David M. Demshur - Chairman, President and CEO Richard L. Bergmark - EVP and CFO Monty L. Davis - SVP and COO Chris Hill - Corporate Controller.

Blake Hutchinson - Howard Weil Rob MacKenzie - Iberia Capital Partners Phillip Lindsay - HSBC Global Research Brandon Dobell - William Blair & Company John Daniel - Simmons & Co. Veny Aleksandrov - FIG Partners Robert Bellinski - Morningstar.

Good morning. My name is Bonnie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Core Lab’s Q3 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). Thank you.

I would now like to turn the call over to Mr. David Demshur, Chief Executive Officer. Please go ahead, sir..

Thanks, Bonnie. 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' third quarter 2014 earnings conference call.

This morning, I am joined by Dick Bergmark, Core’s Executive Vice President and CFO; and Core’s COO, Monty Davis, who will present a detailed operational review And Chris Hill will join us as well. He’s Core’s 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 executes the company’s growth strategies. We believe these three tenets have produced 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 and Core’s fourth quarter 2014 outlook and a general industry outlook as it pertains to Core’s continued growth prospects.

Then Monty will go over Core’s three operating segments detailing our progress and discussing the continued successful introduction of new Core Lab technologies as they relate to 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 over to Chris for remarks regarding forward-looking statements.

Chris?.

Thanks, Dave. Before we start this 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 other 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 a result of new information, forward 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 the 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 third quarter results. Those non-GAAP measures can also be found on our website. With that said, I’ll pass the discussion back to Dave..

Great. Thanks, Chris. I’d like to give a brief investor update. During the third quarter of 2014, Core’s operations produced our most profitable quarter in company history with record EPS and in net income reported. Operating income margins also set an all-time quarterly high.

Looking forward, Core will remain an internationally focused company concentrating on crude oil-related developments, especially in deep and ultra deepwater environments.

And although we’ve been affected by recent low activity levels in the international and deepwater theaters, we know long term that our focus will continue to benefit our long-term shareholders. Core also continued to innovate technologies to boost daily oil production and maximize estimated ultimate recovery rates.

As unconventional tight oil plays mature 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 to boost recovery rates in the Bakken and in the Eagle Ford from high-single-digit rates to rates in the low-teens. These new EOR technologies will generate high-margin revenues for many years to come.

Moreover, Core will continue to increase market penetration of newly introduced technologies such as our FlowProfiler and KODIAK-related technologies, as Core’s production enhancement segment produced a record operating result in the third quarter of 2014.

As stated in our 2Q earnings release, all of our operations are committed to posting future results that are equal or greater than the Core Lab standard over the last past decade. Our record third quarter results are a good start.

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 be recognized and receiving attention from other companies and analysts in our oilfield service sector are, number one, maximizing free cash flow through fiscal discipline. Core follows a strict discipline for allocating capital for investment and growing our business.

And unless certain return on investment capital standards are met or exceeded, the capital expenditure is disallowed. The strict capital discipline produced quarterly levels of free cash flow of nearly 67 million for the third quarter of 2014. In fact, Core converted over $0.24 of every revenue dollar into free cash.

Core's free cash to revenue conversion rate of 24% is one of the highest if not the highest of all oilfield service firms and exceeds the pretax operating margins of all major oilfield service companies that have reported Q3 results to-date. As our top 30 shareholders say, who own 70% of Core Lab’s stock, free cash flow matters.

The second financial tenant is to maximize our 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 all oilfield service companies.

Core's Board believes that the spot price performance over time is directly related to the company’s return on invested capital. Based on our most recent calculations available from Bloomberg, Core's return on invested capital was the highest of any company in its oilfield services comp group that is listed by Bloomberg Financial.

Also, Core's ratio of return on invested capital to weighted average cost of capital was the industry's highest. As our top 30 shareholders say, high returns on invested capital matter. Our third financial tenant is to return all excess capital back to our shareholders.

During the third quarter of 2014, Core returned over 107 million to our shareholders in the forms of quarterly dividends and the repurchases of shares as we opportunistically took advantage of lower Core Lab stock prices. This was the most free cash returned by Core in any quarter in company history.

At the end of the quarter, Core's outstanding diluted share count fell below 44,200,000 shares, levels not seen since the third quarter of 1997. During the quarter, Core returned over $2.40 per share to our shareholders.

Since October of 2002, Core's shareholder capital return program has returned over $1.93 billion or $45 per diluted share to our owners. Collectively, we have lowered our share count by over 39 million shares.

We will continue to follow these three key investment tenants in 2014 and into 2015, which should enable Core to produce industry-leading returns for all of our shareholders, as our top shareholders say, returning capital matters. So I'll now turn it back over to Dick for his detailed financial overview.

Dick?.

Thank you, David. If we look at the income statement, revenues were 276.1 million in the third quarter and that’s versus 273.2 million in the third quarter of last year. As David said, this represents all-time third quarter record revenues.

Of those revenues, services for the quarter were 203.6 million, and that’s up 5% when compared to 194.3 million last year. Product sales for the quarter though are lower at 72.6 million compared to 78.9 million in last year’s third quarter. Moving on to cost of services.

For the quarter, they were 56.0% of revenue, an improvement compared to almost 57% in last year’s third quarter and little over 59% in the prior quarter. Our cost of product sales was 73.1% of revenues and that is similar to last year’s third quarter.

G&A for the quarter was 12.3 million, 4.5% of revenues, which is down from 5.3% in the third quarter of last year. For the full year 2014, we expect G&A to be approximately 48 million. Depreciation and amortization for the quarter was 6.8 million unchanged from last year’s third quarter. We expect depreciation in 2014 to total approximately 27 million.

Other expense this quarter primarily includes foreign exchange losses of 1.9 million. The guidance we gave on our last call for this quarter specifically excluded the impact of any foreign exchange transaction gains or losses, so accordingly our discussion today excludes this foreign exchange loss.

If you exclude those losses to conform to our guidance, EBIT for the quarter is 91 million compared to 85.1 million in last year’s third quarter. EBIT margins were 32.9% for the quarter, up almost 200 basis points sequentially and 170 basis points from the third quarter last year. Our GAAP EBIT for the quarter is 89.1 million.

We’ve also noticed a trend by some of our larger [CAP-Cs] (ph) the contribution margin as their operating margin. This is where they exclude corporate costs like they don’t exists and still call it an operating margin.

While this is somewhat unorthodox in their choice of description as an operating margin, ours for competitive purposes would be north of 38%. This is a true testament to the notion that if you can create value for your clients, you can earn a good margin for your proprietary differentiated technology.

Interest expense is 2.6 million for the quarter compared to 2.3 million in last year’s third quarter. Income tax expense in the quarter is 20.3 million based on an effective tax rate of 23%, and we believe our effective tax rate for the full year will be approximately 23.5%.

Net income for the quarter, ex items, is 67.9 million, up over 12% sequentially and 9% from 62.3 million ex items last year, while our GAAP net income this quarter was 66.5 million. Earnings per share for the quarter is $1.53 on the same basis that our guidance was given and is above the EPS guidance range we gave last quarter.

Our EPS is up by $0.17 or 13% sequentially as well as year-over-year. Our GAAP EPS is $1.50 per share. If we look at the balance sheet, cash is 25.3 million which is similar to the prior year-end balance.

Receivables stand at 201.8 million similar to last year-end, but our DSOs in the quarter improved to 64 days slightly better than the 67 days experienced for all of 2013. Inventory of 49.5 million is up slightly from the year-end balance in anticipation of upcoming international product sales.

Other current assets are 34.7 million, up from the year-end balance of 30.6 million for the most part as a result of an increase in income tax receivable of 3.7 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 147 million, up from the year-end balance due to our client-driven CapEx program. Intangibles and goodwill and other long-term assets are up 8.6 million for the year-end balance of 218.3 million due in part to an increase of 3.4 million in the cash to render value of life insurance and an increase of 2.7 million in deferred tax assets.

If we look at the liability side of the balance sheet, accounts payable is down slightly from prior year-end and other current liabilities are down to 77.4 million from the year-end balance of 85 million, primarily due to expected incentive compensation.

Our long-term debt stands at 370 million compared to 333 million last quarter and is comprised of 150 million in senior unsecured notes and 220 million drawn on our bank revolving credit facility. The increase in borrowings came as a result of our increased share buyback program that David discussed.

As of today, drawings under our credit facility remain at 220 million.

Other long-term liabilities ended at 86.3 million, which is down slightly Shareholders' equity end of the quarter at 101.8 million, down from the year-end balance of 169.4 million and that’s primarily due to the share repurchases and excess of net income since the end of last year.

Capital expenditures for the quarter are 77.8 million and that is down from 9.1 million in the third quarter of last year. We do expect our CapEx program for the full year to be approximately 37 million.

As you know, 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. Of course, that’s one of the reasons why we’ve been able to generate our high returns on invested capital.

If you look at cash flow, cash flow from operating activities in the quarter is 74.4 million and after paying for 7.8 million in CapEx, our free cash flow is 66.6 million. In the third quarter, we turned over 24% of our revenues into free cash flow and that’s certainly one of the highest cash conversion rates in our industry.

During the quarter, we used our free cash flow, cash balances and borrowings to pay 22.2 million in quarterly dividends and to repurchase 562,913 shares for $85.1 million.

Through close of business yesterday in the fourth quarter, we have repurchased a further 119,254 shares at an average price of $139.41 per share for an aggregate cost of 16.6 million. The outstanding indebtedness under revolver continues to stand at 220 million compared to 117 million at the end of the year.

Our diluted share count now stands as of today at 44.1 million shares. Okay, let’s talk about guidance for Q4. As a reminder, we generate approximately 70% of our revenue from projects originating outside the U.S.

Over 80% of our revenue originates from crude oil-related projects and approximately 40% of our revenues from offshore reservoirs but approximately 20% of all of our revenues derive from deepwater developments.

We anticipate that fourth quarter 2014 North American activity will continue to increase slightly for emerging unconventional oil plays, while activity will remain at stable levels in established unconventional tight oil and gas plays.

We also anticipate generating revenue from five of the nine second half 2014 coring programs awarded to Core Lab 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 weaker Brent crude prices, we project flat activity levels through the end of 2014 and expect similar levels of activity entering 2015. Fourth quarter 2014 guidance does reflect a continuation of the higher activity levels experienced in the third quarter.

In spite of recent crude oil pricing weakness and continued softness in the near-term worldwide deepwater environment, our fourth quarter results are still expected to be up from the third quarter levels.

The effects of lower crude prices can be seen in the outlying areas of unconventional plays as production growth rates continues to decelerate in the Bakken play. If crude prices strengthen in the fourth quarter, then our guidance could prove to be conservative.

We believe crude oil markets will balance early in 2015 with crude oil prices strengthening to earlier 2014 levels. Longer term, the world will continue to be challenged to increase global crude supplies and the incremental barrel will continue to gain in value.

Our technology focus aimed at helping our clients produce those incremental barrels position us well for continued future long-term revenue and profit growth. For the fourth quarter of 2014, we expect revenues of 275 million to 280 million, with EPS ranging between $1.53 and $1.56.

Exogenous events affecting our fourth quarter 2014 EPS guidance include reduced profitability in Russia by $0.02 due to ruble depreciation, a cessation of work from Kurdistan impacting our guidance by $0.02 and slowing work from Southern Iraq impacting our operations by $0.01.

While no company, including Core Lab, created the sanctions on Russia or the spread of uncertainty in Iraq and Kurdistan, what we are saying is that excluding those issues as was done for the other companies that operate in these areas, our operations continue to perform very, very well and our true operating margins continue to expand.

If you run the math and add the impact of those items to our current guidance, it actually exceeds our prior guidance for our underlying business. This perspective may have been missed.

Operating margins in the quarter are expected to continue at high levels and to be approximately 33%, exiting 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 as a result of operational activity expected in higher tax rate jurisdictions.

Free cash flow for the final quarter is expected to range between 72 million and 77 million. All of our operational guidance excludes any foreign currency translations and any shares that may have been repurchased other than those already discussed. Now, I’d like to hand the discussion over to Monty for an operational review..

Thanks, Dick. I want to thank our employees for producing our most profitable quarter ever. Third quarter revenue of 276 million was slightly higher than Q3 2013 and Q2 2014. Operating earnings, excluding FX, grew 7% over Q3 2013 and 10% over Q2 2014.

Operating margins of 33%, excluding FX, improved 170 basis points over Q3 2013 and set a new quarterly record high. Reservoir Description revenue of 131.4 million grew 1% over Q2 2014 and was leveled with Q3 2013. Operating earnings of 36.3 million yielded operating margins of 28%.

In the third quarter, we expanded our digital core analysis services to Abu Dhabi and Bogota. This service developed in our Houston Advanced Technology Center enables Core to integrate computer tomography images with laboratory-measured petrophysical data sets.

This combination of high resolution CT images together with Core’s proprietary Nano-Perm and shale services are used to quantify and calibrate petrophysical and hydrocarbon saturation properties of CT imaged Core. The success of this advanced technology in the U.S.

has encouraged Core to expand this service into its Middle East and South American operations where business activity is high and the appetite for a new technology in this region is in great demand. We are adding new services in this product line regularly as the demand in revenue grows.

In addition to providing high pressure enhanced oil recovery and flow assurance services for ultra deepwater Gulf of Mexico projects, Core is actively involved in Continental U.S. EOR budgets. EOR work continues to increase in the Continental U.S. across multiple basins as projects continue for many operators.

Several of these operators has developed multi-field projects that started in 2014 and are expected to continue through 2015. These projects integrate our sampling, PVT and EOR services to evaluate and optimize the production potential of their U.S. unconventional plays.

Core was awarded a major geological contract for rock properties and reservoir geology in Q3 by [Karam] (ph) Petroleum in India. These contracts have a value in excess of 42 million over the next three years. With the award of these contracts, Core is now the major geological service company in India.

During the third quarter, Core introduced and successfully deployed its patent-pending Iron CoreHand. This unique entirely self-contained device and the associated services employ a proprietary design developed by Core Lab’s staff in response to market information and express needs of our clients.

Iron CoreHand was developed to address large diameter and other heavy core segments that would otherwise pose a risk of back and hand injuries during a two-man lift. When deployed at the well site, Iron CoreHand dramatically reduces or eliminates safety risk associated with core handling.

Seeing the obvious safety advantage of Iron CoreHand, a major Gulf of Mexico operator had us deploy the unit on successive core handling jobs. The unit and our highly trained well site engineers performed flawlessly. In addition to improving core-handling safety, Iron CoreHand reduced staff fatigue and accelerated the well site core handling process.

With these successful deployments in hand and the anticipated efficiencies confirmed, additional units are being constructed. The Iron CoreHand reflects the latest and a series of innovative designs intended to improve well site safety and illustrates Core Lab’s tireless commitment to improving workplace safety for our employees and clients.

Production in Enhancement revenue of 122 million grew 10% over Q2 2014. Operating earnings were 46.7 million, which is growth of 25% over Q2 2014. Operating margins of 38.2% are an all-time high and increased 460 basis points over Q2 2014.

Operators are continuing to use our patented FlowProfiler service to help optimize well spacing, fracture stimulation size and horizontal targeting. This has resulted in increased hydrocarbon recovery by identifying opportunities to stimulate more intervals along the wellbores and layers within complex formations.

Our diagnostics have identified that the fracture systems are more contained vertically than previously expected. This means that horizontal wells need to be landed at various depths within the reservoir to ensure all layers are stimulated and produced.

Our FlowProfiler continues to identify hydrocarbon-bearing rock that has not being contacted by the hydraulic fracture system. This information is driving changes to completion designs and development plans yielding increased hydrocarbon recovery. In West Texas specifically, we have traced almost 150 wells both vertical and horizontal.

Several operators have used our diagnostics to adjust horizontal landing depths and targeted intervals based on the hydrocarbon productivity of certain intervals.

Core’s concentrating our efforts in perforating system sales of our higher technology products to deliver value to our customers and returns to our shareholders in preference to the commodity products where price competition is a major factor. This reduces our revenue while maximizing returns for Core and our clients.

In the western U.S., an operator was unable to use conventional fracing procedures in its field and decided to enhance the well completion with Core’s patented KODIAK Enhanced Perforating System and HERO HR High Efficiency Reservoir Optimization charges for hard rock.

The perforating and simultaneous stimulation was tubing-conveyed on a single run with 5,544 feet of guns loaded with 25,560 HERO HR charges and 2,604 KODIAK propellant pellets.

The 39-gram HERO charges, the world’s deepest penetrating, with 69.3 inches of penetration and the KODIAK accelerator propellant pellets were used to boost the effectiveness of the perforating/stimulating event as the customer was unable to use conventional fracing procedures in this field.

The detonation of the perforating charge initiates a complex, sequentially oxidizing reaction of the propellant pellets, thereby generating a high-pressure pulse of gas.

This pulse then initiates and propagates fractures sort of a mini-frac into the reservoir sequence, creating cleaner perforating tunnels and improved hydrocarbon production and ultimate recovery rates.

Core’s ultra high pressure, high temperature perforating gun system was used to successfully complete a lower tertiary well on the shallow shelf in the Gulf of Mexico.

Core’s UltraHPHT system is designed to withstand pressures up to 30,000 psi and temperatures of up to 470 degrees Fahrenheit, suitable for operating in the ultra deep wells currently being drilled on the continental shelf in the Gulf of Mexico.

Currently, plans are being made for completion of an additional well in the same formation by the same operator. Core’s perforating testing facility utilized in the design and testing of the UltraHPHT perforating system is expanding its capabilities to allow for testing up to 40,000 psi and 600 degrees Fahrenheit.

Reservoir Management revenue of 22.6 million grew 2.1% over Q3 2013. Operating earnings of 7.6 million grew 18% over Q3 2013 and yielded operating margins of 34% and an improvement over Q3 2013 by 450 basis points.

Internationally, Reservoir Management completed deepwater projects in the equatorial basins of Brazil and phase two of the Cote D’Ivoire in West Africa. These projects extend our footprint in these rapidly growing petroleum provinces. Our work is continuing in the Senegal-Guinea Bissau deepwater joint industry project.

In East Africa, we are working with our partner INP Mozambique to complete the Mozambique Regional Reservoir Study in anticipation of the recently announced license round. Overall, we have had high demand for our portfolio South Atlantic and transform margin regional datasets.

On the unconventional side, Reservoir Management completed a fracture stimulation optimization project for an operator exploiting tight gas sands in Eastern Australia. The operator will be implementing new stimulation designs and modifying their field development plans as a result.

Reservoir Management also signed a multi-year contract for evaluation of potential unconventional reservoirs in the Middle East. In North America, demand has remained strong for our joint industry projects in the Permian Basin.

Three more companies joined our Delaware Basin project, bringing the total to 27, and two more joined our Midland Basin project for a total of 50 members.

Both of these projects are focused on the reservoir characterization, fracture stimulation, and optimizing well performance of the Wolfcamp, Bone Spring, Avalon, Cline and other unconventional horizons. In the quarter, Reservoir Management also completed a large proprietary pilot project that evaluated a new shale play in the Rockies.

Bonnie, we will now open the call for questions..

(Operator Instructions). Our first question comes from Blake Hutchinson of Howard Weil..

Good morning, guys..

Good morning, Blake..

I’d like to start, I guess, in terms of kind of broad strokes with some of your Brent commentary I guess both pertaining to Core and the industry.

Is the kind of drawing of reference to the recent pullback in Brent to a kind of more flattish outlook for many of your businesses more kind of a realization of the reality that would have – kind of been similar around $100 Brent and the recent pullback just kind of solidifies more of a flat outlook.

And what I’m getting out here is your opinion from what you hear for the customers of what level of Brent we really need to sort of get the industry moving again? Is it $110, is it $120 Brent? The reality for what we need to kind of induce a healthier spending environment..

Well, a couple of – a very complex question there, Blake. We looked at it, we had $110 Brent over the past several quarters if not years and we didn’t see any larger response out of international and/or deepwater activity really outside of the Gulf of Mexico.

And that was due to just project delays and looking at trying to remove costs from some of these large offshore deepwater developments. We think those now start to come into play where those costs have been taken out. And certainly Brent at over $90 the returns on those deepwater offshore projects, the returns are certainly there.

More impact we see are on the fringier unconventional plays with crude prices down there $80, and I think we see that manifest itself when we look at the deceleration of the amount of production growth, for instance, in the Bakken going from an average on a monthly basis of somewhere around – adding 27,000 barrels per month now all down to recently the last trend is down to around 17,000 per month.

That being all said and mixing that into a pot and vis-à-vis the growth prospects for the company, let’s remember that when we look at our service sales, those were up 5% year-over-year. When we look at our product sales, those were down collectively about 7 million year-over-year.

Had we held them, the product sales equal, our growth year-over-year on revenues would have been somewhere around 7% to 8% to 9% really parallel to other companies, international companies that have reported. But remember we are on a march to reduce the amount of basic technology sold out of our product sales division.

So while our margins are marching higher, we do hurt ourselves from a sales standpoint by taking out sales of the basic commodity and replacing them with higher margins.

We’re just taking out more of the basic technology sales right now to try to reduce that from what is about 20% of those sales or about somewhere on the order of several tens of millions and replacing them with other product sales that are of much higher margin.

So, collectively, although we are hurting ourselves from the appearances of a revenue growth prospect and certainly that is tied to Brent and WTI prices, we are also seeing an effect in there for us lessening product sales on the basic technology side..

Sure.

Absolutely, the mix impact is duly noted given Dick’s comments on product sales and obviously the margins that were attained in PE, but I guess sticking to Reservoir Management where I guess I associate more of the Brent levered growth commentary would center around, I mean what specifically now – we kind of did broad strokes does that mean to Core Lab? I guess I think when I think about the building blocks of growth, it’s kicking off the 150 to 200 projects of size that you’re bidding on, kicking off, does that change radically, is there a less velocity of activity on current fields that you’re sticky on or is this just an adjustment to the expiration portion of that Reservoir Management business?.

Reservoir Description I believe you’re saying..

Excuse me, yes..

We don’t have a lot of exposure on the exploration side. That’s less than 15% of our business. It is clearly related to the amount of year-over-year activity levels for Reservoir Description in the international theater and tied to deepwater.

And right now we essentially have those from 2013 to 2014, we have those flat and you can see Reservoir Description is up 1%, 2%, 3% year-over-year.

We don’t expect that to continue just because a lot of these projects are now going to be commissioned and some have already been commissioned; Total, deepwater, offshore Angola, BP Mad Dog 2 coming up for commissioning here in Q1 of 2015.

So we think that breaks the dam on a lot of major development projects that will play a critical role in, and we’ll get back to seeing those international and deepwater growth rates get back to where they are.

And they do have a benefit not only from a revenue growth standpoint but as you know the incremental margins that we generate from those prospects clearly seem out of the wells that we’ve already done in the deepwater Gulf of Mexico in Q3 have an impact not only on revenue growth but more importantly on incremental margins and margin growth in Reservoir Description..

And just finally that comments probably holds it at current Brent?.

Correct..

Okay, great. Thanks. I’ll turn it back..

Our next question comes from Rob MacKenzie of Iberia Capital..

Good morning, guys..

Good morning, Rob..

David, I wanted to maybe dig some more into some of these percentages you’ve thrown out.

Can you guys give us a feel for what percentage of I guess specifically of Reservoir Description is targeting existing producing fields, enhanced oil recovery type work and the like?.

I would say about 85% of that business is targeting existing fields..

Okay..

15% really greenfield developments..

Great.

And then within Production Enhancement, am I correct in assuming that roughly three-quarters 80% of that is the perforating business and the other part is (indiscernible)?.

Rob, about two-thirds would be the products, one-third would be the diagnostic services..

Okay.

And then the products – the perforating business, that would seem to be fairly directly tied to I guess primarily North American frac stage count, right, given the perforating?.

Stage count is clearly the revenue opportunity for us for the entire segment. When you think about it, we can sell a product into each stage and we can do diagnostics on each stage.

So that’s a reasonably good metric to use for that segment, however, cautionary one-third of that segment is outside of the U.S., which is not necessarily as tied to stage count..

Right, just regular perforating and the like, okay. Great, that does it for me for now. Thank you..

Okay, Rob..

Our next question comes from Phillip Lindsay of HSBC..

Good morning, gentlemen. A couple of questions please, general one first. What assumptions are behind your assertion that the oil market will balance out early next year and do you, for example, assume that we do get an OPEC cut or the U.S. shale activity your investment slows? That’s the first question.

And then the second question, do you think that you’ll or you can still maintain that 200 to 400 basis points outperformance versus the overall market in a flat or even down market? Does that rule of thumb still stand in your financial planning?.

Yes, Phil, welcome. Yes, indeed the 200 to 400 basis points based on just historical performances in up and down markets, we believe that to be the fact. And that holds the case. We know no reason why that shouldn’t be. The philosophy of the company to generate new technologies and to enter new fields holds today as it has in the past.

With respect to the balance of the crude oil markets, we now see a deceleration of the growth of production from many of the maturing shale plays liquids rich in the U.S. Moreover, remember worldwide, we have a 2.5% net decline curve rate that we will apply and if history bears true, we will see some small cuts out of OPEC.

That’s our philosophical thinking and the reasoning why we think those oil markets balance early in 2015..

Okay. Just one last follow-up, if I could.

I don’t know whether you’ll be able to answer this or not, but would be prepared at this point to give any directional guidance on your CapEx for next year? Do you think you’ll be low or high or similar?.

It of course is directed by our clients and so we’re going to be watching their budgets, but it could well be lower as a result of their lower activities or as David said in earlier commentary, if commodity prices do recover, we could see a change because it is client directed..

All right. Thanks, guys..

Okay, Phil..

Our next question comes from Brandon Dobell of William Blair..

Thanks. Good morning, guys..

Hello, Brandon..

How much visibility or confidence do you guys have in the pipeline for EOR projects or some of these deepwater coring projects that have been a bit tough to predict so far this year? As you look into '15, how much visibility in the pipeline you guys have?.

Into '15 on the EOR side for some of the maturing shale plays and other plays, pretty good set of confidence in that because we know those are going to occur. Certainly, the crystal ball is not as clear on deepwater owing to where commodity prices will go.

If indeed the oil markets do balance, as we think they would, we think we’ll have a good chance to have some excellent upside from this year both from international activities and also from deepwater developments..

Okay. You went to a decent explanation there on FlowProfiler and some inter-products and how they’re impacting frac design.

What kind of changes are you seeing producers make in response to what they learn from FlowProfiler? Are they using different spacing, more or less prop and I guess I’m just trying to figure out how they’re taking the data to increase recovery rates on those wells?.

Yes, the biggest impact that we found from FlowProfiler is the landing of horizontal wells and what were thought to be pretty homogenous shale sections. We know that solicitous stringers that run through there restrict the growth of frac [height] (ph).

So it is important that let’s say on a pad if we’ve got five wells coming off of one side of that pad, that those all be landed depending on the complexity of the formation that is where those horizontals are landed. We probably would no longer land those all in the same zone.

As a matter of fact, in some cases we’ve seen those five be landed in five different zones to ensure that contact was made when the wellbore was hydraulically stimulated with all of the potential producing zones.

So I think the biggest upshot out of this is the spacing of the horizontals but far more importantly the vertical landing of those wells in that horizontal reservoir..

Okay. And then final one from me, you talked about getting recovery rates and some of these mature basins up from single digits to mid teens or so. How much --.

Low teens..

Sorry, low teens to mid teens.

How much evidence do you guys have that the products and services you provide are doing that? Is it a small subset of wells, is it a large subset of wells or how much reference ability do you guys have to selling to new customers from successful projects?.

Yes, still a small subset of wells and a small subset of clients but the clients that are the ones that are investigating these have been the first movers in the maturing unconventional plays for different completion techniques, read that longer laterals, more stages, closer clusters, more profits.

And it’s the same subset of companies that are looking at these EOR techniques that when we can see that those will be successful, we’ll be following on by the others that are exploiting some of these maturing shale plays. No reason why that shouldn’t be the case..

Got it, okay. Thanks a lot..

All right, Brandon..

(Operator Instructions). Our next question comes from John Daniel of Simmons & Co..

Hi, guys. Good morning..

Good morning, John..

Just a couple for me.

Do you think that in the current oil price environment, let’s just say it’s prolonged into early next year, if that perhaps delays any customer adoption of new product offerings of potentially adding an element of risk to further margin expansion?.

I don’t think so because they are going to get in implementing these new technologies, they’re all based on looking at increasing recovery rates in those incremental barrels. John, those are the cheapest barrels that they have already in place.

So maybe as opposed to drilling new outlier wells in fringier areas or outline areas, they concentrate on wellbores and developments already in place and they look at implementing some of these EOR techniques. It’s the biggest bank for their buck..

I don’t disagree but I think that’s a good theory, but as you know some of these caps will do whatever they can to lower well cost at the expense of -- the right long-term decision. I just (indiscernible) better that you’ve seen that in the past people looking just to short-term lower cost versus the longer term benefit..

We have seen that from some clients but I would say that I wouldn’t put that into the risk profile yet..

Fair enough. Just another crystal ball question for you, Dave.

At this point your view on the worldwide rig count in terms of growth next year?.

You have to give me a crude oil scenario and if the crude oil markets do balance, let’s say WTI gets back to 90, Brent gets back to 100 to 105, I think we see a flat rig environment in North America and you see additional activity internationally..

Okay.

What if I were to just be more cautious and say 80, 85 WTI, 95 Brent, just moderately lower?.

Brent; really no change, maybe a little bit on the margin and you had WTI where?.

80, 85 in that range..

You probably have some rigs going down..

Yes, okay..

Again, it’s these fringier zones of the Bakken, the Eagle Ford, the Niobrara. You have less wells drilled in the TMS. So that’s what you’re looking at..

Fair enough. A housekeeping one for you, Dick. The G&A guidance calls for 48 million for the year which suggested about 14 million in Q4.

Is that just end of the year related stuff or is that a new run rate into '15?.

It’s not a run rate, it’s your typical Q4. And it could prove to be a lot..

Okay, all right. That’s all I have. Thanks..

John, one follow up on that rig count especially in North America. I think all eyes need to be on the stage count as well, because we still believe that we have longer laterals, more stages, tighter perf clusters, we think that certainly continues..

Okay, all right. I’ve got one more if there’s not a long queue, just a quick one here. On the whole profit per well, you guys are very early on about talking about the benefits of more profit per well. At this point, have you seen any examples to suggest that these mega wells, the 15 million, 20 million tons of profit per well if we’re overdoing it.

We might actually see better well results if we dial it back a tad..

I wouldn’t say that we haven’t seen any of those but the overwhelming majority have benefited from that. If you start out with [VAC] (ph) that is not so good, you end up with returns that are going to be not so good..

I think it’s a two-part question, John. One is from a science perspective they’ve proven to provide better output. The economics question is totally different. It’s hard for us to respond to..

Fair enough, okay. Thanks, guys..

Our next question comes from Veny Aleksandrov with FIG Partners..

Hi, guys..

Hello, Veny..

Good morning. My question is about these offshore projects that you have been talking about. There were nine of them and you’re talking about working on five. What happened to the other four? Are they still alive? Are they close to '15? What’s going on..

All of those projects still at this stage are alive. And so will all of them be done? I would say our doubts are going to be higher in 2014. But those that are not being done will be pushed into early '15. And of course in our commentary we still see being on target to at least do five of the nine that we have risk adjusted..

Great. And my next question is you mentioned that if oil prices recover in Q4, your guidance for Q4 might turn out to be conservative..

Correct..

If we have any positive impact, are we going to see it on the Production Enhancement side or both the Production Enhancement and the Reservoir Description?.

Probably both..

Both. Thank you so much. I appreciate it..

Okay, Veny..

(Operator Instructions)..

Bonnie, we’ll take one more..

Our last question comes from Robert Bellinski of Morningstar..

Hi. Good morning. Thanks for taking my call. You mentioned in the release that newer unconventional plays are offsetting slower activity in the established plays.

I’m just wondering by how much are these newer plays offsetting? Is it one-to-one? And then second, how much runway do you see in these new plays at this point, especially if WTI happens to stay at recent levels?.

Yes, I would say the replacement is almost one-for-one now.

And what was your second question?.

How much runway do you see in the new plays in terms of activity?.

Certainly with supporting WTI prices, so $90. A lot of these emerging new plays, there will be sweet spots developed in them and we will see activity levels there. There will be smaller sweet spots in a number of those that we named maybe outside of what we suggested in the Permian Basin. But we still think there’s a great deal of runway there..

Okay. Thanks..

Okay, Bonnie, we’re going to go ahead and wrap. So in summary, Core’s operations posted another all-time record quarter but we know we can still do better. We have 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 oilfield service sector. This positions Core well for the challenges ahead.

The company remains committed to industry-leading levels of free cash generation and returns on invested capital with all excess capital being returned to our shareholders. So in closing, we would like to thank all of our shareholders and the analysts that follow Core.

As already noted by Monty Davis and the executive management and the Board of Supervisors, Directors of Core Laboratories, gives special thanks to our 5,000 worldwide employees that have made these outstanding results possible. We are proud to be associated with our continuing achievements.

So thanks for spending your time with us this morning and we look forward to our next update. Goodbye for now..

Thank you. This concludes today’s conference call. Participants, you may now disconnect..