Q2 2026 Core Laboratories Inc Earnings Call

July 30, 2026

Speaker #1: Good day and welcome to the Core Labs Q2 2026 earnings 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 0.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on the touchtone phone.

Speaker #1: To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Mr. Larry Bruno, Chairman and CEO of Core Labs.

Speaker #1: Good day and welcome to the CORE LABS Q2 2026 earnings 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 0.

Speaker #1: Please go ahead.

Speaker #2: Thanks, Alan. 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 Laboratory's Q2 2026 earnings call.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on the touch-tone phone.

Speaker #2: 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.

Speaker #1: Please go ahead.

Speaker #2: Thanks, Alan. 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 Q2 2026 earnings call.

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 Q2 performance, in addition we'll review Core's strategies and the 3 financial tenets that Core employs to build long-term shareholder value.

Speaker #2: 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.

Speaker #2: 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: 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 Q2 performance.

Speaker #2: I'll then review Core's 2 operating segments, detailing our progress and discussing the continued successful introduction and deployment of Core Labs technologies as well as highlighting some of Core's operations' recent client interactions and major projects worldwide.

Speaker #2: In addition, we'll review CORE strategies and the 3 financial tenets that CORE employs to build long-term shareholder value. Chris will then give a detailed financial overview and have additional comments regarding shareholder value.

Speaker #2: 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 #3: Before we start the conference this morning, I'll mention that some of the statements we make during this call may include projections estimates and other forward-looking information.

Speaker #3: This would include any discussion of the company's business outlook. These types of forward-looking statements are subject to a number of risk and uncertainties that could cause actual results to materially differ from our forward-looking statements.

Speaker #2: 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 #3: These risk 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.

Speaker #3: Before we start the conference this morning, I'll mention that some of the statements we make during this call may include projections estimates and other forward-looking information.

Speaker #3: 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 Q2 results.

Speaker #3: These risk 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.

Speaker #3: Those non-GAAP measures can also be found on our website. With that said, I'll pass the discussion back to Larry.

Speaker #2: Thanks, Gwen. Moving now to some high-level comments about our Q2 2026 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.

Speaker #2: The ongoing military conflict in the Middle East, which began during the first quarter of 2026, continued to affect operations through project delays and logistical disruptions.

Speaker #3: Those non-GAAP measures can also be found on our website. With that said, I'll pass the discussion back to Larry.

Speaker #2: Thanks, Gwen. Moving now to some high-level comments about our Q2 2026 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.

Speaker #2: Across several countries where the company operates, reservoir description for the greatest impacts of the Middle East conflict as crude assay work and reservoir characterization projects depend on field operations, active maritime hydrocarbon trade and transportation, timely sample acquisition, and access to client facilities.

Speaker #2: The ongoing military conflict in the Middle East, which began during the first quarter of 2026, continued to affect operations through project delays and logistical disruptions.

Speaker #2: The closure of the Strait of Hormuz and the widespread disruption to maritime hydrocarbon transportation routes extends beyond the Middle East region. In addition, in both Russia and Ukraine, escalating attacks on refining, storage, and hydrocarbon transportation sites along with evolving sanctions resulted in additional headwinds.

Speaker #2: Production enhancement was comparatively less affected by these geopolitical conflicts, although certain service activities and completion product shipments into the region continued to experience delays.

Speaker #2: Even in this challenging operating environment, energetic product sales improved during the quarter, reflecting continued operator adoption of Core Labs advanced completion technologies across both the U.S.

Speaker #2: and international markets. While the Middle East situation remains uncertain and further geopolitical developments could continue to influence Core's business, operating conditions improved in several other geographic markets during the Q2, and client engagement strengthened outside the Middle East.

Speaker #2: Even in this challenging operating environment, energetic product sales improved during the quarter, reflecting continued operator adoption of CORE LABS Advanced Completion Technologies across both the U.S.

Speaker #2: Looking at reservoir description, Q2 revenue was down 4% from Q1 of 2026 and down 9% compared to Q2 of last year. Q2 operating margin reservoir description ex-item were 5%, down sequentially by approximately 100 basis points.

Speaker #2: and international markets. While the Middle East situation remains uncertain and further geopolitical developments could continue to influence CORE's business, operating conditions improved in several other geographic markets during the Q2, and client engagement strengthened outside the Middle East. description, Q2 revenue was down 4% from Q1 of 2026 and down 9% compared to Q2 of last year.

Speaker #2: Despite the multiple factors impacting Core Labs Q2 results, the company maintained its focus on creating new technology offerings, maximizing operating efficiency, and leveraging our global network to support client operations.

Speaker #2: Looking at reservoir Despite the multiple factors Q2 operating margins and The company's longstanding presence in the Middle East, along with the company's proprietary technologies and dedicated employees, will allow CORE LABS to continue serving its clients across this strategically important region.

Speaker #2: In production enhancement, Q2 revenue was up 15% compared to Q1 of 2026, and margins in production enhancement ex-items were 12%, up nicely from 5% in Q1 of 2026 or over 700 basis points.

Speaker #2: Sequential margins benefited from higher product sales during the quarter, driven by increased operator adoption of Core Labs proprietary completion technologies across both the U.S.

Speaker #2: and international markets. Q2 operating margins also benefited from the resolution of previously recorded tax matters. The company maintained its longstanding commitment to shareholder returns during the quarter, returning free cash to our shareholders through our quarterly dividend and by repurchasing more than $214,000 shares of company stock, representing a value of $2.7 million.

Speaker #2: Q2 marks the 7th consecutive quarter of share buybacks. Core intends to continue using free cash to fund our quarterly dividend, pursue growth opportunities, and improve shareholder value through opportunistic share repurchases.

Speaker #2: Considering current market dynamics and looking ahead to the mid and longer term, Core Labs has decades of experience supporting clients through periods of geopolitical uncertainty.

Speaker #2: The company's longstanding presence in the Middle East, along with the company's proprietary technologies and dedicated employees, will allow Core Labs to continue serving its clients across this strategically important region.

The company maintained, its long-standing commitment to shareholder returns, during the quarter returning, free cash to our shareholders, through our quarterly dividends and buy repurchasing more than 214,000 shares of company. Stock representing a value of 2.7 million.

Speaker #2: Moreover, despite near-term headwinds, Core's global operations—asset-light business model and diversified technology portfolio—position the company for long-term success. For 90 years, Core Labs' resilience, technical leadership, and unwavering client focus have enabled the company to deliver differentiated solutions and help our clients de-risk their operational decisions.

Q2 marked the seventh consecutive quarter of share buybacks. Core intends to continue using free cash to fund our quarterly dividend, pursue growth opportunities, and approve shareholder value through opportunistic share repurchases.

Speaker #2: As we move ahead, Core will continue to execute on its key strategic objectives by: (1) introducing new product and service offerings in key geographic markets; (2) maintaining a lean and focused organization; and (3) maintaining our commitments to returning excess free cash to our shareholders while preserving the company's strong balance sheet.

Speaker #2: Moreover, despite near-term headwinds, CORE's global operations, asset-light business model, and diversified technology portfolio position the company for long-term success. For 90 years, CORE LABS' resilience, technical leadership, and unwavering client focus have enabled the company to deliver differentiated solutions and help our clients de-risk their operational decisions.

Speaker #2: Core's strengths, together with disciplined capital deployment, continued free cash flow generation, and the company's commitment to returning excess capital to its owners, will drive long-term value creation for Core Labs shareholders.

Speaker #2: As we move ahead, CORE will continue to execute on its key strategic objectives by: (1) introducing new product and service offerings in key geographic markets; (2) maintaining a lean and focused organization; and (3) maintaining our commitments to returning excess free cash to our shareholders while preserving the company's strong balance sheet.

Speaker #2: Now to review the company's strategies and the financial tenets that have guided Core Labs shareholder value creation through our more than 32-year history as a publicly traded company.

Speaker #2: 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 returning excess free cash to our shareholders.

Speaker #2: CORE's strengths, together with disciplined capital deployment, continued free cash flow generation, and the company's commitment to returning excess capital to its owners, will drive long-term value creation for CORE LABS shareholders.

Speaker #2: I'll now turn it over to Chris for the detailed financial review.

Speaker #2: Now to review the company's strategies and the financial tenets that have guided CORE LABS shareholder value creation through our more than 32-year history as a publicly traded company.

Speaker #4: Thanks, Larry. Before we review the financial performance for the quarter, the guidance we gave on our last call and past calls excluded the impact of any FX gains and losses and assumed an effective tax rate of 25%.

Speaker #2: 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 returning excess free cash to our shareholders.

Speaker #4: So accordingly, our discussion today excludes any foreign exchange gain or loss for current and prior periods. The comparison periods for the first quarter of 2026 and the second quarter of 2025 also included items that were discussed in those calls, and highlighted in our earnings release for those periods.

Speaker #2: I'll now turn it over to Chris for the detailed financial review.

Speaker #3: Thanks, Larry. Before we review the financial performance for the quarter, the guidance we gave on our last call and past calls excluded the impact of any FX gains and losses and assumed an effective tax rate of 25%.

Speaker #4: 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 Q2 of 2026.

Speaker #3: So accordingly, our discussion today excludes any foreign exchange gain or loss for current and prior periods. The comparison periods for the first quarter of 2026 and the second quarter of 2025 also included items that were discussed in those calls, and highlighted in our earnings release for those periods.

Speaker #4: So now looking at the income statement, revenue was $124.6 million in the Q2, up over 2% compared to the prior quarter, and down 4% year over year.

Speaker #4: Sequentially, we saw increased demand for our completion products in both the U.S. land and international markets, while service revenue increased in certain international regions.

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 Q2 of 2026.

Speaker #4: The conflicts in both the Russia-Ukraine and the Middle East, which have intensified, have primarily impacted our service revenue. Of this revenue, service revenue, which is more international, was $94.3 million for the quarter, flat sequentially, and down 2% year over year.

Speaker #3: So now looking at the income statement, revenue was $124.6 million in the Q2, up over 2% compared to the prior quarter, and down 4% year over year.

Speaker #3: Sequentially, we saw increased demand for our completion products in both the U.S. land and international markets, while service revenue increased in certain international regions.

Speaker #4: Our service revenue associated with crude assay services and regional studies continued to be impacted by the geopolitical conflicts in the Middle East and Russia-Ukraine, which are the primary reason for the year-over-year decrease.

Speaker #3: The conflicts in both the Russia-Ukraine and the Middle East, which have intensified, have primarily impacted our service revenue. Of this revenue, service revenue, which is more international, was $94.3 million for the quarter, flat sequentially, and down 2% year over year.

Speaker #4: However, growth in other regions outside these affected areas offset some of the impact. Sequentially, although the Middle East and Russia have been significantly impacted, service revenue was flat.

Speaker #3: Our service revenue associated with crude assay services and regional studies continued to be impacted by the geopolitical conflicts in the Middle East and Russia-Ukraine, which are the primary reason for the year-over-year decrease.

Speaker #4: We continued to see demand improve for our reservoir rock and fluid analytical programs in certain international regions, where exploration programs are more active. Additionally, our wear completion diagnostic services continued to perform well in the U.S.

Speaker #3: However, growth in other regions outside these affected areas offset some of the impact. Sequentially, although the Middle East and Russia have been significantly impacted, service revenue was flat.

Speaker #4: markets and is showing some growth internationally, excluding the Middle East. Product sales, which are more equally tied to North America and international activity, were 30.3 million for the quarter, and were up 10% sequentially, but down 11% year over year.

Speaker #3: We continued to see demand improve for our reservoir rock and fluid analytical programs in certain international regions, where exploration programs are more active. Additionally, our wear completion diagnostic services continued to perform well in the U.S.

Speaker #4: Sequentially, completion activity in the U.S. improved modestly, however, we saw significant growth in our U.S. completion product sales. Switching to international product sales, which are typically larger, bulk orders, and can vary from one quarter to another, were also up nicely compared to the first quarter.

Speaker #3: markets and is showing some growth internationally, excluding the Middle East. Product sales, which are more equally tied to North America and international activity, were 30.3 million for the quarter, and were up 10% sequentially, but down 11% year over year.

Speaker #4: When looking at year over year, we had a large laboratory instrumentation sale last year, which did not repeat in the Q2 of 2026. However, this was partially offset by improved sales of perforating products in both the U.S.

Speaker #3: Sequentially, completion activity in the U.S. improved modestly, however, we saw significant growth in our U.S. completion product sales. Switching to international product sales, which are typically larger bulk orders and can vary from one quarter to another, were also up nicely compared to the first quarter.

Speaker #4: and international markets. Moving on to cost of services, X items for the quarter was 80% of service revenue, a slight improvement from 81% in the prior quarter, and increased from 77% last year.

Speaker #3: When looking at year over year, we had a large laboratory instrumentation sale last year, which did not repeat in the Q2 of 2026. However, this was partially offset by improved sales of perforating products in both the U.S.

Speaker #4: Sequential improvement was primarily driven by continued cost reduction initiatives in regions impacted by the conflicts. The year-over-year increase is primarily a result of the company continuing to carry costs in the regions which have been more negatively impacted in 2026 by the escalation of conflicts in both the Middle East and Russia-Ukraine.

Speaker #3: and international markets. Moving on to cost of services, X items for the quarter was 80% of service revenue, a slight improvement from 81% in the prior quarter, and increased from 77% last year.

Speaker #4: As discussed on prior calls, the service side of our business has been more affected by geopolitical conflicts and expanded sanctions. Volatility in crude oil prices, along with continued conflict in Russia-Ukraine and the Middle East, have disrupted regional operations and reduced demand for our crude assay services, which are closely tied to the trading and maritime movement of crude oil and derived products.

Speaker #3: Sequential improvement was primarily driven by continued cost reduction initiatives in regions impacted by the conflicts. The year-over-year increase is primarily a result of the company continuing to carry costs in the regions which have been more negatively impacted in 2026 by the escalation of conflicts in both the Middle East and Russia-Ukraine.

Speaker #4: We will continue to manage our cost structure as effectively as possible as we work through these disruptions in certain regions. Cost of sales, X items in the Q2 was 85% of revenue, which improved from 94% in the prior quarter, and was relatively flat compared to last year.

Speaker #3: As discussed on prior calls, the service side of our business has been more affected by geopolitical conflicts and expanded sanctions. Volatility in crude oil prices, along with continued conflict in Russia-Ukraine and the Middle East, have disrupted regional operations and reduced demand for our crude assay services, which are closely tied to the trading and maritime movement of crude oil and derived products.

Speaker #4: Sequential improvement was primarily driven by continued cost control initiatives and manufacturing efficiencies. With these initiatives in place, we anticipate the manufacturing absorption rate and future periods to be in line with projected product sales.

Speaker #3: We will continue to manage our cost structure as effectively as possible as we work through these disruptions in certain regions. Cost of sales, X items in the Q2 was 85% of revenue, which improved from 94% in the prior quarter and was relatively flat compared to last year.

Speaker #4: Additionally, in the Q2 of 2026, we received a partial refund of import tariffs, which were incurred in prior periods. DNA, X items for the quarter was 11 million, which was relatively flat compared to the prior quarter, and up slightly from the same quarter in the prior year.

Speaker #3: Sequential improvement was primarily driven by continued cost control initiatives and manufacturing efficiencies. With these initiatives in place, we anticipate the manufacturing absorption rate and future periods to be in line with projected product sales.

Speaker #4: For 2026, we expect GNA, X items to be approximately $43 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: Additionally, in the Q2 of 2026, we received a partial refund of import tariffs, which were incurred in prior periods. G&A, X items for the quarter was 11 million, which was relatively flat compared to the prior quarter, and up slightly from the same quarter in the prior year.

Speaker #4: Depreciation and amortization for the quarter was 3.8 million, flat compared to the prior quarter. EBIT, X items for the quarter was 9.4 million, up from 6.6 million last quarter, yielding an EBIT margin of approximately 8% and expanding $210 basis points from last quarter.

Speaker #3: For 2026, we expect G&A, X items to be approximately $43 to $45 million. 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 #4: Our EBIT for the quarter on a gap basis was 9.2 million. Interest expense of 2.8 million for the Q2 compares to 2.9 million in the prior quarter, and 2.7 million in the same quarter in the prior year.

Speaker #3: Depreciation and amortization for the quarter was 3.8 million, flat compared to the prior quarter. EBIT, X items for the quarter was 9.4 million, up from 6.6 million last quarter, yielding an EBIT margin of approximately 8% and expanding $210 basis points from last quarter.

Speaker #4: The changes in interest expense were primarily due to changes in our average borrowings, periods. Income tax expense at an effective tax rate of 25% and X items was 1.6 million for the quarter.

Speaker #3: Our EBIT for the quarter on a gap basis was 9.2 million. Interest expense of 2.8 million for the Q2 compares to 2.9 million in the prior quarter, and 2.7 million in the same quarter in the prior year.

Speaker #4: On a gap basis, we recorded tax expense of $500,000 for the quarter. The Q2 expense includes benefits from certain discrete items recorded in the quarter.

Speaker #3: The changes in interest expense were primarily due to changes in our average borrowings with variable interest rates during the periods. Income tax expense at an effective tax rate of 25% and X items was 1.6 million for the quarter.

Speaker #4: The effective tax rate will continue to be supplement-sensitive to the geographic mix of earnings across the globe and the impact of items discrete to each quarter.

Speaker #4: We continue to project the company's effective tax rate to be approximately 25%. Net income, X items for the quarter was 5.1 million, up sequentially from 2.7 million last quarter but down from 8.8 million in the Q2 of last year.

Speaker #3: On a gap basis, we recorded tax expense of $500,000 for the quarter. The Q2 expense includes benefits from certain discrete items recorded in the quarter.

Speaker #4: On a gap basis, we had net income of $6 million for the quarter. Earnings per diluted share, X items was 11 cents for the quarter, compared to 6 cents in the prior quarter and 19 cents in the Q2 of last year.

Speaker #3: The effective tax rate will continue to be supplement-sensitive to the geographic mix of earnings across the globe and the impact of items discrete to each quarter.

Speaker #3: We continue to project the company's effective tax rate to be approximately 25%. Net income, X items for the quarter was 5.1 million, up sequentially from 2.7 million last quarter but down from 8.8 year.

Speaker #4: On a gap basis, EPS was 13 cents for the quarter. Turning to the balance sheet, receivables were $108.8 million and increased slightly from the prior quarter.

Speaker #4: Our DSOs for the Q2 were at $73 days, which improved slightly from $74 days last quarter. The timing of collections have been impacted by the ongoing conflicts, and we continue to remain focused on our collection efforts and the affected regions.

Speaker #3: On a gap basis, we had net income of $6 million for the quarter. Earnings per diluted share, X items was 11 cents for the quarter, compared to 6 cents in the prior quarter and 19 cents in the Q2 of last year.

Speaker #3: On a gap basis, EPS was 13 cents for the quarter. Turning to the balance sheet, receivables were $108.8 million and increased slightly from the prior quarter.

Speaker #4: Inventory, at June 30, 2026, was 58 million, up slightly from last quarter-end. Inventory turns for the quarter were 1.8 and remained the same compared to last quarter, with continued focus we anticipate inventory turns will gradually improve as we progress through the remainder of 2026.

Speaker #3: Our DSOs for the Q2 were at $73 days, which improved slightly from $74 days last quarter. The timing of collections have been impacted by the ongoing conflicts, and we continue to remain focused on our collection efforts and the affected regions.

Speaker #4: And now to the liability side of the balance sheet. Our long-term debt was $116.4 million as of June 30, 2026, and considering cash of $22.7 million, net debt was $93.6 million, which decreased slightly from the last quarter.

Speaker #3: Inventory, at June 30, 2026, was 58 million, up slightly from last quarter-end. Inventory turns for the quarter were 1.8 and remained the same compared to last quarter, with continued focus we anticipate inventory turns will gradually improve as we progress through the remainder of 2026.

Speaker #4: Our leverage ratio is currently at 1.3 compared to 1.2 last quarter. Our debt is currently comprised of $65 million in senior notes, a term loan of $49.4 million, and $2 million outstanding under our bank credit facility.

Speaker #4: Looking at cash flow, for the Q2 of 2026, cash flow from operating activities was $7.8 million, and after paying approximately $4.7 million of capex for operations, our free cash flow for the quarter was $3.1 million.

And now, to the liability side of the balance sheet: our long-term debt was $116.4 million as of June 30, 2026, and considering cash of $22.7 million, net debt was $93.6 million, which decreased slightly from the last quarter.

Our leverage ratio is currently at 1.3 compared to 1.2 last quarter.

Speaker #4: Cash from operation almost doubled this quarter when you compare it to the first quarter, however our capital expenditures were also higher. The elevated capital expenditures are primarily associated with investments to support a recently signed multi-year contract in the Asia-Pacific region and rebuilding our facilities in the Mediterranean region, which incurred weather-related damage in the first quarter.

Our debt is currently comprised of 65 million. In senior notes, a Term Loan of 49.4 million, and 2 million outstanding under our bank credit facility.

Speaker #4: As discussed in prior quarters, the capital expenditures associated with rebuilding our UK facility which was damaged by fire are covered by the company's property and casualty insurance and have been excluded in the calculation of free cash flow.

Looking at cash flow for the second quarter of 2026, cash flow from operating activities was $7.8 million, and after paying approximately $4.7 million of CapEx for operations, our free cash flow for the quarter was $3.1 million.

Cash from operations almost doubled this quarter when you compare it to the first quarter. However, our capital expenditures were also higher.

Speaker #4: In the Q2 of 2026, capital expenditures associated with rebuilding the UK facility were $1.1 million. Looking ahead to the rest of the year, we will continue our strict capital discipline and asset-like business model with capital expenditures primarily targeted at growth opportunities.

The elevated Capital expenditures are primarily associated with Investments to require, uh, to support a recently. Signed multi-year contract in the asia-pacific region and rebuilding our facilities. In the Mediterranean region, which incurred weather related damage in the first quarter.

Speaker #4: Excluding the capex associated with rebuilding the UK facility, we expect capital expenditures for the full year of 2026 to be in the range of $15 to $18 million.

As discussed in Prior quarters. The capital expenditures associated with rebuilding our UK facility, which was damaged by fire are covered by the company's Property and Casualty Insurance and have been excluded in the calculation of free cash flow.

Speaker #4: CoreLab's operational leverage continues to provide the ability to grow revenue and profitability with minimal capital requirements. Capital expenditures for operations has extortically ranged from 2 to 4 percent of revenue, even during periods of significant growth.

And the second quarter of 2026 Capital expenditures. Associated with rebuilding the UK facility, for 1.1 million.

Looking ahead to the rest of the year, we will continue our strict capital discipline and asset-light business model, with capital expenditures primarily targeted at growth opportunities.

Speaker #4: 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 company's financial results.

Excluding the capex associated with rebuilding the UK facility. We expect Capital expenditures for the full year of 2026 to be in the range of 15 to 18 million.

For labs operational, leverage continues to provide the ability to grow revenue and profitability with minimal Capital requirements.

Speaker #4: 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.

Capital expenditures for operations has explored locally, ranged, from 2 to 4 percentage.

Speaker #1: Thank you, Chris. Turning to CoreLab's outlook for the Q3 2026. As a result of the ongoing conflicts in the Middle East and Russia-Ukraine, the IEA, the EIA, and OPEC have all revised their respective 2026 global cruel demand forecast to reflect the impact of higher energy prices constrained product availability and interruptions to global hydrocarbon trade and transportation.

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, 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.

Thank you, Chris.

Speaker #1: While near-term demand has been negatively impacted by the ongoing conflicts, the agency's all project demand growth will rebound in 2027. The long-term need for investment in new resources of global cruel production and initiatives to maximize recovery from existing producing fields remains strong.

Speaker #1: Accelerating decline rates from existing producing fields, together with geopolitical uncertainty, reinforce the importance of energy security and geographically diversified resources of hydrocarbons supply. Collectively, these factors expect to support continued client investment in hydrocarbon development and new exploration.

Turning to poor Labs outlook for the third quarter of 2026, as a result of the ongoing conflicts in the Middle East and Russia Ukraine. The iea the eia and OPEC have all revised their respective 200026 Global crude oil demand for cats to reflect the impact of higher energy prices, constrained product, availability and interruptions to Global hydrocarbon trade and transportation.

While near-term demand has been negatively impacted by the ongoing conflicts, the agencies all project, demand growth will Rebound in 2027.

Speaker #1: Despite client activity headwinds from the two ongoing geopolitical conflicts, core expects Q3 revenue to increase sequentially supported by improvement in several international regions including the South Atlantic margin and Asia-Pacific.

The long-term need for investment and new resources in global crude oil production, and initiatives to maximize recovery from existing producing fields, remains strong.

accelerating decline rates from existing producing Fields together with geopolitical uncertainty, reinforce the importance of energy, security and geographically Diversified

Resources of hydrocarbon Supply.

Speaker #1: Recent escalations in both the Middle East and Russia-Ukraine conflict are expected to continue affecting client operations project timing and logistics across portions of these regions during the Q3.

Our continued client investment in hydrocarbon development and new exploration.

Despite client activity, headwinds from the 2, ongoing geopolitical conflicts.

Speaker #1: With greater impact to reservoir description and the service component of production enhancement, compared to the company's completion product business. US land completion activity is expected to improve modestly as the Q3 2026 progresses.

Core expects third quarter, Revenue to increase sequentially supported by Improvement. In several International regions, including the South Atlantic margin and asia-pacific.

Speaker #1: CoreLab expects growing adoption of its diagnostic services reservoir optimization technologies and proprietary energetic systems to outperform US land completion activity. Longer-term international projects including offshore developments and emerging exploration plays are expected to create additional growth opportunities.

Recent escalations, embossed the Middle East and Russia Ukraine. Conflict are expected to continue affecting client operations, project timing and Logistics across portions of these regions during the third quarter with greater impact to Reservoir description and the service component of production enhancement compared to the company's completion product business.

Us land completion activity is expected to improve modestly as the third quarter 2026 progresses.

Speaker #1: While the timing of recovery uncertain Middle East markets remains difficult to predict, core believes long-term fundamentals support future growth and exploration activity levels. The company's international footprint, proprietary technologies, and expertise support CoreLab to capitalize on opportunities across global markets.

Or labs.

Expects growing adoption of its diagnostic services. Reservoir Optimization Technologies and proprietary energetic systems to outperform U.S. land completion activity.

Speaker #1: In summary, reservoir descriptions Q3 2026 revenue is projected to range from $81 million to $84 million, with operating income of $5.5 million to $7.9 million.

Longer term International projects, including offshore developments and emerging exploration plays are expected to create additional growth opportunities.

While the timing of recovery and certain Middle East markets, remains difficult to predict core beliefs. Long-term fundamental support,

future growth and exploration activity levels.

Speaker #1: Production enhancements Q3 revenue is estimated to range from $47.5 million to $51.5 million, with operating income of $4.8 million to $6.9 million. Core's Q3 2026 revenue is projected to range from $128.5 million to $135.5 million, with operating income of $10.5 million to $15 million.

The company's International footprint, proprietary Technologies and expertise, support core lab to capitalize on opportunities across Global markets.

In summary.

Reservoir descriptions third, quarter 2026. Revenue is projected to range from 81 million to 84 million with operating income of 5.5 million to 7.9 million.

Speaker #1: Yielding operating margins of approximately 10%. EPS for the Q3 is expected to range from $0.12 to $0.20. The company's guidance is based on projections for underlying operations and excludes gains and losses in foreign exchange and assumes an effective tax rate of 25%.

Production enhancements. Third, quarter revenue is estimated to range from 47.5 million to 51.5 million. With operating income of 4.8 million to 6.9 million,

Speaker #1: With that, I'll turn the call back over to Larry.

Speaker #2: Thanks, Gwen. First, I'd like to recognize our employees in the Middle East whose professionalism, resilience, and unwavering support to our clients have been especially evident throughout the recent geopolitical conflict.

Cores third, quarter 2026. Revenue is projected to range from 128.5 million to 135.55 million with operating income of 10.5 million to 15 million yielding operating margins of approximately 10%.

EPS for the third quarter is expected to range from $0.12 to $0.20.

Speaker #2: I'd also like to thank our entire global team of employees for their continued commitment to innovation integrity and exceptional service to our clients. For 90 years, our employees collective expertise and dedication has been the foundation of CoreLab's success.

The company's guidance is based on projections for underlying operations, and excludes gains, and losses in foreign exchange and assumes an effective tax rate of 25%.

With that, I'll turn the call back over to Larry.

Speaker #2: Looking at the macro, while global energy markets continue to navigate geopolitical uncertainty, evolving trade policies and commodity price volatility the IEA, EIA, and OPEC are revising their near-term forecast for oil demand.

Thanks Gwen.

First, I'd like to recognize our employees in the Middle East. Whose professionalism resilience and unwavering support to our clients have been especially evident throughout the recent geopolitical conflict.

Speaker #2: They are also projecting demand growth to rebound by approximately 1.7 to 2 million barrels per day in 2027, supporting constructive long-term market fundamentals. The US EIA's long-term reference case forecast shows crude oil demand growth continuing through 2050, approaching 120 million barrels per day.

I'd also like to thank our entire Global team of employees for the continued to commitment to Innovation, integrity and exceptional service to our clients for 90 years, our employees Collective expertise, and dedication, has been the foundation of corelab, success.

Looking at the macro, while global energy markets continue to navigate geopolitical uncertainty.

Speaker #2: Increases in demand will require more than incremental production growth from existing fields, new supply must also be brought online to replace the natural decline from producing fields.

Speaker #2: The IEA estimates that absent investment, global oil production would decline by approximately 8% per year due to natural field depletion. As a result, they conclude that a significant portion of global upstream capital spending is required production.

Evolving trade policies and commodity price volatility. The iea eia and OPEC are revising their near-term forecast for Oil, demand. They are also projecting demand growth to rebound by approximately 1.7 to 2 million barrels per day. In 2027, supporting constructive long-term Market fundamentals.

The US eia's long-term reference case, forecast shows crude oil demand growth, continuing through 2050 approaching 120 million barrels per day.

Speaker #2: For addressing any incremental growth, the IEA also noted that nearly 90% of upstream investment since 2019 has been directed toward maintaining existing production rather than expanding overall supply.

Increases in demand will require more than incremental production growth from existing fields. New supply must also be brought online to replace the natural decline from producing fields.

Speaker #2: Recent draws in global crude oil inventory in both commercial storage and strategic reserves provide another indication of the need for sustained investment. Inventory draws have helped balance recent supply disruptions resulting from the closure of the Strait of Hormuz, but those volumes will ultimately need to be replenished as the market works to restore adequate supply capacity and support long-term energy security.

The IEA estimates that, absent investment, global oil production will decline by approximately 8% per year due to natural field depletion.

As a result, it conclude that a significant portion of global Upstream Capital spending is required to sustain existing production.

Speaker #2: The most recent EIA short-term outlook projects US crude oil production to average approximately 13.8 million barrels per day in 2026, increasing only modestly from 2025 with only slight additional growth expected in 2027.

For addressing any incremental growth, the IEA also noted that nearly 90% of upstream investments since 2019 have been directed toward maintaining existing production rather than expanding overall supply.

Speaker #2: Taken together, forecasted global demand growth and accelerating decline rates from existing producing fields along with the need to replenish global inventories and moderating incremental US production growth reinforce the need for sustained investment in new discoveries.

Inventory. Drawers, have helped balance recent Supply. Disruptions resulting from the closure of the state of Hermes, but those volumes will ultimately need to be replenished as the market. Works to restore adequate Supply capacity, and support long-term energy security.

Speaker #2: Collectively, these trends together with renewed concerns about energy security reinforce the need for geographically diverse investment cycle encompassing new hydrocarbon exploration appraisal and development of international conventional offshore fields.

The most recent eia short-term Outlook projects us crude oil production to average approximately 13.8 million barrels per day in 2026, increasing only modestly from 2025 with only slight additional growth expected in 2027.

Speaker #2: Furthermore, there will be a growing need for additional investment in existing producing fields to mitigate natural decline. CoreLab's global reach proprietary technologies and specialized technical expertise offer clients critical advantages to optimize their assets.

Taken together, forecasted Global demand growth and accelerating. Decline rates from existing producing Fields, along with the need to replenish Global inventories and moderating incremental us production. Growth, reinforced the need for sustained investment in new discoveries.

Speaker #2: Now let's review the Q2 performance of our two business segments. Starting first to reservoir description, for the first quarter of 2026, revenue came in at $79 million down 4% compared to Q1 of 2026.

Collectively, these trends, together with renewed concerns about energy security, reinforce the need for a geographically diverse investment cycle encompassing new hydrocarbon exploration, appraisal, and development of international conventional offshore fields.

Speaker #2: Operating income for reservoir description X items was $3.7 million down from $4.8 million in Q1. Yielding operating margins of 5%. Sequential margins were primarily impacted by reduced assay work resulting from disruptions to crude oil and derived product cargo movements through the Strait of Hormuz along with delayed project execution and reduced client activity across the Middle East.

Furthermore, it will be a growing need for additional investment in existing producing fields to mitigate natural decline.

Core Labs Global reach, proprietary Technologies and specialized technical expertise or for clients critical advantages to optimize their assets.

Now, let's review the second quarter performance of our two business segments.

Speaker #2: In addition, expanded sanctions and military action against oil and gas infrastructure also negatively impacted the company's operations in Ukraine and Russia. These geopolitical headwinds were partially offset by continued investment in reservoir characterization programs that are supporting international exploration appraisal and development projects in other regions.

Turning first to Reservoir description, for the first quarter of 2026 Revenue came in at 79 million down 4% compared to q1 of 2026.

Operating income for Reservoir description. X items was 3.7 million down from 4.8 million in q1, yielding operating margins of 5%.

Speaker #2: Now for some operational highlights from reservoir description. During the Q2 of. Even as portions of our business remain affected by geopolitical disruptions, clients continue to rely on CoreLab's specialized technical expertise and global laboratory network system.

Sequential margins were primarily impacted by reduced. Assay work resulting from disruptions to crude oil and derived product cargo movements through the Strait of her. Moose along with delayed project execution and reduced client activity across the Middle East.

In addition expanded sanctions and military action against oil, and gas infrastructure. Also negatively impacted the company's operations in Ukraine and Russia.

Speaker #2: CoreLab saw growth in international reservoir characterization activity securing project work on new offshore exploration and appraisal projects as well as carbon capture and storage projects across several regions.

These geopolitical, headwinds were partially offset by continued investment in Reservoir, characterization programs that are supporting International exploration, appraisal and development projects in other regions.

Speaker #2: In particular, activity across West Africa continued to grow during the Q2, reinforcing a broad trend of increasing international offshore projects. CoreLab was engaged by a major international operator to support reservoir characterization activities following a successful offshore Namibia exploration well.

now, for some operational highlights from Reservoir description,

Speaker #2: Also during the Q2 of 2026, CoreLab initiated a reservoir characterization program supporting Murphy Oil's recently announced discovery offshore cote d'ivoire. Following recovery operations at the well site, core samples were transported to CoreLab's Houston Advanced Technology Center for accelerated analysis using the company's proprietary dual energy CT technology.

Speaker #2: CoreLab is very pleased to be assisting Murphy Oil in its cote d'ivoire project. Turning to North America, the company's specialized laboratory capabilities are also helping operators improve recovery from existing producing assets.

During the second quarter of 2026, even as portions of our business remain affected by geopolitical disruptions, clients continue to rely on Core Lab’s specialized technical expertise and global laboratory network. Core Lab saw growth in international reservoir characterization activity, securing project work on new offshore exploration and appraisal projects, as well as carbon capture and storage projects across several regions. In particular, activity across West Africa continued to grow during the second quarter, reinforcing a broad trend of increasing international offshore projects. Core Lab was engaged by a major international operator to support reservoir characterization activities following a successful offshore Namibia exploration well.

Speaker #2: Utilizing proprietary laboratory technologies, CoreLab's advanced technology center in Calgary is supporting a heavy oil operator with laboratory testing of solvent-assisted thermal recovery techniques. Using innovative proprietary steam flood laboratory technologies, CoreLab replicated subsurface conditions and was able to show how oil production progressed while transitioning from low salinity brine injection to a steam flood while also incrementally introducing solvents as temperatures rose.

Also, during the second quarter of 2026, Coral have initiated a reservoir characterization program supporting Murphy oils. Recently announced Discovery offshore code of War.

Following a recovery operations at the Well site course. Samples were transported to Coral Labs, Houston Advanced Technology Center for Accelerated analysis, using the company's proprietary, dual energy, CT technology,

Core Lab is very pleased to be assisting Murphy Oil in its Kota War project.

Turning to North America. The companies specialized laboratory capabilities are also helping operators improve recovery from existing producing assets.

Speaker #2: The integrated testing program continuously measured oil recovery, permeability, and potential formation damage. The results provided the operator with critical data to evaluate the effectiveness of various solvent injection systems allowing them to maximize oil recovery.

Utilizing proprietary laboratory technologies, Core Lab's Advanced Technology Center in Calgary is supporting a heavy oil operator with laboratory testing of solvent-assisted thermal recovery techniques.

Speaker #2: Moving now to production enhancement where CoreLab's technologies continue to help our clients optimize their well completions and improve production. Revenue for production enhancement for the Q2 of 2026 came in at $46 million up 15% sequentially and 5% year over year.

Using Innovative proprietary steam. Flood laboratory Technologies, Coral lab replicated, subsurface conditions, and was able to show how oil production progressed, while transitioning from low salinity brine injection to a steam flood while also incrementally, introducing solvents as temperatures Rose,

Speaker #2: Q2 2026 operating income for production enhancement X items was $5 million yielding operating margins of 12% with sequential incremental margins of 59%. While US completion activity improved modestly during the quarter, many operators continued to emphasize capital discipline maintaining their original 2026 execution plans.

The integrated testing program, continuously measured oil recovery permeability and potential formation damage, the results, provided the operator with critical data to evaluate, the effectiveness of various solvent injection systems, allowing them to maximize oil recovery.

Moving now to production enhancement, where core lab Technologies continue to help our clients optimize their well completions and improve improve production.

Speaker #2: The demand for CoreLab's advanced completion technologies remained strong driven by both improved energetic product sales across both the US and international markets as well as increased market penetration for diagnostic services.

Revenue for production enhancement for the second quarter of 2026 came in at 46, million up, 15% sequentially and 5% year-over-year.

Speaker #2: Now for some operational highlights from production enhancement. During the Q2, operators across several US unconventional basins continued to deploy CoreLab's newly commercialized Impulse perforating technology.

2026 operating income for production enhancement. X items was 5 million yielding operating margins of 12% with sequential incremental, margins of 59%,

Speaker #2: 2026 execution plans. The demand for CORE Labs Advanced Completion Technologies remained strong driven by both improved energetic product sales across both the US and international markets as well as increased market penetration for diagnostic services.

Speaker #2: Impulse incorporates a proprietary energetic material that generates a secondary pressure pulse immediately following the initial perforation event. This technology improves near wellbore connectivity and reduces breakdown pressures leading to faster stage execution and improved completion efficiency.

while us completion activity, improved modestly during the quarter, many operators continue to emphasize Capital discipline, maintaining their original 2026 execution plans,

Speaker #2: Now for some operational highlights from production enhancement. During the Q2, operators across several US unconventional basins continued to deploy CORE Labs newly commercialized InPulse perforating technology.

Speaker #2: As commercialization continues, growing deployment among existing CoreLab clients is supporting increased product adoption and creating opportunities to expand the technology across North American unconventional plays.

Speaker #2: InPulse incorporates a proprietary energetic material that generates a secondary pressure pulse immediately following the initial perforation event. This technology improves near wellbore connectivity and reduces breakdown pressures leading to faster stage execution and improved completion efficiency.

Speaker #2: Impulse has applications in domestic and international markets in both conventional and unconventional reservoirs and for geothermal wells. Application for cores completion diagnostic services are also expanding.

Speaker #2: As commercialization continues, growing deployment among existing CORE Lab clients is supporting increased product adoption and creating opportunities to expand the technology across North American unconventional plays.

Speaker #2: During the Q2, an operator in West Texas utilized cores flow profiler oil and water tracer technology to identify the highest quality landing intervals before committing to specific lateral targets.

Speaker #2: InPulse has applications in domestic and international markets in both conventional and unconventional reservoirs and for geothermal wells. Application for CORE's completion diagnostic services are also expanding.

Speaker #2: Following a successful tracer-backed appraisal program in the vertical borehole the operator deployed tracers into selected horizontal wells where stage by stage diagnostics identified the highest producing completion intervals.

Speaker #2: During the Q2, an operator in West Texas utilized CORE's flow profiler oil and water tracer technology to identify the highest quality landing intervals before committing to specific lateral targets.

Speaker #2: Elsewhere, a major operator in Louisiana utilized the company's gas tracer technology to evaluate production performance across extended length horizontal laterals. The diagnostics confirmed that the completion design had produced sustained gas contribution from the toe of the well increasing confidence in the development of this long lateral.

Speaker #2: CoreLab's diagnostic technology also supported a leading independent operator in Western Canada in evaluating a complex multilateral water shutoff program. Core's diagnostic technologies confirmed that water was bypassing the isolation factor providing definitive evidence that allowed the operator to refine the completion design.

Speaker #2: Collectively, these diagnostic projects demonstrate the expanding role of CoreLab's proprietary tracer technologies across the unconventional development cycle from reservoir appraisal and completion optimization as well as production surveillance and even water management programs.

Speaker #2: CORE Labs diagnostic technology also supported a leading independent operator in Western Canada in evaluating a complex multilateral water shutoff program. CORE's diagnostic technologies confirmed that water was bypassing the isolation factor providing definitive evidence that allowed the operator to refine the completion design.

Speaker #2: That concludes our operational review. We appreciate your participation and Alan will now open the call for questions.

Speaker #1: We will now begin the question and answer session. To ask a question, you may press star then one on your touchdown phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker #2: Collectively, these diagnostic projects demonstrate the expanding role of CORE Labs proprietary tracer technologies across the unconventional development cycle from reservoir appraisal and completion optimization as well as production surveillance and even water management programs.

Speaker #1: If at any time your question has been addressed and you would like to withdraw it, please press star then two. At this time, we will pause momentarily to assemble our roster.

Speaker #2: That concludes our operational review. We appreciate your participation and Alan will now open the call for questions.

Speaker #1: We will now begin the question and answer session. To ask a question, you may press star then one on your touchstone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker #1: Our first question today comes from Don Christ of Johnson Rice. Please go ahead.

Speaker #3: Good morning, guys. Thanks for letting me in. I wanted to start on the assay work. Obviously, the Middle East is a large portion of worldwide shipments of oil and you've been influenced by both that and Ukraine/Russia.

Speaker #1: If at any time your question has been addressed and you would like to withdraw it, please press star then two. At this time, we will pause momentarily to assemble our roster.

Speaker #1: Our first question today comes from Don Crist of Johnson Rice. Please go ahead.

Speaker #3: But I wanted to see how much you're seeing a pickup in movement of oil in other parts of the world. In other words, if 25 or 30 percent of your business was out of those two regions, how much has the rest of the world picked up with movements out of the US or other places?

Speaker #3: Any follow there?

Speaker #4: Yeah, good question. So I don't have in front of me the breakdown by region, but I can tell you that we look at pre-conflict cargo movements versus post-conflict cargo movements, and those are down 16% globally.

Speaker #4: And so you can imagine one of the things I think it's important to convey here is we get we have revenue opportunities on both sides of a transaction.

Speaker #3: Any color there?

Speaker #2: Yeah, good question. So I don't have in front of me the breakdown by region, but I can tell you that we look at pre-conflict cargo movements versus post-conflict cargo movements, and those are down 16% globally.

Speaker #4: So a cargo ship that might be loading in the Middle East, we have an opportunity there. And then if that cargo makes landfall in North America or Europe, we have an opportunity there.

Speaker #4: So we kind of get it at both ends, unfortunately. With the shipments not getting out of the Straits of Hormuz. And then the other thing I think is important, we touched on it during our commentary, is with the volatility in the situation, we're trying to do what we can to minimize costs without disassembling the experience and the staff that we have to do this.

Speaker #2: And so you can imagine one of the things I think it's important to convey here is we get we have revenue opportunities on both sides of a transaction.

Speaker #2: So a cargo ship that might be loading in the Middle East, we have an opportunity there. And then if that cargo makes landfall in North America or Europe, we have an opportunity there.

Speaker #4: Because things change and we don't want to discharge all these folks and then have to try to bring them back or rebuild the organization.

Speaker #2: So we kind of get it at both ends, unfortunately. With the shipments not getting out of the Straits of Hormuz. And then the other thing I think is important, we touched on it during our commentary, is with the volatility in the situation, we're trying to do what we can to minimize costs without disassembling the experience and the staff that we have to do this.

Speaker #4: So we're doing the best we can given the volatility, but we'll continue to stay focused on maximizing efficiency in the operation and making sure we're running as cost-effectively as possible.

Speaker #4: Right. The only other point I would say to Larry is that when these conflicts flare up and then the oil price starts to jumping all over the place, that also slows down the activity when you're talking about moving trading primarily oil.

Speaker #2: Because things change and we don't want to discharge all these folks and then have to try to bring them back or rebuild the organization.

Speaker #2: So we're doing the best we can given the volatility, but we'll continue to stay focused on maximizing efficiency in the operation and making sure we're running as cost-effectively as possible.

Speaker #4: So the trader part of that comes to a stop because they can't predict future oil prices. So it has an immediate impact on that.

Speaker #3: Right. The only other point I would say to Larry is that when these conflicts flare up and then the oil price starts to jumping all over the place, that also slows down the activity when you're talking about moving trading primarily oil.

Speaker #2: And maybe just a comment. Sorry, Don. Maybe just one add-on to that. The Russia-Ukraine situation, we are executing during the quarter a cost reduction plan for that business.

Speaker #3: Okay. But you're testing SBR oil there too, right, that's coming out of the various places around the world?

Speaker #3: So the trader part of that comes to a stop because they can't predict future oil prices. So it has an immediate impact on that.

Speaker #4: Yeah. If there's stuff going into the transportation network around the globe, we get a bite at that apple.

Speaker #4: And maybe just a comment.

Speaker #3: Right. Okay. That's why I wanted to clarify.

Speaker #4: add-on to that. The Russia-Ukraine situation, we are executing during the quarter a cost reduction plan for that business.

Speaker #4: Yeah. Whether it's coming out of an SPR or whether it's coming out of a tank somewhere.

Speaker #3: Okay. And then on the offshore side, the comments that I've heard most recently from other operators is there's more conviction today in projects moving forward than they've seen in the past where operators may be testing pricing or other kind of factors.

Speaker #3: world? Okay. That's why I wanted to clarify.

Speaker #2: Yeah. If out of the various places around the globe, we get a bite at that apple. transportation network around the

Speaker #2: there's stuff going into the Right.

Speaker #2: Yeah. Whether it's coming out of an SPR or whether it's coming out of a tank somewhere.

Speaker #3: Are you seeing more conviction in your customer calls today that these offshore projects that we've been predicting for a couple of years now are moving forward?

Speaker #3: Are you seeing that as well?

Speaker #4: Yeah. And Don, I think that's very true. I think the I'll call it the intensity of the conversations have picked up. But to comment, we made before, we actually saw that starting to happen as back into 2025.

Speaker #3: Are you seeing more conviction in your customer calls today that these offshore projects that we've been predicting for a couple of years now are moving forward?

Speaker #4: And ran into a string of dry holes. Where we had committed work, a substantial amount of committed work, ready to go, and clients said, "Hey, didn't find anything, stand down." And so we talked about some of the projects that were engaged with right now on just discoveries, obviously near a client to be successful.

Speaker #3: Are you seeing that as well?

Speaker #2: Yeah. And Don, I think that's very true. I think the I'll call it the intensity of the conversations have picked up. But to comment, we made before, we actually saw that starting to happen as back into 2025.

Speaker #4: When they're in their exploration efforts. But I think things are lining up for a very nice rebound in activity on offshore reservoir characterization projects late this year, but certainly into 2027.

Speaker #2: And ran into a string of dry holes. Where we had committed work, a substantial amount of committed work, ready to go, and clients said, "Hey, didn't find anything, stand down." And so we talked about some of the projects that were engaged with right now on just discoveries, obviously never a client to be successful.

Speaker #3: Right. Okay. And then one final one for me, a couple of quarters back, you talked about a project or a product that in the US was boosting recoveries, but it had to be done on the initial completion.

Speaker #2: When they're in their exploration efforts. But I think things are lining up for a very nice rebound in activity on offshore reservoir characterization projects late this year, but certainly into 2027.

Speaker #3: Is that this impact product that you're talking about this quarter?

Speaker #4: Well, I'm not quite sure. So there's two topics that might cover that. One is Impulse, which we just talked to again here, where that's a perforating or an energetic technology that kind of pre-stimulates the near wellbore area so that the charge goes off, penetrates the casing, and then right behind that, and I can't remember whether it was milliseconds or microseconds at the moment, a very powerful secondary charge rubberizes the area in the near wellbore.

Speaker #3: Is that this impact product that you're talking about this quarter?

Speaker #2: Well, I'm not quite sure. So there's two topics that might cover that. One is Impulse, which we just talked to again here, where that's a perforating or an energetic technology that kind of pre-stimulates the near wellbore area so that the charge goes off, penetrates the casing, and then right behind that, and I can't remember whether it was milliseconds or microseconds at the moment, a very powerful secondary charge rubbleizes the area in the near wellbore.

Speaker #4: And the feedback we got from our clients were that that was reducing their breakdown time their time to rate, as they refer to it, the time to get the maximum rate.

Speaker #4: The other thing that might fit into your conversation there is enhanced oil recovery, which is a laboratory process. We've got a number of tests going on for clients.

Speaker #4: That look at ways to increase the recovery rate out of unconventional reservoirs. And the commentary about having to be done early on is one of the keys in making that work is to maximize surface area in the near wellbore area.

Speaker #2: And the feedback we got from our clients were that that was reducing their breakdown time. Their time to rate, as they refer to it, the time to get the maximum rate.

Speaker #2: The other thing that might fit into your conversation there is enhanced oil recovery, which is a laboratory process. We've got a number of tests going on for clients.

Speaker #4: And so if you have a lot of penetrations, and you rubberize the area around the near wellbore, that increased surface area allows for better thermodynamic interaction and the enhanced oil recovery process of either swelling the oil, in place, or evaporation or vaporization and condensation, two different techniques, takes place.

Speaker #2: That look at ways to increase the recovery rate out of unconventional reservoirs. And the commentary about having to be done early on is one of the keys in making that work is to maximize surface area in the near wellbore area.

Speaker #4: But they both benefit from how you stimulated the well. And so we've got projects going on on both. We've got growing acceptance of Impulse, charges, and we've got engagement with several clients on these EOR processes where we're validating the thermodynamic processes that will work.

Speaker #2: And so if you have a lot of penetrations, and you rubbleize the area around the near wellbore, that increased surface area allows for better thermodynamic interaction and the enhanced oil recovery process of either swelling the oil in place or evaporation or vaporization and condensation, two different techniques, takes place.

Speaker #4: Now, with those EOR projects, in both cases, containment is an issue that we can't help the clients with. Can they introduce a gas into the reservoir and have it go to work where they want it, or is it going to run down faults or extended fracts and disappear into the subsurface?

Speaker #2: But they both benefit from how you stimulated the going on on both. We've got growing acceptance of Impulse charges and we've got engagement with several clients on these EOR processes where we're validating the thermodynamic processes that will work.

Speaker #4: That's something that we can't really help them with.

Speaker #3: Right. Okay. Well, everybody's looking for more recoveries, so I'm sure both of those products will gain traction. So I appreciate the color guys. I'll turn it back.

Speaker #2: Now, with those EOR projects, in both cases, containment is an issue that we can't help the clients with. Can they introduce a gas into the reservoir and have it go to work where they want it, or is it going to run down faults or extended fracts and disappear into the subsurface?

Speaker #4: Yeah. Thanks, Don. We've published a few things a while back on the vaporization and condensation technique. If people want to go look that up.

Speaker #3: Right.

Speaker #2: Thanks, Don.

Speaker #4: Thanks, Don.

Speaker #2: That's something that we can't really help them with.

Speaker #5: Thanks, Don.

Speaker #1: Our next question comes from Sean Mitchell of Daniel Energy Partners.

Speaker #3: Right. Okay. Well, everybody's looking for more recoveries, so I'm sure both of those products will gain traction. So I appreciate the color guides. I'll turn it back.

Speaker #2: Morning, Sean.

Speaker #3: Good morning, guys.

Speaker #5: Morning.

Speaker #3: Thanks for taking the question. Any color Larry, just additional color around the UAE regulatory approval for Spectrastem and Spectrascan, obviously that was notable in the press release.

Speaker #2: Yeah. Thanks, Don. We've published a few things a while back on the vaporization and condensation technique. If people want to go look that up.

Speaker #3: Any additional color there? And then any additional read-through from your peers this week in OFS land around kind of normalization of the Middle East?

Speaker #3: Right.

Speaker #4: Thanks, Don.

Speaker #2: Thanks, Don.

Speaker #3: Thanks, Don.

Speaker #1: Our next question comes from Sean Mitchell of Daniel Energy Partners.

Speaker #4: Morning, Sean.

Speaker #3: Good morning, guys.

Speaker #3: Anything that's corroborating with what your own opinion it might be, or different?

Speaker #2: Morning.

Speaker #4: Yeah. So on the UAE, the technology that we're talking about there, involve using isotopes. And so it's a technique that we are using in some other parts of the Middle East.

Speaker #3: Any additional color there? And then any additional read-through from your peers this week in OFS land around kind of normalization of the Middle East?

Speaker #4: We've got licensing. We've been doing work for ADNOC and other UAE folks for a while, but now we have another tool in our belt, if you will, to address other diagnostics.

Speaker #3: Anything that's corroborating with what your own opinion it might be, or different?

Speaker #2: Yeah. So on the UAE, the technology that we're talking about there, involve using isotopes. And so it's a technique that we are using in some other parts of the Middle East.

Speaker #4: So that regulatory door is now open for us. We can now store on site, and we can deploy them into the field to help diagnose what's going on.

Speaker #4: Terms of what we're seeing in the Middle East, it's not just the assay work. There's also subsurface reservoir characterization work that's being impacted, as well as completion diagnostics.

Speaker #2: We've got licensing. We've been doing work for ADNOC and other UAE folks for a while, but now we have another tool in our belt, if you will, to address other diagnostics.

Speaker #4: In at least two countries, I'm thinking off the top of my head, that we're field operations got suspended. What we saw happen was there was tankers when the ceasefire was announced, we saw the tankers start to take on more cargo.

Speaker #2: So that regulatory door is now open for us. We can now store on site, and we can deploy them into the field to help diagnose what's going on.

Speaker #2: Terms of what we're seeing in the Middle East, it's not just the assay work. There's also subsurface reservoir characterization work that's being impacted, as well as completion diagnostics in at least two countries.

Speaker #4: And some started to leave the region, but not as many as people might have hoped. And we can track that. We've got independent sources that track the tanker movements that we subscribe to.

Speaker #4: We monitor that. And then on the subsurface projects, things were starting to pick up. So think of this as more of the upstream applications.

Speaker #2: I'm thinking off the top of my head. That we're field operations got suspended. What we saw happen was there was tankers when the ceasefire was announced, we saw the tankers start to take on more cargo.

Speaker #4: That we engage with, things were starting to pick up. Clients were looking at getting back in the field with us so that we could start getting samples from the well site.

Speaker #2: And some started to leave the region, but not as many as people might have hoped. And we can track that. We've got independent sources that track the tanker movements that we subscribe to.

Speaker #4: And that's now pulled back some.

Speaker #3: Got it.

Speaker #4: Maybe one other kind of follow-on to Don's comment. Just on customer interest, what we've heard a lot lately is just more exploration. We actually have heard it a couple of times over the last kind of several weeks from EMP companies.

Speaker #2: We monitor that. And then on the subsurface projects, things were starting to pick up. So think of this as more of the upstream applications.

Speaker #2: That we engage with. Things were starting to pick up. Clients were looking at getting back in the field with us so that we could start getting samples from the well site.

Speaker #4: And just wondering, outside of the Middle East, is the phone starting to ring more and more on kind of exploration and in general? That seems to be coming up more and more today.

Speaker #2: And that's now pulled back some.

Speaker #3: Got it.

Speaker #2: Maybe one other kind of follow on to Don's comment. Just on customer interest, what we've heard a lot lately is just more exploration. We actually have heard it a couple of times over the last kind of several weeks from EMP companies.

Speaker #3: Yeah. No question

Speaker #4: about it. Like I said, it started ringing a while back for us. And fortunately, I saw a failure to launch But Africa's clearly picking up.

Speaker #2: And just wondering, outside of the Middle East, is the phone starting to ring more and more on kind of exploration and in general? That seems to be coming up more and more today.

Speaker #4: Brazil and the South Atlantic margin picking up. And Asia Pacific also picking up for us. And there's a couple of places I can't talk about yet that will raise some eyebrows when if and when those projects come to fruition.

Speaker #3: Yeah. No question about it. Like I said, it started ringing a while back for us. And fortunately, I saw a failure to launch for us.

Speaker #4: And hopefully we'll be able to talk about those in the coming quarters.

Speaker #3: Okay. Great. Thank you.

Speaker #2: Thanks, Sean.

Speaker #5: Yeah. Thanks, Sean.

Speaker #3: We got kind of left at the dock. But Africa's clearly picking up. Brazil and the South Atlantic margin picking up. And Asia Pacific also picking up for us.

Speaker #1: The next question comes from Sophia via CEO of Bank of America. Please go ahead.

Speaker #2: Hey. Good morning, Sophia.

Speaker #3: And there's a couple of places I can't talk about yet that will raise some eyebrows when if and when those projects come to fruition.

Speaker #6: Good morning. I just wanted to ask over the guide a little bit. So obviously you're guiding sequential growth. And is any of that coming from normalization in the Middle East or Russia, Ukraine, or is all of that growth coming from the geo markets you mentioned completely offsetting the geopolitical impacts?

Speaker #3: And hopefully we'll be able to talk about those in the coming quarters.

Speaker #2: Okay. Great. Thank you. Yeah, Sean.

Speaker #1: The next question comes from Sophia via CEO of Bank of America. Please go ahead.

Speaker #4: Hey, good morning, Sophia.

Speaker #5: Good morning. I just wanted to ask over the guide a little bit. So obviously you're guiding sequential growth. And is any of that coming from normalization in the Middle East or Russia, Ukraine?

Speaker #2: So for reservoir descriptions Sophia, we're projecting that to be up mid-single digits and driven by Africa, Brazil, Asia Pacific, and parts of Europe like Larry mentioned.

Speaker #2: So I would say ex-Middle East, although we are seeing some marginal improvement with how projects are moving along. The subsurface projects are moving along in the Middle East.

Speaker #5: Or is all of that growth coming from the geo markets you mentioned completely offsetting the geopolitical impacts?

Speaker #2: And then for production enhancement, we're projecting that to be up mid-single to low double digits. And that's driven by what we think will be a modest improvement on US land.

Speaker #4: So for reservoir descriptions Sophia, we're projecting that to be up mid-single digits and driven by Africa, Brazil, Asia Pacific, and mentioned. So I would say ex-Middle East, although we are seeing some marginal improvement with how projects are moving along.

Speaker #2: We think operators will continue their capital spending plans for 2026. So not as sensitive to the volatility in the commodity prices. And then we also expect our international product business to be up slightly sequentially as well.

Speaker #4: The subsurface projects are moving along in the Middle East. And then for production enhancement, we're projecting that to be up mid-single to low double digits.

Speaker #2: And that's going to be driven by the Eastern Hemisphere and Africa.

Speaker #4: And that's driven by what we think will be a modest improvement on US land. We think operators will continue their capital spending plans for 2026.

Speaker #6: Okay. And then is there any sort of visibility into 4Q yet, or is it way too early?

Speaker #2: I think it's a little early for that given the.

Speaker #4: Tell us when the war is going to end.

Speaker #4: So not as sensitive to the volatility in the commodity prices. And then we also expect our international product business to be up slightly sequentially as well.

Speaker #6: Yeah.

Speaker #4: Yeah. Sophia, I think Gwen covered it very well there. What I might add to that a little bit is we obviously felt like we had to dial in contingencies for what is the upside look like if things come to a conclusion.

Speaker #4: And that's going to be driven by the Eastern Hemisphere and Africa.

Speaker #5: Okay. And then is there any sort of visibility into 4Q yet? Or is it way too early?

Speaker #4: Sooner in the Middle East or what does it look like if things come to fruition later in resolving the Middle East conflict? And on the so that's somewhat we felt sort of compelled to give a pretty wide range there to try to cover the eventualities.

Speaker #4: I think it's a little early for that given the.

Speaker #2: Tell us when the war is going to end.

Speaker #4: Yeah.

Speaker #5: Yeah.

Speaker #2: Yeah. So Sophia, I think Gwen covered it very well there. What I might add to that a little bit is we obviously felt like we had to dial in contingencies for what is the upside look like if things come to a conclusion.

Speaker #4: We try to be as transparent as we can. And what we see is upside and downside on that. And then the other one for us, and we're Chris mentioned, we're working I think, I'm sorry, Gwen mentioned, we're working hard on it.

Speaker #2: Sooner in the Middle East or what does it look like if things come to fruition later in resolving the Middle East conflict? And on the so that's somewhat we felt sort of compelled to give a pretty wide range there to try to cover the eventualities.

Speaker #4: There's a lot of complications in navigating the situations in Russia, Ukraine. We're getting squeezed kind of from both sides there. Different governments telling us opposing things we can and can't do.

Speaker #4: And so that's also challenging to navigate. There was some dramatic images over the second quarter of explosions at Russian storage facilities, for example. And in the Ukraine as well.

Speaker #2: We try to be as transparent as we can. And what we see is upside and downside on that. And then the other one for us, and we're Chris mentioned, we're working I think, I'm sorry, Gwen mentioned, we're working hard on it.

Speaker #2: There's a lot of complications in navigating the situations in Russia, Ukraine. We're getting squeezed kind of from both sides there. Different governments telling us, opposing things we can and can't do.

Speaker #4: And we have operations in both countries. And that's presenting some uncertainty and challenges for us too. On top of that, the sanctions got reinforced.

Speaker #4: I think the US did it in the fourth quarter. And then Europe came in in the first late first quarter. And also enhanced sanctions.

Speaker #2: And so that's also challenging to navigate. There was some dramatic images over the second quarter of explosions at Russian storage facilities, for example. And in the Ukraine as well.

Speaker #4: So that's also tie in our hands on who we can and can't work for.

Speaker #2: And we have operations in both countries. And that's presenting some uncertainty and challenges for us too. On top of that, the sanctions got reinforced.

Speaker #6: All right.

Speaker #4: Okay.

Speaker #2: Thanks, Sophia.

Speaker #4: All right. I think we'll wrap up there. In summary, of course, operational leadership continues to position the company for improving client activity levels. And the incoming in the coming quarters and years.

Speaker #2: I think the US did it in the fourth quarter. And then Europe came in in the first late first quarter. And also enhanced sanctions.

Speaker #4: For nine decades, through many cycles, Coral Lab has successfully navigated changing industry dynamics, geopolitical uncertainty, and global market disruptions by remaining focused on innovation, operational excellence, and serving our clients.

Speaker #2: So that's also tie in our hands on who we can and can't work for.

Speaker #5: All right. Makes sense. Thank you.

Speaker #2: Okay.

Speaker #4: Thanks, Sophia.

Speaker #2: All right. I think we'll wrap up there. In summary, CORS operational leadership continues to position the company for improving client activity levels. And the incoming in the coming quarters and years.

Speaker #4: Coral Lab is well positioned both operationally and technologically to help our global client base optimize reservoir performance and address their evolving needs. Our focus on differentiated technologies scientific expertise and client collaboration continues to distinguish the company across the oil field service sector.

Speaker #2: For nine decades through many cycles, CORE LAB has successfully navigated changing industry dynamics, geopolitical uncertainty, and global market disruptions by remaining focused on innovation, operational excellence, and serving our clients.

Speaker #4: 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.

Speaker #2: CORE LAB is well positioned both operationally and technologically to help our global client base optimize reservoir performance and address their evolving needs. Our focus on differentiated technologies scientific expertise and client collaboration continues to distinguish the company across the oil field service sector.

Speaker #4: In the near term, Coral will continue to use free cash to repurchase shares while preserving its strong balance sheet. In closing, we thank and appreciate all of our shareholders and the analysts that cover Coral Lab.

Speaker #2: 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.

Speaker #4: The executive management team and the board of Coral Laboratories give a special thanks to our worldwide employees that have made these results possible. We're proud to be associated with or continuing achievements.

Speaker #2: In the near term, CORE will continue to use free cash to repurchase shares while preserving its strong balance sheet. In closing, we thank and appreciate all of our shareholders and the analysts that cover CORE LAB.

Speaker #2: 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 or continuing achievements.

Speaker #2: So thanks for spending time with us. And we look forward to our next update. Goodbye for now.

Operator: Good day, and welcome to the Core Labs Q2 2026 earnings 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 a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Larry Bruno, Chairman and CEO of Core Labs. Please go ahead.

Lawrence V. Bruno: Thanks, Alan. 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 Q2 2026 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 six 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 Q2 performance. In addition, we'll review Core strategies and the three financial tenets that Core 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, Alan. 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 Q2 2026 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 six 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 Q2 performance. In addition, we'll review Core strategies and the three financial tenets that Core 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.

Lawrence V. Bruno: I'll then review Core's two operating segments, detailing our progress and discussing the continued successful introduction and deployment of Core Labs technologies, as well as highlighting some of Core's operations, recent client interactions, and major projects worldwide. 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 Labs technologies, as well as highlighting some of Core's operations, recent client interactions, and major projects worldwide. 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.

Gwen Y. Gresham: Before we start the conference this morning, I'll mention that some of the statements we make during this call may include projections, estimates, and other forward-looking information. This would include any discussion of the company's business outlook. These types of forward-looking statements are subject to a number of risks and uncertainties 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 Q2 results.

Gwen Gresham: Before we start the conference this morning, I'll mention that some of the statements we make during this call may include projections, estimates, and other forward-looking information. This would include any discussion of the company's business outlook. These types of forward-looking statements are subject to a number of risks and uncertainties 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 Q2 results.

Gwen Y. Gresham: Those non-GAAP measures can also be found on our website. With that said, I'll pass the discussion back to Larry.

Gwen Gresham: Those non-GAAP measures can also be found on our website. With that said, I'll pass the discussion back to Larry.

Lawrence V. Bruno: Thanks, Gwen. Moving now to some high-level comments about our Q2 2026 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. The ongoing military conflict in the Middle East, which began during Q1 2026, continued to affect operations through project delays and logistical disruptions across several countries where the company operates. Reservoir Description bore the greatest impacts of the Middle East conflict as crude assay work and reservoir characterization projects depend on field operations, active maritime hydrocarbon trade and transportation, timely sample acquisition, and access to client facilities. The closure of the Strait of Hormuz and the widespread disruption to maritime hydrocarbon transportation routes extends beyond the Middle East region.

Larry Bruno: Thanks, Gwen. Moving now to some high-level comments about our Q2 2026 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. The ongoing military conflict in the Middle East, which began during Q1 2026, continued to affect operations through project delays and logistical disruptions across several countries where the company operates. Reservoir Description bore the greatest impacts of the Middle East conflict as crude assay work and reservoir characterization projects depend on field operations, active maritime hydrocarbon trade and transportation, timely sample acquisition, and access to client facilities. The closure of the Strait of Hormuz and the widespread disruption to maritime hydrocarbon transportation routes extends beyond the Middle East region.

Lawrence V. Bruno: In both Russia and Ukraine, escalating attacks on refining, storage, and hydrocarbon transportation sites, along with evolving sanctions, resulted in additional headwinds. Production Enhancement was comparatively less affected by these geopolitical conflicts, although certain service activities and completion product shipments into the region continued to experience delays. Even in this challenging operating environment, energetic product sales improved during the quarter, reflecting continued operator adoption of Core Lab's advanced completion technologies across both the US and international markets. While the Middle East situation remains uncertain and further geopolitical developments could continue to influence Core's business, operating conditions improved in several other geographic markets during Q2 and client engagement strengthened outside the Middle East. Looking at Reservoir Description, Q2 revenue was down 4% from Q1 2026 and down 9% compared to Q2 of last year.

Larry Bruno: In both Russia and Ukraine, escalating attacks on refining, storage, and hydrocarbon transportation sites, along with evolving sanctions, resulted in additional headwinds. Production Enhancement was comparatively less affected by these geopolitical conflicts, although certain service activities and completion product shipments into the region continued to experience delays. Even in this challenging operating environment, energetic product sales improved during the quarter, reflecting continued operator adoption of Core Lab's advanced completion technologies across both the US and international markets. While the Middle East situation remains uncertain and further geopolitical developments could continue to influence Core's business, operating conditions improved in several other geographic markets during Q2 and client engagement strengthened outside the Middle East. Looking at Reservoir Description, Q2 revenue was down 4% from Q1 2026 and down 9% compared to Q2 of last year.

Lawrence V. Bruno: Q2 operating margins in Reservoir Description ex item were 5%, down sequentially by approximately 100 basis points. Despite the multiple factors impacting Core Lab's Q2 results, the company maintained its focus on creating new technology offerings, maximizing operating efficiency, and leveraging our global network to support client operations. In Production Enhancement, Q2 revenue was up 15% compared to Q1 2026, and margins in Production Enhancement ex items were 12%, up nicely from 5% in Q1 2026, or over 700 basis points. Sequential margins benefited from higher product sales during the quarter, driven by increased operator adoption of Core Lab's proprietary completion technologies across both the US and international markets. Q2 operating margins also benefited from the resolution of previously recorded tax matters.

Larry Bruno: Q2 operating margins in Reservoir Description ex item were 5%, down sequentially by approximately 100 basis points. Despite the multiple factors impacting Core Lab's Q2 results, the company maintained its focus on creating new technology offerings, maximizing operating efficiency, and leveraging our global network to support client operations. In Production Enhancement, Q2 revenue was up 15% compared to Q1 2026, and margins in Production Enhancement ex items were 12%, up nicely from 5% in Q1 2026, or over 700 basis points. Sequential margins benefited from higher product sales during the quarter, driven by increased operator adoption of Core Lab's proprietary completion technologies across both the US and international markets. Q2 operating margins also benefited from the resolution of previously recorded tax matters.

Lawrence V. Bruno: The company maintained its longstanding commitment to shareholder returns during the quarter, returning free cash to our shareholders through our quarterly dividend and by repurchasing more than 214,000 shares of company stock, representing a value of $2.7 million. Q2 marks the seventh consecutive quarter of share buybacks. Core intends to continue using free cash to fund our quarterly dividend, pursue growth opportunities, and improve shareholder value through opportunistic share repurchases. Considering current market dynamics and looking ahead to the mid and longer term, Core Lab has decades of experience supporting clients through periods of geopolitical uncertainty. The company's longstanding presence in the Middle East, along with the company's proprietary technologies and dedicated employees, will allow Core Lab to continue serving its clients across this strategically important region. Moreover, despite near-term headwinds, Core's global operations, asset-light business model, and diversified technology portfolio position the company for long-term success.

Larry Bruno: The company maintained its longstanding commitment to shareholder returns during the quarter, returning free cash to our shareholders through our quarterly dividend and by repurchasing more than 214,000 shares of company stock, representing a value of $2.7 million. Q2 marks the seventh consecutive quarter of share buybacks. Core intends to continue using free cash to fund our quarterly dividend, pursue growth opportunities, and improve shareholder value through opportunistic share repurchases. Considering current market dynamics and looking ahead to the mid and longer term, Core Lab has decades of experience supporting clients through periods of geopolitical uncertainty. The company's longstanding presence in the Middle East, along with the company's proprietary technologies and dedicated employees, will allow Core Lab to continue serving its clients across this strategically important region. Moreover, despite near-term headwinds, Core's global operations, asset-light business model, and diversified technology portfolio position the company for long-term success.

Lawrence V. Bruno: For 90 years, Core Lab's resilience, technical leadership, and unwavering client focus have enabled the company to deliver differentiated solutions and help our clients de-risk their operational decisions. As we move ahead, Core will continue to execute on its key strategic objectives by, one, introducing new product and service offerings in key geographic markets, two, maintaining a lean and focused organization, and three, maintaining our commitments to returning excess free cash to our shareholders while preserving the company's strong balance sheet. Core strengths, together with disciplined capital deployment, continued free cash flow generation, and the company's commitment to returning excess capital to its owners, will drive long-term value creation for Core Lab's shareholders. Now to review the company's strategies and the financial tenets that have guided Core Lab's shareholder value creation through our more than 32-year history as a publicly traded company.

Larry Bruno: For 90 years, Core Lab's resilience, technical leadership, and unwavering client focus have enabled the company to deliver differentiated solutions and help our clients de-risk their operational decisions. As we move ahead, Core will continue to execute on its key strategic objectives by, one, introducing new product and service offerings in key geographic markets, two, maintaining a lean and focused organization, and three, maintaining our commitments to returning excess free cash to our shareholders while preserving the company's strong balance sheet. Core strengths, together with disciplined capital deployment, continued free cash flow generation, and the company's commitment to returning excess capital to its owners, will drive long-term value creation for Core Lab's shareholders. Now to review the company's strategies and the financial tenets that have guided Core Lab's shareholder value creation through our more than 32-year history as a publicly traded company.

Lawrence V. Bruno: 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 returning excess free cash to our shareholders. I'll now turn it over to Chris for the detailed financial review.

Larry Bruno: 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 returning excess free cash to our shareholders. I'll now turn it over to Chris for the detailed financial review.

Chris S. Hill: Thanks, Larry. Before we review the financial performance for the quarter, the guidance we gave on our last call and past calls excluded the impact of any FX gains and losses and assumed an effective tax rate of 25%. Accordingly, our discussion today excludes any foreign exchange gain or loss for current and prior periods. The comparison periods for Q1 2026 and Q2 2025 also included 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 Q2 2026.

Chris Hill: Thanks, Larry. Before we review the financial performance for the quarter, the guidance we gave on our last call and past calls excluded the impact of any FX gains and losses and assumed an effective tax rate of 25%. Accordingly, our discussion today excludes any foreign exchange gain or loss for current and prior periods. The comparison periods for Q1 2026 and Q2 2025 also included 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 Q2 2026.

Chris S. Hill: Now looking at the income statement, revenue was $124.6 million in Q2, up +2% compared to the prior quarter and down 4% year-over-year. Sequentially, we saw increased demand for our completion products in both the U.S. land and international markets, while service revenue increased in certain international regions. The conflicts in both Russia/Ukraine and the Middle East, which have intensified, have primarily impacted our service revenue. Of this revenue, service revenue, which is more international, was $94.3 million for the quarter, flat sequentially and down 2% year-over-year. Our service revenue associated with crude assay services and regional studies continue to be impacted by the geopolitical conflicts in the Middle East and Russia/Ukraine, which are the primary reason for the year-over-year decrease. However, growth in other regions outside these affected areas offset some of the impact.

Chris Hill: Now looking at the income statement, revenue was $124.6 million in Q2, up +2% compared to the prior quarter and down 4% year-over-year. Sequentially, we saw increased demand for our completion products in both the U.S. land and international markets, while service revenue increased in certain international regions. The conflicts in both Russia/Ukraine and the Middle East, which have intensified, have primarily impacted our service revenue. Of this revenue, service revenue, which is more international, was $94.3 million for the quarter, flat sequentially and down 2% year-over-year. Our service revenue associated with crude assay services and regional studies continue to be impacted by the geopolitical conflicts in the Middle East and Russia/Ukraine, which are the primary reason for the year-over-year decrease. However, growth in other regions outside these affected areas offset some of the impact.

Chris S. Hill: Sequentially, although the Middle East and Russia have been significantly impacted, service revenue was flat. We continue to see demand improve for our reservoir rock and fluid analytical programs in certain international regions where exploration programs are more active. Additionally, our well completion diagnostic services continue to perform well in the U.S. market and is showing some growth internationally, excluding the Middle East. Product sales, which are more equally tied to North America and international activity, were $30.3 million for the quarter and were up 10% sequentially, down 11% year-over-year. Sequentially, completion activity in the U.S. improved modestly. However, we saw significant growth in our U.S. completion product sales. Switching to international product sales, which are typically larger bulk orders and can vary from one quarter to another, were also up nicely compared to Q1.

Chris Hill: Sequentially, although the Middle East and Russia have been significantly impacted, service revenue was flat. We continue to see demand improve for our reservoir rock and fluid analytical programs in certain international regions where exploration programs are more active. Additionally, our well completion diagnostic services continue to perform well in the U.S. market and is showing some growth internationally, excluding the Middle East. Product sales, which are more equally tied to North America and international activity, were $30.3 million for the quarter and were up 10% sequentially, down 11% year-over-year. Sequentially, completion activity in the U.S. improved modestly. However, we saw significant growth in our U.S. completion product sales. Switching to international product sales, which are typically larger bulk orders and can vary from one quarter to another, were also up nicely compared to Q1.

Chris S. Hill: When looking at year-over-year, we had a large laboratory instrumentation sale last year, which did not repeat in Q2 2026. However, this was partially offset by improved sales of perforating products in both the U.S. and international markets. Moving on to cost of services ex items for the quarter was 80% of service revenue, a slight improvement from 81% in the prior quarter, and increased from 77% last year. Sequential improvement was primarily driven by continued cost reduction initiatives in regions impacted by the conflicts. The year-over-year increase is primarily a result of the company continuing to carry costs in the regions which have been more negatively impacted in 2026 by the escalation of conflicts in both the Middle East and Russia/Ukraine. As discussed on prior calls, the service side of our business has been more affected by geopolitical conflicts and expanded sanctions.

Chris Hill: When looking at year-over-year, we had a large laboratory instrumentation sale last year, which did not repeat in Q2 2026. However, this was partially offset by improved sales of perforating products in both the U.S. and international markets. Moving on to cost of services ex items for the quarter was 80% of service revenue, a slight improvement from 81% in the prior quarter, and increased from 77% last year. Sequential improvement was primarily driven by continued cost reduction initiatives in regions impacted by the conflicts. The year-over-year increase is primarily a result of the company continuing to carry costs in the regions which have been more negatively impacted in 2026 by the escalation of conflicts in both the Middle East and Russia/Ukraine. As discussed on prior calls, the service side of our business has been more affected by geopolitical conflicts and expanded sanctions.

Chris S. Hill: Volatility in crude oil prices, along with continued conflict in Russia/Ukraine and the Middle East, have disrupted regional operations and reduced demand for our crude assay services, which are closely tied to the trading and maritime movement of crude oil and derived products. We will continue to manage our cost structure as effectively as possible as we work through these disruptions in certain regions. Cost of sales ex items in Q2 was 85% of revenue, which improved from 94% in the prior quarter and was relatively flat compared to last year. Sequential improvement was primarily driven by continued cost control initiatives and manufacturing efficiencies. With these initiatives in place, we anticipate the manufacturing absorption rate in future periods to be in line with projected product sales. Additionally, in Q2 2026, we received a partial refund of import tariffs, which were incurred in prior periods.

Chris Hill: Volatility in crude oil prices, along with continued conflict in Russia/Ukraine and the Middle East, have disrupted regional operations and reduced demand for our crude assay services, which are closely tied to the trading and maritime movement of crude oil and derived products. We will continue to manage our cost structure as effectively as possible as we work through these disruptions in certain regions. Cost of sales ex items in Q2 was 85% of revenue, which improved from 94% in the prior quarter and was relatively flat compared to last year. Sequential improvement was primarily driven by continued cost control initiatives and manufacturing efficiencies. With these initiatives in place, we anticipate the manufacturing absorption rate in future periods to be in line with projected product sales. Additionally, in Q2 2026, we received a partial refund of import tariffs, which were incurred in prior periods.

Chris S. Hill: G&A ex items for the quarter was $11 million, which was relatively flat compared to Q1 and up slightly from the same quarter in the prior year. For 2026, we expect G&A ex items to be approximately $43 to $45 million. 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. Depreciation and amortization for the quarter was $3.8 million, flat compared to Q1. EBIT ex items for the quarter was $9.4 million, up from $6.6 million last quarter, yielding an EBIT margin of approximately 8% and expanding 210 basis points from last quarter. Our EBIT for the quarter on a GAAP basis was $9.2 million.

Chris Hill: G&A ex items for the quarter was $11 million, which was relatively flat compared to Q1 and up slightly from the same quarter in the prior year. For 2026, we expect G&A ex items to be approximately $43 to $45 million. 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. Depreciation and amortization for the quarter was $3.8 million, flat compared to Q1. EBIT ex items for the quarter was $9.4 million, up from $6.6 million last quarter, yielding an EBIT margin of approximately 8% and expanding 210 basis points from last quarter. Our EBIT for the quarter on a GAAP basis was $9.2 million.

Chris S. Hill: Interest expense of $2.8 million for Q2 compares to $2.9 million in Q1 and $2.7 million in Q2 in the prior year. The changes in interest expense were primarily due to changes in our average borrowings with variable interest rates during the periods. Income tax expense at an effective tax rate of 25% and ex items was $1.6 million for the quarter. On a GAAP basis, we recorded tax expense of $500,000 for the quarter. Q2 expense includes benefits from certain discrete items recorded in the quarter. 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 continue to project the company's effective tax rate to be approximately 25%.

Chris Hill: Interest expense of $2.8 million for Q2 compares to $2.9 million in Q1 and $2.7 million in Q2 in the prior year. The changes in interest expense were primarily due to changes in our average borrowings with variable interest rates during the periods. Income tax expense at an effective tax rate of 25% and ex items was $1.6 million for the quarter. On a GAAP basis, we recorded tax expense of $500,000 for the quarter. Q2 expense includes benefits from certain discrete items recorded in the quarter. 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 continue to project the company's effective tax rate to be approximately 25%.

Chris S. Hill: Net income ex items for the quarter was $5.1 million, up sequentially from $2.7 million last quarter, down from $8.8 million in Q2 of last year. On a GAAP basis, we had net income of $6 million for the quarter. Earnings per diluted share ex items was $0.11 for the quarter compared to $0.06 in Q1 and $0.19 in Q2 of last year. On a GAAP basis, EPS was $0.13 for the quarter. Turning to the balance sheet, receivables were $108.8 million and increased slightly from the prior quarter. Our DSOs for Q2 were at 73 days, which improved slightly from 74 days last quarter. The timing of collections have been impacted by the ongoing conflicts. We continue to remain focused on our collection efforts in the affected regions.

Chris Hill: Net income ex items for the quarter was $5.1 million, up sequentially from $2.7 million last quarter, down from $8.8 million in Q2 of last year. On a GAAP basis, we had net income of $6 million for the quarter. Earnings per diluted share ex items was $0.11 for the quarter compared to $0.06 in Q1 and $0.19 in Q2 of last year. On a GAAP basis, EPS was $0.13 for the quarter. Turning to the balance sheet, receivables were $108.8 million and increased slightly from the prior quarter. Our DSOs for Q2 were at 73 days, which improved slightly from 74 days last quarter. The timing of collections have been impacted by the ongoing conflicts. We continue to remain focused on our collection efforts in the affected regions.

Chris S. Hill: Inventory at 30 June 2026 was $58 million, up slightly from Q1 end. Inventory turns for the quarter were 1.8 and remained the same compared to Q1. With continued focus, we anticipate inventory turns will gradually improve as we progress through the remainder of 2026. Now to the liability side of the balance sheet. Our long-term debt was $116.4 million as of 30 June 2026. Considering cash of $22.7 million, net debt was $93.6 million, which decreased slightly from Q1. Our leverage ratio is currently at 1.3 compared to 1.2 Q1. Our debt is currently comprised of $65 million in senior notes, a term loan of $49.4 million and $2 million outstanding under our bank credit facility. Looking at cash flow.

Chris Hill: Inventory at 30 June 2026 was $58 million, up slightly from Q1 end. Inventory turns for the quarter were 1.8 and remained the same compared to Q1. With continued focus, we anticipate inventory turns will gradually improve as we progress through the remainder of 2026. Now to the liability side of the balance sheet. Our long-term debt was $116.4 million as of 30 June 2026. Considering cash of $22.7 million, net debt was $93.6 million, which decreased slightly from Q1. Our leverage ratio is currently at 1.3 compared to 1.2 Q1. Our debt is currently comprised of $65 million in senior notes, a term loan of $49.4 million and $2 million outstanding under our bank credit facility. Looking at cash flow.

Chris S. Hill: For Q2 2026, cash flow from operating activities was $7.8 million, and after paying approximately $4.7 million of CapEx for operations, our free cash flow for the quarter was $3.1 million. Cash from operation almost doubled this quarter when you compare it to Q1. Our capital expenditures were also higher. The elevated capital expenditures are primarily associated with investments to support a recently signed multi-year contract in the Asia Pacific region and rebuilding our facilities in the Mediterranean region, which incurred weather-related damage in Q1. As discussed in prior quarters, the capital expenditures associated with rebuilding our UK facility, which was damaged by fire, are covered by the company's property and casualty insurance and have been excluded in the calculation of free cash flow. In Q2 2026, capital expenditures associated with rebuilding the UK facility were $1.1 million.

Chris Hill: For Q2 2026, cash flow from operating activities was $7.8 million, and after paying approximately $4.7 million of CapEx for operations, our free cash flow for the quarter was $3.1 million. Cash from operation almost doubled this quarter when you compare it to Q1. Our capital expenditures were also higher. The elevated capital expenditures are primarily associated with investments to support a recently signed multi-year contract in the Asia Pacific region and rebuilding our facilities in the Mediterranean region, which incurred weather-related damage in Q1. As discussed in prior quarters, the capital expenditures associated with rebuilding our UK facility, which was damaged by fire, are covered by the company's property and casualty insurance and have been excluded in the calculation of free cash flow. In Q2 2026, capital expenditures associated with rebuilding the UK facility were $1.1 million.

Chris S. Hill: Looking ahead to the rest of the year, we will 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 for the full year of 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. 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.

Chris Hill: Looking ahead to the rest of the year, we will 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 for the full year of 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. 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.

Chris S. Hill: I will now turn it over to Gwen for an update on our guidance and outlook.

Chris Hill: I will now turn it over to Gwen for an update on our guidance and outlook.

Gwen Y. Gresham: Thank you, Chris. Turning to Core Lab's outlook for Q3 2026. As a result of the ongoing conflicts in the Middle East and Russia-Ukraine, the IEA, the EIA, and OPEC have all revised their respective 2026 global crude oil demand forecast to reflect the impact of higher energy prices, constrained product availability, and interruptions to global hydrocarbon trade and transportation. While near-term demand has been negatively impacted by the ongoing conflicts, the agencies all project demand growth will rebound in 2027. The long-term need for investment in new resources of global crude oil production and initiatives to maximize recovery from existing producing fields remains strong. Accelerating decline rates from existing producing fields, together with geopolitical uncertainty, reinforce the importance of energy security and geographically diversified resources of hydrocarbon supply. Collectively, these factors expect to support continued client investment in hydrocarbon development and new exploration.

Gwen Gresham: Thank you, Chris. Turning to Core Lab's outlook for Q3 2026. As a result of the ongoing conflicts in the Middle East and Russia-Ukraine, the IEA, the EIA, and OPEC have all revised their respective 2026 global crude oil demand forecast to reflect the impact of higher energy prices, constrained product availability, and interruptions to global hydrocarbon trade and transportation. While near-term demand has been negatively impacted by the ongoing conflicts, the agencies all project demand growth will rebound in 2027. The long-term need for investment in new resources of global crude oil production and initiatives to maximize recovery from existing producing fields remains strong. Accelerating decline rates from existing producing fields, together with geopolitical uncertainty, reinforce the importance of energy security and geographically diversified resources of hydrocarbon supply. Collectively, these factors expect to support continued client investment in hydrocarbon development and new exploration.

Gwen Y. Gresham: Despite client activity headwinds from the two ongoing geopolitical conflicts, Core expects Q3 revenue to increase sequentially, supported by improvement in several international regions, including the South Atlantic margin and Asia Pacific. Recent escalations in both the Middle East and Russia-Ukraine conflict are expected to continue affecting client operations, project timing, and logistics across portions of these regions during Q3, with greater impact to Reservoir Description and the service component of Production Enhancement compared to the company's completion product business. US land completion activity is expected to improve modestly as Q3 2026 progresses. Core Lab expects growing adoption of its diagnostic services, reservoir optimization technologies, and proprietary energetic systems to outperform US land completion activity. Longer-term international projects, including offshore development and emerging exploration plays, are expected to create additional growth opportunities.

Gwen Gresham: Despite client activity headwinds from the two ongoing geopolitical conflicts, Core expects Q3 revenue to increase sequentially, supported by improvement in several international regions, including the South Atlantic margin and Asia Pacific. Recent escalations in both the Middle East and Russia-Ukraine conflict are expected to continue affecting client operations, project timing, and logistics across portions of these regions during Q3, with greater impact to Reservoir Description and the service component of Production Enhancement compared to the company's completion product business. US land completion activity is expected to improve modestly as Q3 2026 progresses. Core Lab expects growing adoption of its diagnostic services, reservoir optimization technologies, and proprietary energetic systems to outperform US land completion activity. Longer-term international projects, including offshore development and emerging exploration plays, are expected to create additional growth opportunities.

Gwen Y. Gresham: While the timing of recovery in certain Middle East markets remains difficult to predict, Core believes long-term fundamentals support future growth in exploration activity levels. The company's international footprint, proprietary technologies, and expertise support Core Lab to capitalize on opportunities across global markets. In summary, Reservoir Description's Q3 2026 revenue is projected to range from USD 81 million to 84 million, with operating income of USD 5.5 million to 7.9 million. Production Enhancement's Q3 revenue is estimated to range from USD 47.5 million to 51.5 million, with operating income of USD 4.8 million to 6.9 million. Core's Q3 2026 revenue is projected to range from USD 128.5 million to 135.5 million, with operating income of USD 10.5 million to 15 million, yielding operating margins of approximately 10%. EPS for Q3 is expected to range from $0.12 to $0.20.

Gwen Gresham: While the timing of recovery in certain Middle East markets remains difficult to predict, Core believes long-term fundamentals support future growth in exploration activity levels. The company's international footprint, proprietary technologies, and expertise support Core Lab to capitalize on opportunities across global markets. In summary, Reservoir Description's Q3 2026 revenue is projected to range from USD 81 million to 84 million, with operating income of USD 5.5 million to 7.9 million. Production Enhancement's Q3 revenue is estimated to range from USD 47.5 million to 51.5 million, with operating income of USD 4.8 million to 6.9 million. Core's Q3 2026 revenue is projected to range from USD 128.5 million to 135.5 million, with operating income of USD 10.5 million to 15 million, yielding operating margins of approximately 10%. EPS for Q3 is expected to range from $0.12 to $0.20.

Gwen Y. Gresham: The company's guidance is based on projections for underlying operations and excludes gains and losses in foreign exchange and assumes an effective tax rate of 25%. With that, I'll turn the call back over to Larry.

Gwen Gresham: The company's guidance is based on projections for underlying operations and excludes gains and losses in foreign exchange and assumes an effective tax rate of 25%. With that, I'll turn the call back over to Larry.

Lawrence V. Bruno: Thanks, Gwen. First, I'd like to recognize our employees in the Middle East, whose professionalism, resilience, and unwavering support to our clients have been especially evident throughout the recent geopolitical conflict. I'd also like to thank our entire global team of employees for their continued commitment to innovation, integrity, and exceptional service to our clients. For 90 years, our employees' collective expertise and dedication has been the foundation of Core Lab's success. Looking at the macro, while global energy markets continue to navigate geopolitical uncertainty, evolving trade policies, and commodity price volatility, the IEA, EIA, and OPEC are revising their near-term forecast for oil demand. They are also projecting demand growth to rebound by approximately 1.7 to 2 million barrels per day in 2027, supporting constructive long-term market fundamentals. The U.S. EIA's long-term reference case forecast shows crude oil demand growth continuing through 2050, approaching 120 million barrels per day.

Larry Bruno: Thanks, Gwen. First, I'd like to recognize our employees in the Middle East, whose professionalism, resilience, and unwavering support to our clients have been especially evident throughout the recent geopolitical conflict. I'd also like to thank our entire global team of employees for their continued commitment to innovation, integrity, and exceptional service to our clients. For 90 years, our employees' collective expertise and dedication has been the foundation of Core Lab's success. Looking at the macro, while global energy markets continue to navigate geopolitical uncertainty, evolving trade policies, and commodity price volatility, the IEA, EIA, and OPEC are revising their near-term forecast for oil demand. They are also projecting demand growth to rebound by approximately 1.7 to 2 million barrels per day in 2027, supporting constructive long-term market fundamentals. The U.S. EIA's long-term reference case forecast shows crude oil demand growth continuing through 2050, approaching 120 million barrels per day.

Chris S. Hill: Increases in demand will require more than incremental production growth from existing fields. New supply must also be brought online to replace the natural decline from producing fields. The IEA estimates that absent investment, global oil production would decline by approximately 8% per year due to natural field depletion. As a result, they conclude that a significant portion of global upstream capital spending is required to sustain existing production.

Chris Hill: Increases in demand will require more than incremental production growth from existing fields. New supply must also be brought online to replace the natural decline from producing fields. The IEA estimates that absent investment, global oil production would decline by approximately 8% per year due to natural field depletion. As a result, they conclude that a significant portion of global upstream capital spending is required to sustain existing production.

Lawrence V. Bruno: For addressing any incremental growth. The IEA also noted that nearly 90% of upstream investments since 2019 has been directed toward maintaining existing production rather than expanding overall supply. Recent draws in global crude oil inventory in both commercial storage and strategic reserves provide another indication of the need for sustained investment. Inventory draws have helped balance recent supply disruptions resulting from the closure of the Strait of Hormuz, but those volumes will ultimately need to be replenished as the market works to restore adequate supply capacity and support long-term energy security. The most recent EIA Short-Term Outlook projects US crude oil production to average approximately 13.8 million barrels per day in 2026, increasing only modestly from 2025, with only slight additional growth expected in 2027.

Larry Bruno: For addressing any incremental growth. The IEA also noted that nearly 90% of upstream investments since 2019 has been directed toward maintaining existing production rather than expanding overall supply. Recent draws in global crude oil inventory in both commercial storage and strategic reserves provide another indication of the need for sustained investment. Inventory draws have helped balance recent supply disruptions resulting from the closure of the Strait of Hormuz, but those volumes will ultimately need to be replenished as the market works to restore adequate supply capacity and support long-term energy security. The most recent EIA Short-Term Outlook projects US crude oil production to average approximately 13.8 million barrels per day in 2026, increasing only modestly from 2025, with only slight additional growth expected in 2027.

Lawrence V. Bruno: Taken together, forecasted global demand growth and accelerating decline rates from existing producing fields, along with the need to replenish global inventories and moderating incremental US production growth, reinforce the need for sustained investment in new discoveries. Collectively, these trends, together with renewed concerns about energy security, reinforce the need for a geographically diverse investment cycle encompassing new hydrocarbon exploration, appraisal, and development of international conventional offshore fields. Furthermore, there will be a growing need for additional investment in existing producing fields to mitigate natural decline. Core Lab's global reach, proprietary technologies, and specialized technical expertise offer clients critical advantages to optimize their assets. Now let's review the Q2 performance of our two business segments. Turning first to Reservoir Description. For the Q1 of 2026, revenue came in at $79 million, down 4% compared to Q1 of 2026.

Larry Bruno: Taken together, forecasted global demand growth and accelerating decline rates from existing producing fields, along with the need to replenish global inventories and moderating incremental US production growth, reinforce the need for sustained investment in new discoveries. Collectively, these trends, together with renewed concerns about energy security, reinforce the need for a geographically diverse investment cycle encompassing new hydrocarbon exploration, appraisal, and development of international conventional offshore fields. Furthermore, there will be a growing need for additional investment in existing producing fields to mitigate natural decline. Core Lab's global reach, proprietary technologies, and specialized technical expertise offer clients critical advantages to optimize their assets. Now let's review the Q2 performance of our two business segments. Turning first to Reservoir Description. For the Q1 of 2026, revenue came in at $79 million, down 4% compared to Q1 of 2026.

Lawrence V. Bruno: Operating income for Reservoir Description, ex items, was $3.7 million, down from $4.8 million in Q1, yielding operating margins of 5%. Sequential margins were primarily impacted by reduced assay work resulting from disruptions to crude oil and derived product cargo movements through the Strait of Hormuz, along with delayed project execution and reduced client activity across the Middle East. In addition, expanded sanctions and military action against oil and gas infrastructure also negatively impacted the company's operations in Ukraine and Russia. These geopolitical headwinds were partially offset by continued investment in reservoir characterization programs that are supporting international exploration, appraisal, and development projects in other regions. Now for some operational highlights from Reservoir Description. During the Q2 of 2026, even as portions of our business remain affected by geopolitical disruptions, clients continue to rely on Core Lab's specialized technical expertise and global laboratory network system.

Larry Bruno: Operating income for Reservoir Description, ex items, was $3.7 million, down from $4.8 million in Q1, yielding operating margins of 5%. Sequential margins were primarily impacted by reduced assay work resulting from disruptions to crude oil and derived product cargo movements through the Strait of Hormuz, along with delayed project execution and reduced client activity across the Middle East. In addition, expanded sanctions and military action against oil and gas infrastructure also negatively impacted the company's operations in Ukraine and Russia. These geopolitical headwinds were partially offset by continued investment in reservoir characterization programs that are supporting international exploration, appraisal, and development projects in other regions. Now for some operational highlights from Reservoir Description. During the Q2 of 2026, even as portions of our business remain affected by geopolitical disruptions, clients continue to rely on Core Lab's specialized technical expertise and global laboratory network system.

Lawrence V. Bruno: Core Lab saw growth in international reservoir characterization activity, securing project work on new offshore exploration and appraisal projects, as well as carbon capture and storage projects across several regions. In particular, activity across West Africa continued to grow during Q2, reinforcing a broad trend of increasing international offshore projects. Core Lab was engaged by a major international operator to support reservoir characterization activities following a successful offshore Namibia exploration well. Also during Q2 2026, Core Lab initiated a reservoir characterization program supporting Murphy Oil's recently announced discovery offshore Côte d'Ivoire. Following recovery operations at the well site, core samples were transported to Core Lab's Houston Advanced Technology Center for accelerated analysis using the company's proprietary Dual Energy CT technology. Core Lab is very pleased to be assisting Murphy Oil in this Côte d'Ivoire project.

Larry Bruno: Core Lab saw growth in international reservoir characterization activity, securing project work on new offshore exploration and appraisal projects, as well as carbon capture and storage projects across several regions. In particular, activity across West Africa continued to grow during Q2, reinforcing a broad trend of increasing international offshore projects. Core Lab was engaged by a major international operator to support reservoir characterization activities following a successful offshore Namibia exploration well. Also during Q2 2026, Core Lab initiated a reservoir characterization program supporting Murphy Oil's recently announced discovery offshore Côte d'Ivoire. Following recovery operations at the well site, core samples were transported to Core Lab's Houston Advanced Technology Center for accelerated analysis using the company's proprietary Dual Energy CT technology. Core Lab is very pleased to be assisting Murphy Oil in this Côte d'Ivoire project.

Lawrence V. Bruno: Turning to North America, the company's specialized laboratory capabilities are also helping operators improve recovery from existing producing assets. Utilizing proprietary laboratory technologies, Core Lab's Advanced Technology Center in Calgary is supporting a heavy oil operator with laboratory testing of solvent-assisted thermal recovery techniques. Using innovative proprietary steam flood laboratory technologies, Core Lab replicated subsurface conditions and was able to show how oil production progressed while transitioning from low salinity brine injection to a steam flood, while also incrementally introducing solvents as temperatures rose. The integrated testing program continuously measured oil recovery, permeability, and potential formation damage. The results provided the operator with critical data to evaluate the effectiveness of various solvent injection systems, allowing them to maximize oil recovery. Moving now to Production Enhancement, where Core Lab technologies continue to help our clients optimize their well completions and improve production.

Larry Bruno: Turning to North America, the company's specialized laboratory capabilities are also helping operators improve recovery from existing producing assets. Utilizing proprietary laboratory technologies, Core Lab's Advanced Technology Center in Calgary is supporting a heavy oil operator with laboratory testing of solvent-assisted thermal recovery techniques. Using innovative proprietary steam flood laboratory technologies, Core Lab replicated subsurface conditions and was able to show how oil production progressed while transitioning from low salinity brine injection to a steam flood, while also incrementally introducing solvents as temperatures rose. The integrated testing program continuously measured oil recovery, permeability, and potential formation damage. The results provided the operator with critical data to evaluate the effectiveness of various solvent injection systems, allowing them to maximize oil recovery. Moving now to Production Enhancement, where Core Lab technologies continue to help our clients optimize their well completions and improve production.

Lawrence V. Bruno: Revenue for Production Enhancement for Q2 2026 came in at $46 million, up 15% sequentially and 5% year-over-year. Q2 2026 operating income for Production Enhancement, ex items, was $5 million, yielding operating margins of 12%, with sequential incremental margins of 59%. While US completion activity improved modestly during the quarter, many operators continued to emphasize capital discipline, maintaining their original 2026 execution plans. The demand for Core Lab's advanced completion technologies remained strong, driven by both improved energetic product sales across both the US and international markets, as well as increased market penetration for diagnostic services. Now for some operational highlights from Production Enhancement. During Q2, operators across several US unconventional basins continued to deploy Core Lab's newly commercialized InPulse perforating technology. InPulse incorporates a proprietary energetic material that generates a secondary pressure pulse immediately following the initial perforation event.

Larry Bruno: Revenue for Production Enhancement for Q2 2026 came in at $46 million, up 15% sequentially and 5% year-over-year. Q2 2026 operating income for Production Enhancement, ex items, was $5 million, yielding operating margins of 12%, with sequential incremental margins of 59%. While US completion activity improved modestly during the quarter, many operators continued to emphasize capital discipline, maintaining their original 2026 execution plans. The demand for Core Lab's advanced completion technologies remained strong, driven by both improved energetic product sales across both the US and international markets, as well as increased market penetration for diagnostic services. Now for some operational highlights from Production Enhancement. During Q2, operators across several US unconventional basins continued to deploy Core Lab's newly commercialized InPulse perforating technology. InPulse incorporates a proprietary energetic material that generates a secondary pressure pulse immediately following the initial perforation event.

Lawrence V. Bruno: This technology improves near wellbore connectivity and reduces breakdown pressures, leading to faster stage execution and improved completion efficiency. As commercialization continues, growing deployment among existing Core Lab clients is supporting increased product adoption and creating opportunities to expand the technology across North American unconventional plays. InPulse has applications in domestic and international markets, in both conventional and unconventional reservoirs, and for geothermal wells. Application for Core's completion diagnostic services are also expanding. During Q2, an operator in West Texas utilized Core's FlowProfiler oil and water tracer technology to identify the highest quality landing intervals before committing to specific lateral targets. Following a successful tracer-backed appraisal program in the vertical borehole, the operator deployed tracers into selected horizontal wells, where stage-by-stage diagnostics identified the highest producing completion intervals.

Larry Bruno: This technology improves near wellbore connectivity and reduces breakdown pressures, leading to faster stage execution and improved completion efficiency. As commercialization continues, growing deployment among existing Core Lab clients is supporting increased product adoption and creating opportunities to expand the technology across North American unconventional plays. InPulse has applications in domestic and international markets, in both conventional and unconventional reservoirs, and for geothermal wells. Application for Core's completion diagnostic services are also expanding. During Q2, an operator in West Texas utilized Core's FlowProfiler oil and water tracer technology to identify the highest quality landing intervals before committing to specific lateral targets. Following a successful tracer-backed appraisal program in the vertical borehole, the operator deployed tracers into selected horizontal wells, where stage-by-stage diagnostics identified the highest producing completion intervals.

Lawrence V. Bruno: Elsewhere, a major operator in Louisiana utilized the company's gas tracer technology to evaluate production performance across extended length horizontal laterals. The diagnostics confirmed that the completion design had produced sustained gas contribution from the toe of the well, increasing confidence in the development of this long lateral. Core Lab's diagnostic technology also supported a leading independent operator in Western Canada in evaluating a complex multilateral water shutoff program. Core's diagnostic technologies confirmed that water was bypassing the isolation packer, providing definitive evidence that allowed the operator to refine the completion design. Collectively, these diagnostic projects demonstrate the expanding role of Core Lab's proprietary tracer technologies across the unconventional development cycle, from reservoir appraisal and completion optimization, as well as production surveillance and even water management programs. That concludes our operational review. We appreciate your participation. Alan will now open the call for questions.

Larry Bruno: Elsewhere, a major operator in Louisiana utilized the company's gas tracer technology to evaluate production performance across extended length horizontal laterals. The diagnostics confirmed that the completion design had produced sustained gas contribution from the toe of the well, increasing confidence in the development of this long lateral. Core Lab's diagnostic technology also supported a leading independent operator in Western Canada in evaluating a complex multilateral water shutoff program. Core's diagnostic technologies confirmed that water was bypassing the isolation packer, providing definitive evidence that allowed the operator to refine the completion design. Collectively, these diagnostic projects demonstrate the expanding role of Core Lab's proprietary tracer technologies across the unconventional development cycle, from reservoir appraisal and completion optimization, as well as production surveillance and even water management programs. That concludes our operational review. We appreciate your participation. Alan will now open the call for questions.

Operator: We will now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone 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 it, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question today comes from Don Crist of Johnson Rice. Please go ahead.

Don Crist: Morning, guys. Thanks for letting me in.

Lawrence V. Bruno: Yeah. Morning, Don.

Larry Bruno: Yeah. Morning, Don.

Don Crist: I wanted to start on the assay work. Obviously, the Middle East is a large portion of worldwide shipments of oil, and you are being influenced by both that and Ukraine/Russia. I wanted to see how much you are seeing a pickup in movement of oil in other parts of the world. In other words, if 25% or 30% of your business was out of those two regions, how much has the rest of the world picked up with movements out of the US or other places?

Lawrence V. Bruno: Yeah, Don.

Larry Bruno: Yeah, Don.

Lawrence V. Bruno: Andy, you want to call it there?

Larry Bruno: Andy, you want to call it there?

Lawrence V. Bruno: Yeah. Good question. I don't have in front of me the breakdown by region. I can tell you that we look at pre-conflict cargo movements versus post-conflict cargo movements, and those are down 16% globally.

Larry Bruno: Yeah. Good question. I don't have in front of me the breakdown by region. I can tell you that we look at pre-conflict cargo movements versus post-conflict cargo movements, and those are down 16% globally.

Don Crist: Okay.

Lawrence V. Bruno: You can imagine, one of the things I think it is important to convey here is we have revenue opportunities on both sides of a transaction. A cargo ship that might be loading in the Middle East, we have an opportunity there. If that cargo makes landfall in North America or Europe, we have an opportunity there. We kind of get it at both ends, unfortunately, with the shipments not getting out of the Straits of Hormuz. The other thing I think is important, we touched on it during our commentary, is with the volatility in the situation, we are trying to do what we can to minimize costs without disassembling the experience and the staff that we have to do this.

Larry Bruno: You can imagine, one of the things I think it is important to convey here is we have revenue opportunities on both sides of a transaction. A cargo ship that might be loading in the Middle East, we have an opportunity there. If that cargo makes landfall in North America or Europe, we have an opportunity there. We kind of get it at both ends, unfortunately, with the shipments not getting out of the Straits of Hormuz. The other thing I think is important, we touched on it during our commentary, is with the volatility in the situation, we are trying to do what we can to minimize costs without disassembling the experience and the staff that we have to do this.

Lawrence V. Bruno: Because things change, and we don't want to discharge all these folks and then have to try to bring them back or rebuild the organization. We are doing the best we can given the volatility, but we will continue to stay focused on maximizing efficiency in the operation and making sure we are running as cost-effectively as possible.

Larry Bruno: Because things change, and we don't want to discharge all these folks and then have to try to bring them back or rebuild the organization. We are doing the best we can given the volatility, but we will continue to stay focused on maximizing efficiency in the operation and making sure we are running as cost-effectively as possible.

Don Crist: Right. The only other point I would say too, Larry, is that when these conflicts flare up and then the oil price starts jumping all over the place, that also slows down the activity when you are talking about moving, trading primarily oil. The trader part of that comes to a stop because they can't predict future oil prices. It has an immediate impact on that.

Don Crist: Okay.

Don Crist: Maybe just a comment. Sorry, Don, maybe just one add-on to that, the Russia-Ukraine situation. We are executing during the quarter a cost reduction plan for that business.

Don Crist: Okay. You're testing SPR oil though, too, right? That's coming out of the various places around the world?

Lawrence V. Bruno: Yeah. If there's stuff going into the transportation network around the globe, we get a bite at that apple.

Larry Bruno: Yeah. If there's stuff going into the transportation network around the globe, we get a bite at that apple.

Don Crist: Right. Okay. That's what I wanted to clarify.

Lawrence V. Bruno: Yeah. Whether it's coming out of an SPR or whether it's coming out of a tank somewhere.

Larry Bruno: Yeah. Whether it's coming out of an SPR or whether it's coming out of a tank somewhere.

Don Crist: Okay.

Don Crist: On the offshore side, the comments that I've heard most recently from other operators is there's more conviction today in projects moving forward than they've seen in the past, where operators may be testing pricing or other kind of factors. Are you seeing more conviction in your customer calls today that these offshore projects that we've been predicting for a couple of years now are moving forward? Are you seeing that as well?

Lawrence V. Bruno: Yeah, Don, I think that's very true. I think the, I'll call it the intensity of the conversations have picked up. The comment we made before, we actually saw that starting to happen as back into 2025 and ran into a string of dry holes where we had committed work, a substantial amount of committed work, ready to go, and client said, didn't find anything, stand down. We talked about some of the projects that we're engaged with right now on discoveries. Obviously, and their clients to be successful, when they're in their exploration efforts. I think things are lining up for a very nice rebound in activity on offshore reservoir characterization projects late this year, but certainly into 2027.

Larry Bruno: Yeah, Don, I think that's very true. I think the, I'll call it the intensity of the conversations have picked up. The comment we made before, we actually saw that starting to happen as back into 2025 and ran into a string of dry holes where we had committed work, a substantial amount of committed work, ready to go, and client said, didn't find anything, stand down. We talked about some of the projects that we're engaged with right now on discoveries. Obviously, and their clients to be successful, when they're in their exploration efforts. I think things are lining up for a very nice rebound in activity on offshore reservoir characterization projects late this year, but certainly into 2027.

Don Crist: Right. Okay. One final one from me. A couple quarters back, you had talked about a project or a product that in the US was boosting recoveries, but it had to be done on the initial completion. Is that this InPulse product that you talked about this quarter?

Lawrence V. Bruno: Well, I'm not quite sure. There's two topics that might cover that. One is InPulse, which we just talked to again here, where that's a perforating or an energetic technology that pre-stimulates the near wellbore area so that the charge goes off, penetrates the casing, and then right behind that, and I can't remember whether it was milliseconds or microseconds at the moment, a very powerful secondary charge rubblizes the area in the near wellbore. The feedback we got from our clients were that that was reducing their breakdown time, their time to rate, as they refer to it, the time to get the maximum rate. The other thing that might fit into your conversation there is enhanced oil recovery, which is a laboratory process. We've got a number of tests going on for clients that look at ways to increase the recovery rate out of unconventional reservoirs.

Larry Bruno: Well, I'm not quite sure. There's two topics that might cover that. One is InPulse, which we just talked to again here, where that's a perforating or an energetic technology that pre-stimulates the near wellbore area so that the charge goes off, penetrates the casing, and then right behind that, and I can't remember whether it was milliseconds or microseconds at the moment, a very powerful secondary charge rubblizes the area in the near wellbore. The feedback we got from our clients were that that was reducing their breakdown time, their time to rate, as they refer to it, the time to get the maximum rate. The other thing that might fit into your conversation there is enhanced oil recovery, which is a laboratory process. We've got a number of tests going on for clients that look at ways to increase the recovery rate out of unconventional reservoirs.

Lawrence V. Bruno: The commentary about having to be done early on is one of the keys in making that work is to maximize surface area in the near wellbore area. If you have a lot of penetrations and you rubblize the area around the near wellbore, that increased surface area allows for better thermodynamic interaction and the enhanced oil recovery process of either swelling the oil in place or evaporation, or vaporization and condensation, two different techniques, takes place. They both benefit from how you've stimulated the well. We've got projects going on both, where we've got growing acceptance of impulse charges and we've got engagement with several clients on these EOR processes where we're validating the thermodynamic processes that will work. Now, with those EOR projects, in both cases, containment is an issue that we can't help the clients with.

Larry Bruno: The commentary about having to be done early on is one of the keys in making that work is to maximize surface area in the near wellbore area. If you have a lot of penetrations and you rubblize the area around the near wellbore, that increased surface area allows for better thermodynamic interaction and the enhanced oil recovery process of either swelling the oil in place or evaporation, or vaporization and condensation, two different techniques, takes place. They both benefit from how you've stimulated the well. We've got projects going on both, where we've got growing acceptance of impulse charges and we've got engagement with several clients on these EOR processes where we're validating the thermodynamic processes that will work. Now, with those EOR projects, in both cases, containment is an issue that we can't help the clients with.

Lawrence V. Bruno: Can they introduce a gas into the reservoir and have it go to work where they want it? Is it gonna run down faults or extended tracks and disappear into the subsurface? That's something that we can't really help with.

Larry Bruno: Can they introduce a gas into the reservoir and have it go to work where they want it? Is it gonna run down faults or extended tracks and disappear into the subsurface? That's something that we can't really help with.

Don Crist: Right. Okay. Well, everybody's looking for more recovery, I'm sure both of those products will gain traction.

Lawrence V. Bruno: Yeah.

Larry Bruno: Yeah.

Don Crist: I appreciate the color, guys. I'll turn it back.

Lawrence V. Bruno: Yeah. Thanks, Don. We published a few things a while back on the vaporization and condensation technique, if people wanna go look that up.

Larry Bruno: Yeah. Thanks, Don. We published a few things a while back on the vaporization and condensation technique, if people wanna go look that up.

Don Crist: Bye.

Chris S. Hill: Thanks, Don.

Chris Hill: Thanks, Don.

Chris S. Hill: Thanks, Don.

Chris Hill: Thanks, Don.

Lawrence V. Bruno: Thanks, Don.

Larry Bruno: Thanks, Don.

Operator: Our next question comes from Sean Mitchell of Daniel Energy Partners.

Gwen Y. Gresham: Morning, Sean.

Gwen Gresham: Morning, Sean.

Gwen Y. Gresham: Good morning.

Gwen Gresham: Good morning.

Sean Mitchell: Morning.

Lawrence V. Bruno: Thanks for taking the question. Any color, Larry, just additional color around the UAE regulatory approval for SpectraStim and SpectraScan? Obviously, that was notable in the press release. Any additional color there? Any additional read-through from your peers this week, in OFS land around normalization of the Middle East? Anything that's corroborating with what your own opinion it might be or different? On the UAE, the technology that we're talking about there involve using isotopes. It's a technique that we are using in some other parts of the Middle East, where we've got licensing. We've been doing work for ADNOC and other UAE folks for a while, but now we have another tool in our belt, if you will, to address other diagnostics. That regulatory door is now open for us.

Larry Bruno: Thanks for taking the question. Any color, Larry, just additional color around the UAE regulatory approval for SpectraStim and SpectraScan? Obviously, that was notable in the press release. Any additional color there? Any additional read-through from your peers this week, in OFS land around normalization of the Middle East? Anything that's corroborating with what your own opinion it might be or different? On the UAE, the technology that we're talking about there involve using isotopes. It's a technique that we are using in some other parts of the Middle East, where we've got licensing. We've been doing work for ADNOC and other UAE folks for a while, but now we have another tool in our belt, if you will, to address other diagnostics. That regulatory door is now open for us.

Lawrence V. Bruno: We can now store on-site, and we can deploy them into the field to help diagnose what's going on. In terms of what we're seeing in the Middle East, it's not just the assay work, there's also the subsurface reservoir characterization work that's being impacted, as well as completion diagnostics in at least two countries, I'm thinking off the top of my head, where field operations got suspended. When the ceasefire was announced, we saw the tankers start to take on more cargo, and some started to leave the region, but not as many as people might have hoped. We can track that. We've got independent sources that track the tanker movements that we subscribe to. We monitor that. On the subsurface projects, things were starting to pick up.

Larry Bruno: We can now store on-site, and we can deploy them into the field to help diagnose what's going on. In terms of what we're seeing in the Middle East, it's not just the assay work, there's also the subsurface reservoir characterization work that's being impacted, as well as completion diagnostics in at least two countries, I'm thinking off the top of my head, where field operations got suspended. When the ceasefire was announced, we saw the tankers start to take on more cargo, and some started to leave the region, but not as many as people might have hoped. We can track that. We've got independent sources that track the tanker movements that we subscribe to. We monitor that. On the subsurface projects, things were starting to pick up.

Lawrence V. Bruno: Think of this as more of the upstream applications that we engage with. Things were starting to pick up. Clients were looking at getting back in the field with us, so that we could start getting samples from the well site, and that's now pulled back some.

Larry Bruno: Think of this as more of the upstream applications that we engage with. Things were starting to pick up. Clients were looking at getting back in the field with us, so that we could start getting samples from the well site, and that's now pulled back some.

Sean Mitchell: Got it. Maybe one other follow-on to Don's comment, just on customer interest. What we've heard a lot lately is just more exploration. We actually have heard it a couple of times over the last several weeks from E&P companies. Just wondering, outside of the Middle East, is the phone starting to ring more and more on exploration in general? That seems to be coming up more and more today.

Lawrence V. Bruno: Yeah. No question about it. Like I said, it started ringing a while back for us, unfortunately, a sort of failure to launch for us. We got left at the dock. Africa's clearly picking up, Brazil, and the South Atlantic margin picking up, Asia Pacific also picking up for us. There's a couple places I can't talk about yet that will raise some eyebrows if and when those projects come to fruition. Hopefully, we'll be able to talk about those in the coming quarters.

Larry Bruno: Yeah. No question about it. Like I said, it started ringing a while back for us, unfortunately, a sort of failure to launch for us. We got left at the dock. Africa's clearly picking up, Brazil, and the South Atlantic margin picking up, Asia Pacific also picking up for us. There's a couple places I can't talk about yet that will raise some eyebrows if and when those projects come to fruition. Hopefully, we'll be able to talk about those in the coming quarters.

Sean Mitchell: Okay, great. Thank you.

Sean Mitchell: Thanks, Sean.

Sean Mitchell: Yeah. Thanks, Sean.

Operator: The next question comes from Sophia Vallecillo of Bank of America. Please go ahead.

Gwen Y. Gresham: Hey, good morning, Sophia.

Gwen Gresham: Hey, good morning, Sophia.

Sophia Vallecillo: Morning. I just wanted to ask over the guide a little bit. Obviously, you're guiding sequential growth and is any of that coming from normalization in the Middle East or Russia/Ukraine, or is all of that growth coming from the geo markets you mentioned, completely offsetting the geopolitical impacts?

Gwen Y. Gresham: For Reservoir Description, Sophia, we're projecting that to be up mid-single digits and driven by Africa, Brazil, Asia Pacific, and parts of Europe, like Larry mentioned. I would say ex Middle East, although we are seeing some marginal improvement with how projects are moving along, the subsurface projects are moving along in the Middle East. For Production Enhancement, we're projecting that to be up mid-single to low double digits, and that's driven by what we think will be a modest improvement on US land. We think operators will continue their capital spending plans for 2026, so not as sensitive to the volatility in the commodity prices. We also expect our international product business to be up slightly sequentially as well. That's going to be driven by the Eastern Hemisphere and Africa.

Gwen Gresham: For Reservoir Description, Sophia, we're projecting that to be up mid-single digits and driven by Africa, Brazil, Asia Pacific, and parts of Europe, like Larry mentioned. I would say ex Middle East, although we are seeing some marginal improvement with how projects are moving along, the subsurface projects are moving along in the Middle East. For Production Enhancement, we're projecting that to be up mid-single to low double digits, and that's driven by what we think will be a modest improvement on US land. We think operators will continue their capital spending plans for 2026, so not as sensitive to the volatility in the commodity prices. We also expect our international product business to be up slightly sequentially as well. That's going to be driven by the Eastern Hemisphere and Africa.

Sophia Vallecillo: Okay. Is there any sort of visibility into Q4 yet, or is it way too early?

Gwen Y. Gresham: I think it's a little early for that given.

Gwen Gresham: I think it's a little early for that given.

Lawrence V. Bruno: Tell us when the war's going to end.

Larry Bruno: Tell us when the war's going to end.

Sophia Vallecillo: Yeah.

Lawrence V. Bruno: Yeah. Sophia, I think Gwen covered it very well there.

Larry Bruno: Yeah. Sophia, I think Gwen covered it very well there.

Sophia Vallecillo: Yeah.

Lawrence V. Bruno: What I might add to that a little bit is, we obviously felt like we had to dial in contingencies for what does the upside look like if things come to a conclusion sooner in the Middle East, or what does it look like if things come to fruition later in the resolve of the Middle East conflict. That's somewhat, we felt sort of compelled to give a pretty wide range there to try to cover the eventualities. We try to be as transparent as we can in what we see as upside and downside on that. The other one for us, Chris mentioned, I'm sorry, Gwen mentioned, we're working hard on it. There's a lot of complications in navigating the situations in Russia/Ukraine. We're getting squeezed from both sides there, different governments telling us opposing things we can and can't do.

Larry Bruno: What I might add to that a little bit is, we obviously felt like we had to dial in contingencies for what does the upside look like if things come to a conclusion sooner in the Middle East, or what does it look like if things come to fruition later in the resolve of the Middle East conflict. That's somewhat, we felt sort of compelled to give a pretty wide range there to try to cover the eventualities. We try to be as transparent as we can in what we see as upside and downside on that. The other one for us, Chris mentioned, I'm sorry, Gwen mentioned, we're working hard on it. There's a lot of complications in navigating the situations in Russia/Ukraine. We're getting squeezed from both sides there, different governments telling us opposing things we can and can't do.

Lawrence V. Bruno: That's also challenging to navigate. There were some dramatic images over the Q2 of explosions at Russian storage facilities, for example, and in Ukraine as well. We have operations in both countries, and that's presenting some uncertainty and challenges for us, too. On top of that, the sanctions got reinforced. I think the US did it in Q4, then Europe came in in the late Q1 and also enhanced sanctions, that's also tying our hands on who we can and can't work for.

Larry Bruno: That's also challenging to navigate. There were some dramatic images over the Q2 of explosions at Russian storage facilities, for example, and in Ukraine as well. We have operations in both countries, and that's presenting some uncertainty and challenges for us, too. On top of that, the sanctions got reinforced. I think the US did it in Q4, then Europe came in in the late Q1 and also enhanced sanctions, that's also tying our hands on who we can and can't work for.

Sophia Vallecillo: All right. Makes sense. Thank you.

Lawrence V. Bruno: Okay.

Larry Bruno: Okay.

Gwen Y. Gresham: Thanks, Sophia.

Gwen Gresham: Thanks, Sophia.

Lawrence V. Bruno: I think we'll wrap up there. In summary, Core's operational leadership continues to position the company for improving client activity levels in the coming quarters and years. For nine decades, through many cycles, Core Lab has successfully navigated changing industry dynamics, geopolitical uncertainty, and global market disruptions by remaining focused on innovation, operational excellence, and serving our clients. Core Lab is well-positioned, both operationally and technologically, to help our global client base optimize reservoir performance and address their evolving needs. Our focus on differentiated technologies, scientific expertise, and client collaboration continues to distinguish the company across the oil field 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.

Larry Bruno: I think we'll wrap up there. In summary, Core's operational leadership continues to position the company for improving client activity levels in the coming quarters and years. For nine decades, through many cycles, Core Lab has successfully navigated changing industry dynamics, geopolitical uncertainty, and global market disruptions by remaining focused on innovation, operational excellence, and serving our clients. Core Lab is well-positioned, both operationally and technologically, to help our global client base optimize reservoir performance and address their evolving needs. Our focus on differentiated technologies, scientific expertise, and client collaboration continues to distinguish the company across the oil field 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.

Lawrence V. Bruno: In the near term, Core will continue to use free cash to repurchase shares while preserving its strong balance sheet. 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. Thanks for spending time with us, and we look forward to our next update. Goodbye for now.

Larry Bruno: In the near term, Core will continue to use free cash to repurchase shares while preserving its strong balance sheet. 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. 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.

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