(Source: PRNewswire-FirstCall)
AMSTERDAM, April 22 /PRNewswire-FirstCall/ -- Core Laboratories N.V. reported first quarter 2009 revenue of $178,876,000, which was approximately equal to revenue reported for the first quarter of 2008. Net income for the quarter was $29,192,000, including foreign exchange losses, compared with net income of $26,747,000 for the first quarter of 2008. Earnings per diluted share (EPS) for the first quarter of 2009 were $1.26, while EPS for the year-earlier quarter were $1.11.
Excluding foreign exchange losses that equaled $0.05 per share, Core's EPS for the first quarter of 2009 was $1.31, compared with last year's first quarter adjusted EPS of $1.23.
Operating income for the first quarter of 2009 reached $48,507,000, excluding the effects for foreign exchange losses. First quarter operating margins, defined as operating income excluding the effects of foreign exchange divided by revenue, were 27%, which is comparable with the year-earlier first quarter operating margins using adjusted operating income.
Free cash flow, defined as cash from operations minus capital expenditures, reached an all-time quarterly high of $47,463,000, and quarter-ending cash was $73,036,000, the highest quarter-end total ever recorded by the Company. For the quarter, free cash flow topped $2.00 per diluted share, while cash totaled $3.15 per diluted share. Core utilized some of this free cash to repurchase shares in the quarter after receiving shareholder authorization on 29 January 2009 to repurchase up to 25.6% of the Company's issued share capital. Core's total average outstanding share count of 23,210,000 is now at its lowest level since the third quarter of 1997. In addition, during the past year, Core's indebtedness, net of cash, has been reduced from approximately $271,000,000 to approximately $165,000,000, a decrease of $106,000,000, or nearly 40%.
First quarter results were supported by year-over-year first quarter revenue and operating profit gains for Reservoir Description operations and revenue gains for Reservoir Management operations. Both operating segments have significant international operations and projects, which include deepwater exposure on both southern Atlantic coastlines. Production Enhancement operations, with greater exposure to North American natural gas markets, posted slightly lower first quarter revenue and operating profit totals. Increased market penetration by, and acceptance of, recently introduced Production Enhancement services and products largely offset the significant decline in North American drilling activities.
Segment Highlights
Core Laboratories reports results under three operating segments: Reservoir Description, Production Enhancement, and Reservoir Management.
Reservoir Description
Reservoir Description operations reported quarterly revenue of $102,523,000, up 2% from year-earlier totals, and operating income of $24,752,000, up 8% from last year's first quarter. Excluding adjustments, operating income totaled $26,428,000, up 23% from last year's first quarter total. Operating margins were 24%, or 26% excluding currency effects, up 440 basis points over year-earlier margins that exclude non-operational gains.
Reservoir Description margins benefited from de-emphasis of its Russian operations and downsizing of its Mexican, Venezuelan, and Nigerian operations over the past three years, as the Company focused on development and production-related crude-oil projects almost to the exclusion of more cyclical exploration-related activities.
During the quarter, Reservoir Description continued large-scale core analyses studies, reservoir fluids phase-behavior projects, and crude oil and derived petroleum products characterization studies on a global basis. Significant projects continue in the Middle East, Asia-Pacific, and offshore deepwater regions of the southern Atlantic margins and Gulf of Mexico.
Production Enhancement
Production Enhancement operations posted first quarter 2009 revenue of $63,100,000 and operating income of $18,324,000, or $18,594,000 excluding currency effects. Year-over-year first quarter revenue was down 6%; operating income was down 16%; and operating income, excluding currency effects, was down 15%, reflecting the effects of the significant declines in North American drilling activity. Operating margins were 29% for the quarter.
Given that North American drilling activity was down over 27% from the first quarter of 2008, Production Enhancement operations performed relatively well, primarily because of continued market penetration by the Company's HERO(TM), SuperHERO(TM), and SuperHERO Plus+(TM) line of perforating charges and Core's patented and proprietary fracture diagnostic services. Because these products and services are more focused on high-end well completion and stimulation programs, mainly in the Barnett, Haynesville, Fayetteville, Marcellus, and Muskwa/Montney shale plays, increased demand for Core's specialized services outpaced the significant decrease in drilling of lower-end, vertical natural gas wells. The HERO line of charges continued to increase its market penetration and accounted for 65% of all perforating charges sold by Core in the first quarter.
In addition, the Company has successfully introduced a SpectraChem Plus+(TM) service. This enhanced service enables natural gas producers to determine the efficiency and effectiveness of frac fluid flowback from a stimulated formation. This new service also determines whether reservoir formation fluids are present in the returned fluids. The presence of reservoir formation fluids in the frac fluid returns can lead an operator to perform excessive reservoir cleanup, which increases costs and could lower productivity.
Reservoir Management
Reservoir Management operations recorded first quarter 2009 revenue of $13,253,000, up 11% from the year-earlier quarter; operating income of $3,478,000; and an operating margin of 26%. Excluding foreign exchange losses, operating income was $3,673,000, and the operating margin was 28%.
The Company has six ongoing joint-industry projects and studies in the western south Atlantic margin offshore Brazil, including several in deepwater, and five joint-industry projects continuing on the eastern south Atlantic margin offshore West Africa, also including the deepwater. In total, over 40 international oil companies are participating in these studies, including Petrobras, ExxonMobil, Shell, Total, BP, Conoco, Chevron, Anadarko, Hess, Devon, Statoil, Occidental, Newfield, and Repsol.
Core also continues to expand joint-industry projects in its North American Gas Shales study, now with 62 companies, and is conducting subset studies in the Haynesville Shale for 33 companies and the Marcellus Shale for 22 companies.
Free Cash Flow, Cash, and Share Repurchase Program
For the first quarter of 2009, Core generated approximately $50,118,000 in cash from operations and had approximately $2,655,000 in capital expenditures. Free cash flow for the quarter totaled approximately $47,463,000, the highest quarterly total ever recorded by the Company, topping $2.00 per diluted share. Cash reached $73,036,000, which was the highest quarter-ending level ever reported by Core, and it represents $3.15 of cash per diluted outstanding share.
