David Demshur – Chairman, President and CEO Chris Hill – Corporate Controller Dick Bergmark – EVP and CFO Monty Davis – SVP and COO.

Blake Hutchinson – Howard Weil Veny Aleksandrov - FIG Partners LLC Brandon Dobell – William Blair & Company Phillip Lindsay - HSBC Global Research Rob MacKenzie - FBR Capital Markets Stephen Gengaro - Sterne, Agee & Leach Darren Gacicia - Guggenheim Securities, LLC John Daniel - Simmons & Co..

Good morning, my name is Kimberly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Core Lab Earnings Q2 2014 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

Mr. Demshur, you may begin your conference..

Thanks, Kimberly. Good morning, in North America good afternoon in Europe, and good evening in Asia Pacific. We’d like to welcome all of our shareholders, analysts and most importantly, our employees to Core Laboratories' second quarter 2014 earnings conference call.

This morning I am joined by Dick Bergmark, Core’s Executive Vice President and CFO; Core’s COO, Monty Davis, who will present the detailed operational review and Chris Hill, Core Labs' IR Analyst. The call will be divided into five segments. Chris will start by making remarks regarding forward-looking statements.

Then we’ll come back and give a brief investor update and highlight the three financial tenets by which Core’s Executive Management team executes the company’s growth strategies. We believe these three tenets have produced long-term industry-leading shareholder returns and returns on invested capital.

We will also discuss Core’s long-held philosophy of returning excess capital back to our shareholders. Dick will then follow with a detailed financial overview, and additional comments regarding building shareholder value, Core’s second half 2014 outlook and a general industry outlook as it pertains to Core Lab's growth prospects.

Then Monty Davis will go over Core’s three operating segments detailing our progress and discussing the continued successful introduction of new Core Lab technologies that are tied to the best practices in completing, stimulating and producing horizontal wells and then highlighting some of Core’s operations and major projects worldwide.

Then we’ll open the phones for a Q&A session. I’ll turn it back to Chris for remarks regarding forward-looking statements.

Chris?.

Thanks Dave. Before we start the conference this morning, I’ll mention that some of the statements that we make during this call may include projections, estimates, and other forward-looking information. This would include any discussion of the company’s business outlook.

These types of forward-looking statements are subject to a number of risks and uncertainties relating to the oil and gas industry, business conditions, international markets, international political climate and other factors, including those discussed in our ‘34 Act filings that may affect our outcome.

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

For more detailed discussion of some of our foregoing risks and uncertainties, see item 1A, Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, as well as other reports and registration statements filed by us with the SEC and AFM. Our comments include non-GAAP financial measures.

Reconciliation to the most directly comparable GAAP financial measures is included in the press release announcing our second quarter results. Those non-GAAP measures can also be found on our website. With that said, I’ll pass the discussion back to Dave..

Okay, Chris thanks. I would like to give a brief investor update. Core's operations produced a solid quarter with record second quarter revenue and EPS, but these results were below our standards for performance and we will do better. The second quarter of 2014 rolled out as expected per our 12 May Conference Call.

In today's -- in last earnings release, we provided EPS guidance for Q3 and Q4 using the lower end of our revenue guidance range, coupled with incremental margin guidance that produced a conservative outlook for the second half of 2014.

Using the upper revenue guidance range and historical incremental margins, would bring provided EPS guidance to the top end of prior guidance that we gave on the 12th May call.

Looking forward, we remain an internationally focused company, concentrating on crude oil related developments, especially in deep and ultra deep water environments and although reservoir description margins have been affected by recent low levels of activity in four of the last five quarters, we know that long term, that our deep water focus will lead to increasing our reservoir description margins and continue to benefit our long term shareholders.

Core will also continue to innovate technologies to boost daily production and maximize estimate ultimate recovery rates. As unconventional title in place, mature in the U.S. in their initial development stages Core is diligently innovating enhanced oil recovery techniques that will be utilized by our most technologically sophisticated clients.

We are currently looking at ways to boost recovery in the Bakken and in the Eagle Ford from high single digits to rates in the low teens. These new EOR techniques will be able to generate higher margin revenues over the next decade plus.

Moreover Core will continue to increase market penetration of our newly introduced FlowProfiler and KODIAK-related technologies, which should generate record levels of production enhancement and company-wide revenue, operating income and free cash flow in the second half of 2014.

All of our operations are committed to posting future results that are equal to or greater than the Core Lab standard established over the past decade plus and we'll start doing that in quarter three.

Turning to Core's ongoing performance, Core has always followed and will continue to follow three key investment tenants that have led to long-term industry-leading returns.

These three important tenants, which are now starting to receive attention from other companies and analysts in our oilfield services sector are number one maximizing free cash flow through discipline. Core follows a strict discipline for allocating capital for investment and growing our businesses.

Unless certain return on investment capital standards are met or exceeded, the capital expenditure is disallowed. The strict capital discipline produce quarterly levels of free cash flow of over $53 million. In fact Core converted over $0.20 of every revenue dollar into free cash.

Core's free cash flow to revenue conversion rate of over 20% exceeds pretax operating margins of most other oilfield service companies, but we can do better. For 2014, Core expects second half free cash flow to exceed a $300 million run rate, all of which is expected to be returned to our shareholders.

As our top 20 shareholders say, they own 70% of the shares, free cash flow matters. The second financial tenant is to maximize return on invested capital.

Core's Board has initiated an incentive compensation program for Core's Executive and Senior Management teams based on the company producing a return on invested capital in the top docile for the oilfield service industry. Core's Board believes that the spot price performance over time is directly related to its return on invested capital.

Based on the most recent calculations available from Bloomberg, Core's return on invested capital was the highest of any company in the oilfield services group listed by Bloomberg Financial. Also Core's ratio of return on invested capital to our weighted average cost of capital was the industry's highest.

As our top 20 shareholders say, high returns on invested capital matter. Our third financial tenant, long-held is to return excess capital to our shareholders.

During the second quarter of 2014, Core returned over $100 million to our shareholders in the forms of quarterly dividends and the repurchases of shares as we opportunistically took advantage of lower Core live stock prices.

At the end of the quarter, Core's outstanding diluted share count fell below $45 million shares, levels not seen since the third quarter of 1997. Collectively during the quarter, Core returned over $2.20 per share to our shareholders.

Since October of 2002, Core's shareholder capital return program has returned over $1.83 billion or over $40 per diluted share to our owners. We have lowered our share count by almost 39 million shares.

We will continue to follow these three financial tenants throughout 2014, which should enable Core to continue to produce industry-leading returns for our shareholder, as our top shareholders say, returning capital to our shareholders matter.

So now I'll turn it back over to Dick for a detailed financial overview, Dick?.

Thank you, David. If you look at the income statement, revenues are the midpoint of our May 12 updated guidance at $267.6 million in the second quarter, that's versus $263.1 million in the second quarter of last year. This represents all time second quarter record revenues.

Of these revenues, services for the quarter were $188.3 million, up slightly when compared to $187.7 million last year. Product sales for the quarter were also higher at $79.3 million compared to $75.5 million in last year's second quarter.

And moving on to cost of services for the quarter, they are 59.3% of revenue compared to 58.4% in last year's second quarter and our cost of product sales is 71% of revenues, which is similar to last year's second quarter. G&A for the quarter was $11.1 million, which is about 4.2% of revenues, which is also the same as last year.

Depreciation and amortization for the quarter, $6.3 million, up from last year's second quarter and we expect depreciation in 2014 to total approximately $27 million. Other income this quarter is primarily foreign exchange gains of $1.3 million.

The guidance we gave on our last call for this quarter specifically excluded the impact of any foreign exchange gains or losses. So accordingly, our discussion today excludes this foreign exchange gain. So excluding those gains to conform to our guidance, EBIT for the quarter is $82.8 million. GAAP EBIT is $84.1 million.

Interest expense is $2.8 million for the quarter, compared to $2.3 million in last year's second quarter, up due to borrowings to accelerate our share repurchase program. Income tax expense in the quarter is $17.2 million based on an effective tax rate of 21.2%.

To conform to our guidance, which assumed a 24% effective tax rate, income tax expense would have been $19.2 million in the second quarter. We believe our effective tax rate for the second half of the year will be approximately 23.5%. Net income for the quarter is $63.7 million, up from $59.7 million last year, while ex items it is $60.5 million.

Earnings per share for the quarter is $1.35 on the same basis that our guidance was given versus main street of a $1.34. Our GAAP EPS is $1.42 per share, up by $0.13 or 10% over last year.

If we look at the balance sheet, cash is $29.5 million, compared to the prior year and balance of $25.1 million, cash balances and our free cash flow during the quarter were used primarily to repurchase stock and to pay out dividends.

Receivables stand at $201 million, down slightly from year end, our DSOs in the quarter remained at 65 days experience in all of 2013. Inventory at $51.4 million, is up from the prior year end up $46.8 million in anticipation of increasing product sales.

Other current assets of $40.3 million, up from the yearend balance of $30.6 million for the most part as a result of an increase in income tax receivable of $8.6 million, reflecting the timing difference between when statutory tax payments are required to be made to the various tax offices and the corresponding current tax provision recorded under GAAP rules for our financial statements.

PP&E is $143.9 million, up from the yearend balance of $138.8 million, due to our client-driven CapEx program and there are no material changes in intangibles, goodwill and deferred tax assets. Other long-term assets at $43.4 million, up from yearend balance due to an increase of $3.5 million and the cash value of life insurance.

And now if we look at our liability side of the balance sheet, our accounts payable are $51.3 million in line with prior year-end balance, other current liabilities of $82.6 million are down from the last yearend balance of $85 million, primarily due a slight decrease and discretionary benefit play-in cost of $4.7 million.

Our long-term debt stands at $333 million, compared to $279 million last quarter and is comprised of $150 million in senior unsecured notes and $183 million drawn on our bank revolving credit facility. The increase in borrowings came as a result of our increased share buyback program.

As of today, drawings under our credit facility remain at $183 million. Other long term liabilities ended at $85.9 million, down from last year's balance of $88.8 million, primarily due to a decrease of $5.6 million in deferred tax liabilities.

Shareholder's equity ended the quarter at $136.3 million, down from the yearend balance of $169.4 million primarily due to share repurchases and dividends since the end of the year. Utilizing annualized net income for the second quarter, our return on equity is over 185%, making it one of the highest returns earned in the industry.

Capital expenditures for the quarter are $12.1 million, up from $9.5 million in the second quarter of 2013. We elected to accelerate our CapEx program to front load this year in order to gain the impact from those investments sooner with a view towards improving results in the second half.

We expect our CapEx program in 2014 to be approximately $37 million.

Our CapEx growth is client directed for the most part, meaning that we will increase our capacity for locations or for increases in technology on the basis of discussions with clients about their specific needs, which is one of the reasons why we’ve been able to generate our high returns on invested capital.

Looking at cash flow, cash from operating activities in the quarter is $65.6 million and after paying for our $12.1 million in CapEx, our free cash flow is $53.5 million. In the second quarter we turned as David said almost 20% of our revenues into free cash flow, certainly one of the highest cash conversion rates in our industry.

During the quarter, we used our free cash flow, cash balances and bank borrowings to pay $22.4 million in quarterly dividends and to repurchase 455,219 shares for $78.5 million. In essence we gave back, $100 million to our shareholders in the second quarter. This use of cash continues to be designed to enhance shareholder value.

Now if we look at the guidance for the remainder of the year, we anticipate that North American activity will continue to increase for emerging unconventional oil plays, while activity will remain at reduced, yet stable levels in established unconventional tight-oil and gas plays.

We also anticipate higher numbers of deepwater coring programs, especially in the deepwater Gulf of Mexico. The volume of high pressure, high temperature reservoir fluid phase-behavior projects is also expected to remain at high levels.

Internationally in response to a very supportive Brent Crude price, we expect modest growth through the end of 2014 and expect higher levels of activity entering 2015. Therefore for the third quarter of 2014, we expect revenue of approximately $280 million to $290 million and EPS to range between $1.49 and $1.52, up sequentially by approximately 11%.

Within those ranges, operating margins are expected to be approximately 32% with year-over-year incremental margins as high as 60%, a 23% effective tax rate is assumed for the third quarter of 2014.

If one does the math using these revenue ranges, EBIT margins and incremental margins, one can mathematically arrive at EPS levels in excess of our guidance and that previously given on May 12. Consequently from our perspective, we are reaffirming our guidance and that previously given on May 12.

Free cash flow is expected to be between $77 million and $81 million. For the fourth quarter of 2014, we expect revenue of $285 million to $295 million, with EPS ranging between $1.56 and $1.61.

Within those ranges, operating margins in the quarter are expected to be approximately 33% while existing the year at 34% with year-over-year incremental margins as high as 60%. A 24% effective tax rate is assumed for the fourth quarter of 2014 as a result of operational activity expected in higher tax rate jurisdictions.

And the same observation regarding the mathematical potential applies to our Q4 guidance as well. Free cash flow in the quarter is expected to range between $81 million and $85 million. All operational guidance excludes any foreign currency translation and any shares that maybe repurchased other than those already discussed.

So with that, let’s pass the discussion over to Monty for an operational review..

Thanks, Dick. Q2, 2014 was our highest revenue second quarter in company history and generated 31% margins and our highest Q2 EPS ever. I thank our employees for all their hard work in producing these results and providing our clients with excellent service and products.

Reservoir description revenues were $131 million in Q2 generating operating margins of 27%, which were at the top of our expectations even with the reduced activity levels we discussed early. We are seeing fewer cores taking a more mature unconventional plays in the U.S.

and a large market decline in the Canadian oil sands, all affecting reservoir description Q2 revenues.

We are providing high pressures, enhanced oil recovery for ultra-deepwater Gulf of Mexico projects and pressures up to 21,500 psi, which includes determination of minimum miscibility pressures, physical measurement fluids after they are contacted with the injection gases and thermodynamic testing for reservoir's simulation models.

These fluids are also tested using Core Lab's proprietary pressurized fluid imaging system to ensure production, deposition and formation damage does not occur, providing complete EOR -- high pressure EOR and flow assurance testing. We signed our highest revenue reservoir description contract in company history in Q2.

This five-year contract is with the Kuwait Oil Company. Core Laboratories continue to support KOC with numerous reservoir condition projects from the South Recta Field which contains highly viscous fluid with low solution gas.

These projects are typical reservoir condition studies with the addition of measurements at high temperature in this case 325 degree F to help understand how fluid characteristics and productions will change if enhanced oil recovery methods such as steam floods are introduce.

Today approximately 300 wells have been analyzed and based on the current information a large number of studies are expected during the new contract period.

And EOR project was recently completed on samples collected from the [indiscernible] field during this project it was observed that fluid properties differ based on where they were collected within the field. This suggested that the reservoir may include a vault or compartment, which was something that KOC had previously not considered.

KOC is planning to apply various improved oil recovery techniques to maintain reservoir pressure as well as improve production from several North Kuwait fields. Core Laboratories performed displacement tests under stimulated reservoir conditions utilizing our high-tech fluid systems to investigate various scenarios.

These tests included lower Burgan relative permeability method comparison plus water alternating gas and miscible gas versus residual oil saturation content enhanced our recovery test which indicated that the miscible gas had a slightly higher recovery and residual oil saturation content after miscible gas injection.

These results will guide KOC in deciding what type of displacement fluid to inject into the reservoir. Production enhancement revenues generated operating margins of 34% in Q2. North America revenues were up nicely, but this was largely offset by declines in revenues in Latin America and other international markets.

Our patented FlowProfiler revenue was up significantly in the second quarter as we continue its introduction into the market. This service is helping operators in liquid rich plays to evaluate and optimize the effectiveness of their completion and development strategies.

FlowProfiler tracers are being used to identify communication between fracs stages from the treatment well to surrounding offset wells, enabling the operator to make informed decision on lateral and vertical horizontal well space.

FlowProfiler is being combined with Core’s other diagnostic services to provide a comprehensive understanding of the completion and identify opportunities to increase recovery.

The addition of new FlowProfiler oil tracers are being introduced the additions soluble new FlowProfiler oil tracers are being introduced in July and are expected to make an impact on revenues in the third and fourth quarters and beyond.

The addition of several new SpectraChem tracers in the second quarter has already started making an impact on activity levels. The additional tracers are allowing operators to more discretely evaluate the growing number of frac stages in horizontal wells.

This strategic move to add Regional Engineering Advisors over the last year is helping the growth of the company’s business by shifting from sales on a well basis to big multi-well longer term projects. The Regional Engineering Advisors were put in place to meet the demands from customers to access Core’s industry recognized experts.

This team has been successful and helping our clients across North America to increase production through changes and completion designs and development strategies. June activity for all well stimulation diagnostic services was up substantially and this trend is continuing into the third quarter.

Core’s KODIAK Perforating System helped an independent operator with multiple shallow oil wells in the Texas Oklahoma border area. These wells like most over time are depleting a need of re-stimulation. In the past this operator used acid, but with the escalating cost of this option wanted an alternative solution.

These shallow wells were too costly to frac. So KODIAK Enhanced Perforating was introduced. This system provides re-perforation with our HERO charges and propellant stimulation with KODIAK at the same time rather than the multiple downhaul runs required with other propellant systems.

Computer modeling was able to illustrate what the KODIAK Enhanced Perforating System would do for this well. The operator reported that well production had tripled following the re-stimulation using Core’s KODIAK system. Most of the perforating systems are proprietary best-in-class systems.

A smaller for Core Lab is the basic technology product subject to pricing pressures from competitors. Some perforating companies continue to purchase these basic technology products from us. We sell these when we can get a reasonable return on them. The pricing on these items has stabilized late in the second quarter.

Reservoir management revenue growth for Q2 was 10% generating operating margins of 37% for the quarter. Reservoir management continues to expand our geo-engineering projects in the Permian Basin that are focused on improving oil recovery factors from the multiple horizons being exploited by operators.

The Delaware Basin project has focused on the Avalon Shale, Bone Spring Sands and Wolfcamp source rocks with the play expanding into the Southern Delaware Basin. Twenty-four companies are members of the project and have contributed core, well logs and completion and production data for 38 wells that are being analyzed and evaluated by our team.

The project is on target to include over 72 wells. The Midland Basin project has focused on the Wolfcamp, Cline, Spraberry, and Dean and has been recently expanded to include the Barnett and Woodford sections. A total of 48 member companies are now participating with membership continuing to increase.

Over 80 wells containing Core have been contributed with some wells represented by over a 1,000 feet of Core. The project will eventually have well over a 130 cored pilot wells.

Similar to the Delaware Basin project, the scope of the project includes reservoir characterization, fracture stimulation optimization and production best practices for oil recovery. During the quarter, Reservoir Management also initiated a new project directed at expanding the Woodford oil play in Oklahoma.

Recent successes in the SCOOP and stack areas of the Anadarko Basin are driving possible expansion of the play to include other areas. A total of nine operators have joined the project to date. Internationally, Reservoir Management has continued increasing our portfolio of West Africa and East African deepwater projects.

Regional petroleum system studies are being performed in cooperation with national oil and gas ministries in Cote d'Ivoire, Senegal, Tanzania and Mozambique. Kimberly, we'll now open the call for questions..

[Operator instructions] Your first question is from the line of Blake Hutchinson. .

Good morning, guys..

Good morning. Blake..

Just -- first of all just -- within the production enhancement segment, Dick, I think you gave a product sales number that was above both first quarter and last year. Help us square the total topline growth with the fact that product is going up, but that’s where the major weakness is identified.

Was the detriment of exiting Venezuela and Argentina a little more impactful or would you suggest that some of the higher growth services, just had maybe taken a pause as well, guess it’s just surprising to see the product growth given that you had called out a low end charge suite as the major pressure point..

Yeah, if you look at the broader market at the number of directional wells drilled compared to his revenue growth, the difference are the things you just mentioned.

Clearly, Argentina within our numbers a year ago, but not in our numbers today because we’ve closed that operation Venezuela as well and then certainly pressure on the lower end and that’s why Monty talked about, the benefits of the some of the KODIAK charges and the more higher end charges are beginning to show these improved results year-over-year..

And Blake if you look at the rollout for production enhancement, our June numbers were the best month ever, ever reported -- recorded by production enhancement and that has continued up through yesterday morning for production enhancement into the third quarter..

And just to be clear, I took the exits from Argentina and Venezuela as you would still do some business there but clearly even that’s been more profound effect or are you just -- you're avoiding this country due to currency risk etcetera..

Yes. Currency risk and I would say we could foresee those sales in both countries going to zero and they almost all are at zero now..

Okay, great. Thank you, and then just with your risking of the deepwater coring programs have stayed more and less the same what visibility can you give us in terms of timing you know understanding that these can take most of full quarter to pull -- the course to be pulled and analyzed.

Are some of these projects actually underway or given your margin guidance to get higher as the year progresses do we picture these all kind of kicking of the same time and we’ll see what actually hits the tape by year end?.

Blake, this is Monty. We have projects underway right now where we’re out capturing the core on deepwater wells. It does take the -- the analysis of that is over time. It will be both in the third and fourth quarter even though cores are being taken right now and then it goes beyond that.

Some of it will go to 2015 as we do analysis, over a period of time more analysis is recommended of a more specific nature, some specialized core analysis techniques and so these wells because of the science being applied, the analysis will go over a longer period of time.

There are -- as I said, we’re taking some now, we expect to take -- to capture more cores throughout the third and fourth quarter. It is not all at once, it’s spaced out by the -- depending on the drilling programs of the operators..

Yeah, so Blake right now it’s rolling out as scheduled and as planned..

Okay, great. That was very helpful. Thanks Monty..

Your next question is from the line of Veny Aleksandrov..

Good morning..

Good morningm Veny..

My first question is on the guidance and you mentioned a little bit about other you’re giving conservative guidance for the -- what's going to take to go the upper end of previous guidance to $6 and that’s more offshore projects being started and [files] (ph) that you risk or more work on the production it has this month.

How can I think about it?.

Well when you think about the big drivers for this company, think of international, think of deepwater, and certainly improvements in the unconventional. So if we get improvements in any of those areas, Veny, I think that’s what pushes us, through those levels.

And clearly internationally, if you use international rig count as a measure of activity, I think everyone’s been pretty disappointed with that. But if we do see that begin to improve and we get incremental work, we’ve seen our incremental margins drive upward to 60% and that can clearly help drive that EPS range as well..

And to follow-up on this question, with the geopolitical situation, how is it affecting your business right now and do you see any directing factors..

Well it's interesting in Europe, we have actually seen an increase in our activity level and looking at unconventional plays, we’ve done some work here just in the quarter in Germany, revisited some work in Poland.

So I think that the geopolitical climate may be precipitating a relook at some of these unconventional plays, especially those tied to natural gas. So early days for that, but we do have some indication that some of the operating companies are looking at that pretty hard again..

Thank you, appreciated..

Okay Veny..

Your next question is from the line of Brandon Dobell, William Blair & Company..

Thanks. Good morning, guys..

Good morning, Brandon..

Maybe a little color on comparing I guess old technology versus new technology and production enhancement in the established plays versus some of the newer plays, I guess I am just trying to figure at what point some of these newer unconventional plays get big enough either from a production enhancement perspective or just a service prospective to offset the I guess weakness or kind of flat revenues in the established plays?.

Yeah, couple of holds there Brandon. Number one, with the emerging plays we’re seeing more and more coring in reservoir fluid activity from those. They clearly haven’t offset the volumes that we get out of the major established plays.

But one of the things that we see going forward and we’re concentrating on is going to look at enhanced oil recovery techniques in these established plays; for instance, these techniques could utilize light hydrocarbon gas floods where some of the -- for instance, some of the flaring going on right now in the Bakken could be utilized I think very effectively for some light hydrocarbon gas floods.

So flooding from methane all the way through butane, injecting that back in the field to lift recovery rates.

Also there is a project ongoing right now small in scope but they’re actually trucking CO2 to a field looking at a miscible-gas flood, again very small scale, but if the economics work as we believe, you might see more exotic gases as opposed to going in by pipeline being trucked in and then thirdly, looking at alternating steam and gases for enhanced oil recovery, both in the Bakken and in the Eagle Ford.

So a couple of positives, we’re seeing more corn fluids out of the emerging plays. We believe that all of the work from the established plays does get -- all the routine work and initial work does ultimately get replaced by looking at EOR techniques, three of which I’ve mentioned that we are working on currently..

Any sense for I guess let's call it a timeframe for when that -- or when you guys expect that to happen, I guess I am just to trying to get a better handle on revenue dollars and revenue growth from newer things versus the older things, is that up 2014 or 2015 or is it going to stretch out longer when those newer dollars start to replace the old dollars..

Yeah, good question. We’re seeing some of the newer dollars now, but those are from our most technologically sophisticated clients. Once they usually indicate that these are working on their public company conference calls, we see other companies coming to answer that bell already. So it is already a 2014 event.

If that’s successful as we think we'll see more of it in the fourth quarter, and then certainly more of it in 2015..

Okay and then final one from me. In description, you guys called out the pipeline of international work.

Maybe any sense of scale from growth rate basis, a sequential growth rate basis, sounds like there’s a lot interest in projects but are we talking things that’ll make a difference, a notable difference this year in that segment or is that more about work that’s going to show up in 2015..

Well currently, through Q2 of second quarter, our rate is international up 1% or 2%; so not very exciting at all. As we mentioned on our May 12, 2014 call we are seeing some additional projects being commissioned.

So we do expect some additional international dollars in the second half of 2014, really nothing to get excited about, but again that building into the year 2015..

Okay. Great. Thanks a lot..

All right Brandon..

Your next question is form the line of Phillip Lindsay..

Yep. Good morning, gentleman..

Good morning, Phillip..

Yes, two questions please. First of all on the basic cost situation, your main competitor, I was talking to them recently, we are talking about the record -- record month through the spring and you just posted a record month in June so that suggest to me that the industry is in pretty good shape albeit there was some competitive nuances.

So perhaps you can just discuss further the outlook for this particular industry in terms of demand and supply, maybe you can add a geographical dimension to your answer..

Certainly North America is going to be playing a key role in that as we see more lateral footage being drilled and more stages being shot and we expect trend to continue. You’re going to see more perforating gun systems being used.

We see a very competitive advantage as Monty already mentioned with our KODIAK charges not only in the initial completion and stimulation of some of these horizontal wellbores but the recompletion and re-stimulation of those wellbores. Right now, less than 20% of our production enhancement revenues are tied to this basic technology.

We project that going below 10% by this time next year and I'll turn it over to Monty for some additional comments..

Yeah, we think that we will see a lot of application of our advanced technologies. We can demonstrate better results to the operators from using the KODIAK and the HERO charges versus a basic technology charge that might be available to them. So we have that competitive advantage.

We’re working on some new technologies that we’ll be talking about in the next conference call that will also enhance the recompletions or the even new completions. We think that the increase in horizontal drilling in particular will benefit the production enhancement segment of the business.

That’s where the growth is in the horizontal drillings and that’s going to be good for production enhancement of both the stimulation diagnostics and the perforating business of course..

Okay. Thanks and then related question if I could, a few of the European players over the last week or so have been discussing, how oil companies are becoming more contractual or more legal in their approach -- all its parallel approach to drive down cost in the supply chain.

Now, clearly you guys are not a contracting business but I would just like to get a sense on whether your own commercial discussions with the oil companies have become more difficult of late..

Hey Phil, this is Dick. We haven’t seen any change in that. I think that the type of service that we are provide is commodity based, they are unique and we spoke project by project. So we haven’t seen any change in the contracting methods of our client..

All right. That’s great. Thank you..

Your next question is from the line of Rob MacKenzie..

Good morning, guys..

Hello Rob..

I guess longer question so far, what I would like to try and -- if you guys could do for us is tie that together for us through what you said on FlowProfiler and the other growth initiative you guys have well in place here.

Any kind of stat at what kind of growth profile that might mean over a one to three year timeframe because we’ve clearly seen a deceleration this year, partly impacted by exiting a couple of markets are we still the same kind of growth profile or do we have to adjust our thinking..

I think if you look at our forecast for going forward and thinking that most of that growth profile is going to come out of production enhancement, you’ll see a little addition of growth from some of these deepwater cores and from help from international. I don’t basically see any change in the past growth profile going forward..

Great. Thank you. I wanted to come back to FlowProfiler specifically. You guys have started highlighting that recently, it’s basically being introduced as we speak. Help us understand if you will, what is the market potential for that technology? It’s an un-served market niche ineffectively a new technology to help optimize production there.

It would seem to me that it could be quite large, but I have no way to start quantifying that.

Can you -- can you help us with that?.

Hard to quantify, but we think it will be our largest product -- our largest services introduction in production enhancement ever. It all depends how many operators are going to use that in their horizontal well construction..

How big was the most recent largest one?.

Well, you have HTD-BLAST, which we went from about a $30 million opportunity now to over $60 million an opportunity. We’re projecting FlowProfiler certainly to be above that..

Great. Thanks very much. I will turn it back..

Okay Rob..

Your next question is from the line of Stephen Gengaro, Sterne, Agee & Leach..

Thanks. Good morning, gentleman..

Morning Stephen..

I wanted to just follow-up on as we think about 2015 and beyond your traditional perimeters of growth relative to worldwide activity levels.

Do you think we’ll resume that level next year?.

If -- and again if Brent crude prices stay where they are at, it supports every major international development that we know of and so does the activity level follow that? We would expect to see that right now. But sooner or later we will see that happen and that’s why we continue our dedication and focus to deepwater developments.

Certainly those projects are being recalibrated from a cost standpoint, but Stephen we see no reason why that shouldn’t happen..

Okay. Thank you..

Okay Stephen..

Your next question is from the line of Darren Gacicia..

Hey, thanks guys. I just curious as we go forward you look at some of your legacy more maturing unconventional plays and you are saying that the coring activity slowing a little bit there, what is that saying about the lifecycle of the plays and how you guys sell into it.

I think what I am hearing is, is that the initial kind of delineation and coring work that was done upfront is having now the enhanced recovery part of production enhancements accelerating. Is there a different way to think about that or there are nuances to the lifecycle s you guys look to sell products into these plays..

Nope. I think you hit it right on the head. Most of those will not be products though. Most of those will be services associated with dynamic flow regimes in and around the shales..

The other thing let me add to that is on the reservoir description side. While there would be fewer cores, we will have fluid activity, fluid testing that continues on and actually probably grows as the more drilling takes place in those plays..

Yeah and again that being associated with delineating effective EOR projects..

So it's kind of being agnostic to segment so the slowing activity is a natural pause within the lifecycle of the play that should reaccelerate and that’s what telling us for back out guidance blowing into ’15..

Correct..

Understood. Now separately when you think about you’re talking about work offshore, it strikes me that you guys do dwell in plays once you go into development phase. Obviously there has been a lot of debate on that activity and offshore on the development side.

Is you visibility such that development work should start to accelerate your work in some of these offshore projects and that’s embedded in what you’re telling us?.

Yes, as Monty said we’ve already mobilized projects in the deepwater Gulf Of Mexico. There are nine major coring projects scheduled there for the second half. We’ve mobilized on a number of those already. So that’s rolling out as planned.

Remember last year in the second half, there were five major coring programs scheduled for the deepwater Gulf of Mexico. We had risk adjusted that to three. We actually got all five and that’s why you saw beats in Q3 and Q4 last year and there was that extra revenue that came along with us getting those two other jobs that came along with that..

Got you. So basically what -- still I gather that's in line with guidance is we obviously started the year with an expectations set on one trajectory given the couple of factors we just discussed that had to slowdown for the first two quarters, but it seems like you reaccelerate that trajectory going into the second half and into 2015..

Yep and that's what our guidance is and the deepwater Gulf of Mexico essentially no deepwater cores were cut in the first half of the year. So we did an offer there and we’re hoping five for nine in the second half. If we go six or seven for nine, yeah, we’ll be at the high end, little less than that, maybe where our conservative guidance is at..

And you are -- you go nine for nine kind of at some point in ’15..

Hey -- we hope that’s exactly right. Well, maybe we go five for nine and then get the other four in ’15..

Yeah. That’s what I am saying. All right, well thank you. I appreciate the clarity and the color..

Okay Darren..

[Operator instructions] Your next question is from the line of John Daniel..

Hey guys. Dave..

Good morning, John..

Good morning. I’ve got two really macro questions for you.

In the past, you have had a pretty good insight into rig activity and you probably know right now we’re seeing all of the land to rig contractors accelerating their new built programs and simply extrapolating the current new built cadence for both the public and private guys being probable that we’re on a run rate to build close to 200 rigs in 2015 and so as that a backdrop, do you see the U.S.

market being able to absorb that many rigs next year?.

All depends on some of these emerging plays. So keep an eye on how the -- the TMS, the SCOOP, the Codell, how these other plays evolve. If they continue to evolve as they have well with some of the expectation of the some of the E&P companies that are in there, the answer is probably yes.

But I think it is very contingent on what the size and the development and the success in these emerging plays would be.

Now in saying that, going to pad drilling, I think that some of the older iron is probably going to get pushed out, so does the new iron push out the old iron, if it’s 200 rigs, probably won’t push all of them out, but if you get a little acceleration, some of these developing plays, some of the old iron gets pushed out, yeah maybe those 200 rigs can go to work..

Last year you guys accurately predicted the trend of more profit per well and clearly that was a great call.

At this point, are you guys seeing any signs by customers that, given the shift or the likely shift of more higher raw material costs that’s specifically sand and so forth that they might find a way to shift back to using less problem per well, save money?.

Yeah John, we’re still in the longer lateral more stages over pump profit. If you look at the returns that you get and you guys could easily run this and I think you guys have done some good work on this. If you look at some of the higher cost operators, their returns are higher as well.

You have operators out in the Permian Basin that on average spend a million dollars more per well but they’re yielding an additional 400,000 barrels in ultimate estimated recovery. For me that’s a no-brainer..

Thanks. That’s all I had. Thanks guys..

Okay John..

There are no further questions..

Yeah I think Dick’s going to make a comment on Iraq..

Yeah I just want to -- yeah I was just thinking about one of the earlier questions about some of the political event risks that are going on at the time and we would like to address our efforts that we’ve talked about on prior calls regarding Kurdistan.

If you recall prior calls, we’ve talked about putting in a mobile facility there and then finally upgrading that to a full fixed laboratory.

We’ve decided to put that on hold because of the political risk events that are occurring now and the equipment that we had acquired for that are being put in other locations that can drive revenue more currently. So we just want to update you on that.

There's also been a variety of press reports about some of the conflicts between the different parts of the country, Iraq versus Kurdistan and oil rights and who controls the ability of companies to operate. We’ve been named in some of that press just as other companies have as well.

We seen no impact on our business as a result of those discussions because the one company that was reported to one of the Iraqi companies that was reported to control contracts we really didn’t do much business with in any case. So we don’t see those events as a material change in our business in Iraq..

Any follow-up comments on that Monty?.

No, I think most of that equipment is -- is needed and will be used in Kuwait, not all of it, but most of it as we’ve expanded that operation and will be expanding that operation.

Obviously, you never like for your plans to disrupted by activities of war, but we’re happy to be able to redeploy that equipment in a very useful and productive way in Kuwait. We’ve hoped that some day we are back in Kurdistan but there is no way to project when that might be..

Yeah, and to make clear, the projects that we’re working there now in places like Abu Dhabi and up in Aberdeen. Those continue on unabated. So from a political risk standpoint we’ve taken some action, but work continues to come out of those locations.

So in closing and summary Core’s operations posted another solid quarter, but we know we can do better and we will. We’ve never been better operationally or technologically positioned to help our clients expand their existing production base.

We remain uniquely focused and are the most technologically advanced reservoir optimization company in the oil field service sector. This positions Core well for the challenges ahead. The company remains committed to industry leading levels of free cash generation, returns on investment capital and the return of excess capital to our shareholders.

So in closing, we would like to thank all of our shareholders and the analysts that follow Core and as already noticed by Monty Davis, the Executive Management and the Board of Core Laboratories gives a special thanks to our 5,000 worldwide employees to making these results possible. We are proud to be associated with their continuing effort.

So thanks for spending your morning with us and we look forward to our next update. Good bye for now. Operator This concludes today’s conference. You may now disconnect..