmed that these test cases, plugless systems, successfully stimulated the stages. Moreover, these results demonstrate that Core's SpectraStim technology provides operators with a reliable, cost-efficient method to evaluate new completion designs.
Larry Bruno: The award highlights Pulverizer's technical merit, successful field application, and its role in advancing plug and abandonment operations. Commercial adoption continues to expand, with multiple international Pulverizer deployments scheduled for early 2026. Also, in Q4, multiple US unconventional operators engaged Core Lab to employ diagnostic technologies to evaluate emerging plugless completion designs on their land wells. Plugless completion designs are aimed at reducing cost and improving operational efficiency.
Speaker #2: Also in the fourth quarter, multiple US unconventional operators engaged CORE LAB to employ diagnostic technologies to evaluate emerging plugless completion designs on their land wells.
Speaker #2: Plugless completion designs are aimed at reducing cost and improving operational efficiency. CORE deployed its proprietary spectrastem propant tracer diagnostics to assess diverter-based stage isolation and to verify stimulation effectiveness across the multiple stage laterals.
Larry Bruno: Core deployed its proprietary SpectraStim proppant tracer diagnostics to assess diverter-based stage isolation and to verify stimulation effectiveness across the multiple stage laterals. Core Lab's diagnostic technology delivered clear insight into the proppant placement and confirmed that these test cases, plugless systems, successfully stimulated the stages. Moreover, these results demonstrate that Core's SpectraStim technology provides operators with a reliable, cost-efficient method to evaluate new completion designs.
Speaker #2: CORE LAB's diagnostic technology delivered clear insight into the propant placement and confirmed that these test cases plugless systems successfully stimulated the stages. Moreover, these results demonstrate that CORE's spectrastem technology provides operators with a reliable cost-efficient method to evaluate new completion designs.
Speaker #2: Additional diagnostically evaluated wells will be needed to determine the range of applications that are suitable for plugless completions. That concludes our operational review. We appreciate your participation and Dave will now open the phone for questions.
Larry Bruno: Additional diagnostically evaluated wells will be needed to determine the range of applications that are suitable for plugless completions. That concludes our operational review. We appreciate your participation, and Dave will now open the floor, the phone for questions.
Larry Bruno: Additional diagnostically evaluated wells will be needed to determine the range of applications that are suitable for plugless completions. That concludes our operational review. We appreciate your participation, and Dave will now open the floor, the phone for questions.
Speaker #2: We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone speakerphone, please pick up your phone. handset before pressing the keys.
Speaker #2: We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone speakerphone, please pick up your phone.
Operator: We will now begin the question-and-answer session. To ask a question, you may press Star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star and then two. Our first question comes from Don Crist with Johnson Rice. Please go ahead.
Operator: We will now begin the question-and-answer session. To ask a question, you may press Star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star and then two. Our first question comes from Don Crist with Johnson Rice. Please go ahead.
Speaker #2: If at any time your question has been If you are using a addressed and you would like to withdraw your question, please press star and then two.
Speaker #2: Our first question comes from Don Christ with Johnson Rice. Please go ahead.
Speaker #2: ahead.
Speaker #3: Good morning, Don. Good morning,
Speaker #4: guys. Good morning. Hopefully, y'all are doing well this morning.
Gwen Gresham: Good morning, Don.
Gwen Gresham: Good morning, Don.
Don Crist: Morning, guys. Good morning. Hopefully, you all are doing well this morning.
Don Crist: Morning, guys. Good morning. Hopefully, you all are doing well this morning.
Speaker #2: Yeah, fine,
Speaker #2: Don. Larry, the first
Larry Bruno: Yeah, fine, Don.
Larry Bruno: Yeah, fine, Don.
Speaker #4: A question for me, and I know it's gotten a lot of headlines recently, but maybe it's calmed down in the last week or two, is on Venezuela.
Don Crist: Larry, the first question from me, and I know it's gotten a lot of headlines recently, but maybe it's calmed down in the last week or two, is on Venezuela. I know, it's gonna take a lot to go back in there for these operators, but from Core's perspective, I would assume that y'all have a long history there and could benefit if operators are looking to expand presence there. Any comments around Venezuela?
Don Crist: Larry, the first question from me, and I know it's gotten a lot of headlines recently, but maybe it's calmed down in the last week or two, is on Venezuela. I know, it's gonna take a lot to go back in there for these operators, but from Core's perspective, I would assume that y'all have a long history there and could benefit if operators are looking to expand presence there. Any comments around Venezuela?
Speaker #4: I know it's going to take a lot to go back in there. For these operators, but from CORE's perspective, I would assume that y'all have a long history there and could benefit if operators are looking to expand presence there.
Speaker #4: Any comments
Speaker #4: around Venezuela?
Speaker #2: Yeah,
Speaker #2: Don. Good question. And it is a common question that is coming up in meetings. So yeah, so it turns out Venezuela was the first international company that CORE LAB ventured into some and we were there for nearly 60 years.
Larry Bruno: Yeah, Don, good question, and it is a common question that guys is coming up in meetings. So, yeah, so turns out Venezuela was the first international company that Core Lab ventured into some... And we've been there for nearly 60 years. And so a lot of experience dealing with very challenging reservoirs in the Orinoco Belt, the heavy oil belt, and also our headquarters that, and at the time, were in Maracaibo. Our predecessors, I think, made a good call a number of years back when the Red Shirts showed up and looked like a challenging environment, and we left Venezuela and moved into Colombia.
Larry Bruno: Yeah, Don, good question, and it is a common question that guys is coming up in meetings. So, yeah, so turns out Venezuela was the first international company that Core Lab ventured into some... And we've been there for nearly 60 years. And so a lot of experience dealing with very challenging reservoirs in the Orinoco Belt, the heavy oil belt, and also our headquarters that, and at the time, were in Maracaibo. Our predecessors, I think, made a good call a number of years back when the Red Shirts showed up and looked like a challenging environment, and we left Venezuela and moved into Colombia.
Speaker #2: And so a lot of experience dealing with very challenging reservoirs in the Orinoco Belt, the heavy oil belt, and also our headquarters at the time were in Maracaibo.
Speaker #2: Our predecessors, I think, made a good call a number of years back when the red shirt showed up and looked like a challenging environment, and we left Venezuela and moved into Colombia.
Speaker #2: So what we do have of legacy data that we could is a fair amount monetize if there was interest in it. From people wanting to get back in and get up to speed on rock and fluid properties.
Larry Bruno: So what we do have is a fair amount of legacy data that we could monetize if there was interest in it from people wanting to get back in and get up to speed on rock and fluid properties. I think for the near term, the bigger advantages are going to be for metal-heavy companies, not Core Lab. And so if you're a wellhead company, if you're into patching pipe, if you're into fixing leaks and re-environmental remediation, that's probably gonna be where the first dollars are made down there.
Larry Bruno: So what we do have is a fair amount of legacy data that we could monetize if there was interest in it from people wanting to get back in and get up to speed on rock and fluid properties. I think for the near term, the bigger advantages are going to be for metal-heavy companies, not Core Lab. And so if you're a wellhead company, if you're into patching pipe, if you're into fixing leaks and re-environmental remediation, that's probably gonna be where the first dollars are made down there.
Speaker #2: I think for the near term, the bigger advantages are going to be for metal-heavy companies not CORE LAB. And so if you're a wellhead company if you're into patching pipe, if you're into fixing leaks and environmental remediation, that's probably going to be where the first dollars are made down follow operators into the there.
Larry Bruno: We would probably follow operators into the country, and we have mobile lab capabilities that we can deploy, and we can be present in a yard with some power that we can set up to do rock and fluid analysis, or the basics at least, in country, and we can do that quickly when the need arises. And then over time, we'll look at the landscape and see if it makes sense to have a presence back in Venezuela, but I think that's a question that's several quarters at least away from having to be addressed.
Larry Bruno: We would probably follow operators into the country, and we have mobile lab capabilities that we can deploy, and we can be present in a yard with some power that we can set up to do rock and fluid analysis, or the basics at least, in country, and we can do that quickly when the need arises. And then over time, we'll look at the landscape and see if it makes sense to have a presence back in Venezuela, but I think that's a question that's several quarters at least away from having to be addressed.
Speaker #2: country and we We would probably have mobile lab capabilities that we can deploy and we can be present in a yard with some power.
Speaker #2: That we can set up to do rock and fluid analysis or the basics at least in country, and we can do that quickly when the need arises.
Speaker #2: And then, over time, we'll look at the landscape and see if it makes sense to become a presence back in Venezuela. But I think that's a question that's several quarters, at least, away from having to be addressed.
Speaker #4: Yeah, I would agree with that comment. It's probably more of a 27 story than a 26 story, but just get your kind of expectation on it.
Don Crist: Yeah, I would agree with that comment. It's probably more of a 27 story than a 26 story, but just wanted to get, you know, your kinda expectation on it. So, moving over to the Middle East, you know, we're hearing a lot of commentary about rigs going back to work in Saudi and then good conversations in, you know, Algeria and Turkey and other places on the unconventional side.
Don Crist: Yeah, I would agree with that comment. It's probably more of a 27 story than a 26 story, but just wanted to get, you know, your kinda expectation on it. So, moving over to the Middle East, you know, we're hearing a lot of commentary about rigs going back to work in Saudi and then good conversations in, you know, Algeria and Turkey and other places on the unconventional side.
Speaker #4: So moving over to the Middle East, we're hearing a lot of commentary about rigs going back to work in Saudi and then good conversations in Algeria and Turkey and other places on the of quarters since you put out a broader unconventional side.
Speaker #4: I know it's been a couple update on your Middle East facility that was built during COVID and kind of had a slow start, but do you have capabilities there to expand rapidly or would you have to put more CapEx into that facility if Algeria kicked off in a big way in later 26, 27, or Turkey or any of these other kind of areas picked up?
Don Crist: I know it's been a couple of quarters since you put out a broader update on your Middle East facility that was, you know, built during COVID and kinda had a slow start, but do you have capabilities there to expand rapidly, or would you have to put more CapEx into that facility if, you know, Algeria kicked off in a big way in, you know, later 2026, 2027, or Turkey or any of these other kinda areas picked up?
Don Crist: I know it's been a couple of quarters since you put out a broader update on your Middle East facility that was, you know, built during COVID and kinda had a slow start, but do you have capabilities there to expand rapidly, or would you have to put more CapEx into that facility if, you know, Algeria kicked off in a big way in, you know, later 2026, 2027, or Turkey or any of these other kinda areas picked up?
Speaker #2: Yeah, so let's bifurcate a little bit the Middle East and North Africa. So in the second quarter of 2025, we announced that we expanded our lab capabilities in Saudi Arabia to bring the full suite of analytical technologies that had been developed in our US operation for East.
Larry Bruno: ... Yeah, so let's bifurcate a little bit the Middle East and North Africa. So, in the second quarter of 2025, we announced that we expanded our lab capabilities in Saudi Arabia to bring the full suite of analytical technologies that had been developed in our US operation for unconventionals, and we put that into the Middle East. And if you read our earnings release there, we were quickly rewarded for that investment, large expedited project with some very nice returns on that. I think what, how I would describe, and we only have one really great, great client in Saudi Arabia. We did not see the pullback in activity that some of the more drilling-focused companies did. We have ongoing great engagement with Aramco.
Larry Bruno: ... Yeah, so let's bifurcate a little bit the Middle East and North Africa. So, in the second quarter of 2025, we announced that we expanded our lab capabilities in Saudi Arabia to bring the full suite of analytical technologies that had been developed in our US operation for unconventionals, and we put that into the Middle East. And if you read our earnings release there, we were quickly rewarded for that investment, large expedited project with some very nice returns on that. I think what, how I would describe, and we only have one really great, great client in Saudi Arabia.
Speaker #2: And if you read our earnings release there, we were quickly unconventionals, and we put that into the Middle rewarded for that investment, large expedited project describe and with some very nice returns on I only have one really great client that.
Speaker #2: see the pullback in in Saudi Arabia. We did not activity that some of the more drilling-focused companies did. We have ongoing great engagement with Aramco.
Larry Bruno: We did not see the pullback in activity that some of the more drilling-focused companies did. We have ongoing great engagement with Aramco.
Speaker #2: Saudi Aramco—they're a great client for us and have been for decades. And so, throughout the Middle East, we've got opportunities. Lab in Qatar, a nice flow of work from there.
Larry Bruno: They're Saudi Aramco. They're a great client for us and have been for decades. And so, throughout the Middle East, we've got opportunities, lab in Qatar, and a nice flow of work from there, Oman, Abu Dhabi, and Kuwait, and we're in position with permanent facilities in all those locations. In North Africa, we recently held a technology conference to address opportunities across North Africa, from Algeria, Libya, Tunisia, and into Egypt. And we see opportunities developing there. There's a great need for people to assess damaged and under developed fields that have been, I'll call it, wilting under years of neglect. And so there's opportunities for us there. There's unconventional opportunities emerging in that region that we have-- we'll have a lot to say about.
Larry Bruno: They're Saudi Aramco. They're a great client for us and have been for decades. And so, throughout the Middle East, we've got opportunities, lab in Qatar, and a nice flow of work from there, Oman, Abu Dhabi, and Kuwait, and we're in position with permanent facilities in all those locations. In North Africa, we recently held a technology conference to address opportunities across North Africa, from Algeria, Libya, Tunisia, and into Egypt. And we see opportunities developing there. There's a great need for people to assess damaged and under developed fields that have been, I'll call it, wilting under years of neglect.
Speaker #2: Oman, Abu Dhabi, and Kuwait. And we're in position with permanent facilities in all those locations. In North Africa, we recently held I think what I would a technology conference to address from Algeria, Libya, opportunities across North Africa Tunisia, and into Egypt.
Speaker #2: And we see opportunities developing there; there's a great need for people to assess damaged and underdeveloped fields that have been—I'll call it wilting under years of neglect.
Speaker #2: And so there's opportunities for us there. There's unconventional opportunities emerging in that region that we will have a lot to say about. We currently operate or would service Aberdeen facility for rock and fluid analysis on reservoir evaluation.
Larry Bruno: And so there's opportunities for us there. There's unconventional opportunities emerging in that region that we have-- we'll have a lot to say about.
Larry Bruno: We currently operate or would service that out of our Aberdeen facility for rock and fluid analysis on reservoir evaluation. And again, if we have to put in some mobile lab operations to facilitate that, we're ready to roll.
Larry Bruno: We currently operate or would service that out of our Aberdeen facility for rock and fluid analysis on reservoir evaluation. And again, if we have to put in some mobile lab operations to facilitate that, we're ready to roll.
Speaker #2: And again, in some of that, we're ready with mobile lab operations to facilitate roll.
Don Crist: I appreciate all that color. And I guess one for Chris, you know, obviously, you shifted around some of the debt as you paid off the notes and put it on the revolver. Can you just kind of frame how you're thinking about future cash flows, free cash flow, and, you know, paying off that revolver debt that has a higher interest rate versus share buybacks, and just kind of your thoughts around that?
Don Crist: I appreciate all that color. And I guess one for Chris, you know, obviously, you shifted around some of the debt as you paid off the notes and put it on the revolver. Can you just kind of frame how you're thinking about future cash flows, free cash flow, and, you know, paying off that revolver debt that has a higher interest rate versus share buybacks, and just kind of your thoughts around that?
Speaker #4: guess one for Chris, obviously you shifted around some of I appreciate all that color and I the debt as you paid off the notes and put it on the revolver.
Speaker #4: Can you just kind of frame how you're thinking about future cash flows, free cash flow, and paying off that revolver debt versus share buybacks and just kind of your
Speaker #2: Sure, it did. Moving it into this term loan under the credit facility out of the private placement notes does give us more flexibility with that.
Chris Hill: Sure. It did, moving it into this term loan under the credit facility, out of the private placement notes, does give us more flexibility with that. There's no, you know, penalty to pay down that early. There is some required pay downs. I think it's $2.5 million a year, if my memory serves me right. So we will be paying it down. But as far as our use of free cash flow, we still think the stock is undervalued. You've seen us shift over the last five quarters on using some of that towards share repurchases versus paying down the debt. And so I don't see that changing. You know, we're gonna be opportunistic with the share buyback, so we see a dip in the market, we might get more aggressive.
Chris Hill: Sure. It did, moving it into this term loan under the credit facility, out of the private placement notes, does give us more flexibility with that. There's no, you know, penalty to pay down that early. There is some required pay downs. I think it's $2.5 million a year, if my memory serves me right. So we will be paying it down. But as far as our use of free cash flow, we still think the stock is undervalued. You've seen us shift over the last five quarters on using some of that towards share repurchases versus paying down the debt. And so I don't see that changing.
Speaker #2: to pay down that early. There is some required paydowns. I think it's 2.5 million a year if my memory serves me right. So we will be paying it down, but as far as our use of free cash flow, we still think the stock You've seen us shift over the last five quarters on using some of that towards share repurchases versus paying down the debt.
Speaker #2: And changing. We're going to be opportunistic with the share buybacks. So we aggressive, but I see it as a mix between continuing to make sure the leverage ratio kind of stays where we're comfortable but see a dip in the market. also using it to buy back
Speaker #2: And changing. We're going to be opportunistic with the share buybacks. So we aggressive, but I see it as a mix between continuing to make sure the leverage ratio kind of stays where we're comfortable but see a dip in the market.
Chris Hill: You know, we're gonna be opportunistic with the share buyback, so we see a dip in the market, we might get more aggressive.
Chris Hill: But, I see it as a mix between continuing to make sure the leverage ratio kind of stays where we're comfortable, but also, using it to buy back shares.
Chris Hill: But, I see it as a mix between continuing to make sure the leverage ratio kind of stays where we're comfortable, but also, using it to buy back shares.
Speaker #2: shares. And Don, I might add to that.
Speaker #4: all the—Don, there's a quarter of a point click in our favor. If we get the leverage ratio below one and we can see where it's within close proximity to where we are, that looks like a smart place to try to get to.
Larry Bruno: And, Don, I might add to that.
Larry Bruno: And, Don, I might add to that.
Don Crist: I appreciate it.
Don Crist: I appreciate it.
Larry Bruno: Don, there's a quarter of a point click in our favor if we get the leverage ratio below 1, and we can see where it's within close proximity to where we are. That looks like a smart place to try to get to as we can. But in the meantime, I think if you look at how we've been allocating capital between debt reduction and share buybacks, that's probably a good optics on where we're going for the near term.
Larry Bruno: Don, there's a quarter of a point click in our favor if we get the leverage ratio below 1, and we can see where it's within close proximity to where we are. That looks like a smart place to try to get to as we can. But in the meantime, I think if you look at how we've been allocating capital between debt reduction and share buybacks, that's probably a good optics on where we're going for the near term.
Speaker #4: As we can, but in the meantime, I think if you look at how we've been allocating capital between debt reduction and share buybacks, that's probably a good optic on where term.
Speaker #4: As we can, but in the meantime, I think if you look at how we've been allocating capital between debt reduction and share buybacks, that's probably a good optics on where we're going.
Speaker #4: That's For the near all about those basis points. I get it. I appreciate all the color, guys. I'll turn it
Don Crist: It's all about those basis points. I get it. I appreciate all the color, guys. I'll turn it back.
Don Crist: It's all about those basis points. I get it. I appreciate all the color, guys. I'll turn it back.
Speaker #4: back. Thank you, Don.
Speaker #3: Thanks. Appreciate
Chris Hill: Thanks.
Chris Hill: Thanks.
Gwen Gresham: Thank you, Don.
Gwen Gresham: Thank you, Don.
Speaker #1: And the next question comes
Chris Hill: Appreciate it.
Chris Hill: Appreciate it.
Speaker #1: from Josh Jane with it. Daniel Energy Partners. Please go ahead.
Operator: And the next question comes from Josh Jayne with Daniel Energy Partners. Please go ahead.
Operator: And the next question comes from Josh Jayne with Daniel Energy Partners. Please go ahead.
Speaker #4: Hello, Johnny. Josh.
Gwen Gresham: Hey, Josh.
Gwen Gresham: Hey, Josh.
Speaker #3: Good
Speaker #3: morning. I wanted to start
Chris Hill: Hello, Josh.
Chris Hill: Hello, Josh.
Josh Jayne: Morning. I wanted to start with something you mentioned in the release and then also on the call. You talked about an increase in regional study sales on Africa and Brazil, highlighting the renewed industry interest in exploration activity. I feel like there were numerous large operators over the last couple of quarters who've highlighted the need for exploration activity, international and offshore, moving forward. So do you see this sort of as the beginning of demand accelerating as we move through this year and in the next year? Or do you think it was just, you know, a little small uptick in Q4? Just how do you see this all playing out?
Josh Jayne: Morning. I wanted to start with something you mentioned in the release and then also on the call. You talked about an increase in regional study sales on Africa and Brazil, highlighting the renewed industry interest in exploration activity. I feel like there were numerous large operators over the last couple of quarters who've highlighted the need for exploration activity, international and offshore, moving forward. So do you see this sort of as the beginning of demand accelerating as we move through this year and in the next year? Or do you think it was just, you know, a little small uptick in Q4?
Speaker #3: release and then also on the call. You talked about an with something you mentioned in the increase in regional study sales on Hi, Africa and Brazil.
Speaker #3: Highlighting the renewed industry interest in exploration activity. And I feel like there were numerous large operators over the last couple of quarters who've highlighted the need for exploration activity We might get more international and offshore moving forward.
Speaker #3: So, do you see this sort of as the beginning of demand accelerating as we move through this year and into next year, or do you think it was just a little small uptick in Q4? Or just, how do you see this all playing?
Speaker #3: Out? No, Josh, it's clearly a—
Josh Jayne: Just how do you see this all playing out?
Speaker #2: trend. And I've talked about this a little bit; we think the trend is already started. And last year, we would have seen—I would say markedly better performance in reservoir description if we hadn't had so many operators come up with dry holes.
Larry Bruno: No, Josh, it's clearly a trend. And I've talked about this a little bit. We think the trend has already started. And last year, we would have seen, I would say, markedly better performance in reservoir description if we hadn't had so many operators come up with dry holes. So in other words, committed work to Core Lab, nice stack of work coming up for us, and a series of geologic failures, if you will, by the operators that resulted in no cores, no fluids. And so we see that trend continuing. We've got a nice portfolio of project commitments in front of us. And I think people are getting further along in their commitment to these larger projects and larger evaluations. We do have core coming in.
Larry Bruno: No, Josh, it's clearly a trend. And I've talked about this a little bit. We think the trend has already started. And last year, we would have seen, I would say, markedly better performance in reservoir description if we hadn't had so many operators come up with dry holes. So in other words, committed work to Core Lab, nice stack of work coming up for us, and a series of geologic failures, if you will, by the operators that resulted in no cores, no fluids. And so we see that trend continuing. We've got a nice portfolio of project commitments in front of us.
Speaker #2: So in other words, committed work to core lab. Nice stack of work coming up for us. And a series of geologic failures, if you will, by the operators.
Speaker #2: That resulted in no cores, no fluids. And so we see portfolio of project commitments in front of that trend continuing. We've got a nice us.
Speaker #2: I think people are getting further along in their commitment to, and in larger evaluations; we do have folks on location in a number of places, over the last quarter or two, and today. We do see an increase in FIDs around the world.
Larry Bruno: And I think people are getting further along in their commitment to these larger projects and larger evaluations. We do have core coming in.
Larry Bruno: We have, we have folks on location in a number of places over the last quarter or two, and today. We do see an increase in FIDs around the world that are all, I would say, they're not indications, they are facts that are showing that an international wave is coming. People recognize that the growth in US production is flattening. And look, there's opportunities in that. We're, we're engaged with, I'll call it, mechanical imp- improvements in a production enhancement that might imp- help improve US production, and also, thermodynamic lab testing for ways to get those extra molecules out of the ground. We've got experiments going on in the lab for clients. So, we're gonna work on trying to improve recovery in the US.
Larry Bruno: We have, we have folks on location in a number of places over the last quarter or two, and today. We do see an increase in FIDs around the world that are all, I would say, they're not indications, they are facts that are showing that an international wave is coming. People recognize that the growth in US production is flattening.
Speaker #2: That are all, I would say, they're not indications; they're facts that are showing that an international wave is coming. People recognize that the growth in US production is flattening.
Speaker #2: opportunities in that. We're engaged with, I'll call it, mechanical improvements in production enhancement that might help improve US production. And also, thermodynamic lab testing for ways to get those extra molecules out of the ground.
Larry Bruno: And look, there's opportunities in that. We're, we're engaged with, I'll call it, mechanical imp- improvements in a production enhancement that might imp- help improve US production, and also, thermodynamic lab testing for ways to get those extra molecules out of the ground. We've got experiments going on in the lab for clients. So, we're gonna work on trying to improve recovery in the US.
Speaker #2: going on in the lab for clients. So we're going to work on trying to improve recovery in the US. But for the longer term, the trend is clearly in the direction of more international exploration, and the bigger structures that can move the needle in terms of reserve replacement, which is a term we've been waiting to come back into the vernacular and the industry, is going to be offshore opportunities.
Larry Bruno: But for the longer term, the trend is clearly in the direction of more international exploration and the bigger structures that can move the needle in terms of reserve replacement, which is a term we've been waiting to come back into, the vernacular in the industry, is gonna be offshore opportunities. And so the sale of off-the-shelf and ongoing studies that we are able to provide, allow people to quickly get up to speed on the geologic variables they're gonna encounter as they drill in these, offshore environments, whether it's the South Atlantic margin or, offshore, Africa or Asia Pacific.
Larry Bruno: But for the longer term, the trend is clearly in the direction of more international exploration and the bigger structures that can move the needle in terms of reserve replacement, which is a term we've been waiting to come back into, the vernacular in the industry, is gonna be offshore opportunities. And so the sale of off-the-shelf and ongoing studies that we are able to provide, allow people to quickly get up to speed on the geologic variables they're gonna encounter as they drill in these, offshore environments, whether it's the South Atlantic margin or, offshore, Africa or Asia Pacific.
Speaker #2: of off-the-shelf and ongoing studies that we are able to And so the sale And look, there's We've got experiments provide allow people to quickly get up to speed on the geologic variables they're going to encounter as they drill or offshore Africa, or Asia environments, whether it's the South Atlantic margin Pacific.
Speaker #3: Thanks for all that. And maybe we could just move to the—oh, go ahead.
Josh Jayne: Thanks for all that. Maybe we could just move to the... go ahead.
Josh Jayne: Thanks for all that. Maybe we could just move to the... go ahead.
Speaker #2: Nope, we didn't have
Speaker #2: anything. Oh, oh, sorry about
Larry Bruno: Nope, we didn't have anything.
Larry Bruno: Nope, we didn't have anything.
Speaker #3: that. Maybe just to move you highlighted the onshore environment and how it's obviously a little bit more sensitive to the US, to changes in commodity prices.
Josh Jayne: Oh. Oh, sorry about that. Maybe just to move to the US. You highlighted the onshore environment and how it's obviously a little bit more sensitive to changes in commodity prices. Could you talk to what those are? So if we sort of break out of this, you know, flat to down commodity price range that we've seen over the last couple of months, what it ultimately would take from a commodity price standpoint to sort of materially change the activity outlook in the US?
Josh Jayne: Oh. Oh, sorry about that. Maybe just to move to the US. You highlighted the onshore environment and how it's obviously a little bit more sensitive to changes in commodity prices. Could you talk to what those are? So if we sort of break out of this, you know, flat to down commodity price range that we've seen over the last couple of months, what it ultimately would take from a commodity price standpoint to sort of materially change the activity outlook in the US?
Speaker #3: Could you talk to what those are? So if we sort of break out of this flat-to-down commodity price range that we've seen over the last couple of months, what it ultimately would take from a commodity price standpoint to sort of materially change the activity outlook in the US?
Speaker #2: Yeah, I think, Josh, that's probably a better question for some of our operators. I looking for some think if I was in their shoes, I'd be stability in the commodity price.
Larry Bruno: Yeah, I think, Josh, that's probably a better question for some of our operators. I think if I was in their shoes, I'd be looking for some stability in the commodity price. And, you know, you see 8 to 10% swings, you know, $5 to $6 bouncing around here. And look, a lot of the companies have different hedging strategies and all that that impact their plans. I think it's best to defer to them on that. But if you look at actions as an indication of their thinking, rig count's down, frack spread's down. And so I would say it's still an environment that they're and also, there's been a consolidation in the industry. That's also impacting activity levels as those kind of sort themselves through.
Larry Bruno: Yeah, I think, Josh, that's probably a better question for some of our operators. I think if I was in their shoes, I'd be looking for some stability in the commodity price. And, you know, you see 8 to 10% swings, you know, $5 to $6 bouncing around here. And look, a lot of the companies have different hedging strategies and all that that impact their plans. I think it's best to defer to them on that. But if you look at actions as an indication of their thinking, rig count's down, frack spread's down. And so I would say it's still an environment that they're and also, there's been a consolidation in the industry.
Speaker #2: And swings—$5, $6—you see 8%, 10% bouncing around here, and look, a lot of the companies have different hedging strategies, and all that impacts their plans.
Speaker #2: I think it's best to defer to them on that. But if you look at actions as an indication of their thinking, rig counts down, frac spreads down, and so I would say it's still an environment that they're—and also, there's been consolidation in the industry.
Speaker #2: That's also impacting activity levels as those kind of sort themselves it varies by company. Our through. I'd hate to put a price on it because I think objective is to use our products to help them get more oil and gas out of the ground as cheaply as possible.
Larry Bruno: That's also impacting activity levels as those kind of sort themselves through.
Larry Bruno: I'd hate to put a price on it because I think it varies by company. Our objective is to use our product to help them get more oil and gas out of the ground, as cheaply as possible. And then, where there are opportunities, like enhanced oil recovery and unconventionals, to do the lab testing that give them techniques that they can try to increase, the recoverables on these unconventional wells from high single digits, 8, 9, 10%. If we can help them get that to 12, 13% by some, laboratory-proven, techniques, then, that'll be good for us and good for our clients.
Larry Bruno: I'd hate to put a price on it because I think it varies by company. Our objective is to use our product to help them get more oil and gas out of the ground, as cheaply as possible. And then, where there are opportunities, like enhanced oil recovery and unconventionals, to do the lab testing that give them techniques that they can try to increase, the recoverables on these unconventional wells from high single digits, 8, 9, 10%. If we can help them get that to 12, 13% by some, laboratory-proven, techniques, then, that'll be good for us and good for our clients.
Speaker #2: And then where there are opportunities, like enhanced oil recovery and unconventionals, to do the lab testing that gives them to increase techniques that they can try the recoverable on these unconventional wells from high single digits, 8, 9, 10 percent.
Speaker #2: If we can help them get that to 12 or 13 percent by some laboratory-proven techniques, then that'll be good for us and good for our clients.
Speaker #3: Thanks for that. And then if I could just squeeze one more, I'm not sure if you explicitly called out the tariff impact in 2025.
Josh Jayne: Thanks for that. Then if I could just squeeze one more. I'm not sure if you explicitly called out the tariff impact in 2025. I know you highlighted it in Q4 as sort of a headwind, but so if you did call it out, I apologize for missing it. But maybe you could talk about the impact in 2025 so that we could think about what the potential tailwind is, you know, moving forward in the event that things settle down a bit. Thanks.
Josh Jayne: Thanks for that. Then if I could just squeeze one more. I'm not sure if you explicitly called out the tariff impact in 2025. I know you highlighted it in Q4 as sort of a headwind, but so if you did call it out, I apologize for missing it. But maybe you could talk about the impact in 2025 so that we could think about what the potential tailwind is, you know, moving forward in the event that things settle down a bit. Thanks.
Speaker #3: I know you highlighted it again in Q4 as sort of a headwind, but so if you did call it out, I apologize for missing it.
Speaker #3: But maybe you could talk about the impact in 2025 so that we could think about what the potential tailwind is moving forward in the event that things settle down a bit.
Speaker #3: Thanks.
Speaker #2: Sure. Josh, this
Speaker #2: is Chris. So I think in impactful as we got into I would say the latter part of the third quarter and then the fourth quarter because we had 2025, it started to become more previously purchased supplies.
Chris Hill: Sure. Josh, this is Chris. So I think, you know, in 2025, it started to become more impactful as we got into, I would say, the latter part of Q3 and then Q4, because we had previously purchased supplies, you know, think of raw materials for the products, but then also the chemical tracers for the service side. We had supplies that kinda lasted through, partway through Q3. So those are all imported products. They all attract tariffs. Some are higher than others. So I think the impact in Q4 is you're gonna see that repeat going forward unless there's a change in, you know, the tariffs that are being applied right now. So it's probably somewhere in the range of, you know, $0.02 to 0.03 each quarter.
Chris Hill: Sure. Josh, this is Chris. So I think, you know, in 2025, it started to become more impactful as we got into, I would say, the latter part of Q3 and then Q4, because we had previously purchased supplies, you know, think of raw materials for the products, but then also the chemical tracers for the service side. We had supplies that kinda lasted through, partway through Q3. So those are all imported products. They all attract tariffs. Some are higher than others. So I think the impact in Q4 is you're gonna see that repeat going forward unless there's a change in, you know, the tariffs that are being applied right now.
Speaker #2: Think of raw materials for the products, but then also the chemical tracers for the service side. We had supplies that kind of lasted through partway through the third quarter.
Speaker #2: All imported products, they all—so those attract tariffs. Some are higher than others. So, I think the impact in Q4 is you're going to see that repeat going forward unless there's a change in the tariffs that are being applied right now.
Speaker #2: So it's probably somewhere in the range of 2 to 3 cents each it's primarily the production quarter. And enhancement group, but also some things in reservoir description, but not as impactful for that
Chris Hill: So it's probably somewhere in the range of, you know, $0.02 to 0.03 each quarter.
Chris Hill: And it's primarily the Production Enhancement group, but also some things in Reservoir Description, but not as impactful for that group.
Chris Hill: And it's primarily the Production Enhancement group, but also some things in Reservoir Description, but not as impactful for that group.
Speaker #2: group.
Speaker #3: And Josh, I'd
Larry Bruno: And, Josh, I'd add to that-
Larry Bruno: And, Josh, I'd add to that-
Speaker #2: Yeah, I'd add to ask—thank you, I'll turn it back. that that we're always trying to mitigate this and so for example, on the chemicals used for diagnostics, we traditionally had brought those into the US mix-up cocktails of our proprietary blends of these chemicals to be used as tracers.
Josh Jayne: Thank you. I'll turn it back.
Josh Jayne: Thank you. I'll turn it back.
Larry Bruno: Yeah, I'd add to that, that we're always trying to mitigate this. And so, for example, on the chemicals used for diagnostics, we traditionally had brought those into the US, mixed up cocktails of our proprietary blends of these chemicals to be used as tracers, and then shipped them out as we needed to various other regions on the world. Well, if we can ship those directly to the other regions and our expanding footprint, like the lab we put into Abu Dhabi, for example, for tracer diagnostics, if we can ship those right to Abu Dhabi going forward, we'll bypass some of the tariff, call it, complications that are presented to us in making up our proprietary tracers. So it is an impact for us.
Larry Bruno: Yeah, I'd add to that, that we're always trying to mitigate this. And so, for example, on the chemicals used for diagnostics, we traditionally had brought those into the US, mixed up cocktails of our proprietary blends of these chemicals to be used as tracers, and then shipped them out as we needed to various other regions on the world.
Speaker #2: And then ship them out as we needed to, to various other regions of the world. Well, if we can ship those directly to the other regions—and our expanding footprint, like the lab we put into Abu Dhabi, for example, for tracer diagnostics—if we can ship those right to Abu Dhabi going forward, we'll bypass some of the tariff, call it, complications that are presented to us in making up our proprietary tracers.
Larry Bruno: Well, if we can ship those directly to the other regions and our expanding footprint, like the lab we put into Abu Dhabi, for example, for tracer diagnostics, if we can ship those right to Abu Dhabi going forward, we'll bypass some of the tariff, call it, complications that are presented to us in making up our proprietary tracers. So it is an impact for us.
Speaker #2: So it is an impact for us. I would say it's a hard part is costs have gone up, energetic powders have gone up, chemical tracers and lab supplies have gone up.
Larry Bruno: I would say it's hard part is planning, but steel costs have gone up, energetic powders have gone up. Chemical tracers and lab supplies have gone up. But we're working hard to mitigate that through our procurement process and how we, let's call it, draw the arrows on where things come from and where they go.
Larry Bruno: I would say it's hard part is planning, but steel costs have gone up, energetic powders have gone up. Chemical tracers and lab supplies have gone up. But we're working hard to mitigate that through our procurement process and how we, let's call it, draw the arrows on where things come from and where they go.
Speaker #2: But we're working hard to mitigate that through our procurement process and how we—let's call it—draw the arrows on where things come from and where they
Speaker #2: go. Understood.
Speaker #3: Thank you for taking the questions.
Speaker #1: Thanks, Josh.
Josh Jayne: Understood. Thank you for taking the questions.
Josh Jayne: Understood. Thank you for taking the questions.
Speaker #4: This concludes our question and answer session. I would like to turn the conference back over to Larry Bruno for any closing remarks.
Gwen Gresham: Thanks, Josh.
Gwen Gresham: Thanks, Josh.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Larry Bruno for any closing remarks.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Larry Bruno for any closing remarks.
Speaker #2: Okay, we'll wrap up
Speaker #2: In summary, of course, remarks: operational leadership continues to position the company for improving client activity levels in the coming quarters and years. We have never been better operationally or technologically positioned to help our global client base's evolving needs.
Larry Bruno: Okay, we'll wrap up here. In summary, Core's operational leadership continues to position the company for improving client activity levels in the coming quarters and years. We have never been better operationally or technologically positioned to help our global client base optimize their reservoirs and to address their evolving needs. We remain uniquely focused and are the most technologically advanced, client-focused reservoir optimization company in the oilfield service sector. The company will remain focused on maximizing free cash and returns on invested capital. In addition to our quarterly dividend, we'll bring value to our shareholders via growth opportunities, driven by both the introduction of problem-solving technologies and new market penetration. In the near term, Core will continue to use free cash to repurchase shares and maintain a strong balance sheet, while always investing in growth opportunities and evaluating various methods to increase shareholder value.
Larry Bruno: Okay, we'll wrap up here. In summary, Core's operational leadership continues to position the company for improving client activity levels in the coming quarters and years. We have never been better operationally or technologically positioned to help our global client base optimize their reservoirs and to address their evolving needs. We remain uniquely focused and are the most technologically advanced, client-focused reservoir optimization company in the oilfield service sector. The company will remain focused on maximizing free cash and returns on invested capital.
Speaker #2: We remain uniquely technologically advanced, client-focused, reservoir optimization company in the focused and are the most oil field service sector. The company will remain focused on maximizing free cash and returns on invested capital.
Speaker #2: In addition to our quarterly dividend, we'll bring value to our shareholders via growth opportunities driven by both the introduction of problem-solving technologies and new market penetration.
Larry Bruno: In addition to our quarterly dividend, we'll bring value to our shareholders via growth opportunities, driven by both the introduction of problem-solving technologies and new market penetration. In the near term, Core will continue to use free cash to repurchase shares and maintain a strong balance sheet, while always investing in growth opportunities and evaluating various methods to increase shareholder value.
Speaker #2: We’ll continue to use free cash to repurchase shares and maintain a strong balance sheet, while always investing in growth opportunities. In the near term, we are evaluating various methods to increase shareholder value.
Speaker #2: So in closing, we thank and appreciate all of our shareholders and the analysts at COVER CORELAB. The executive management team and the board of CORELABORATORIES give a special thanks to our worldwide employees that have made these results possible.
Larry Bruno: So in closing, we thank and appreciate all of our shareholders and the analysts that cover Core Lab. The executive management team and the board of Core Laboratories give a special thanks to our worldwide employees that have made these results possible. We're proud to be associated with their continuing achievements. So thanks for spending time with us, and we look forward to our next update. Goodbye for now.
Larry Bruno: So in closing, we thank and appreciate all of our shareholders and the analysts that cover Core Lab. The executive management team and the board of Core Laboratories give a special thanks to our worldwide employees that have made these results possible. We're proud to be associated with their continuing achievements. So thanks for spending time with us, and we look forward to our next update. Goodbye for now.
Speaker #2: We're proud to be associated with their continuing achievements. So thanks for spending time with us, and we look forward to our next update. Goodbye for now.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
