Deeper Digging Spurs Demand For Core Lab

In oil and gas exploration, much of the low-hanging fruit already has been picked. That's heightened the need for technology that can analyze and help extract harder-to-reach deposits.

Core Laboratories CLB, based in the Netherlands, is one of the most profitable companies in that industry, with an Earnings Per Share Rating of 98.

Its earnings growth ranged from 32% to 79% the past five quarters, although EPS gains slowed each of those periods.

Still, its earnings growth for the latest year and quarter are well-above the industry group's medians.

Sales grew 15% in the most recent quarter, in line with the industry group's median.

Core analyzes oil and natural gas in underground reservoirs to decide if extraction is justified.

It also helps exploration companies get the most out of challenging deposits to maximize return on investment.

Core says its operating margins have continued to expand, thanks to new technologies.

A successful product is the SuperHero, which blows holes in rocks between a well bore and reservoirs, and scatters less debris. The result is better initial flow rates.

Lehman Bros. raised price targets on Core and other oil-service and drilling stocks on May 20, citing "a strong recovery in 2008 and 2009 for North American natural gas drilling and substantial growth internationally over the next few years."

Core, which operates in 50 countries, had a pretax margin of 25.5% for 2007, the best level in at least eight years. Margin improved each of the past four years.

The stock has been in a correction since early November. It's now 9% off its high.