Core Labs Trims 3Q Outlook - Analyst Blog
October 03 2012 - 4:45AM
Zacks
Core Laboratories
N.V. (CLB) cut its view for the upcoming quarter owing to
lower North American rig counts.
The Amsterdam, Netherlands-based oilfield service company now
expects its third quarter 2012 earnings in the band of $1.09 to
$1.13 per share on the back of consolidated revenues of $240
million to $245 million.
Earlier – during its second quarter earnings release – Core
Laboratories had projected earnings in a range of $1.17 to $1.25
per share and revenues of about $250 million to $260 million. It
was based on a flat North American rig count, besides factoring in
improving activity outside North America.
But since the end of the second quarter 2012, the U.S. land rig
count of Baker Hughes Inc. (BHI) has slipped by
approximately 6%, or by 112 units, with the Canadian rig count 30%
below the year-ago level. This level of low activity has affected
Core Laboratories' Production Enhancement segment.
Core Laboratories now expects third quarter 2012 revenue for this
segment to be roughly $100 million, reflecting a minor sequential
improvement.
The company anticipates activity levels for the balance of the year
to be similar to the third quarter. With this, Core Laboratories
would expect fourth quarter revenues and earnings to be similar to
the third quarter.
Core Laboratories’ deep portfolio of proprietary products and
services positions it to operate successfully in the current
environment of low commodity prices and growing maturity in the
global hydrocarbon reserve base. Additionally, the company’s strong
presence in the emerging shale plays and its global footprint –
including markets in the Middle East, Asia Pacific, and East and
West Africa – facilitate steady growth rates going forward.
However, the company’s business is not immune to gas/oil price
volatility, exploration and production spending patterns, costs,
geo-political risks, competition and the advent of new
technologies.
We expect Core Laboratories to perform in line with the broader
market and, therefore, maintain our Neutral recommendation.
However, the company retains a Zacks #4 Rank, which is equivalent
to a Sell rating for a period of one to three months.
BAKER-HUGHES (BHI): Free Stock Analysis Report
CORE LABS NV (CLB): Free Stock Analysis Report
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