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What changed in Core Laboratories Inc. /DE/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Core Laboratories Inc. /DE/'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+252 added−245 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-15)

Top changes in Core Laboratories Inc. /DE/'s 2024 10-K

252 paragraphs added · 245 removed · 192 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThese technologies provide clients with analog data sets in situations where acquisition of new conventional core may not be possible or where only wellbore drill cuttings are available. High-resolution images of wellbore cuttings and sidewall cores are quickly and efficiently matched with analogs from Core Lab’s proprietary database of samples from around the world.
Biggest changeCore Lab’s proprietary World Wide Rock Catalog TM provides a database and analog reference set for predicting properties when physical measurements are unavailable. These technologies provide clients with analog data sets in situations where the acquisition of new conventional core may not be possible or where only wellbore drill cuttings are available.
We continue to add new modules to our suite of data management platforms that enhance the customer experience and improve access to project results. We conduct numerous large-scale, multi-company reservoir description projects, applying proprietary and state-of-the-art techniques from the earliest phases of a field development program until the last economic barrel of oil is recovered.
We continue to add new modules to our suite of data management platforms that enhance customer experience and improve access to project results. We conduct numerous large-scale, multi-company reservoir description projects, applying proprietary and state-of-the-art techniques from the earliest phases of a field development program until the last economic barrel of oil is recovered.
We also have engaged a third-party sustainability data company to quantify the impact of emissions categorized as: • Scope 1 (direct GHG emissions that occur from sources that we control or own), • Scope 2 (indirect GHG emissions associated with the purchase of electricity, steam, heat, or cooling) or • Scope 3 (indirect emissions that occur upstream or downstream in our value chain) This system assists us in setting science-based targets for our Scope 1 and Scope 2 emissions.
We have also engaged a third-party sustainability data company to quantify the impact of emissions categorized as: • Scope 1 (direct GHG emissions that occur from sources that we control or own), • Scope 2 (indirect GHG emissions associated with the purchase of electricity, steam, heat, or cooling) or • Scope 3 (indirect emissions that occur upstream or downstream in our value chain) This system assists us in setting science-based targets for our Scope 1 and Scope 2 emissions.
Future downturns in the oil and gas industry, or in the oilfield services business as well as the adoption and implementation of legislation, executive orders, and other regulatory initiatives that seek to combat climate change by restricting fossil fuel activities, limiting GHG emissions, certain methods of extraction of oil and gas, or the locations in which such activities may be 8 conducted, may have a material adverse effect on our financial position, results of operations or cash flows.
Future downturns in the oil and gas industry, or in the oilfield services business as well as the adoption and implementation of legislation, executive orders, and other regulatory initiatives that seek to combat climate change by restricting fossil fuel activities, limiting GHG emissions, certain methods of extraction of oil and gas, or the locations in which such activities may be conducted, may have a material adverse effect on our financial position, results of operations or cash flows.
Such work is performed in an industrial or laboratory setting, or at our clients’ worksite which would also require travel. These types of conditions are susceptible to workplace accidents. See Item 1A. Risk Factors, “Risk factors associated with health, safety and the environment” for further discussion on environmental matters. Competition The business in which we engage is competitive.
Such work is performed in an industrial or laboratory setting, or at our clients’ worksite which would also require travel. These types of conditions are susceptible to workplace accidents. See Item 1A. Risk Factors, “Risk factors associated with health, safety and the environment” for further discussion on environmental matters. 8 Competition The business in which we engage is competitive.
Some of these initiatives include deployment of technologies associated with the assessment of strata to establish strategies tied to subsurface gas storage and mining of elements such as lithium, which are critical components of batteries for energy storage. Measurement and analytical techniques are also be used to assist our clients with reporting requirements associated with carbon sequestration.
Some of these initiatives include deployment of technologies associated with the assessment of strata to establish strategies tied to subsurface gas storage and mining of elements such as lithium, which are critical components of batteries for energy storage. Measurement and analytical techniques are also used to assist our clients with reporting requirements associated with carbon sequestration.
Two commonly used production enhancement methods are (i) hydraulic fracturing of the reservoir rock to improve flow and (ii) flooding a reservoir with water, carbon 3 dioxide, nitrogen or hydrocarbon gases to drive more oil and gas to the producing wellbores. Many oilfields today are hydraulically fractured and/or flooded to maximize oil and gas recovery.
Two commonly used production enhancement methods are (i) hydraulic fracturing of the reservoir rock to improve flow and (ii) flooding a reservoir with water, carbon dioxide, nitrogen or hydrocarbon gases to drive more oil and gas to the producing wellbores. Many oilfields today are hydraulically fractured and/or flooded to maximize oil and gas recovery.
Environment and Climate Governmental Laws and Regulations We are subject to stringent governmental laws and regulations, both in the United States and other countries, pertaining to protection of the environment. We have developed policies and procedures associated with the management, handling, recycling or disposal of chemicals and gases and other materials and wastes resulting from our operations.
Environment and Climate Governmental Laws and Regulations We are subject to stringent governmental laws and regulations, both in the United States and other countries, pertaining to protection of the environment. 6 We have developed policies and procedures associated with the management, handling, recycling or disposal of chemicals and gases and other materials and wastes resulting from our operations.
We empower our employees by fostering a sense of responsibility for managing their own work environment through open communication, and a management-supported “zero accident” culture. 9 Web Site Access to Our Periodic SEC Reports Our primary internet address is https://www.corelab.com .
We empower our employees by fostering a sense of responsibility for managing their own work environment through open communication, and a management-supported “zero accident” culture. Web Site Access to Our Periodic SEC Reports Our primary internet address is https://www.corelab.com .
We also take steps designed to ensure that any potential environmental conditions have been remediated as required by local regulation and standards. GHG Emissions 7 Core Laboratories maintains a sustainability management system that tracks our consumption of non-renewable resources.
We also take steps designed to ensure that any potential environmental conditions have been remediated as required by local regulation and standards. GHG Emissions Core Laboratories maintains a sustainability management system that tracks our consumption of non-renewable resources.
In areas where environmental regulations do not exist, we have established other policies and procedures in efforts to preserve the environment. 6 Additionally, our analytical and manufacturing processes involve the handling and use of numerous chemicals and gases as well as the generation of wastes.
In areas where environmental regulations do not exist, we have established other policies and procedures in efforts to preserve the environment. Additionally, our analytical and manufacturing processes involve the handling and use of numerous chemicals and gases as well as the generation of wastes.
Physical Risk Analysis In 2020, Core Lab conducted a physical risk assessment with the aid of a third-party sustainability data company for 100 of our locations to understand the exposure of our facilities and capital assets to climate change physical impacts under future climate change scenarios.
Physical Risk Analysis In 2020, Core Lab conducted a physical risk assessment with the aid of a third-party sustainability data company for 100 of our locations to understand the exposure of our facilities and capital assets to climate change physical impacts under future 7 climate change scenarios.
Sustained deviations from normal weather patterns, such as cooler or warmer summers and winters, can have a significant impact on demand as consumptions of energy, particularly natural gas, is seasonal. See Item 1A. Risk Factors, “Risk factors associated with health, safety and the environment” for further discussion on environmental matters.
Sustained deviations from normal weather patterns, such as cooler or warmer summers and winters, can have a significant impact on demand as consumption of energy, particularly natural gas, is seasonal. See Item 1A. Risk Factors, “Risk factors associated with health, safety and the environment” for further discussion on environmental matters.
Our overall exposure has remained consistent throughout the scenarios, although exposure to a cold wave shows a decline through the scenarios. These physical risks could result in loss of revenue, increase in our costs, including insurance premiums, or affect the availability of insurance against such risks. We do not have locations that are in a natural, rural environment.
Our overall exposure has remained consistent throughout the scenarios, although exposure to a cold wave shows a decline through the scenarios. These physical risks could result in loss of revenue, increase in our costs, including insurance premiums, or affect the availability of insurance against such risks. We do not have locations in a natural, rural environment.
Producing incremental barrels increases our clients' cash flows which we believe will result in additional capital expenditures by our clients, and ultimately further opportunities for us. Core Lab retains rights of ownership to complete joint industry projects studies, which can be resold at a later date.
Producing incremental barrels increases our clients’ cash flows which we believe will result in additional capital expenditures by our clients, and ultimately further opportunities for us. Core Lab retains rights of ownership to complete joint industry project studies, which can be resold at a later date.
Our Business Development group manages a Large Account Management Program to better serve our largest and most active clients by meeting with key personnel within their organizations to ensure the quality of our services and products are meeting their expectations and addressing any issues or needs in a timely manner.
Our Business Development group manages a Large Account Management Program to better serve our largest and most active clients by meeting with key personnel within their organizations to ensure the quality of our services and products are meeting their expectations and address any issues or needs in a timely manner.
We manufacture products primarily in five facilities for distribution on a global basis. Product sales accounted for 27%, 29% and 27% of our revenue for the years ended December 31, 2023, 2022 and 2021, respectively. Reservoir Description Commercial oil and gas fields consist of porous and permeable reservoir rocks that contain crude oil, natural gas and formation water.
We manufacture products primarily in five facilities for distribution on a global basis. Product sales accounted for 26%, 27% and 29% of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively. Reservoir Description Commercial oil and gas fields consist of porous and permeable reservoir rocks that contain crude oil, natural gas and formation water.
Occupational Safety and Health Regulations Our operations in the United Sates and foreign countries are subject to stringent occupational safety and health laws and regulations, which are intended to protect worker health and safety, including the federal Occupational Safety and Health Act, which establishes requirements to protect the health and safety of workers. The U.S.
Occupational Safety and Health Regulations Our operations in the United States and foreign countries are subject to stringent occupational safety and health laws and regulations, which are intended to protect worker health and safety, including the federal Occupational Safety and Health Act, which establishes requirements to protect the health and safety of workers. The U.S.
In addition, we assist clients in evaluating subsurface targets associated with Carbon Capture and Sequestration (“CCS”) projects or initiatives. We have over 70 offices in more than 50 countries and have approximately 3,600 employees.
In addition, we assist clients in evaluating subsurface targets associated with Carbon Capture and Sequestration (“CCS”) projects or initiatives. We have over 70 offices in more than 50 countries and have approximately 3,500 employees.
We provide integrated diagnostic services to evaluate and monitor the effectiveness of well completions and to develop solutions aimed at increasing the effectiveness of enhanced oil recovery projects. We offer our services worldwide through a global network of offices. Services accounted for 73%, 71% and 73% of our revenue for the years ended December 31, 2023, 2022 and 2021, respectively.
We provide integrated diagnostic services to evaluate and monitor the effectiveness of well completions and to develop solutions aimed at increasing the effectiveness of enhanced oil recovery projects. We offer our services worldwide through a global network of offices. Services accounted for 74%, 73% and 71% of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
We recognize the unique perspectives and thoughts that our employees bring to our environment which stimulates innovation and generates out-of-the-box solutions that benefit our Company, clients and industry. We promote a culture-centric focus on the health and safety of our employees and the environment with a pro-active approach towards identifying and managing risks through recognition, evaluation, and education.
We recognize the unique perspectives and thoughts that our employees bring to our environment which stimulates innovation and generates out-of-the-box solutions that benefit our Company, clients and industry. We promote a culture-centric focus on the health and safety of our employees and the environment with a proactive approach towards identifying and managing risks through recognition, evaluation, and education.
These values represent and establish the foundation by which we treat each other, conduct our business and simply define “how we do things around here”. By embedding our Core Values into our operating strategies, we ensure that our company culture and mission also drive our Environmental, Social and Governance (“ESG”) sustainability efforts.
These values represent and establish the foundation by which we treat each other, conduct our business and simply define “how we do things around here.” By embedding our Core Values into our operating strategies, we ensure that our company culture and mission also drive our Environmental, Social and Governance (“ESG”) sustainability efforts.
We intend to continue concentrating our efforts on services and technologies that help our clients reduce risk by evaluating geologic and engineering aspects of subsurface stratigraphic targets to improve reservoir performance and increase oil and gas recovery, as well as CCS projects and other projects directed at the global objectives in reducing carbon emissions.
We intend to continue concentrating our efforts on services and technologies that help our clients reduce risk by evaluating geologic and engineering aspects of subsurface stratigraphic targets to improve reservoir performance and increase oil and gas recovery, as well as CCS projects and other projects directed at the global objective to reduce carbon emissions.
Human Capital We are primarily a service provider in the oilfield services industry, so our workforce includes employees who are highly skilled professionals, including engineers and geologists, and other technical personnel, in addition to our administrative employees. As of December 31, 2023, we had approximately 3,600 employees.
Human Capital We are primarily a service provider in the oilfield services industry, so our workforce includes employees who are highly skilled professionals, including engineers and geologists, and other technical personnel, in addition to our administrative employees. As of December 31, 2024, we had approximately 3,500 employees.
Likewise, governmental, scientific, and public concern over the threat of climate change arising from GHG emissions, including public and private incentive programs for alternative and renewable energy sources, may result in a change in consumer preferences for energy sources and therefore a decreased demand for our customers’ products.
Likewise, governmental, scientific, and public concern over the threat of climate change arising from greenhouse gas (“GHG”) emissions, including public and private incentive programs for alternative and renewable energy sources, may result in a change in consumer preferences for energy sources and therefore a decreased demand for our customers’ products.
Our non-U.S. operations accounted for 65%, 66% and 68% of our revenue during the years ended December 31, 2023, 2022 and 2021, respectively.
Our non-U.S. operations accounted for 66%, 65% and 66% of our revenue during the years ended December 31, 2024, 2023 and 2022, respectively.
This process is designed to help employees understand where they add value to the organization, provide focus on and discussion around career aspirations, and reward employees for high performance. We aspire to create an inclusive work culture where differences are valued.
These processes are designed to help employees understand where they add value to the organization, provide focus on and discussion around career aspirations, and reward employees for high performance. We aspire to create an inclusive work culture where differences are valued.
ITEM 1. BUSINESS General Core Laboratories Inc. is a Delaware corporation. We were established in 1936 and are one of the world’s leading providers of proprietary and patented reservoir description and production enhancement services and products to the oil and gas industry.
ITEM 1. BUSINESS General Core Laboratories Inc. is a Delaware corporation. We were established in 1936 and are one of the world’s leading providers of proprietary and patented reservoir description and production enhancement services and products to the oil and gas industry, primarily through client relationships with many of the world’s major, national and independent oil companies.
The following graphs and table summarize our reported revenue by geographic region for the years ended December 31, 2023, 2022 and 2021: United States Europe/Africa/ Middle East Asia Pacific Canada Former Soviet Union Latin/ South America Consolidated 2023 $ 178,549 $ 213,339 $ 32,770 $ 26,898 $ 26,118 $ 32,116 $ 509,790 2022 $ 166,701 $ 200,863 $ 32,688 $ 27,797 $ 29,514 $ 32,172 $ 489,735 2021 $ 148,183 $ 199,798 $ 39,308 $ 26,167 $ 33,804 $ 22,992 $ 470,252 While we are subject to fluctuations and changes in currency exchange rates relating to our international operations, we attempt to limit our exposure to foreign currency fluctuations by limiting the amount in which our foreign contracts are denominated in a currency other than the U.S. dollar.
The following graphs and table summarize our reported revenue by geographic region for the years ended December 31, 2024, 2023 and 2022 (in thousands): United States Europe/Africa/ Middle East Asia Pacific Canada Former Soviet Union Latin/ South America Consolidated 2024 $ 178,895 $ 220,360 $ 37,796 $ 28,637 $ 26,723 $ 31,437 $ 523,848 2023 $ 178,549 $ 213,339 $ 32,770 $ 26,898 $ 26,118 $ 32,116 $ 509,790 2022 $ 166,701 $ 200,863 $ 32,688 $ 27,797 $ 29,514 $ 32,172 $ 489,735 While we are subject to fluctuations and changes in currency exchange rates relating to our international operations, we attempt to limit our exposure to foreign currency fluctuations by limiting the amount in which our foreign contracts are denominated in a currency other than the U.S. dollar.
Core Lab’s manufacturing operations in the United States and Canada continue to meet the global demand for our perforating systems through facility expansion in addition to gains in efficiency and productivity.
Core Lab’s manufacturing operations in the United States and Canada continue to meet the global demand for our perforating systems while gaining in efficiency and productivity.
On May 1, 2023, Core Laboratories N.V. completed its previously announced redomestication transaction (the “Redomestication Transaction”), which included (i) the merger (the “Merger”) of Core Laboratories N.V. with and into Core Laboratories Luxembourg S.A., a public limited liability company incorporated under the laws of Luxembourg, with Core Laboratories Luxembourg S.A. surviving, and (ii) following the completion of the Merger, the migration of Core Laboratories Luxembourg S.A. out of Luxembourg and its domestication as Core Laboratories Inc., a Delaware corporation.
On May 1, 2023, Core Laboratories N.V. completed its previously announced redomestication transaction (the “Redomestication Transaction”), which through a series of steps, resulted in the merger of Core Laboratories N.V., a holding company in the Netherlands, with and into Core Laboratories Luxembourg S.A., a public limited liability company incorporated under the laws of Luxembourg, with Core Laboratories Luxembourg S.A. surviving, and subsequently the migration of Core Laboratories Luxembourg S.A. out of Luxembourg and its domestication as Core Laboratories Inc., a Delaware corporation.
Production Enhancement Core Lab's Production Enhancement group provides products and diagnostic services to help optimize well completions, reservoir operations and field development strategies, in order to increase recoverable reserves in the most efficient way. These product offerings include perforating technologies to establish communication between the wellbore and the reservoir. Diagnostic services are used to assess well completions and field floods.
Production Enhancement Core Lab's Production Enhancement group provides products and diagnostic services to help optimize well completions, reservoir operations and field development strategies, in order to increase recoverable reserves in the most efficient way.
We offer competitive compensation and benefit programs in each country where we operate. Our approach not only encompasses competitive compensation and benefits, but also personal and professional growth opportunities within a global performance culture. We develop our employees through performance management processes, competency-based development plans and training both in leadership and functional areas while also offering educational assistance programs.
We offer competitive compensation and benefit programs in each country where we operate. Our approach not only encompasses competitive compensation and benefits, but also personal and professional growth opportunities within a global performance culture.
NITRO SM services include: Dual Energy Computed Tomography (“DECT”), Micro Computed Tomography, high and low frequency nuclear magnetic resonance, high-resolution gamma logging and continuous high energy x-ray fluorescence, along with pressure-volume-temperature (“PVT”), compositional analysis, and other Core Lab proprietary technologies.
NITRO SM services include: Dual Energy Computed Tomography (“DECT”), Micro Computed Tomography, high and low frequency nuclear magnetic resonance, high-resolution gamma logging and continuous high energy x-ray fluorescence, along with pressure-volume-temperature (“PVT”), compositional analysis, and other Core Lab proprietary technologies. 2 Core Lab conducts a wide variety of physical laboratory tests to measure and evaluate fluid flow through the rock, often at in-situ reservoir temperatures and pressures.
These complementary operating segments provide different services and products and utilize different technologies for evaluating and improving reservoir performance and increasing oil and gas recovery from new and existing fields.
Operations We derive our revenue from services and product sales to clients primarily in the oil and gas and associated industries. We operate our business in two segments. These complementary operating segments provide different services and products and utilize different technologies for evaluating and improving reservoir performance and increasing oil and gas recovery from new and existing fields.
Core Lab has been at the forefront of digital transformation technologies for more than two decades. Core Lab’s extensive, proprietary databases and analog technologies, coupled with artificial intelligence (“AI”) and machine learning, help our clients improve efficiencies and lower operating costs throughout the upstream value chain.
Core Lab’s extensive, proprietary databases and analog technologies, coupled with artificial intelligence (“AI”) and machine learning, help our clients improve efficiencies and lower operating costs throughout the upstream value chain. The analysis and integration of these critical datasets is enhanced because of Core Lab’s proprietary RAPID TM database.
We expanded our talent assessment process to identify emerging technical and leadership talent across the Company. Our annual performance management cycle is an ongoing process that enables managers and employees to collaborate throughout the year to set performance goals and development objectives that align to business objectives.
We develop our employees through performance management and talent assessment processes, competency-based development plans and training both in leadership and functional areas while also offering educational assistance programs. 9 Our annual performance management cycle is an ongoing process that enables managers and employees to collaborate throughout the year to set performance goals and development objectives that align to business objectives.
Physically measured data sets from the matching analogs are delivered to our clients in time to make appraisal and development decisions.
High-resolution images of wellbore cuttings and sidewall cores are quickly and efficiently matched with analogs from Core Lab’s proprietary database of samples from around the world. Physically measured data sets from the matching analogs are delivered to our clients in time to make appraisal and development decisions.
Core Lab conducts a wide variety of physical laboratory tests to measure and evaluate fluid flow through the rock, often at in-situ reservoir temperatures and pressures. These are most commonly applied to conventional reservoirs. We have also 2 developed unique analytical processes to understand the flow characteristics and saturation profiles of unconventional reservoir systems.
These are most commonly applied to conventional reservoirs. We have also developed unique analytical processes to understand the flow characteristics and saturation profiles of unconventional reservoir systems. Core Lab has been at the forefront of digital transformation technologies for more than two decades.
Core Lab’s proprietary Advanced Rock Typing technology combines Core Lab’s vast, comprehensive database of physical measurements and World Wide Rock Catalog TM with its proprietary image acquisition technology and innovative AI image recognition. Core Lab’s proprietary World Wide Rock Catalog TM provides a database and analog reference set for predicting properties when physical measurements are unavailable.
Core Lab’s Digital Innovation Group works collaboratively with multiple international and national oil companies on projects that utilize Core Lab’s proprietary digital technologies and services. Core Lab’s proprietary Advanced Rock Typing technology combines Core Lab’s vast, comprehensive database of physical measurements and World Wide Rock Catalog TM with its proprietary image acquisition technology and innovative AI image recognition.
This global emphasis allows us to enhance our revenue through efficient utilization of our worldwide network. Acquisitions We continually review potential acquisitions to add key services and technologies, enhance market presence or complement existing business.
This global emphasis allows us to increase our revenue and enhance our profit through efficient utilization of our worldwide network.
More information relating to any significant acquisitions is included in Note 3 - Acquisitions and Divestures of the Notes to the Consolidated Financial Statements. 1 Operations We derive our revenue from services and product sales to clients primarily in the oil and gas and associated industries. We operate our business in two segments.
Acquisitions We continually review potential acquisitions to add key services and technologies, enhance market presence or complement existing business. 1 More information relating to any significant acquisitions is included in Note 3 - Acquisitions and Divestures of the Notes to the Consolidated Financial Statements.
Removed
The analysis and integration of these critical datasets is enhanced because of Core Lab’s proprietary RAPID TM database. Core Lab’s Digital Innovation Group works collaboratively with multiple international and national oil companies on projects that utilize Core Lab’s proprietary digital technologies and services.
Added
These product offerings include perforating technologies to establish communication between the wellbore and the reservoir. 3 Diagnostic services are used to assess well completions and field floods.
Added
Core Lab’s eighty-plus years of expertise evaluating both subsurface geology and fluid flow through natural, porous media and our reputation for reliable and efficient reservoir optimization services provides us with opportunities to play a positive role in supporting emerging energy transition initiatives.
Added
Core Lab offers technologically advanced services that provide scientific data important to the design of client projects that involve injecting carbon dioxide (“CO2”) into geologic formations for permanent storage or to improve recovery of hydrocarbons.
Added
Within Core Lab’s CCS Consortium and through our laboratories, we study how CO2 interacts with fluids in the reservoir as well as how CO2 mobilizes residual oil in collaboration with the reservoir.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur operations may be adversely affected by sanctions, export controls, and similar measures targeting Russia and other countries and territories as well as other responses to Russia’s military conflict in Ukraine. 12 The recent geopolitical conflict between Russia and Ukraine has resulted in the U.S. government, European Union, the United Kingdom and other countries imposing broad-ranging and coordinated economic sanctions and export control measures against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic, including, among others: • a prohibition on doing business with certain Russian companies, large financial institutions, officials and oligarchs; • a prohibition on commercial activities in the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic; • a commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications (“SWIFT”), the electronic banking network that connects banks globally; • a ban on imports of Russian crude oil, certain refined petroleum products, and liquefied propane gas originating in or exported from Russia to the European Union, subject to limited exceptions; • a ban on imports of Russian crude oil, liquefied natural gas and coal to the United States; • a ban on new investment in the Russian energy sector; • a prohibition by the U.S. on exporting, selling, or supplying certain categories of services, including engineering services, to persons located in Russia; and • enhanced export controls and trade sanctions targeting Russia’s importation of certain goods and technology, including restrictive measures on the export and re-export of dual-use goods, stricter licensing policy with respect to issuing export licenses, and increased use of “end-use” controls to block or impose licensing requirements on exports.
Biggest changeThe geopolitical conflict between Russia and Ukraine has resulted in the U.S. government, European Union, the United Kingdom and other countries imposing broad-ranging and coordinated economic sanctions and export control measures against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic, including, among others: • a prohibition on doing business with certain Russian companies, large financial institutions, officials and oligarchs; • a prohibition on commercial activities in the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic; • a commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications (“SWIFT”), the electronic banking network that connects banks globally; • a ban on imports of Russian crude oil, certain refined petroleum products, and liquefied propane gas originating in or exported from Russia to the European Union, subject to limited exceptions; • a ban on imports of Russian crude oil, liquefied natural gas and coal to the United States; • a ban on new investment in the Russian energy sector; • a prohibition by the U.S. on exporting, selling, or supplying certain categories of services, including engineering services and petroleum services, to persons located in Russia; and • enhanced export controls and trade sanctions targeting Russia’s importation of certain goods and technology, including restrictive measures on the export and re-export of dual-use goods, stricter licensing policy with respect to issuing export licenses, and increased use of “end-use” controls to block or impose licensing requirements on exports.
Our operations, and those of our clients, are subject to the various laws, regulations and other legal requirements of those respective countries as well as various risks peculiar to each country, which may include, but are not limited to: ▪ global economic conditions; ▪ political actions and requirements of national governments including trade restrictions, embargoes, seizure, detention, nationalization and expropriation of assets; ▪ interpretation of tax statutes and requirements of taxing authorities worldwide, including the United States, routine examination by taxing authorities and assessment of additional taxes, penalties and/or interest; ▪ trade and economic sanctions, tariffs or other restrictions imposed by the European Union, the United Kingdom, the United States or other countries; ▪ civil unrest; ▪ acts of terrorism; ▪ fluctuations and changes in currency exchange rates (see section below); ▪ the impact of inflation; ▪ difficulty in repatriating foreign currency received in excess of the local currency requirements; ▪ current conditions in oil producing countries such as Venezuela, Nigeria, Libya, Iran and Iraq considering their potential impact on the world markets; and ▪ geopolitical conflicts in the countries or regions we operate in, including the Russia-Ukraine and Middle East conflicts.
Our operations, and those of our clients, are subject to the various laws, regulations and other legal requirements of those respective countries as well as various risks peculiar to each country, which may include, but are not limited to: ▪ global economic conditions; ▪ political actions and requirements of national governments including trade restrictions, embargoes, seizure, detention, nationalization and expropriation of assets; ▪ interpretation of tax statutes and requirements of taxing authorities worldwide, including the United States, routine examination by taxing authorities and assessment of additional taxes, penalties and/or interest; ▪ trade and economic sanctions, tariffs or other restrictions imposed by the European Union, the United Kingdom, the United States or other countries; ▪ civil unrest; ▪ acts of terrorism; ▪ fluctuations and changes in currency exchange rates (see section below); 11 ▪ the impact of inflation; ▪ difficulty in repatriating foreign currency received in excess of the local currency requirements; ▪ current conditions in oil producing countries such as Venezuela, Nigeria, Libya, Iran and Iraq considering their potential impact on the world markets; and ▪ geopolitical conflicts in the countries or regions we operate in, including the Russia-Ukraine and Middle East conflicts.
These locations and activities are susceptible to the physical effects of climate change, 11 such as increased frequency or severity of tropical storm systems, hurricanes, droughts, floods, extreme winter weather, or geologic/geophysical conditions that may result in: ▪ decreased or lost production capacity; ▪ loss of or reduced supply chain availability; ▪ temporary closure of locations due to electricity outages, damages or disruptions caused by extreme weather events; ▪ displacement of employees; and ▪ increase in premium for or reduced ability to obtain insurance for property, business interruption and liability.
These locations and activities are susceptible to the physical effects of climate change, such as increased frequency or severity of tropical storm systems, hurricanes, droughts, floods, extreme winter weather, or geologic/geophysical conditions that may result in: ▪ decreased or lost production capacity; ▪ loss of or reduced supply chain availability; ▪ temporary closure of locations due to electricity outages, damages or disruptions caused by extreme weather events; ▪ displacement of employees; and ▪ increase in premium for or reduced ability to obtain insurance for property, business interruption and liability.
Our failure to achieve consolidation savings, to incorporate the acquired businesses and assets into our existing operations successfully or to minimize any unforeseen operational difficulties could have a material adverse effect on our financial condition and results of operation. We may be unable to attract and retain skilled and technically knowledgeable employees, which could adversely affect our business.
Our failure to achieve consolidation savings, to incorporate the acquired businesses and assets into our existing operations successfully or to minimize any unforeseen operational difficulties could have a material adverse effect on our financial condition and results of operation. 15 We may be unable to attract and retain skilled and technically knowledgeable employees, which could adversely affect our business.
These stringent laws and regulations could require us to acquire permits or other authorizations to conduct regulated activities, install and maintain costly equipment and pollution 16 control technologies, impose specific safety and health standards addressing work protection, or to incur costs or liabilities to mitigate or remediate pollution conditions caused by our operations or attributable to former owners or operators.
These stringent laws and regulations could require us to acquire permits or other authorizations to conduct regulated activities, install and maintain costly equipment and pollution control technologies, impose specific safety and health standards addressing work protection, or to incur costs or liabilities to mitigate or remediate pollution conditions caused by our operations or attributable to former owners or operators.
Furthermore, in retaliation against new international sanctions and as part of measures to stabilize and support the volatile Russian financial and currency markets, Russian authorities imposed significant currency control measures aimed at restricting the outflow of foreign currency and capital from Russia, imposed various restrictions on transacting with non-Russian parties, banned exports of various products and other economic and financial restrictions.
Furthermore, in retaliation against new international sanctions and as part of measures to stabilize and support the volatile Russian financial and currency markets, Russian authorities imposed 12 significant currency control measures aimed at restricting the outflow of foreign currency and capital from Russia, imposed various restrictions on transacting with non-Russian parties, banned exports of various products and other economic and financial restrictions.
Our results of operations may be adversely affected because our efforts to comply with applicable anti-corruption laws such as the United States’ Foreign Corrupt Practices Act (the “FCPA”) and the United Kingdom’s Anti-Bribery Act (the “ABA”) could restrict our ability to do business in foreign markets relative to our competitors who are not subject to these laws.
Our results of operations may be adversely affected because our efforts to comply with applicable anti-corruption laws such as the United States’ Foreign Corrupt Practices Act (the “FCPA”) and the United Kingdom’s Anti-Bribery Act (the 13 “ABA”) could restrict our ability to do business in foreign markets relative to our competitors who are not subject to these laws.
New, modified or stricter enforcement of environmental laws and regulations could be adopted or implemented that significantly increase our compliance costs, pollution mitigation costs, or the cost of any remediation of environmental contamination that may become necessary, and these costs could have a material adverse effect on our business, financial condition, results of operation, or cash flows.
New, modified or stricter enforcement of environmental laws and regulations could be adopted or implemented that significantly 16 increase our compliance costs, pollution mitigation costs, or the cost of any remediation of environmental contamination that may become necessary, and these costs could have a material adverse effect on our business, financial condition, results of operation, or cash flows.
These cost-cutting measures may include reductions in the quarterly dividend, base salaries of senior executives and employees, annual capital expenditures, implementation of temporary employee furloughs, and workforce reductions, among other reductions of corporate and operating costs. 10 In addition, these initiatives could result in disruptions to Core Lab’s operations.
These cost-cutting measures may include reductions in the quarterly dividend, base salaries of senior executives and employees, annual capital expenditures, implementation of temporary employee furloughs, and workforce reductions, among other reductions of corporate and operating costs. In addition, these initiatives could result in disruptions to Core Lab’s operations.
The process of integrating acquired businesses may involve unforeseen difficulties and may require a disproportionate amount of our managerial and financial resources. In addition, possible future acquisitions may be larger and 15 for purchase prices significantly higher than those paid for earlier acquisitions.
The process of integrating acquired businesses may involve unforeseen difficulties and may require a disproportionate amount of our managerial and financial resources. In addition, possible future acquisitions may be larger and for purchase prices significantly higher than those paid for earlier acquisitions.
Our clients in the oil and gas industry are also subject to many laws and regulations relating to environmental and natural resource protection in the United States and in foreign countries where we operate, and many are required to obtain permits and 17 other authorizations for their operations.
Our clients in the oil and gas industry are also subject to many laws and regulations relating to environmental and natural resource protection in the United States and in foreign countries where we operate, and many are required to obtain permits and other authorizations for their operations.
Our and our clients’ compliance with such existing, or any new or amended legal requirements that are placed into effect and applicable in areas where we or our clients conduct operations, could result in our or our clients’ incurring significant additional expense and operating restrictions.
Our and our clients’ compliance with such existing, or any new or amended legal requirements that are placed into effect and applicable in 17 areas where we or our clients conduct operations, could result in our or our clients’ incurring significant additional expense and operating restrictions.
From time to time, statements in those voluntary disclosures may be based on aspirational expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected 18 risks or events, including the costs associated therewith.
From time to time, statements in those voluntary disclosures may be based on aspirational expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.
Our clients may not consider our proposed services and products to be of value to them; or if the proposed services and products are of a competitive nature, our clients may not view them as superior to 14 our competitors’ services and products.
Our clients may not consider our proposed services and products to be of value to them; or if the proposed services and products are of a competitive nature, our clients may not view them as superior to our competitors’ services and products.
We operate from locations around the globe and provides services in coastal regions and coastal cities and services related to marine shipping activities of our clients.
We operate from locations around the globe and provide services in coastal regions and coastal cities and services related to marine shipping activities of our clients.
A growing number of states have adopted, and other states are considering adopting, legal requirements that could impose more stringent disclosure, permitting and/or well construction requirements on hydraulic fracturing operations, and local governments may also seek to adopt ordinances within their jurisdictions regulating the time, place and manner of hydraulic fracturing activities.
Certain states have adopted or are considering adopting, legal requirements that could impose more stringent disclosure, permitting and/or well construction requirements on hydraulic fracturing operations, and local governments may also seek to adopt ordinances within their jurisdictions regulating the time, place and manner of hydraulic fracturing activities.
Although Vinson & Elkins L.L.P., Core Lab’s U.S. tax counsel, is currently of the opinion that the Redomestication Transaction should qualify as a form of reorganization within the meaning of Section 368(a) of the Code, and Core Laboratories N.V., Core Laboratories Luxembourg S.A. and Core Laboratories Inc. intend to file tax returns consistent with this intended tax treatment, this tax treatment is not free from doubt.
Although Vinson & Elkins L.L.P., Core Lab’s U.S. tax counsel, provided an opinion that the Redomestication Transaction should qualify as a form of reorganization within the meaning of Section 368(a) of the Code, and Core Laboratories N.V., Core Laboratories Luxembourg S.A. and Core Laboratories Inc. may have or intend to file tax returns consistent with this intended tax treatment, this tax treatment is not free from doubt.
Environmental Protection Agency (“EPA”) finalized more stringent methane emissions rules for new, modified, and reconstructed facilities in the oil and gas sector, known as OOOOb, as well as standards for existing sources for the first time ever, known as OOOOc which may increase operating costs for some of our clients.
As another example, in December 2023, the U.S. Environmental Protection Agency (“EPA”) finalized more stringent methane emissions rules for new, modified, and reconstructed facilities in the oil and gas sector, known as OOOOb, as well as standards for existing sources for the first time ever, known as OOOOc which may increase operating costs for some of our clients.
Litigation, which could demand significant financial and management resources, may be necessary to enforce our patents or other intellectual property rights. Also, there can be no assurance that we can obtain licenses or other rights to necessary intellectual property on acceptable terms.
Litigation, which could demand significant financial and management resources, may be necessary to enforce our patents or other intellectual property rights. Also, there can be no assurance that we can obtain licenses or other rights to necessary intellectual property on acceptable terms. We are subject to cyber security risks.
There are numerous factors affecting the supply of and demand for our services and products, which are summarized as: ▪ general and economic business conditions, including market prices of oil and gas and expectations about future prices; ▪ the adoption of legal requirements or taxation; ▪ changes in existing laws, regulations or other governmental actions; ▪ cost of producing and the ability to deliver oil and natural gas; ▪ the level of drilling and production activity; ▪ financial condition of our client base and their ability to fund capital expenditures; ▪ coordination by the OPEC+; ▪ civil unrest or political uncertainty in oil producing or consuming countries; ▪ level of consumption of oil, gas and petrochemicals by consumers; ▪ availability of services and materials for our clients to grow their capital expenditures and to deliver product to market; and ▪ availability of materials and equipment from key suppliers.
There are numerous factors affecting the supply of and demand for our services and products, which are summarized as: ▪ general and economic business conditions, including market prices of oil and gas and expectations about future prices; 10 ▪ global or domestic health crises; ▪ the adoption of legal requirements or taxation; ▪ changes in existing laws, regulations or other governmental actions; ▪ cost of producing and the ability to deliver oil and natural gas; ▪ the level of drilling and production activity; ▪ financial condition of our client base and their ability to fund capital expenditures; ▪ coordination by the OPEC+; ▪ civil unrest or political uncertainty in oil producing or consuming countries and other geopolitical conflict, including the ongoing conflict in the Middle East and between Russia and Ukraine; ▪ level of consumption of oil, gas and petrochemicals by consumers; ▪ availability of services and materials for our clients to grow their capital expenditures and to deliver product to market; and ▪ availability of materials and equipment from key suppliers.
Internal Revenue Code of 1986, as amended, Core Lab Shareholders may be required to pay U.S. federal income taxes. 19 It is intended that the steps in the Redomestication Transaction qualify as a form of “reorganization” within the meaning of Section 368(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”).
If the Redomestication Transaction does not qualify as a “reorganization” under Section 368(a) of the U.S. Internal Revenue Code of 1986, as amended, Core Lab Shareholders may be required to pay U.S. federal income taxes. It is intended that the steps in the Redomestication Transaction qualify as a form of “reorganization” within the meaning of Section 368(a) of the U.S.
Should future sanctions require us to cease or wind down our Russian operations, our assets located there may be impacted and could become subject to impairment. As of December 31, 2023, the Company’s fixed assets in Russia were $4.2 million, or approximately 4% of the Company’s total fixed assets and less than 1% of the Company’s total assets.
Should future sanctions require us to cease or wind down our Russian operations, our assets located there may be impacted and could become subject to impairment. As of December 31, 2024, the Company’s fixed assets and total assets in Russia were $4.5 million and $11.7 million, respectively. Total assets located in Russia represent approximately 2% of the Company’s total assets.
Our certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
These provisions could limit the price that certain investors might be willing to pay in the future for shares of our common stock. 19 Our certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
Additionally, the Company leases its operating facilities in Russia, and as of December 31, 2023, the contractual obligation to exit these leased 13 facilities is approximately $0.6 million. For the year ended December 31, 2023, revenue attributable to our operations in Russia was $22.8 million, representing less than 5% of the Company’s total revenue.
Additionally, the Company leases its operating facilities in Russia, and as of December 31, 2024, the contractual obligation to exit these leased facilities is approximately $0.4 million. For the year ended December 31, 2024, revenue attributable to our operations in Russia was $23.0 million, representing approximately 4% of the Company’s total revenue.
Such expectations and assumptions may be prone to error or subject to misinterpretation given the lack of an established single approach to identifying, measuring and reporting on many ESG matters.
Such expectations and assumptions may be prone to error or subject to misinterpretation given the lack of an established single approach to identifying, measuring and reporting on many ESG matters. We are subject to the physical effects of climate change, which may adversely affect our business and results of operations.
We have no way to predict the progress or outcome of the conflict in Ukraine or its impacts in Ukraine, Russia or Belarus as the conflict, and any resulting government responses, are fluid and beyond our control. The Russia-Ukraine conflict may also heighten many other risks, any of which could materially and adversely affect our business and results of operations.
We have no way to predict the progress or outcome of the conflict in Ukraine or its impacts in Ukraine, Russia or Belarus as the conflict, and any resulting government responses, are fluid and beyond our control.
Risk factors associated with our common stock Provisions in our certificate of incorporation, bylaws and Delaware law may discourage a takeover attempt even if a takeover might be beneficial to our stockholders.
See Item 1A. Risk Factors, “Risk factors associated with health, safety and the environment” for further discussion on environmental matters. Risk factors associated with our common stock Provisions in our certificate of incorporation, bylaws and Delaware law may discourage a takeover attempt even if a takeover might be beneficial to our stockholders.
Our operations and the operations of our customers are also susceptible to the physical effects of climate change, such as increased frequency or severity storm systems, hurricanes, droughts, floods, extreme winter weather, or geologic/geophysical conditions. Such events can impact our operations directly and indirectly, and could also result in increased insurance costs.
To the extent that climate change alters weather patterns, it can impact the demand for our customers’ products. Our operations and the operations of our customers are also susceptible to the physical effects of climate change, such as increased frequency or severity of storm systems, hurricanes, droughts, floods, extreme winter weather, or geologic/geophysical conditions.
In addition, any future significant cancellations or deferrals of service contracts or product orders could materially and adversely affect profit margins, increase product obsolescence and restrict our ability to fund our operations. We are subject to the physical effects of climate change, which may adversely affect our business and results of operations.
In addition, any future significant cancellations or deferrals of service contracts or product orders could materially and adversely affect profit margins, increase product obsolescence and restrict our ability to fund our operations. Risk factors associated with our international presence We depend on the results of our international operations, which expose us to risks inherent in doing business abroad.
We are actively monitoring the situation in Ukraine and assessing its impact on our operations in the region, including our business partners and customers. We have not experienced any material interruptions in our infrastructure, supplies or networks needed to support our operations.
We have not experienced any material interruptions in our infrastructure, supplies or networks needed to support our operations.
As business conditions change, the Company may need to implement cost-cutting measures that may adversely affect its business.
Risk factors associated with the industry in which we operate Any cost reduction initiatives that Core Lab undertakes may not deliver the results it expects, and these actions may adversely affect its business. As business conditions change, the Company may need to implement cost-cutting measures that may adversely affect its business.
Similarly, governments have and may continue to take actions to restrict where or how our clients are permitted to operate. To the extent that climate change alters weather patterns, it can therefore impact the demand for our customers’ products.
Similarly, governments have and may continue to take actions to restrict where or how our clients are permitted to operate. The requirements of the EPA’s final methane rules and similar regulations for the oil and gas industry have the potential to increase our clients’ operating costs and thus may adversely affect our financial results and cash flows.
Removed
Risk factors associated with the industry in which we operate Events beyond Core Lab’s control, including a global or domestic health crisis, have resulted and may continue to result in unexpected adverse operating and financial results.
Added
We conduct our business in over 50 countries.
Removed
A global or domestic health crisis such as the COVID-19 pandemic may significantly reduce demand for our services, and may have a material adverse effect on our financial condition, results of operations and cash flows over a long period of time.
Added
Our operations may be adversely affected by sanctions, export controls, and similar measures targeting Russia and other countries and territories as well as other responses to Russia’s military conflict in Ukraine.
Removed
The effects may include significant and swift reduction in international and U.S. economic activity, reduced demand for oil, coupled with an oversupply of oil, leading to a decrease in oil prices.
Added
If we discontinue our operations in Russia as a result of expanded sanctions, we could incur employee severance and other associated exit costs of approximately $2.5 million, as required under local laws.
Removed
Government reaction to a pandemic and restrictions and limitations applied by governments, continued widespread growth in infections, travel restrictions, quarantines, or site closures as a result of the health crises could, among other things, impact the ability of Core Lab’s employees and contractors to perform their duties, cause increased technology and security risk due to extended and company-wide telecommuting, lead to disruptions in Core Lab’s logistics and negatively affect customer relationships.
Added
During the year ended December 31, 2024, revenue attributable to the Company’s Ukraine operations and assets located in Ukraine, were immaterial to the Company’s total revenue and total assets. We are actively monitoring the situation in Ukraine and assessing its impact on our operations in the region, including our business partners and customers.
Removed
All of these factors may impact the timing of the recognition of revenue and results of operations for a particular quarter.
Added
Our operations, financial results and cash flows, including our ability to repatriate cash, may be adversely affected due to the conflict and will depend on various factors, including the extent and duration of the conflict, its effects on regional and global economic and geopolitical conditions, and the effect of more expansive or stringent laws, sanctions or trade control restrictions, whether adopted by Western nations or the Russian Federation, on our business, the global economy and global supply chains.
Removed
The extent to which our operating and financial results would continue to be affected depend on various factors and consequences beyond our control, which depend on numerous evolving factors and future developments that we are not able to predict, including, but not limited to, the following: ▪ the length of time that the pandemic continues; ▪ its effect on the demand for oil and natural gas; ▪ the response of the overall economy and the financial markets; ▪ the effect of governmental actions taken in response to the pandemic; and ▪ the speed and effectiveness of responses to combat the health crises.
Added
The Russia-Ukraine conflict may also heighten many other risks, any of which could materially and adversely affect our business and results of operations.
Removed
Any of those outcomes could have a material adverse effect on Core Lab’s business, financial condition, results of operations and cash flows and could perhaps amplify risk factors described in this Form 10-K. Any cost reduction initiatives that Core Lab undertakes may not deliver the results it expects, and these actions may adversely affect its business.
Added
A cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss. The frequency and magnitude of cybersecurity attacks is increasing and threat actors have become more sophisticated.
Removed
See Item 1A. Risk Factors, “Risk factors associated with health, safety and the environment” for further discussion on environmental matters. Risk factors associated with our international presence We depend on the results of our international operations, which expose us to risks inherent in doing business abroad. We conduct our business in over 50 countries.
Added
Cybersecurity attacks are similarly evolving and include without limitation use of malicious software, surveillance, credential stuffing, spear phishing, social engineering, use of deepfakes (i.e., highly realistic synthetic media generated by artificial intelligence), attempts to gain unauthorized access to data, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data.
Removed
Cessation of our Russian operations resulting from future sanctions may cause us to incur employee severance and other associated costs statutorily required under local labor laws. During the year ended December 31, 2023, revenue attributable to the Company’s Ukraine operations and assets located in Ukraine, were not significant to the Company’s total revenue and total assets.
Added
We may be unable to anticipate, detect or prevent future attacks, particularly as the vectors used by threat actors change frequently or are not readily identifiable until deployed. We may also be unable to investigate or remediate cybersecurity incidents as threat 14 actors are increasingly using techniques designed to circumvent controls, avoid detection, and delete or obfuscate forensic evidence.
Removed
Our operations are subject to the risk of cyber-attacks that could have a material adverse effect on our consolidated results of operations and consolidated financial condition. Our information technology systems are subject to possible breaches and other threats, including insider threats, that could cause us harm.
Added
Our technologies, systems and networks, and those of our vendors, suppliers and other business partners, may become the target of cyberattacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary information, personal information and other data, or other disruption of our business operations.
Removed
Although we devote significant resources to protect our systems, there can be no assurance that our systems will prevent or limit the effects of cyber-attacks or will be sufficient to prevent or detect, or to avoid a material adverse impact on our systems when such attacks do occur.
Added
In addition, certain cyber incidents, such as unauthorized surveillance, may remain undetected for an extended period. Our systems and insurance coverage (if any) for protecting against cyber security risks, including cyberattacks, may not be sufficient and may not protect against or cover all of the losses (including potential reputational loss) we may experience.
Removed
For example, in the U.S., some of our oil and gas customers will be required to pay a fee for certain methane emissions beginning in 2024 and in December 2023, the U.S.
Added
As cyber incidents continue to evolve, particularly with the advent of artificial intelligence, we may be required to expend additional resources to modify or enhance our cybersecurity measures or to investigate and remediate the effects of cyber incidents.
Removed
These provisions could limit the price that certain investors might be willing to pay in the future for shares of our common stock.
Added
We utilize technologies, controls and procedures, as well as internal staff and external service providers to protect our systems and data, to identify and remediate vulnerabilities and to monitor and respond to threats. However, there can be no assurance that such measures will be sufficient to prevent security breaches from occurring. No security measure is infallible.
Removed
If the Redomestication Transaction does not qualify as a “reorganization” under Section 368(a) of the U.S.
Added
If we or the third parties with whom we interact were to experience a successful attack, the potential consequences to our business, workforce and the communities in which we operate could be significant, including financial losses, regulatory fines, loss of business, an inability to settle transactions or maintain operations, litigation costs, remediation costs, disruptions related to investigation, and significant damage to our reputation.
Added
For example, in November 2024, the EPA finalized the methane emissions charge rule, implementing the Inflation Reduction Act of 2022 “IRA 2022,” which applies to oil and gas facilities emitting more than 25,000 metric tons of CO2 equivalent per year.
Added
If the methane emissions charge rule is implemented, it could increase our U.S. customers’ operating costs, and the fees and other requirements of the regulation could accelerate the transition away from fossil fuels, which may in turn reduce demand for our products and services and adversely affect our business and results of operations.
Added
Such events can impact our operations directly and indirectly, and could also result in increased insurance costs.
Added
The United States Securities and Exchange Commission released its final rule on climate-related disclosures on March 6, 2024, requiring the disclosure of certain climate-related risks and financial impacts, as well as GHG emissions.
Added
Under the rule, large accelerated filers would be required to incorporate the applicable climate-related disclosures into their filings beginning in fiscal year 2025, with additional requirements relating to the disclosure of Scope 1 and 2 greenhouse gas emissions, if material, and attestation reports for certain large accelerated filers subsequently phasing in.
Added
However, the future of the SEC climate rule is uncertain at this time given that its implementation has been stayed pending the outcome of legal challenges; moreover, the Commission may seek to repeal the rule though we cannot predict whether such action will occur or its timing. Business operations may also subject us or our customers to state-mandated climate disclosures.
Added
For instance, the Climate-Related Financial Risk Act (“CRFRA”) in California requires the disclosure of a climate-related financial risk report (in line with the Task Force on the Climate-related Financial Disclosures (“TCFD”) recommendations or equivalent disclosure requirements under the International Sustainability Standards Board’s (“ISSB”) climate-relate disclosure standards) every other 18 year for public and private companies that are “doing business in California” and have total annual revenue of $500 million.
Added
Reporting under this law would begin in 2026 and the ultimate impact of the law on our business is uncertain—the Governor of California has directed further consideration of the implementation deadlines for each of the laws, and there is potential for legal challenges to be filed with respect to the scope of the law—but, absent clarification or revisions to the law, alongside the SEC disclosure rule, finalization and implementation may result in increased compliance costs and increased costs of and restrictions on access to capital.
Added
Internal Revenue Code of 1986, as amended (the “Code”).

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−1 removed11 unchanged
Biggest changeOur Board of Directors is responsible for oversight of the risks that the Company faces, including cybersecurity threats. Our operating divisions and management teams help identify risks that are relevant to the Company during our periodic business planning and review cycle and rank these risks in relation to the achievement of business objectives.
Biggest changeOur operating divisions and management teams help identify risks that are relevant to the Company during our periodic business planning and review cycle and rank these risks in relation to the achievement of business objectives. We understand cybersecurity threats to be dynamic and to intersect with various other enterprise risks within the organization.
In each meeting, the Director of Cybersecurity and IT Governance provides an overview of cybersecurity matters, including status update on threat reduction initiatives undertaken by the Company and future initiatives under consideration. 20 The Audit Committee is responsible for overseeing our cybersecurity threat risks and receives updates during its quarterly meetings from our Director of Cybersecurity and IT Governance.
In each meeting, the Director of Cybersecurity and IT Governance provides an overview of cybersecurity matters, including status update on threat reduction initiatives undertaken by the Company and future initiatives under consideration. The Audit Committee is responsible for overseeing our cybersecurity threat risks and receives updates during its quarterly meetings from our Director of Cybersecurity and IT Governance.
As a result, in addition to our information technology policies and procedures, we have implemented cybersecurity processes that aim to address, among other things, information security, password security, third party vetting, security incident response and vulnerability management.
We have therefore integrated cybersecurity risk into our overall risk management program. As a result, in addition to our information technology policies and procedures, we have implemented cybersecurity processes that aim to address, among other things, information security, password security, third party vetting, security incident response and vulnerability management.
As a result, we are exposed to cybersecurity threats which could result in loss of or damage to our intellectual property, proprietary information, client data and reputation, or interruption of our business operations, or additional costs to prevent, respond to, or mitigate cyber-attacks.
As a result, we are exposed to cybersecurity threats which could result in loss of or damage to our intellectual property, proprietary information, client data and reputation, or interruption of our business operations, or additional costs to prevent, respond to, or mitigate cyber-attacks. 20 Our Board of Directors is responsible for oversight of the risks that the Company faces, including cybersecurity threats.
Removed
We understand cybersecurity threats to be dynamic and to intersect with various other enterprise risks within the organization. We have therefore integrated cybersecurity risk into our overall risk management program.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeIn addition, our more significant manufacturing facilities are located in Godley, Texas, Red Deer, Alberta, Canada and Pyle, Wales which are included in our Production Enhancement operating segment. Our facilities are adequate for our current operations; however, expansion into new facilities or the replacement or modification of existing facilities may be required to accommodate future growth.
Biggest changeIn addition, our more significant manufacturing facilities are located in Frépillon , France, Godley, Texas, Red Deer, Alberta, Canada, and Pyle, 21 Wales which are included in our Production Enhancement operating segment. Our facilities are adequate for our current operations; however, expansion into new facilities or the replacement or modification of existing facilities may be required to accommodate future growth.
ITEM 2. PR OPERTIES Currently, we have over 70 offices (totaling approximately 3.2 million square feet of space) in more than 50 countries. In these locations, we lease approximately 1.5 million square feet and own approximately 1.7 million square feet.
ITEM 2. PR OPERTIES Currently, we have over 70 offices (totaling approximately 3.1 million square feet of space) in more than 50 countries. In these locations, we lease approximately 1.4 million square feet and own approximately 1.7 million square feet.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−2 removed2 unchanged
Biggest changeThe following graph and related information is “furnished” and shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended (the “Exchange Act”) except to the extent that Core Laboratories specifically incorporates it by reference into such filing. 22 Share Repurchases in the Fourth Quarter of 2023 The following table provides information about our purchases of equity securities that are registered by us pursuant to Section 12 of the Exchange Act during the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of a Publicly Announced Program Maximum Number of Shares that may be Purchased Under the Program (2) October 1, 2023 to October 31, 2023 (1) 11,118 $ 23.99 — 4,672,858 November 1, 2023 to November 30, 2023 (1) 1,134 $ 20.82 — 4,671,864 December 1, 2023 to December 31, 2023 (1) 84,499 $ 17.67 — 4,611,835 Total 96,751 $ 18.43 — (1) During the quarter, 96,751 shares were surrendered to us by participants in a stock-based compensation plan to settle any personal tax liabilities which may result from the award.
Biggest changeThe following graph and related information is “furnished” and shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended (the “Exchange Act”) except to the extent that Core Laboratories specifically incorporates it by reference into such filing. 23 Share Repurchases in the Fourth Quarter of 2024 The following table provides information about our purchases of equity securities that are registered by us pursuant to Section 12 of the Exchange Act during the three months ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of a Publicly Announced Program Maximum Number of Shares that may yet be Purchased Under the Program October 1 - 31, 2024 (1) 21,829 $ 19.22 — — November 1 - 30, 2024 (1) 52,136 $ 19.64 — — December 1 - 31, 2024 (1) 191,017 $ 18.12 — — Total 264,982 $ 18.51 — (1) During the quarter, 87,766 shares were surrendered to us by participants in a stock-based compensation plan to settle any personal tax liabilities which may result from the award.
Core Lab is now an established member of the OSX which includes a greater concentration of our most direct peers. The graph assumes that the value of the investment in our common shares and each index was $100 at December 31, 2018 and that all dividends were reinvested.
Core Lab is now an established member of the OSX which includes a greater concentration of our most direct peers. The graph assumes that the value of the investment in our common shares and each index was $100 at December 31, 2019 and that all dividends were reinvested.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for discussion of equity compensation plans. Performance Graph The following performance graph compares the performance of our common stock to the Standard & Poor’s 500 Index and the Philadelphia Oil Service Index (“OSX”) for the period beginning December 31, 2018 and ending December 31, 2023.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for discussion of equity compensation plans. Performance Graph The following performance graph compares the performance of our common stock to the Standard & Poor’s 500 Index and the Philadelphia Oil Service Index (“OSX”) for the period beginning December 31, 2019 and ending December 31, 2024.
Subsequent to the Redomestication Transaction in May 2023, shareholder approval is not required under U.S. or Delaware law and the repurchase of shares in the open market is at the discretion of our Board of Directors and management.
This authorization was renewed at subsequent annual or special shareholder meetings. Subsequent to the Redomestication Transaction in May 2023, shareholder approval is not required under U.S. or Delaware law and the repurchase of shares in the open market is at the discretion of our Board of Directors and management.
On January 31, 2024, the closing price, as quoted by the NYSE, was $15.77 per share and there were 46,856,536 shares of common stock issued and outstanding held by approximately 195 record holders. These amounts exclude shares held by us as treasury stock. See Part III, “Item 12.
On January 31, 2025, the closing price, as quoted by the NYSE, was $16.97 per share and there were 46,826,820 shares of common stock issued and outstanding held by approximately 176 record holders. These amounts exclude shares held by us as treasury stock. See Part III, “Item 12.
In connection with our initial public offering in September 1995, prior to the Redomestication Transaction and under Dutch law requirements, our shareholders authorized management to repurchase up to 10% of our issued share capital, for a period of 18 months. This authorization was renewed at subsequent annual or special shareholder meetings.
Additionally, we purchased 177,216 shares in the open market during the quarter. In connection with our initial public offering in September 1995, prior to the Redomestication Transaction and under Dutch law requirements, our shareholders authorized management to repurchase up to 10% of our issued share capital, for a period of 18 months.
From the activation of the share repurchase program through December 31, 2023, we have repurchased 40,379,635 shares for an aggregate purchase price of approximately $1.7 billion, or an average price of $41.28 per share.
From the activation of the share repurchase program through December 31, 2024, we have repurchased 40,666,075 shares for an aggregate purchase price of approximately $1.7 billion, or an average price of $41.12 per share. At December 31, 2024, we held 140,048 shares in treasury. ITEM 6. [R ESERVED] 24
Removed
(2) During the quarter, 17,267 treasury shares were distributed relating to stock-based awards, including 13,492 in October, 2,820 in November and 3,775 in December.
Removed
At December 31, 2023, we held 82,021 shares in treasury and have the authority to repurchase 4,611,835 additional shares under our stock repurchase program as described in the preceding paragraph. ITEM 6. [R ESERVED] 23

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

101 edited+33 added−35 removed58 unchanged
Biggest changeResults for the years ended December 31, 2023, 2022 and 2021 are summarized in the following chart. 26 Results of operations as a percentage of applicable revenue for the years ended December 31, 2023, 2022 and 2021 are as follows (in thousands, except for per share information): 2023 / 2022 2022 / 2021 2023 2022 2021 % Change REVENUE: Services $ 371,914 73.0 % $ 346,974 70.8 % $ 344,342 73.2 % 7.2 % 0.8 % Product sales 137,876 27.0 % 142,761 29.2 % 125,910 26.8 % (3.4 )% 13.4 % Total revenue 509,790 100.0 % 489,735 100.0 % 470,252 100.0 % 4.1 % 4.1 % OPERATING EXPENSES: Cost of services* (1) 282,135 75.9 % 274,297 79.1 % 267,641 77.7 % 2.9 % 2.5 % Cost of product sales* (1) 117,822 85.5 % 119,358 83.6 % 100,255 79.6 % (1.3 )% 19.1 % Total cost of services and product sales 399,957 78.5 % 393,655 80.4 % 367,896 78.2 % 1.6 % 7.0 % General and administrative expense (1) 40,259 7.9 % 38,117 7.8 % 44,173 9.4 % 5.6 % (13.7 )% Depreciation and amortization 15,784 3.1 % 17,161 3.5 % 18,516 3.9 % (8.0 )% (7.3 )% Other (income) expense, net (850 ) (0.2 )% (722 ) (0.1 )% (5,595 ) (1.2 )% NM NM OPERATING INCOME 54,640 10.7 % 41,524 8.5 % 45,262 9.6 % 31.6 % (8.3 )% Interest expense 13,430 2.6 % 11,570 2.4 % 9,152 1.9 % 16.1 % 26.4 % Income before income taxes 41,210 8.1 % 29,954 6.1 % 36,110 7.7 % 37.6 % (17.0 )% Income tax expense 4,185 0.8 % 10,296 2.1 % 15,891 3.4 % (59.4 )% (35.2 )% Net income 37,025 7.3 % 19,658 4.0 % 20,219 4.3 % 88.3 % (2.8 )% Net income attributable to non-controlling interest 350 0.1 % 205 — 492 0.1 % NM NM Net income attributable to Core Laboratories Inc. $ 36,675 7.2 % $ 19,453 4.0 % $ 19,727 4.2 % 88.5 % (1.4 )% Diluted earnings per share $ 0.78 $ 0.42 $ 0.43 85.7 % (2.3 )% Diluted earnings per share attributable to Core Laboratories Inc. $ 0.77 $ 0.42 $ 0.42 83.3 % 0.0 % Diluted weighted average common shares outstanding 47,523 46,813 46,690 Other Data: Current ratio (2) 2.53:1 2.05:1 2.08:1 Debt to EBITDA ratio (3) 2.11:1 2.68:1 2.70:1 Debt to Adjusted EBITDA ratio (4) 1.76:1 2.29:1 2.08:1 * Percentage based on applicable revenue rather than total revenue.
Biggest changeResults for the years ended December 31, 2024, 2023 and 2022 are summarized in the following chart. 27 Results of operations as a percentage of applicable revenue for the years ended December 31, 2024, 2023 and 2022 are as follows (in thousands, except for per share information): 2024 / 2023 2023 / 2022 2024 2023 2022 % Change REVENUE: Services $ 388,205 74.1 % $ 371,914 73.0 % $ 346,974 70.8 % 4.4 % 7.2 % Product sales 135,643 25.9 % 137,876 27.0 % 142,761 29.2 % (1.6 )% (3.4 )% Total revenue 523,848 100.0 % 509,790 100.0 % 489,735 100.0 % 2.8 % 4.1 % OPERATING EXPENSES: Cost of services* (1) 297,324 76.6 % 282,135 75.9 % 274,297 79.1 % 5.4 % 2.9 % Cost of product sales* (1) 123,198 90.8 % 117,822 85.5 % 119,358 83.6 % 4.6 % (1.3 )% Total cost of services and product sales 420,522 80.3 % 399,957 78.5 % 393,655 80.4 % 5.1 % 1.6 % General and administrative expense (1) 39,770 7.6 % 40,259 7.9 % 38,117 7.8 % (1.2 )% 5.6 % Depreciation and amortization 14,953 2.9 % 15,784 3.1 % 17,161 3.5 % (5.3 )% (8.0 )% Other (income) expense, net (9,953 ) (1.9 )% (850 ) (0.2 )% (722 ) (0.1 )% NM NM OPERATING INCOME 58,556 11.2 % 54,640 10.7 % 41,524 8.5 % 7.2 % 31.6 % Interest expense 12,369 2.4 % 13,430 2.6 % 11,570 2.4 % (7.9 )% 16.1 % Income before income taxes 46,187 8.8 % 41,210 8.1 % 29,954 6.1 % 12.1 % 37.6 % Income tax expense 14,034 2.7 % 4,185 0.8 % 10,296 2.1 % 235.3 % (59.4 )% Net income 32,153 6.1 % 37,025 7.3 % 19,658 4.0 % (13.2 )% 88.3 % Net income attributable to non-controlling interest 753 0.1 % 350 0.1 % 205 — NM NM Net income attributable to Core Laboratories Inc. $ 31,400 6.0 % $ 36,675 7.2 % $ 19,453 4.0 % (14.4 )% 88.5 % Diluted earnings per share $ 0.67 $ 0.78 $ 0.42 (14.1 )% 85.7 % Diluted earnings per share attributable to Core Laboratories Inc. $ 0.66 $ 0.77 $ 0.42 (14.3 )% 83.3 % Diluted weighted average common shares outstanding 47,685 47,523 46,813 Other Data: Current ratio (2) 2.32:1 2.53:1 2.05:1 Debt to EBITDA ratio (3) 1.37:1 2.11:1 2.68:1 Debt to Adjusted EBITDA ratio (4) 1.31:1 1.76:1 2.29:1 * Percentage based on applicable revenue rather than total revenue.
We have no way to predict the progress or outcome of these events, and any resulting government responses are fluid and beyond our control.
We have no way to predict the progress or outcome of these events, and any resulting government responses are fluid and beyond our control.
If impairment is still indicated, we compare the fair value of the assets to the carrying amount and recognize an impairment loss for the amount by which the carrying value exceeds the fair value.
If impairment is still indicated, we compare the fair value of the assets to the carrying value and recognize an impairment loss for the amount by which the carrying value exceeds the fair value.
They are inherently uncertain and investors should recognize that events and actual results could turn out to be significantly different from our expectations. By way of illustration, when used in this document, words such as “anticipate”, “believe”, 36 “expect”, “intend”, “estimate”, “project”, “will”, “should”, “could”, “may”, “predict” and similar expressions are intended to identify forward-looking statements.
They are inherently uncertain and investors should recognize that events and actual results could turn out to be significantly different from our expectations. By way of illustration, when used in this document, words such as “anticipate”, “believe”, “expect”, “intend”, “estimate”, “project”, “will”, “should”, “could”, “may”, “predict” and similar expressions are intended to identify forward-looking statements.
These capitalized long-lived assets could become impaired if our operating plans or business environment changes. 35 Intangible assets, including patents, technology, and trademarks, are carried at cost less accumulated amortization and impairment for intangibles with a definite life. Intangibles with definite lives are amortized using the straight-line method based on the estimated useful life of the intangible.
These capitalized long-lived assets could become impaired if our operating plans or business environment changes. Intangible assets, including patents, technology, and trademarks, are carried at cost less accumulated amortization and impairment for intangibles with a definite life. Intangibles with definite lives are amortized using the straight-line method based on the estimated useful life of the intangible.
Forward-Looking Statements This Form 10-K and the documents incorporated in this Form 10-K by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. These “forward-looking statements” are based on an analysis of currently available competitive, financial and economic data and our operating plans.
Forward-Looking Statements This Form 10-K and the documents incorporated in this Form 10-K by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. These “forward-looking 37 statements” are based on an analysis of currently available competitive, financial and economic data and our operating plans.
We believe our future cash flows from operations, supplemented by our borrowing capacity and the ability to issue additional equity and debt, should be sufficient to 31 fund our debt requirements, working capital, capital expenditures, dividends, share repurchase program and future acquisitions. The Company will continue to monitor and evaluate the availability of debt and equity markets.
We believe our future cash flows from operations, supplemented by our borrowing capacity and the ability to issue additional equity and debt, should be sufficient to fund our debt requirements, working capital, capital expenditures, dividends, share repurchase program and future acquisitions. The Company will continue to monitor and evaluate the availability of debt and equity markets.
Liquidity and Capital Resources General We have historically financed our activities through cash on hand, cash flows from operations, bank credit facilities, equity financing and the issuance of debt. Cash flows from operating activities provide the primary source of funds to finance our operating needs, capital expenditures, dividends and share repurchase program.
Liquidity and Capital Resources 32 General We have historically financed our activities through cash on hand, cash flows from operations, bank credit facilities, equity financing and the issuance of debt. Cash flows from operating activities provide the primary source of funds to finance our operating needs, capital expenditures, dividends and share repurchase program.
Cash used in financing activities in 2022 of $23.4 million was primarily due to: 1) a net reduction in debt of $15.0 million, 2) debt issuance costs incurred of $2.2 million associated with renewing our credit facility in 2022, 3) dividends paid of $1.9 million, and 4) repurchase of common stock of $3.9 million.
Cash used in financing activities in 2022 of $23.4 million was primarily due to: 1) a net reduction in debt of $15.0 million, 2) debt issuance costs 33 incurred of $2.2 million associated with renewing our credit facility in 2022, 3) dividends paid of $1.9 million, and 4) repurchase of common stock of $3.9 million.
We estimate the useful lives and salvage values of our assets based on historical data of similar assets. When long-lived assets are sold or retired, the remaining costs and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income.
We estimate the useful lives and salvage values of our assets based on historical data of similar 36 assets. When long-lived assets are sold or retired, the remaining costs and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income.
Certain of our material, wholly owned subsidiaries, are guarantors or co-borrowers under the Credit Facility and Senior 33 Notes. See Note 11 - Long-Term Debt, net of the Notes to the Consolidated Financial Statements for additional information regarding the terms and financial covenants of the Senior Notes and the Credit Facility.
Certain of our material, wholly owned subsidiaries, are guarantors or co-borrowers under the Credit Facility and Senior Notes. See Note 11 - Long-Term Debt, net of the Notes to the Consolidated Financial Statements for additional information regarding the terms and financial covenants of the Senior Notes and the Credit Facility.
The increased revenue in 2023 is primarily due to growing client activity for our reservoir core and reservoir fluids analysis services on projects in several regions across the globe, as well a growing demand for CCS projects.
The increased revenue in 2023 is primarily due to growing client activity for our reservoir core and reservoir fluids analysis services on projects in several regions across the globe, as well as growing demand for CCS projects.
We consider an accounting estimate to be critical if it is highly subjective and if changes in the estimate under different assumptions would result in a material impact on our financial condition and results of operations. The following transaction types require significant judgment and, therefore, are considered critical accounting policies as of December 31, 2023.
We consider an accounting estimate to be critical if it is highly subjective and if changes in the estimate under different assumptions would result in a material impact on our financial condition and results of operations. The following transaction types require significant judgment and, therefore, are considered critical accounting policies as of December 31, 2024.
Net income for the year ended December 31, 2023 includes a non-cash tax benefit of approximately $11.6 million associated with the Company’s Redomestication Transaction, partially offset by a decrease of $3.3 million in net deferred tax assets, and non-cash investment gains of $5.0 million in 2023 compared to non-cash losses of $5.1 million and a decrease in other non-cash items of $0.5 million in 2022.
Net income for the year ended December 31, 2023 includes a non-cash tax benefit of approximately $11.6 million associated with the Company’s Redomestication Transaction, partially offset by a decrease of $3.3 million in net deferred tax assets, and non-cash investment gains of $5.0 million in 2023 compared to non-cash losses of $5.1 million in 2022.
Based on our assessments, we did not identify any triggering events and determined there was no impairment for LLA in Russia and Ukraine as of December 31, 2023. We record goodwill as the excess of the purchase price over the fair value of the net assets acquired in acquisitions accounted for under the purchase method of accounting.
Based on our assessments, we did not identify any triggering events and determined there was no impairment for LLA in Russia and Ukraine as of December 31, 2024. We record goodwill as the excess of the purchase price over the fair value of the net assets acquired in acquisitions accounted for under the purchase method of accounting.
These material future contractual obligations are discussed in Note 7 - Leases, Note 11 - Long-term Debt, net and Note 12 - Pension and Other Postretirement Benefit Plans of the Notes to the Consolidated Financial Statements. We have no significant purchase commitments or similar obligations outstanding at December 31, 2023.
These material future contractual obligations are discussed in Note 7 - Leases, Note 11 - Long-term Debt, net and Note 12 - Pension and Other Postretirement Benefit Plans of the Notes to the Consolidated Financial Statements. We have no significant purchase commitments or similar obligations outstanding at December 31, 2024.
We did not record any material impairment charges relating to our long-lived assets and intangible assets with definite lives during the years ended December 31, 2023, 2022 and 2021. The geopolitical conflict between Russia and Ukraine, which began in February 2022 and has continued through December 31, 2023, has resulted in disruptions to our operations in Russia and Ukraine.
We did not record any material impairment charges relating to our long-lived assets and intangible assets with definite lives during the years ended December 31, 2024, 2023 and 2022. The geopolitical conflict between Russia and Ukraine, which began in February 2022 and has continued through December 31, 2024, has resulted in disruptions to our operations in Russia and Ukraine.
We assess intangibles with indefinite lives and goodwill for impairment either by performing a qualitative assessment or a quantitative test. The qualitative assessment is to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value is less than its carrying amount.
We assess intangibles with indefinite lives and goodwill for impairment either by performing a qualitative assessment or a quantitative test. The qualitative assessment is to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value is less than carrying value.
We completed our annual impairment assessment of intangibles with indefinite lives and goodwill as of December 31, 2023 and 2022, by performing a qualitative assessment, which indicated we did not meet the threshold of more likely than not that there was an impairment and therefore no quantitative test was required.
We completed our annual impairment assessment of intangibles with indefinite lives and goodwill as of December 31, 2024 and 2023, by performing a qualitative assessment, which indicated we did not meet the threshold of more likely than not that there was an impairment and therefore no quantitative test was required.
Although we cannot be certain that these net operating loss carry-forwards will be utilized, we anticipate that we will have sufficient taxable income in future years to allow us to fully utilize the carry-forwards that are not subject to a valuation allowance as of December 31, 2023.
Although we cannot be certain that these net operating loss carry-forwards will be utilized, we anticipate that we will have sufficient taxable income in future years to allow us to fully utilize the carry-forwards that are not subject to a valuation allowance as of December 31, 2024.
The Company’s operation, assets and facilities in Ukraine are immaterial. As of December 31, 2023, all laboratory facilities, offices, and locations in Russia continued to operate with no significant impact to local business operations. The Company evaluated LLA in Russia and Ukraine as part of our assessment of our assets group.
The Company’s operation, assets and facilities in Ukraine are immaterial. As of December 31, 2024, all laboratory facilities, offices, and locations in Russia continued to operate with no significant impact to local business operations. The Company evaluated LLA in Russia and Ukraine as part of our assessment of our assets group.
The geopolitical conflict between Russia and Ukraine that erupted in February 2022, caused disruptions to traditional maritime supply chains associated with the movement of crude oil, initially reducing the level of crude oil sourced from Russia and being imported into various European ports.
The geopolitical conflict between Russia and Ukraine that began in February 2022, caused disruptions to traditional maritime supply chains associated with the movement of crude oil, initially reducing the level of crude oil sourced from Russia and being imported into various European ports.
Deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amount and the tax basis of assets and liabilities using enacted tax rates in effect for the years in which the asset is expected to be recovered or the liability is expected to be settled.
Deferred tax assets and liabilities are determined based on the difference between the financial statement carrying value and the tax basis of assets and liabilities using enacted tax rates in effect for the years in which the asset is expected to be recovered or the liability is expected to be settled.
Whenever possible impairment is indicated, we compare the carrying value of the assets or asset group to the sum of the estimated undiscounted future cash flows expected from use, plus salvage value, less the costs of the subsequent disposition of the assets.
Whenever possible impairment is indicated, we compare the carrying value of the assets or asset groups to the sum of the estimated undiscounted future cash flows expected from use, plus salvage value, less the costs of the subsequent disposition of the assets.
If it is concluded that it is more-likely-than not that an impairment exists, a quantitative test is required which compares the estimated fair value to its carrying value. If the estimated fair value is less than its carrying value, then there is an impairment loss limited to the carrying amount.
If it is concluded that it is more-likely-than not that an impairment exists, a quantitative test is required which compares the estimated fair value to carrying value. If the estimated fair value is less than carrying value, then there is an impairment loss limited to the carrying value.
Results of Operations Operating Results for the Year Ended December 31, 2023 Compared to the Years Ended December 31, 2022 and 2021 We evaluate our operating results by analyzing revenue, operating income and operating income margin (defined as operating income divided by total revenue).
Results of Operations Operating Results for the Year Ended December 31, 2024 Compared to the Years Ended December 31, 2023 and 2022 We evaluate our operating results by analyzing revenue, operating income and operating income margin (defined as operating income divided by total revenue).
“NM” means not meaningful. (1) “Corporate and other” represents those items that are not directly relating to a particular operating segment. Reservoir Description Reservoir Description operations are closely correlated with trends in international and offshore activity levels, with approximately 80% of its revenue sourced from producing fields, development projects and movement of crude oil and derived products outside the U.S.
(1) “Corporate and other” represents those items that are not directly relating to a particular operating segment. 31 Reservoir Description Reservoir Description operations are closely correlated with trends in international and offshore activity levels, with approximately 80% of its revenue sourced from producing fields, development projects and movement of crude oil and derived products outside the U.S.
Given the uncertain trend in industry activity levels, we have not determined, at this time, the level of investment that will be made in 2024.
Given the uncertain trend in industry activity levels, we have not determined, at this time, the level of investment that will be made in 2025.
If unused, those carry-forwards which are subject to expiration may expire during the years 2024 through 2037. During 2023, no material net operating loss carry-forwards, which carried a full valuation allowance, expired unused. We expect our investment in capital expenditures to track with client demand for our services and products.
If unused, those carry-forwards which are subject to expiration may expire during the years 2025 through 2038. During 2024, no material net operating loss carry-forwards, which carried a full valuation allowance, expired unused. We expect our investment in capital expenditures to track with client demand for our services and products.
The Company has maintained its annual capital expenditures between $10.0 million and $13.5 million during the years 2021, 2022 and 2023, which is significantly reduced from average annual capital expenditures in years prior to the pandemic.
The Company has maintained its annual capital expenditures between $10.0 million and $13.0 million during the years 2022, 2023 and 2024, which is significantly reduced from average annual capital expenditures in years prior to the pandemic.
Our share price has increased from $4.03 per share in 2002, when we began to repurchase shares, to $17.66 per share on December 31, 32 2023, an increase exceeding 300%. The 1% stock buyback excise tax may apply to the shares repurchased under our share purchase program.
Our share price has increased from $4.03 per share in 2002, when we began to repurchase shares, to $17.31 per share on December 31, 2024, an increase exceeding 300%. The 1% stock buyback excise tax may apply to the shares repurchased under our share purchase program.
The 2021 Senior Notes and the 2023 Senior Notes are collectively the “Senior Notes”. In accordance with the terms of the Credit Facility, our leverage ratio is 1.76, and our interest coverage ratio is 6.37, each for the period ended December 31, 2023. We are in compliance with all covenants contained in our Credit Facility and Senior Notes.
The 2021 Senior Notes and the 2023 Senior Notes are collectively the “Senior Notes”. In accordance with the terms of the Credit Facility, our leverage ratio is 1.31, and our interest coverage ratio is 6.74, each for the period ended December 31, 2024. We are in compliance with all covenants contained in our Credit Facility and Senior Notes.
We also have uncertain tax positions of $3.5 million that we have accrued for at December 31, 2023; the amounts and timing of payment, if any, are uncertain. See Note 9 - Income Taxes of the Notes to the Consolidated Financial Statements for further detail of this amount.
We have uncertain tax positions of $3.3 million that we have accrued for at December 31, 2024; the amounts and timing of payment, if any, are uncertain. See Note 9 - Income Taxes of the Notes to the Consolidated Financial Statements for further detail of this amount.
According to the latest International Energy Agency’s report, the current global demand for crude oil and natural gas remains at a high level though the growth momentum is expected to slow down in 2024 due to further weakening of the macroeconomic climate, as Gross Domestic Product (GDP) growth stays below trend in major economies, including China.
According to the latest International Energy Agency’s report, the current global demand for crude oil and natural gas remains at a moderate level though the growth momentum is expected to slow down in 2025 due to further weakening of the macroeconomic climate, as Gross Domestic Product (“GDP”) growth stays below trend in major economies, including China.
The following table summarizes the annual average and year-end worldwide and U.S. rig counts for the years ended December 31, 2023, 2022 and 2021, as well as the annual average and year-end spot price of a barrel of WTI crude, Europe Brent crude and a MMBtu of natural gas: 24 2023 2022 2021 Baker Hughes Worldwide Average Rig Count (1) 1,814 1,747 1,362 Baker Hughes U.S.
The following table summarizes the annual average and year-end worldwide and U.S. rig counts for the years ended December 31, 2024, 2023 and 2022, as well as the annual average and year-end spot price of a barrel of WTI crude, Europe Brent crude and a MMBtu of natural gas: 25 2024 2023 2022 Baker Hughes Worldwide Average Rig Count (1) 1,735 1,814 1,747 Baker Hughes U.S.
Valuation allowances of our net deferred tax assets aggregated to $8.3 million and $9.3 million at December 31, 2023 and 2022, respectively.
Valuation allowances of our net deferred tax assets aggregated to $8.8 million and $8.3 million at December 31, 2024 and 2023, respectively.
At December 31, 2023, we had tax net operating loss carry-forwards in various jurisdictions of $32.8 million.
At December 31, 2024, we had tax net operating loss carry-forwards in various jurisdictions of $28.8 million.
The increase in U.S. operations benefited from growing client activity for our reservoir core and reservoir fluids analysis services on projects from across the globe that are often conducted in our advanced technology center located in Houston, Texas, as well as a growing demand for CCS projects.
The increase in U.S. service revenue in 2024 compared to 2023, benefited from continued growing client activity from 2023 into 2024, for our reservoir core and reservoir fluids analysis services on projects from across the globe that are often conducted in our advanced technology center located in Houston, Texas, as well as a growing demand for CCS projects.
Cost of services expressed as a percentage of service revenue improved to 76% in 2023 from 79% in 2022. Improvement in cost of services as a percentage of service revenue in 2023, was primarily associated with improved utilization of our global laboratory network on higher revenue.
Improvement in cost of services as a percentage of service revenue in 2023, was primarily associated with improved utilization of our global laboratory network on higher revenue.
Outlook Currently, global oil inventories are low relative to historical levels, and supply from the Organization of the Petroleum Exporting Countries and other oil producing nations (“OPEC+”) is not expected to be sufficient to meet forecasted oil demand growth for the next few years.
Outlook Currently, global oil inventories are low relative to historical levels, and with continued supply restrictions from the Organization of the Petroleum Exporting Countries and other oil producing nations (“OPEC+”) global supply is expected to be managed and maintained at a level to meet forecasted growth in oil demand for the next few years.
During 2023, we repurchased 113,792 shares of our common stock for an aggregate amount of $2.2 million, or an average price of $19.35 per share. See Note 14 - Equity of the Notes to the Consolidated Financial Statements for additional information. We believe our share repurchase program has been beneficial to our shareholders over the longer term.
During 2024, we repurchased 286,440 shares of our common stock for an aggregate amount of $5.3 million, or an average price of $18.52 per share. See Note 14 - Equity of the Notes to the Consolidated Financial Statements for additional information. We believe our share repurchase program has been beneficial to our shareholders over the longer term.
Land-based Year-End Rig Count (2) 603 763 565 Average Crude Oil Price per Barrel WTI (3) $ 77.58 $ 94.90 $ 68.14 Average Crude Oil Price per Barrel Brent (4) $ 82.49 $ 100.93 $ 70.86 Average Natural Gas Price per MMBtu (5) $ 2.52 $ 6.45 $ 3.89 Year-end Crude Oil Price per Barrel WTI (3) $ 71.89 $ 80.16 $ 75.33 Year-end Crude Oil Price per Barrel Brent (4) $ 77.69 $ 82.82 $ 77.24 Year-end Natural Gas Price per MMBtu (5) $ 2.58 $ 3.52 $ 3.82 (1) Twelve month average rig count as reported by Baker Hughes - Worldwide Rig Count.
Land-based Year-End Rig Count (2) 575 603 763 Average Crude Oil Price per Barrel WTI (3) $ 76.63 $ 77.58 $ 94.90 Average Crude Oil Price per Barrel Brent (4) $ 80.52 $ 82.49 $ 100.93 Average Natural Gas Price per MMBtu (5) $ 2.19 $ 2.52 $ 6.45 Year-end Crude Oil Price per Barrel WTI (3) $ 72.44 $ 71.89 $ 80.16 Year-end Crude Oil Price per Barrel Brent (4) $ 74.58 $ 77.69 $ 82.82 Year-end Natural Gas Price per MMBtu (5) $ 3.40 $ 2.58 $ 3.52 (1) Twelve month average rig count as reported by Baker Hughes - Worldwide Rig Count.
On May 1, 2023, Core Laboratories N.V. completed its previously announced redomestication transaction (the “Redomestication Transaction”), which included (i) the merger (the “Merger”) of Core Laboratories N.V. with and into Core Laboratories Luxembourg S.A., a public limited liability company incorporated under the laws of Luxembourg, with Core Laboratories Luxembourg S.A. surviving, and (ii) following the completion of the Merger, the migration of Core Laboratories Luxembourg S.A. out of Luxembourg and its domestication as Core Laboratories Inc., a Delaware corporation.
On May 1, 2023, Core Laboratories N.V. completed its previously announced redomestication transaction (the “Redomestication Transaction”), which through a series of steps, resulted in the merger of Core Laboratories N.V., a holding company in the Netherlands, with and into Core Laboratories Luxembourg S.A., a public limited liability company incorporated under the laws of Luxembourg, with Core Laboratories Luxembourg S.A. surviving, and subsequently the migration of Core Laboratories Luxembourg S.A. out of Luxembourg and its domestication as Core Laboratories Inc., a Delaware corporation.
Average Rig Count (1) 689 721 475 Baker Hughes U.S. Land-based Average Rig Count (1) 670 706 461 Baker Hughes Worldwide Year-End Rig Count (2) 1,739 1,835 1,563 Baker Hughes U.S. Year-End Rig Count (2) 623 780 579 Baker Hughes U.S.
Average Rig Count (1) 599 689 721 Baker Hughes U.S. Land-based Average Rig Count (1) 580 670 706 Baker Hughes Worldwide Year-End Rig Count (2) 1,660 1,739 1,835 Baker Hughes U.S. Year-End Rig Count (2) 589 623 780 Baker Hughes U.S.
During the year ended December 31, 2023, we wrote off previously deferred costs of $0.5 million upon termination of our 2022 ATM Program. See Note 14 - Equity for additional information. During the year ended December 31, 2023, the State of Louisiana expropriated the access road to one of our facilities and paid us a settlement of $0.6 million.
See Note 14 - Equity for additional information. During the year ended December 31, 2023, the State of Louisiana expropriated the access road to one of our facilities and paid us a settlement of $0.6 million.
The North America mid-continent winter storm in February 2021 caused business interruptions and property losses to certain facilities, and we received insurance settlements of $0.7 million and $1.6 million in 2022 and 2021, respectively.
During the year ended December 31, 2022, we received insurance settlements of $0.7 million associated with business interruptions and property losses to certain facilities caused by the North America mid-continent winter storm in February 2021.
Revenue from the Reservoir Description operating segment for the year ended December 31, 2023 was $333.3 million, an increase of 8% compared to 2022.
Revenue from the Reservoir Description operating segment for the year ended December 31, 2024 was $346.1 million, an increase of 4% compared to 2023.
The Company continues to see improvement in international projects across several international 30 regions; however, increases in project activity were partially offset by disruptions in the maritime movement and logistical trading patterns for crude oil and derived products, caused by the Russia-Ukraine and Middle East geopolitical conflicts.
The Company continues to see growth in international projects across several international regions and disruptions in the maritime movement and logistical trading patterns for crude oil and derived products, caused by the Russia-Ukraine and Middle East geopolitical conflicts have begun to stabilize.
Foreign exchange (gain) loss, net is summarized in the following table (in thousands): For the Years Ended December 31, 2023 2022 2021 Angolan Kwanza $ 188 $ (2 ) $ (36 ) Australian Dollar 81 9 113 British Pound (408 ) 212 86 Canadian Dollar 156 238 77 Colombian Peso 92 (430 ) (281 ) Euro 438 (382 ) (450 ) Indonesian Rupiah 82 379 123 Norwegian Krone 103 (31 ) 12 Russian Ruble (375 ) 35 (16 ) Turkish Lira (472 ) 114 47 Other currencies, net 291 87 97 Foreign exchange (gain) loss, net $ 176 $ 229 $ (228 ) Interest Expense Interest expense for the year ended December 31, 2023 was $13.4 million compared to $11.6 million and $9.2 million in 2022 and 2021, respectively.
Foreign exchange (gain) loss, net is summarized in the following table (in thousands): For the Years Ended December 31, 2024 2023 2022 Angolan Kwanza $ (46 ) $ 188 $ (2 ) Australian Dollar (2 ) 81 9 British Pound 117 (408 ) 212 Canadian Dollar 293 156 238 Colombian Peso 62 92 (430 ) Euro 41 438 (382 ) Indonesian Rupiah 315 82 379 Nigerian Naira 126 (74 ) (39 ) Norwegian Krone (20 ) 103 (31 ) Russian Ruble 36 (375 ) 35 Turkish Lira 53 (472 ) 114 Other currencies, net 222 365 126 Foreign exchange (gain) loss, net $ 1,197 $ 176 $ 229 30 Interest Expense Interest expense for the year ended December 31, 2024 was $12.4 million compared to $13.4 million and $11.6 million in 2023 and 2022, respectively.
Segment Revenue 2023 / 2022 2022 / 2021 2023 2022 2021 % Change REVENUE: Reservoir Description $ 333,345 65.4 % $ 307,691 62.8 % $ 313,609 66.7 % 8.3 % (1.9 )% Production Enhancement 176,445 34.6 % 182,044 37.2 % 156,643 33.3 % (3.1 )% 16.2 % Total revenue $ 509,790 100.0 % $ 489,735 100.0 % $ 470,252 100.0 % 4.1 % 4.1 % OPERATING INCOME: Reservoir Description* $ 41,039 12.3 % $ 22,902 7.4 % $ 28,958 9.2 % 79.2 % (20.9 )% Production Enhancement* 12,519 7.1 % 16,351 9.0 % 15,163 9.7 % (23.4 )% 7.8 % Corporate and other (1) 1,082 0.2 % 2,271 0.5 % 1,141 0.2 % NM NM OPERATING INCOME $ 54,640 10.7 % $ 41,524 8.5 % $ 45,262 9.6 % 31.6 % (8.3 )% * Percentage, which represents operating margin, is based on operating income divided by applicable revenue rather than total revenue.
Segment Revenue 2024 / 2023 2023 / 2022 2024 2023 2022 % Change REVENUE: Reservoir Description $ 346,146 66.1 % $ 333,345 65.4 % $ 307,691 62.8 % 3.8 % 8.3 % Production Enhancement 177,702 33.9 % 176,445 34.6 % 182,044 37.2 % 0.7 % (3.1 )% Total revenue $ 523,848 100.0 % $ 509,790 100.0 % $ 489,735 100.0 % 2.8 % 4.1 % OPERATING INCOME: Reservoir Description* $ 51,466 14.9 % $ 41,039 12.3 % $ 22,902 7.4 % 25.4 % 79.2 % Production Enhancement* 6,612 3.7 % 12,519 7.1 % 16,351 9.0 % (47.2 )% (23.4 )% Corporate and other (1) 478 0.1 % 1,082 0.2 % 2,271 0.5 % NM NM OPERATING INCOME $ 58,556 11.2 % $ 54,640 10.7 % $ 41,524 8.5 % 7.2 % 31.6 % * Percentage, which represents operating margin, is based on operating income divided by applicable revenue rather than total revenue.
Depreciation and Amortization Depreciation and amortization expense for the year ended December 31, 2023 was $15.8 million, a decrease from $17.2 million and $18.5 million in 2022 and 2021, respectively, and are associated with lower capital expenditures in 2021 through 2023. 28 Other (Income) Expense, net The components of other (income) expense, net are as follows (in thousands): For the Years Ended December 31, 2023 2022 2021 Gain on sale of assets $ (200 ) $ (1,068 ) $ (427 ) Results of non-consolidated subsidiaries (394 ) (294 ) (62 ) Foreign exchange (gain) loss, net 176 229 (228 ) Rents and royalties (698 ) (709 ) (571 ) Return on pension assets and other pension costs (1,365 ) (545 ) (306 ) Loss on lease abandonment and other exit costs 1,146 — — Assets write-down 1,143 — — ATM termination costs 455 — — Insurance and other settlements (604 ) (669 ) (2,236 ) Severance and other charges — 3,332 — Gain on sale of business — — (1,012 ) Other, net (509 ) (998 ) (753 ) Total other (income) expense, net $ (850 ) $ (722 ) $ (5,595 ) In 2022, we sold our ownership interest in mineral rights of certain properties for a net gain of $0.7 million which is included in gain on sale of assets.
The decrease in 2024 and 2023 is associated with assets which became fully depreciated and lower levels of capital expenditures. 29 Other (Income) Expense, net The components of other (income) expense, net are as follows (in thousands): For the Years Ended December 31, 2024 2023 2022 Gain on sale of assets $ (1,779 ) $ (200 ) $ (1,068 ) Results of non-consolidated subsidiaries (236 ) (394 ) (294 ) Foreign exchange (gain) loss, net 1,197 176 229 Rents and royalties (1,922 ) (698 ) (709 ) Return on pension assets and other pension costs (1,178 ) (1,365 ) (545 ) Loss on lease abandonment and other exit costs 699 1,146 — Assets write-down 1,110 1,143 — Insurance and other settlements (8,432 ) (604 ) (669 ) Severance and other charges 985 — 3,332 ATM termination costs — 455 — Other, net (397 ) (509 ) (998 ) Total other (income) expense, net $ (9,953 ) $ (850 ) $ (722 ) In 2024 and 2022, we sold certain ownership interest in mineral rights of certain properties for a net gain of $1.4 million and $0.7 million, respectively, which is included in gain on sale of assets.
As of December 31, 2023, substantially all of our $15.1 million of cash was held by our foreign subsidiaries. The Company continues to maintain a quarterly dividend of $0.01 per share.
As of December 31, 2024, $18.4 million of our $19.2 million of cash balances was held by our foreign subsidiaries. The Company continues to maintain a quarterly dividend of $0.01 per share.
Service revenue for the year ended December 31, 2023, was $371.9 million, an increase of 7% compared to 2022. The increase was due to growth in activity levels in both U.S. and international markets. Over 70% of service revenue is generated from international markets.
Service revenue for the year ended December 31, 2024, was $388.2 million, an increase of 4% compared to 2023. The increase was due to growth in activity levels in both U.S. and international markets.
Cash Flows The following table summarizes cash flows (in thousands): For the Years Ended December 31, 2023 2022 2021 Cash provided by (used in): Operating activities $ 24,789 $ 24,956 $ 36,579 Investing activities (6,652 ) (3,856 ) (10,223 ) Financing activities (18,445 ) (23,375 ) (22,459 ) Net change in cash and cash equivalents $ (308 ) $ (2,275 ) $ 3,897 Comparing the year ended December 31, 2023 to the year ended December 31, 2022, net income increased $17.4 million, however, cash provided by operating activities was relatively flat between these periods.
Cash Flows The following table summarizes cash flows (in thousands): For the Years Ended December 31, 2024 2023 2022 Cash provided by (used in): Operating activities $ 56,388 $ 24,789 $ 24,956 Investing activities (6,394 ) (6,652 ) (3,856 ) Financing activities (45,957 ) (18,445 ) (23,375 ) Net change in cash and cash equivalents $ 4,037 $ (308 ) $ (2,275 ) Comparing the year ended December 31, 2024, to the year ended December 31, 2023, net income decreased $4.9 million, however, cash provided by operating activities increased $31.6 million.
These debt instruments are summarized in the following table (in thousands): December 31, Interest Rate Maturity Date 2023 2022 2011 Senior Notes Series B (1) 4.11% September 30, 2023 $ — $ 75,000 2021 Senior Notes Series A (2) 4.09% January 12, 2026 45,000 45,000 2021 Senior Notes Series B (2) 4.38% January 12, 2028 15,000 15,000 2023 Senior Notes Series A (3) 7.25% June 28, 2028 25,000 — 2023 Senior Notes Series B (3) 7.50% June 28, 2030 25,000 — Credit Facility 56,000 40,000 Total long-term debt 166,000 175,000 Less: Debt issuance costs (2,866 ) (2,614 ) Long-term debt, net $ 163,134 $ 172,386 On September 30, 2023, we retired our 2011 Senior Notes with aggregate principal amount of $75.0 million upon the maturity date with available capacity under our credit facility discussed below.
Our debt instruments are summarized in the following table (in thousands): December 31, Interest Rate Maturity Date 2024 2023 2021 Senior Notes Series A (1) 4.09% January 12, 2026 $ 45,000 $ 45,000 2021 Senior Notes Series B (1) 4.38% January 12, 2028 15,000 15,000 2023 Senior Notes Series A (2) 7.25% June 28, 2028 25,000 25,000 2023 Senior Notes Series B (2) 7.50% June 28, 2030 25,000 25,000 Credit Facility 18,000 56,000 Total long-term debt 128,000 166,000 Less: Debt issuance costs (1,889 ) (2,866 ) Long-term debt, net $ 126,111 $ 163,134 34 As of December 31, 2024, we have two series of senior notes, the 2021 Senior Notes and the 2023 Senior Notes, outstanding with an aggregate principal amount of $110.0 million.
Cost of Product Sales, excluding depreciation Cost of product sales for the year ended December 31, 2023 was $117.8 million, a decrease of 1% compared to 2022, which corresponded to the decrease in product sales revenue.
Cost of product sales for the year ended December 31, 2023 was $117.8 million, a decrease of 1% compared to 2022 and cost of product sales expressed as a percentage of product sales revenue increased to approximately 86% in 2023 from 84% in 2022.
Notable larger projects are in locations such as Guyana and Suriname located offshore South America, Australia, Southern Namibia and the Middle East, including Qatar, Saudi Arabia, Kuwait and the United Arab Emirates. Analysis and measurement of crude oil derived products also occurs in every major producing region of the world.
Notable larger projects are in locations such as Guyana and Suriname located offshore South America, Australia, Southern Namibia and the Middle East. Analysis and measurement of crude oil derived products also occurs in every major producing region of the world. Additionally, some of our major clients have increased their investment in projects to capture and sequester CO2.
In general, activities associated with the exploration of oil and gas in the U.S. onshore market are more sensitive to changes in the crude-oil commodity prices, as opposed to larger international and offshore projects which take multiple years to plan and develop, and once announced and started, will continue through completion, despite changes in the current price of crude oil.
(5) Average daily and year-end Henry Hub natural gas spot price as reported by the EIA. In general, activities associated with the exploration of oil and gas in the U.S. onshore market are more sensitive to changes in the crude-oil commodity prices, as opposed to larger international and offshore projects which take multiple years to plan and develop.
Long-term international and offshore projects which are commonly announced through Final Investment Decisions and subsequently initiated are not as susceptible or at-risk to delay or suspension due to short-term volatility in crude-oil commodity prices.
Outside of the U.S., international average rig count showed an increase of approximately 6% in 2023 from 2022, however, subsequently remained flat in 2024. Long-term international and offshore projects which are commonly announced through Final Investment Decisions and subsequently initiated are not as susceptible or at-risk to delay or suspension due to short-term volatility in crude-oil commodity prices.
See Note 9 - Income Taxes of the Notes to the Consolidated Financial Statements for further detail of income tax expense. Segment Analysis The following charts and tables summarize the annual revenue and operating results as a percentage of applicable revenue for our two complementary operating segments.
Segment Analysis The following charts and tables summarize the annual revenue and operating results as a percentage of applicable revenue for our two complementary operating segments.
Although the Company reduced its outstanding debt in 2023 when compared to 2022, interest expense was higher in 2023 primarily due to: 1) rising interest rates on our aggregated variable rate debt during these periods, and 2) replacement of the 2011 Senior Notes of $75 million with fixed rate of 4.11% that matured in September 2023, by the 29 2023 Senior Notes of $50 million with higher fixed rates of 7.25% to 7.50%.
In 2023, the Company reduced its outstanding debt from end of 2022, however, the interest expense was higher in 2023 primarily due to: 1) rising interest rates on our variable rate debt during these periods, and 2) partial refinancing of the 2011 Senior Notes of $75 million with the 2023 Senior Notes of $50 million, as discussed above.
Additionally, we, along with CLIH, have a secured credit facility, the Eighth Amended and Restated Credit Agreement (as amended, the “Credit Facility”) for an aggregate borrowing commitment of $135.0 million with a $50.0 million “accordion” feature. As of December 31, 2023, the Credit Facility has an available borrowing capacity of approximately $69.1 million.
(“CLIH”) as issuer, have senior notes that were issued through private placement transactions. Additionally, we, along with CLIH, have a secured credit facility, the Eighth Amended and Restated Credit Agreement (as amended, the “Credit Facility”) for an aggregate borrowing commitment of $135.0 million with a $50.0 million “accordion” feature.
Income Tax Expense Income tax expense was $4.2 million in 2023 and resulted in an effective tax rate of 10.2%. The 2023 tax expense was primarily impacted by the reversal of deferred tax liabilities of $11.6 million associated with the Redomestication Transaction, partially offset by the geographic mix of earnings.
Income Tax Expense Income tax expense was $14.0 million in 2024 and resulted in an effective tax rate of 30.4%. The 2024 tax expense was primarily impacted by the geographic mix of earnings. Income tax expense was $4.2 million in 2023 and resulted in an effective tax rate of 10.2%.
Additionally, operating companies reduced activity later in the year as they were ahead of schedule in their annual drilling programs due to efficiencies gained in drilling and completing wells. Operators have remained disciplined with their annual plans and remain focused on return of investment versus growing production.
In 2023, the decrease in drilling and completion activities in the U.S. land market is primarily due to operating companies reduced activity in 2023 as they were ahead of schedule in their annual drilling programs due to efficiencies gained in drilling and completing wells. Operators continue to remain focused on return of investment versus growing production, as discussed above.
This data indicates that during the period of higher activity, operators were drilling wells but not completing them as the DUC inventory grew. As activity levels began to decline, operators began to drill fewer new wells and were completing some of the wells that had been previously drilled but not completed.
As activity levels began to decline, operators began to drill fewer new wells and were completing some of the wells that had been previously drilled but not completed. As drilling and completion activity levels continued to decline from 2023 to 2024, the number of wells completed continued to outpace the number of new wells drilled during these periods.
As a result, rig count in the U.S. land market at the end of 2023 declined by 21% compared to 2022.
As a result, average rig count in the U.S. onshore market declined by 13% in 2024 compared to 2023.
As a result, average crude-oil prices were elevated during 2022, but have since decreased and moderated in 2023. The maritime supply chains associated with the movement of crude oil have continued to realign and stabilize throughout 2023, which has reduced some of the volatility in crude-oil prices.
The maritime supply chains associated with the movement of crude oil have continued to realign and stabilize throughout 2023 and in 2024, which 35 has reduced some of the volatility in crude-oil prices and disruptions to our operations.
Coming out of the COVID-19 pandemic, U.S. land drilling and completion activities improved during 2021 and strengthened throughout 2022, however, activity decreased during 2023. Since April 2023, the U.S. land-based rig count has continuously declined resulting in a 21% reduction at the end of 2023 compared to 2022, as some drilling operators cut back new drilling projects.
U.S. land drilling and completion activities improved in 2022, however, activity decreased during 2023 and continued to decrease throughout 2024. Since April 2023, the U.S. land-based rig count has continuously declined resulting in a 5% reduction as of December 31, 2024 compared to December 31, 2023.
However, in 2023, U.S. land drilling activity decreased as natural gas prices declined significantly and efficiencies gains in drilling and completing wells allowed operators 25 to complete their 2023 drilling programs ahead of schedule. This resulted in the U.S. land-based rig count decreasing approximately 21% at the end of 2023 from the end of 2022, as discussed above.
In the U.S., the land-based average rig count decreased approximately 5% from 2022 to 2023 primarily due to a significant decline in natural gas prices. Additionally, efficiencies gains in drilling and completing wells allowed operators to complete their drilling programs ahead of their original schedule.
As a result, it is anticipated that crude-oil commodity prices for the near-term will remain at current levels or increase if projections for demand remain accurate. In 2022, capital spending towards the exploration of crude oil and natural gas reached their highest level in over a decade.
As a result, it is anticipated that crude-oil commodity prices for the near-term will remain at current levels or increase if projections for demand remain accurate or disruptions to supply occur.
The Company's volume of associated laboratory services is expected to be commensurate with the trading and movement of crude-oil into Europe, the Middle East, Asia and across the globe.
The conflict in the Middle East that began in October 2023 has resulted in additional disruptions in the movement and trading of crude oil which continued throughout 2024. The Company's volume of associated laboratory services is commensurate with the trading and movement of crude-oil into Europe, the Middle East, Asia and across the globe.
Outside the U.S., international oil and gas projects continue to build and are expected to grow and accelerate into the next several years. Therefore, our clients’ activities associated with the appraisal, development and production of crude oil and natural gas are also expected to remain at current levels or increase in 2024.
U.S. onshore drilling and completion activities are expected to remain at levels comparable to activity levels in 2024, with some typical seasonal decrease towards the end of the year. Therefore, our clients’ activities associated with the appraisal, development and production of crude oil and natural gas are also expected to remain at current levels or increase in 2025.
The decrease in operating income and operating margin in 2023, correlates to the decrease in revenue and higher absorption of fixed costs on a lower revenue base, as well as continued inflationary impact on materials and shipping costs. Operating income was $16.4 million in 2022 compared to $15.2 million in 2021.
The decrease in operating income and operating margins in 2023, correlates to the decrease in revenue and higher absorption of fixed costs on a lower revenue base, as well as increased cost associated with inflation on materials and shipping costs.
Information published by the EIA, shows that the inventory of wells drilled but uncompleted (a “DUC” well) in the U.S., was 5,099 as of December 31, 2021, and declined to 4,577 and 4,374 at end of 2022 and 2023, respectively.
Information published by the EIA, shows that the inventory of wells drilled but uncompleted (a “DUC” well) in the U.S., was 5,825 as of December 31, 2023, and declined to 5,238 at end of 2024. This data indicates that during the period of higher activity, operators were drilling wells but not completing them as the DUC inventory grew.
However, the United States, the European Union, the United Kingdom and other countries may implement additional sanctions, export controls or other measures against Russia, Belarus and other countries, regions, officials, individuals or industries in the respective territories.
The United States, the European Union, the United Kingdom and other countries continue to expand sanctions, export controls and other measures against Russia, Belarus, Iran and other countries, officials, individuals or industries in the respective territories, which may have further impact on the trading and movement of crude oil and derived products.
Production Enhancement Production Enhancement’s operations are largely focused on complex completions in unconventional, tight-oil reservoirs in the U.S. as well as conventional projects across the globe. During the year 2022, U.S. onshore drilling and completion activities continued to increase through mid-November, and subsequently had a typical seasonal decline at the end of the year.
Production Enhancement Production Enhancement’s operations are largely focused on complex completions in unconventional, tight-oil reservoirs in the U.S. as well as conventional projects across the globe. U.S. onshore drilling and completion activities peaked in 2022, after the COVID-19 pandemic, but declined in 2023 and declined further in 2024.
Our major clients continue to focus on capital management, return on invested capital, free cash flow, and returning capital to their shareholders, as opposed to a focus on production growth. The companies adopting value versus volume metrics tend to be the more technologically sophisticated operators and form the foundation of Core Lab’s worldwide client base.
The companies adopting value versus volume metrics tend to be the more technologically sophisticated operators and form the foundation of Core Lab’s worldwide client base.
As a result, average crude-oil prices were elevated during 2022, but have since decreased and moderated in 2023. The maritime supply chains associated with the movement of crude oil have continued to realign and stabilize throughout 2023, which has reduced some of the volatility in crude-oil prices.
The maritime supply chains associated with the movement of crude oil have continued to realign and stabilize in 2023 and 2024, which reduced some of the volatility in crude-oil prices, however, expanded sanctions were issued in January 2025, which have resulted in more recent elevated prices and uncertainty.
GAAP (in thousands): For the Years Ended December 31, Free Cash Flow Calculation 2023 2022 2021 Net cash provided by operating activities $ 24,789 $ 24,956 $ 36,579 Less: cash paid for capital expenditures (10,579 ) (10,216 ) (13,539 ) Free cash flow $ 14,210 $ 14,740 $ 23,040 Free cash flow decreased slightly by $0.5 million for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to a slightly higher level of capital spending in 2023.
GAAP (in thousands): For the Years Ended December 31, Free Cash Flow Calculation 2024 2023 2022 Net cash provided by operating activities $ 56,388 $ 24,789 $ 24,956 Less: cash paid for capital expenditures (13,028 ) (10,579 ) (10,216 ) Free cash flow $ 43,360 $ 14,210 $ 14,740 Free cash flow increased significantly by $29.2 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to improvement in our operational working capital as discussed above, offset by a slightly higher level of capital spending associated with replacing equipment and restoring the facility that were damaged in the fire at one of our facilities in the U.K. that occurred in 2024.
Operating income for the year ended December 31, 2023 was $41.0 million, an increase of 79% compared to 2022. Operating margins increased to 12.3% in 2023 from 7.4% in 2022.
Operating income for the year ended December 31, 2024 was $6.6 million, a decrease of 47%. Operating margins decreased to 3.7% in 2024 from 7.1% in 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed5 unchanged
Biggest changeUnder the Amended Credit Facility, the Secured Overnight Financing Rate (“SOFR”) plus 2.00% to SOFR plus 3.00% will be applied to outstanding borrowings. At December 31, 2023, we had an outstanding borrowings of $56 million. A 10% change in interest rates would not have a material impact on our results of operations or cash flows.
Biggest changeThe fair value of our debt at December 31, 2024 and 2023 approximated the book value. 38 Under the Amended Credit Facility, the Secured Overnight Financing Rate (“SOFR”) plus 2.00% to SOFR plus 3.00% will be applied to outstanding borrowings. At December 31, 2024, we had an outstanding borrowings of $18 million.
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK Market Risk We are exposed to market risk, which is the potential loss arising from adverse changes in market prices and rates. We do not believe that our exposure to market risks, which are primarily related to interest rate changes, is material.
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK Market Risk We are exposed to market risk, which is the potential loss arising from adverse changes in market prices and rates. We do not believe that our exposure to market risks, which is primarily related to interest rate changes, is material.
Interest Rate Risk We maintain certain debt instruments at a fixed rate whose fair value will fluctuate based on changes in interest rates and market perception of our credit risk. The fair value of our debt at December 31, 2023 and 2022 approximated the book value.
Interest Rate Risk We maintain certain debt instruments at a fixed rate whose fair value will fluctuate based on changes in interest rates and market perception of our credit risk.
Foreign Currency Risk We operate in a number of international areas which exposes us to foreign currency exchange rate risk. We do not currently hold or issue forward exchange contracts or other derivative instruments for hedging or speculative purposes.
A 10% change in interest rates would not have a material impact on our results of operations or cash flows. Foreign Currency Risk We operate in a number of international areas which exposes us to foreign currency exchange rate risk. We do not currently hold or issue forward exchange contracts or other derivative instruments for hedging or speculative purposes.

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