A specialist oilfield services company that runs laboratories to analyze rock cores, fluid, and gas samples pulled from underground reservoirs, helping oil and gas producers understand what lies beneath their wells and how to get more out of them. Founded in Dallas in 1936, Core Lab is credited with turning core analysis into a commercial service for the industry. Its name comes straight from that job—"core" being the cylindrical rock samples drilled out of the earth that its scientists study.
Operating income fell 40% as Middle East conflict disruptions and the absence of a prior-year insurance recovery compressed margins.
The Middle East conflict hit Core Lab's largest directly. fell 4% to $124.6 million and dropped 40% to $9.2 million as Reservoir Description revenue fell 9% and its margin collapsed from 14% to 5%, while a $2.6 million insurance recovery that boosted the prior-year quarter did not repeat. The company is now more dependent on its smaller Production Enhancement segment, which grew 5% and widened its margin to 11%.
Key takeaways
fell 40% to $9.2 million, with contracting 4.4 points to 7.3%, as the Reservoir Description absorbed the impact of conflict-driven declines and the absence of a $2.6 million insurance recovery recorded in Q2 2025.
Reservoir Description fell 9% to $78.7 million and its contracted to 5% from 14% a year ago, which management attributed to from Middle East and Russia-Ukraine conflict disruptions and maintained cost structures in the region despite lower activity.
Section summaries
Management's Discussion and Analysis
Q2 2026 revenue fell 4% YoY to $124.6M and operating income dropped 40% to $9.2M, driven by Middle East conflict disruptions and higher costs.
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Total declined 4% to $124.6 million, with service revenue down 2% due to lower international activity from Middle East and Russia-Ukraine conflicts, and product sales down 11% on lower lab equipment shipments.
Production Enhancement rose 5% to $45.9 million and its widened to 11% from 7%, driven by higher U.S. completion product sales, well diagnostic services, and tariff refunds.
Product sales fell 11% , extending a multi-quarter decline that management has linked to a suspended international order and lower U.S. onshore activity; service fell 2% on lower international activity.
fell 70% to $3.1 million from $10.4 million a year ago, as lower profitability was only partially offset by improved management.
The company drew $50 million on a delayed draw term loan during the quarter to retire $45 million in maturing Senior Notes; ended the period at $113.9 million, down 8.6% .
What changed
The U.S.-Israel-Iran military conflict flagged as a material risk in Q1 2026 materialized in Q2: Reservoir Description fell 9% and its contracted to 5%, confirming that Middle East laboratory operations and client demand were disrupted.
The suspended international product order flagged in multiple prior quarters remained unresolved; product sales fell 11% in Q2 2026, extending a decline that has now persisted for over a year.
The $2.6 million insurance recovery that boosted Q2 2025 did not repeat, removing a non-operational that had masked underlying cost pressure in the Reservoir Description .
Production Enhancement's widened to 11% from 7% a year ago, a clear improvement from the 2% margin reported in Q1 2026, suggesting the 's shift toward higher-margin diagnostic services and tariff refunds provided a buffer against product sales weakness.
of $3.1 million was a fraction of the $10.4 million produced in Q2 2025, and the $0.5 million generated in Q1 2026, leaving the company with $3.6 million in free cash flow for the first half of 2026 compared with $14.3 million a year ago.
What to watch
Whether the Middle East conflict disruption to Reservoir Description laboratory operations and client demand persists into Q3 2026, or whether the 's 5% represents a trough.
Whether the suspended international product order is reinstated, which would directly reverse a key driver of the 11% product sales decline.
The trajectory of Production Enhancement's 11% — whether the improvement is sustained by service mix and tariff refunds, or whether it normalizes once those benefits are lapped.
generation in the second half of 2026, given that the first half produced only $3.6 million and the company has $113.9 million in after the $50 million term loan draw.
Reservoir Description fell 9% to $78.7 million and contracted from 14% to 5%, primarily due to conflict-driven and the absence of a prior-year insurance recovery.
Production Enhancement grew 5% to $45.9 million and improved from 7% to 11%, driven by higher U.S. completion product sales and well diagnostic services, plus tariff refunds.
Cost of services as a percentage of service rose to 80% from 77% a year ago, reflecting maintained cost structures in the Middle East despite lower revenue and inflationary pressure on laboratory supplies.
fell to $3.6 million from $14.3 million in the prior-year period, as lower profitability was partially offset by improved management.
The Company drew a $50 million delayed draw term loan to retire $45 million in maturing Senior Notes, and expects international large-scale projects to be more resilient to near-term oil price volatility.
Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in market risk from the information provided in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” of Core Laboratories Inc.'s Annual Report on Form 10-K for the year ended December 31, 2025.
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There have been no material changes in market risk from the information provided in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” of Core Laboratories Inc.'s Annual Report on Form 10-K for the year ended December 31, 2025.
Our business faces many risks. Any of the risks discussed in this Quarterly Report or our other SEC filings could have a material impact on our business, financial position or results of operations. Additional risks and uncertainties not presently known to us or that we currentl…
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Our business faces many risks. Any of the risks discussed in this Quarterly Report or our other SEC filings could have a material impact on our business, financial position or results of operations.
Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. For a detailed discussion of the risk factors that should be understood by any investor contemplating investment in our securities, please refer to “Item 1A - Risk Factors” in Core Laboratories Inc.’s Annual Report on Form 10-K for the year ended December 31, 2025.