Core Lab Extends Sequential Growth Amid Middle East Disruption

The Tip Desk · November 9, 2026 · 4 min read

Third-quarter revenue reached $132.1 million as Reservoir Description reversed a sequential decline and Production Enhancement product sales rose 14%.

Core Laboratories Inc. (CLB) reported third-quarter 2026 revenue of $132.1 million, up 6% sequentially after a 2% sequential increase in the prior quarter and down 2% from a year earlier.

GAAP operating income was $12.1 million, and diluted earnings attributable to Core Laboratories were $0.12 a share. Operating income excluding items was $12.6 million, with a 10% operating margin versus 8% in the second quarter. EPS excluding items was $0.16.

The sequential recovery in Reservoir Description was the quarter’s defining turn. The unit, which sources about 80% of its revenue from projects outside the United States, posted revenue of $84.3 million, reversing a 4% sequential decline in the second quarter. GAAP operating income in the segment was $7.7 million, and ex-items operating income was $8.1 million, with a 10% margin versus 5% in the prior quarter. Sequential incremental margins were 78%.

Chief Executive Larry Bruno said international revenue rose in Europe-Africa, Asia-Pacific, Latin America and the Middle East, with a gradual improvement in Middle East activity particularly late in the quarter. Demand for assay services in the Middle East showed modest improvement late in the quarter but remained below pre-conflict levels. The company said ongoing geopolitical instability and sanctions in the Middle East and Russia-Ukraine continued to weigh on demand.

During the quarter, a leading national oil company in the Middle East awarded Core Lab an expanded analytical program after an initial reservoir characterization study, using the company’s PRISM workflow, High Frequency NMR, NANO-k 100 Nano Permeametry and SMP-200 Shale Matrix Permeameter technologies. Omega Oil and Gas engaged Core to evaluate more than 360 feet of conventional core and sidewall cores from two appraisal wells in Queensland’s Taroom Trough.

Production Enhancement, focused on complex completions in the United States and globally, posted revenue of $47.8 million, up 4% sequentially and 3% year-over-year. GAAP operating income was $4.3 million; ex-items operating income was $4.4 million, with a 9% margin. Product sales rose 14% sequentially, with increases in both U.S. land and international markets. U.S. sales benefited from increased demand for completion products and growing adoption of proprietary completion technologies, the company said. International product sales grew across Europe, Asia-Pacific and the Middle East. Those gains were partially offset by the timing of diagnostic service activity in the Gulf of America, as several large projects originally scheduled for the third quarter were delayed, impacting both revenue and operating margins.

A North American oilfield service company engaged Core Lab to enhance perforating operations using AERO FLEX, AERO POINT and AERO SET technologies, and is expanding adoption of the AERO product family throughout its North American operations. A Brazilian independent operator engaged the company to support a waterflood optimization project using SpectraFlood tracer technology and is expanding use of the flood diagnostic technology across more than 50 conventional assets.

Free cash flow was $1.7 million, down from $3.1 million in the second quarter. Cash from operations was $5.0 million and capital expenditures associated with operations were $3.3 million. The company said higher costs of carrying inventory for certain raw materials used in perforating systems, and higher accounts receivable as activity in both segments increased exiting the quarter, raised working capital. Capital expenditures to restore the Aberdeen Advanced Technology Center after a February 2024 fire were about $500,000 in the third quarter and are excluded from free cash flow.

Core Lab repurchased 87,873 shares for about $1.1 million. Net debt was $93.4 million as of September 30, 2026, a reduction of $200,000. The leverage ratio was under 1.50. The board approved a $0.01 a share quarterly cash dividend payable November 30, 2026.

For the fourth quarter of 2026, Core Lab expects revenue to remain relatively flat sequentially, reflecting continued disruptions in the Middle East, including early-quarter attacks that have already delayed some projects. The company projects revenue of $128.5 million to $134.5 million, operating income of $10.7 million to $15.1 million, and EPS of $0.12 to $0.20. Reservoir Description is guided to $81.0 million to $85.0 million of revenue and $5.1 million to $8.3 million of operating income; Production Enhancement to $47.5 million to $49.5 million of revenue and $5.5 million to $6.7 million of operating income. The company said it expects customary year-end seasonal moderation in U.S. land completion activity, partially offset by sequential improvement in diagnostic services, and a sequential increase in Production Enhancement service activity.