CLB 10-K & 10-Q changes, risk factors and insider trading

Our forward-looking statements are based on assumptions that we believe to be reasonable but that may not prove to be accurate. All of our forward-looking information is, therefore, subject to risks and uncertainties that could cause actual results to differ materially from the results expected. All known,known material risks and uncertainties are discussed below.

As business conditions change, the Company may need to implement cost-cutting measures that may adversely affect its business. These cost-cutting measures may include reductions in various expenses, including the quarterly dividend, base salaries of senior executives and employees, and annual capital expenditures, as well as implementation of temporary employee furloughs, and workforce reductions, amongand other reductionsmeasures ofto reduce corporate and operating costs.

InThese addition, thesecost-cutting initiatives could result in disruptions to Core Lab’s operations. Any cost-cuttingsuch measures could also negatively impact Core Lab’s business by delaying the introduction of new products or technologies, interrupting servicethe effective deployment of additionalexisting products,products and services, or impacting employee retention. ThereIn addition, there can be no assurance that additionalthese costscost controls will notclosely offsetcorrelate anywith suchreduced reductionsoperating of its operations.activity. If Core Lab’s operating costs are higher than expected, or if it does not maintain adequate control of its costs and expenses,costs, Core Lab’s results of operations will suffer. If Core Lab is unable to mitigate these or other potential risks related to its cost cutting initiatives, it may disrupt Core Lab’s business or could have a material adverse effect on its financial condition and results of operations.

Downturns in the oil and gas industry, or in the oilfield services business, or lower success rates of our clients’ exploration and drilling efforts, may have a material adverse effect on our financial condition or results of operations.

coordination by the OPEC+ countries;

civil unrest or political uncertainty in oil producing or consuming countries and other geopolitical conflict, including thecommencement ongoingof a major military conflict inbetween the MiddleUnited EastStates, Israel and Iran in February 2026, the continuing conflict between Russia and UkraineUkraine, and political uncertainty in Venezuela;

The oil and gas industry historically has historically experienced periodic downturns, which have been characterized by diminished demand for our oilfield services and products and downward pressure on the prices we charge. A significant downturn in the oil and gas industry could result in a reduction in demand for oilfield services and could adversely affect our operating results.

We cannot accurately predict which or what level of our services and products our clients will need in the future. Orders are placed with our suppliers based on forecasts of client demand and, in some instances, we may establish buffer inventories to accommodate anticipated demand. Our forecasts offor client demand are based on multiple assumptions, each of which may introduce errors into the estimates. In addition, many of our suppliers require a longer lead time to provide products than our clients’ demand for delivery of our finished products. If we overestimate client demand, we may allocate resources to the purchase of materials or manufactured products that we may not be able to sell when we expect to, if at all. As a result, we could hold excess or obsolete inventory, which would reduce gross margin and adversely affect financial results. Conversely, if we underestimate client demand or if insufficient manufacturing capacity is available, we could miss revenue opportunities and potentially lose market share and damage our client relationships. In addition, any future significant cancellations or deferrals of service contracts or product orders could materially and adversely affect profit margins, increase product obsolescence and restrict our ability to fund our operations.

political actions and requirements of national governmentsgovernments, including trade restrictions, embargoes, seizure, detention, nationalization and expropriation of assets;

Historically, economic downturns and political events have resulted in lower demand for our services and products in certain markets. The continuing instability in the Middle East, North Africa, South America and Ukraine, escalation of military conflict in the Middle East, and the potential for activity from terrorist groups that the U.S. government has cautioned against have further heightened our exposure to international risks. The global economy is highly influenced by public confidence in the geopolitical environment, and the situations in the affected countries and regions, as mentioned above, continue to be highly fluid; therefore, we expect to experience heightened international risks.

From time to time, certain geopolitical conflicts may lead to imposition of economic sanctions and associated export controls applicable to our operations. These sanctions and/or export controls may be imposed against certain countries, companies and individuals thatand they may restrict or prohibit transactions involving the countries, companies and individuals identified, which may also further restrict or prohibit us infrom conductingproviding salesgood or services and/or maintaining operations in anythe of theseaffected jurisdictions.

The ongoing geopolitical conflict between Russia and Ukraine has resulted in the U.S. government, European Union, the United Kingdom and other countries imposing broad-ranging and coordinated economic sanctions and export control measures against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic, including, among others:

a prohibition on doing business with certain Russian companies, large financial institutions, government officials and oligarchs;

a commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications (“SWIFT”),Telecommunications, the electronic banking network that connects banks globally;

a prohibition by the U.S. on exporting, selling, or supplying certain categories of services, including engineeringengineering-related services, petroleum services and petroleumanalytical testing services, to persons located in Russia; and enhanced export controls and trade sanctions targeting Russia’s importation of certain goods and technology, including restrictive measures on the export and re-export of dual-use goods, stricter licensing policy with respect to issuing export licenses, and increased use of “end-use” controls to block or impose licensing requirements on exports.

As the conflict in Ukraine continues,continues and these sanctions may change and be expanded, whichit could further hinder the Company’s ability to do business in Russia or with certain Russian entities,entities and/or our ability to repatriate cash, which could have an adverse impact on the Company’s financial condition and results of operations. Furthermore, in retaliation against new international sanctions and as part of measures to stabilize and support the volatile Russian financial and currency markets, Russian authorities imposed significant currency control measures aimed at restricting the outflow of foreign currency and capital from Russia, imposed various restrictions on transacting with non-Russian parties, banned exports of various products and imposed other economic and financial restrictions.

We have not experienced any material interruptions in our infrastructure, supplies or networks needed to support our operations in Russia or Ukraine. Should future sanctions require us to cease or wind down our Russian operations, our assets located there may be impacted and could become subject to impairment. As of December 31, 2024,2025, the Company’s fixed assets and total assets in Russia were $4.5$4.6 million and $11.7$16.8 million, respectively. Total assets located in Russia represent approximately 2%2.8% of the Company’s total assets. Additionally, the Company leases its operating facilities in Russia, and as of December 31, 2024,2025, the contractual obligation to exit these leased facilities is approximately $0.4$0.8 million. For the year ended December 31, 2024,2025, revenue attributable to our operations in Russia was $23.0$26.2 million, representing approximately 4%5.0% of the Company’s total revenue. If we discontinue our operations in Russia as a result of expanded sanctions, we could incur employee severance and other associated exit costs of approximately $2.5 million, as required under local laws.

We are actively monitoring the situation in Ukraine and assessing its impact on our operations in the region, including our business partners and customers. We have not experienced any material interruptions in our infrastructure, supplies or networks needed to support our operations. However, the situation is continuously evolving and the United States, the European Union, the United Kingdom and other countries may implement additional sanctions, export controls or other measures against Russia, Belarus and other countries, regions, officials, individuals or industries in the respective territories. We have no way to predict the progress or outcome of the conflict in Ukraine or its impacts in Ukraine, Russia or Belarus as the conflict,conflict and any resulting government responses, are fluid and beyond our control. OurThe effect on our operations, financial results and cash flows, including our ability to repatriate cash, may be adversely affected due to the conflict andflows will depend on various factors, including the extent and duration of the conflict, its effects on regional and global economic and geopolitical conditions, and the effect of more expansive or stringent laws, sanctions or trade control restrictions,controls, whether adopted by Western nations or the Russian Federation, on our business, the global economy and global supply chains.

Our results of operations may be adversely affected because our efforts to comply with applicable anti-corruption laws such as the United States’ Foreign Corrupt Practices Act (the “FCPA”) and the United Kingdom’s Anti-Bribery Act (the “ABA”) could restrict our ability to do business in foreign markets relative to our competitors who are not subject to these laws.

The market for our services and products is characterized by changing technology and product introduction. As a result, our success is dependent upon our ability to develop or acquire new services and products on a cost-effective basis and to introduce them into the marketplace in a timely manner. WhileOur wefuture intendgrowth and financial performance will depend in part upon our ability to continuedevelop, committing substantial financial resourcesmarket and effort to the development or acquisition ofintegrate new products and services and products, we may not be able to successfully differentiateaccommodate our servicescustomer’s preferences along with the rapid pace of technological advancement, including artificial intelligence and productsmachine from those of our competitors. Our clients may not consider our proposed services and products to be of value to them; or if the proposed services and products are of a competitive nature, our clients may not view them as superior to our competitors’ services and products. In addition, we may not be able to adapt to evolving markets and technologies, develop or acquire new services or products, or achieve and maintain technological advantages.learning.

The frequency and magnitude of cybersecurity attacks is increasingincreasing, and threat actors have become more sophisticated. Cybersecurity attacks are similarly evolving and include without limitation use of malicious software, surveillance, credential stuffing, spear phishing, social engineering, use of deepfakes (i.e., highly realistic synthetic media generated by artificial intelligence), attempts to gain unauthorized access to data, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data. We may be unable to anticipate, detect or prevent future attacks, particularly as the vectors used by threat actors change frequently or are not readily identifiable until deployed. We may also be unable to investigate or remediate cybersecurity incidents as threat actors are increasingly using techniques designed to circumvent controls, avoid detection, and delete or obfuscate forensic evidence.

Compliance with environmental legal requirements in the United States at the federal, state or local levels may require acquiring permits to conduct regulated activities, incurring capital expenditures to limit or prevent emissions, discharges and any unauthorized releases, and complying with stringent practices to handle, recycle and dispose of certain wastes. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial or corrective obligations, the occurrence of delays or cancellations in the permitting, performance or expansion of projects and the issuance of injunctive relief in affected areas. Certain of these laws and regulations may impose joint and several, strict liability for environmental liabilities, such as the remediation of historical contamination or recent spills, and failure to comply with such laws and regulations could result in the assessment of damages, fines and penalties, the imposition of remedial or corrective action obligations, the occurrence of delays or cancellations in permitting or development of projects, or the suspension or cessation of some or all of our operations. These stringent laws and regulations could require us to acquire permits or other authorizations to conduct regulated activities, install and maintain costly equipment and pollution control technologies, impose specific safety and health standards addressing work protection, or to incur costs or liabilities to mitigate or remediate pollution conditions caused by our operations or attributable to former owners or operators. Certain of these laws and regulations may impose liability on a joint and several and strict liability basis requiring the remediation of historical contamination not directly associated with our operations as well as more recent releases. Failure to comply with applicable laws and regulations could result in the assessment of monetary fines and other civil and/or criminal penalties, the imposition of remedial or corrective action obligations, the occurrence of delays or cancellations in permitting or development of projects, or the suspension or cessation of some or all of our operations.

Environmental laws and regulations could limit our clients’ exploration and production activities. For example, hydraulic fracturing continues to attract considerable public and governmental attention, both in the United States and in foreign countries, resulting in various controls applied to fracturing activities or locations where such activities may be performed. Although we do not directly engage in drilling or hydraulic fracturing activities, we provide products and services to operators in the oil and gas industry. For example, certain states have adopted, or are considering adopting, legal requirements that could impose more stringent disclosure, permitting and/or well construction requirements on hydraulic fracturing operations, and local governments may also seek to adopt ordinances within their jurisdictions regulating the time, place and manner of hydraulic fracturing activities.

U.S., foreign federal, regional, state or local governmental actions aimed at species conservation, preventing hydraulic fracturing activities, or otherwise limiting oil and gas operations or production in certain locations, could indirectly cause us to incur additional costs, cause our or our oil and natural gas exploration and production customers’ operations to become subject to operating restrictions or bans, result in new difficulties obtaining permits or other authorizations, and limit future development activity in affected areas. To the extent any such existing or future legal requirements result in increased costs or restrictions or cancellation in the operation of our clients, such developments could reduce demand for our products and services and have an indirect material adverse effect on our business.

Our clients in the oil and gas industry are also subject to many laws and regulations relating to environmental and natural resource protection in the United States and in foreign countries where we operate, and many are required to obtain permits and other authorizations for their operations. In particular, we, our third-party vendors that supply us with goods and services in support of our business, and our clients are subject to an increased governmental, and public, political and scientific attention focus on risks associated with the threat of climate change arising from the emission of greenhouse gases (“GHG”).GHG. Various governments have adopted or are considering adopting legislation, regulations or other regulatory initiatives, including the Paris Agreement, the Europe Climate Law, that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions at national or local levels in jurisdictions where weour clients operate. Our and our clients’ complianceCompliance with such existing, or any new or amended legal requirements that are placed into effect and applicable in areas where we or our clients conduct operations, could result in our or our clients’ incurring significant additional expense and operating restrictions.restrictions which could result in reduced demand for our products and services.

New or amended legislation, executive actions, regulations or other regulatory initiatives that impose more stringent oil and gas sector requirements or fees on GHG emissions or restrict the areas in which this sector may produce oil and natural gas or generate GHG emissions could result in increased compliance costs or costs of producing fossil fuels. For example, in November 2024, the EPA finalized the methane emissions charge rule, implementing the Inflation Reduction Act of 2022 “IRA 2022,” which applies to oil and gas facilities emitting more than 25,000 metric tons of CO2 equivalent per year. If the methane emissions charge rule is implemented, it could increase our U.S. customers’ operating costs, and the fees and other requirements of the regulation could accelerate the transition away from fossil fuels, which may in turn reduce demand for our products and services and adversely affect our business and results of operations.

To the extent that climate change alters weather patterns, it can impact the demand for our customers’ products. Our operations and the operations of our customers are also susceptible to the physical effects of climate change, such as increased frequency or severity of storm systems, hurricanes, droughts, floods, extreme winter weather, or geologic/geophysical conditions. Such events canmay impact our operations directly and indirectly, and could also result in increased insurance costs.

Increasing attention to environmental, socialsustainability and governancecorporate (“ESG”)responsibility matters may impact our business.

Regulations associated with ESGsustainability and sustainabilitycorporate responsibility have been, and are, being implemented and we anticipate that these regulatory requirements will continue to expand in themarkets Europeanwhere Unionwe (“EU”), the United States and globally, at all levels of government and from private institutions and stakeholders.operate. As a result, numerous regulatory initiativesregulations have been made, and are likely to continue to be made, to monitor and limit existing emissions of GHGs or implement laws, policies or regulatory initiatives that may contribute to energy conservation measures, stimulate demand for alternative forms of energy or limit areas where fossil fuel production may occur, which may translate into reduced demand for our services.

Business operations may also subject us or our customers to state-mandated climate disclosures. For instance, the Climate-Related Financial Risk Act (“CRFRA”) in California requires the disclosure of a climate-related financial risk report (in line with the Task Force on the Climate-related Financial Disclosures (“TCFD”) recommendations or equivalent disclosure requirements under the International Sustainability Standards Board’s (“ISSB”) climate-relate disclosure standards) every other year for public and private companies that are “doing business in California” and have total annual revenue of at least $500 million. Reporting under this law wouldwas set to begin in 2026 and the ultimate impact of the law on our business is uncertain—uncertain. In November 2025, the GovernorNinth Circuit Court of CaliforniaAppeals hasgranted directedan furtherinjunction considerationpending appeal that stays enforcement of the implementationCRFRA. deadlinesA separate law, SB 253 directed the California Air Resources Board (“CARB”) to create rules relating to GHG reporting. CARB’s regulations require the reporting of Scope 1 and Scope 2 GHG emissions starting August 10, 2026, for eachcompanies that are “doing business in California” and have total annual revenue of theat laws,least and$1 therebillion. is potential for legal challenges to be filed with respect to the scope of the law—but, absentAbsent clarification or revisions to thethese law,laws, alongside the SEC disclosure rule, finalization and implementationcompliance, may result in increased compliance costs and increased costs of and restrictions on access to capital.

Investor and societal expectations regarding voluntary ESGcorporate responsibility disclosures, and consumer demand for alternative forms of energy may result in increased costs, reduced demand for our services, reduced profits, increased risks of governmental investigations and private party litigation, and negative impacts on our stock price and access to capital markets. These pressures could have similar impacts on our customers, and therefore, indirectly impact our operations by decreasing demand for our services. Our managerial ESG Steering Team is the primary group for overseeing and managing our ESGsustainability initiatives. Team members review the implementation and effectiveness of our ESGsustainability programs and policies and report on these matters to the Board of Directors. While we have sought voluntary aspirational goals for GHG emission reductions from base year 2018, we note that even with our governance oversight in place, we may not be able to adequately identify or manage ESG-relatedsustainability-related risks and opportunities, which may include failing to achieve ESG-relatedsustainability-related aspirational goals. We have published voluntary disclosures regarding ESGsustainability matters under an annual Sustainability Report and the Global Reporting Initiative, an international independent standards organization. From time to time, statements in those voluntary disclosures may be based on aspirational expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith. Such expectations and assumptions may be prone to error or subject to misinterpretation given the lack of an established single approach to identifying, measuring and reporting on many ESGsustainability matters.

The exclusive forum provision would not apply to suits brought to enforce any liability or duty created by the Securities Act of 1933 (the “Securities Act”) or the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or any other claim for which the federal courts have exclusive jurisdiction. To the extent that any such claims may be based upon federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.

On May 1, 2023, Core Laboratories N.V. completed its previously announced redomestication transaction (the “Redomestication Transaction”), which through a series of steps, resulted in the merger of Core Laboratories N.V., a holding company in the Netherlands, with and into Core Laboratories Luxembourg S.A., a public limited liability company incorporated under the laws of Luxembourg, with Core Laboratories Luxembourg S.A. surviving, and subsequently the migration of Core Laboratories Luxembourg S.A. out of Luxembourg and its domestication as Core Laboratories Inc., a Delaware corporation. TheSee RedomesticationNote Transaction1 has- beenDescription accountedof forBusiness as a transaction between entities under common control. There is no difference betweenof the combined separate entities priorNotes to the RedomesticationConsolidated TransactionFinancial and the combined separate entities after the Redomestication Transaction with respect to the consolidated financial statements; therefore, comparative information reported in these financial statements do not differ from amounts previously reported under Core Laboratories N.V.’s consolidated financial statements. These financial statements should be read in conjunction with Core Laboratories N.V.’s Quarterly Report on Form 10-Q for the three months ended March 31, 2023 and Core Laboratories N.V.’s Annual Report on Form 10-K for the year ended December 31, 2022, including Note 2 - Summary of Significant Accounting Policies.Statements.

The following table summarizes the annual average and year-end worldwide and U.S. rig counts for the years ended December 31, 2024,2025, 20232024 and 2022,2023, as well as the annual average and year-end spot price of a barrel of West Texas Intermediate (“WTI”) crude, Europe Brent crude and a MMBtu of natural gas:

In general, activities associated with the exploration of oil and gas in the U.S. onshore market are more sensitive to changes in the crude-oil commodity prices, as opposed to larger international and offshore projects which take multiple years to plan and develop. These international and offshore projects once announced and started, will continue through completion, despite changes in the current price of crude oil. The geopolitical conflict between Russia and Ukraine that began in February 2022, caused disruptions to traditional maritime supply chains associated with the movement of crude oil, initially reducing the level of crude oil sourced from Russia and being imported into various European ports. The disruptions to traditional maritime supply chains of crude oil and derived products, such as diesel fuel, and associated sanctions imposed on maritime exports of these products out of Russia caused significant volatility in both the prices and trading patterns of these products duringfrom 2022the inception of the conflict through 2023 before stabilizing in 2024 and intothroughout 2023.2025. As a result, averageAverage crude-oil prices which were elevated duringat 2022,the butinception of the conflict, have since decreased, moderatingmoderated in 2023 and stabilizingcontinued to stabilize in 2024. The maritime supply chains associated with the movement of crude oil have continued to realign and stabilize in 2023 and 2024, which reduced some of the volatility in crude-oil prices, however,However, expanded sanctions were issued in January 2025, which havecaused resultedtemporary disruptions in moresupply, recentbut elevateddid pricesnot andhave uncertainty.any meaningful or extended impact to commodity prices.

The conflict in the Middle East that began in October 2023 has resulted in additional disruptions in the movement and trading of crude oil which continued throughout 2024. The Company's volume of associated laboratory services is commensurate with the trading and movement of crude-oil into Europe, the Middle East, Asia and across the globe. However, the United States, the European Union, the United Kingdom and other countries may implement additional sanctions, export controls or other measures against Russia, Belarus and other countries, regions, officials, individuals or industries in the respective territories. We have no way to predict the progress or outcome of these events, and any resulting government responses are fluid and beyond our control. According to the latest International Energy Agency’s report, the current global demand for crude oil and natural gas remains at a moderate level though the growth momentum is expected to slow down in 2025 due to further weakening of the macroeconomic climate, as Gross Domestic Product (“GDP”) growth stays below trend in major economies, including China.

Information published recently by the EIA, shows that the inventory of wells drilled but uncompleted (a “DUC” well) in the U.S., was 5,8255,798 as of December 31, 2023,2024, and declined to 5,2385,020, or a 13% reduction, at end of 2024.2025. This data indicates that during the period of higher activity, operators were drilling wells but not completing them as the DUC inventory grew. As activity levels began to decline, operators began to drill fewer new wells and were completing some of the wells that had been previously drilled but not completed. As drilling and completion activity levels continued to decline from 20232024 to 2024,2025, the number of wells completed continued to outpace the number of new wells drilled during these periods.

In the U.S., the land-based average rig count decreased approximately 5%13% in 2024 from 2022 to 2023 primarily due to a significant decline in natural gas prices. Additionally, efficiencies gainsgained in drilling and completing wells allowed operators to complete their drilling programs ahead of their original schedule. AverageIn natural2025, gas prices continued to decline by approximately 13% in 2024 compared to 2023, and as a resultdespite the overall U.S. land-based average rig count decreaseddecrease of 6% from 2024 levels, activity in certain natural gas basins improved as the average natural gas prices increased by a61% similarin level2025 compared to average prices in 2024. Demand for product sales and associated services will typically change in tandem with the changes in the rig count and associated drilling and completion activity.

Outside of the U.S., international average rig count showed an increase of approximately 6%20% in 20232024 from 2022,2023, however, subsequently remaineddecreased flatby 7% in 2024.2025, which was primarily in the Middle East, Latin America and Asia Pacific regions. Long-term international and offshore projects which are commonly announced through Final Investment Decisions and subsequently initiated are not as susceptible or at-risk to delay or suspension due to short-term volatility in crude-oil commodity prices. The Company has maintained its annual capital expenditures between $10.0 million and $13.0 million during the years 2022, 2023 and 2024, which is significantly reduced from average annual capital expenditures in years prior to the pandemic.

Service revenue is primarily tied to activities associated with the exploration, production, movement and refinement of oil, gas and derived products outside the U.S. Service revenue for the year ended December 31, 2025, was $399.4 million, an increase of 3% compared to 2024. Approximately 70% of service revenue is generated from international markets. The increase in service revenue was due to growth in both U.S. and international markets. In 2025, growth occurred in several international markets, primarily in Europe and Africa, despite the headwinds from the on-going geopolitical conflicts and expanded sanctions previously discussed. The increase in U.S. service revenue in 2025 compared to 2024, was attributable to increased demand for well completion diagnostic services and growing client activity for our laboratory crude assay services in 2025. Growth in service revenue in 2025 has been negatively impacted by certain projects that were planned and scheduled but were canceled, as the well drilled by our clients were determined to be uneconomical or unsuccessful. Service revenue for the year ended December 31, 2024, was $388.2 million, an increase of 4% compared to 2023. The increase was due to growth in activity levels in both U.S. and international markets. Approximately 70% of service revenue is generated from international markets, and inIn 2024, growth occurred in several international markets, primarily in Europe, Africa and Asia Pacific, despite the headwinds from the on-going geopolitical conflicts previously discussed.conflicts. The increase in U.S. service revenue in 2024 compared to 2023, benefited from continuedincreased growing client activity from 2023 into 2024,demand for our reservoir core and reservoir fluids analysis services on international projects from across the globe that are often conducted in our advanced technology center located in Houston, Texas, as well as a growing demand for CCS projects. Well completion diagnostic services in the U.S. market also showed strong growth in 2024 compared to 2023 although some well diagnostic projects in the Gulf of Mexico were delayed due to multiple hurricanes during 2024. Service revenue for the year ended December 31, 2023, was $371.9 million, increased by 7% compared to 2022. In 2023, the increase was due to growth in activity levels in both U.S. and international markets. The growth occurred in several international markets including the recovery of services in the European region. The increase in U.S. operations benefited from growing client activity year over year for our reservoir core and reservoir fluids analysis services on projects from across the globe, as well as a growing demand for CCS projects.2023.

Product sales revenue, whichrevenue is equally tied to the completion of onshore wells in theNorth U.S.America and international activities. Product sales to the U.S. onshore markets are generally delivered more frequently and in smaller quantities, versus product sales to international markets which are typically shipped and delivered in bulk and the timing of delivery can vary from one period to another. Product sales revenue for the year ended December 31, 2025, was $127.1 million, a decrease of 6% compared to 2024. The decline in our product sales revenue was in line with the 6% decline in U.S. land-based average rig count in 2025 compared to 2024. Product sales revenue for the year ended December 31, 2024, was $135.6 million, a decrease of 2% compared to 2023. The decline in our product sales revenue iswas primarily associated with the activity decline in the U.S. onshore market, where the U.S. land-based average rig count decreased 13% in 2024 compared to 2023. Product sales revenue for the year ended December 31, 2023, was $137.9 million, a decrease of 3% compared to 2022. The decrease in product sales,sales is primarily driven by the decline into the U.S. onshoremarket market,was wherepartially the U.S. land-based average rig count decreasedoffset by 5%a higher level of product sales to international markets in 2023 compared to 2022.2024.

Cost of services for the year ended December 31, 2025 was $302.2 million, an increase of 2% compared to 2024, which is lower than the change in service revenue. Cost of services expressed as a percentage of service revenue decreased to 76% in 2025 compared to 77% in 2024. The improvement in cost of services as a percentage of service revenue in 2025 compared to 2024, was primarily due to increased efficiencies and the benefits of lower compensation costs as a result of cost reduction initiatives implemented during 2025. Cost of services for the year ended December 31, 2024 was $297.3 million, an increase of 5% compared to 2023, which is slightly higher than the change in service revenue. Cost of services for the year ended December 31, 2023 was $282.1 million, an increase of 3% compared to 2022. Cost of services expressed as a percentage of service revenue increased to 77% in 2024 compared to 76% in 2023. The slight increase in cost of services as a percentage of service revenue in 2024, was primarily associated with higher employee compensation and higher operating costs as a result of additional costs incurred due to the fire incident at oneour of ourAberdeen, U.K. facilities.facility. The additionalfire related costs and loss of income from business interruption were substantially covered by insurance proceeds recorded in Other (income) expense, net. Cost of services expressed as a percentage of service revenue improved to 76% in 2023 from 79% in 2022. Improvement in cost of services as a percentage of service revenue in 2023, was primarily associated with improved utilization of our global laboratory network on higher revenue.

General and administrative (“G&A”) expense includes corporate management and centralized administrative services that benefit our operations. G&A expense was $45.4 million in 2025, an increase of 14% or $5.7 million. The increase was primarily associated with: 1) a higher stock compensation cost of $3.4 million that aligned with achievement of certain performance conditions; 2) unfavorable changes in mark-to-market value of company-owned life insurance of $1.9 million; and 3) increased license fees and implementation costs of $0.7 million associated with a new global human capital management system. G&A expense was $39.8 million in 2024, a decrease of 1% or $0.5 million.million compared to 2023. The decrease is associated with lower employee compensation costs, which were substantially offset by increases in costs associated with the implementation of a global human capital management system and a third-party assessment of the Company’s IT cybersecurity environment. G&A expense was $40.3 million in 2023, an increase of 6% or $2.1 million compared to 2022. The increase is primarily due to changes in value of company owned life insurance and stock compensation expense during the period. See Note 1716 - Stock-Based Compensation of the Notes to the Consolidated Financial Statements for further details.

Depreciation and amortization expense for the year ended December 31, 20242025 was $15.0$14.6 million, a decrease from $15.8$15.0 million and $17.2$15.8 million in 20232024 and 2022,2023, respectively. The decrease in 20242025 and 20232024 is primarily associated with assets which became fully depreciated and lower levels of capital expenditures.depreciated.

In 2024 and 2022,2024, we sold certain ownership interest in mineral rights of certain properties for a net gain of $1.4 million and $0.7 million, respectively, which is included in gain on sale of assets.

During the year ended December 31, 2023, the State of Louisiana expropriated the access road to one of our facilities and paid us a settlement of $0.6 million. During the year ended December 31, 2022, we received insurance settlements of $0.7 million associated with business interruptions and property losses to certain facilities caused by the North America mid-continent winter storm in February 2021.

Foreign exchange (gain) loss, net for the primary currencies in which we operate and those with a material effect for the period presented is summarized in the following table (in thousands):

Interest expense for the year ended December 31, 20242025 was $12.4$10.6 million compared to $13.4$12.4 million and $11.6$13.4 million in 20232024 and 2022,2023, respectively. In 2025, the Company reduced its total outstanding debt by $15.0 million or 12% from end of 2024. The decrease in interest expense is associated with lower outstanding debt and lower average blended interest rates in 2025 compared to 2024. In 2024, the Company reduced its total outstanding debt by $38.0 million or 23% from end of 2023. The decrease in interest expense associated with lower outstanding debt was partially offset by a higher average blended interest ratesrate in 2024 compared to 2023. In September 2023, the 2011 Senior Notes of $75 million with a fixed rate of 4.11% matured and were partially refinanced with the 2023 Senior Notes of $50 million with higher fixed rates of 7.25% and 7.50%. In 2023, the Company reduced its outstanding debt from end of 2022, however, the interest expense was higher in 2023 primarily due to: 1) rising interest rates on our variable rate debt during these periods, and 2) partial refinancing of the 2011 Senior Notes of $75 million with the 2023 Senior Notes of $50 million, as discussed above. See Note 1110 - Long-term Debt, net of the Notes to the Consolidated Financial Statements for further detail. Interest expense was also affected by changes associated with our interest rate swap agreements, as described in Note 1514 - Derivative Instruments and Hedging Activities of the Notes to the Consolidated Financial Statements.

Income tax expense was $15.5 million in 2025 and resulted in an effective tax rate of 33.8%. The 2025 tax expense was primarily impacted by our geographic mix of earnings, non-deductible expenses, unrecoverable tax receivable, and valuation allowance on deferred tax assets. Income tax expense was $14.0 million in 2024 and resulted in an effective tax rate of 30.4%. The 2024 tax expense was primarily impacted by the geographic mix of earnings. Income tax expense was $4.2 million in 2023 and resulted in an effective tax rate of 10.2%. The 2023 tax expense was primarily impacted by the reversal of deferred tax liabilities of $11.6 million associated with the Redomestication Transaction, partially offset by the geographic mix of earnings.

Reservoir Description operations are closely correlated with trends in international and offshore activity levels, with approximately 80% of its revenue sourced from producing fields, development projects and movement of crude oil and derived products outside the U.S. The Company continues to see growth in international projects across several international regionsregions. andAdditionally, despite expanded sanctions imposed in early 2025, the temporary disruptions in the maritime movement and logistical trading patterns for crude oil and derived products, caused by the Russia-Ukraine and Middle East geopolitical conflicts havestabilized begunsomewhat tothe stabilize.remainder of 2025.

Revenue from the Reservoir Description operating segment for the year ended December 31, 2024 was $346.1 million, an increase of 4% compared to 2023. The increased revenue in 2024 iswas primarily due to growing client activity for our reservoir core and reservoir fluids analysis services on projects in several regions across the globe, as well as continued momentum of growing demand for CCS projects in the last couple of years. Additionally, crude assay services associated with the maritime movement of crude oil and derived products which were impacted by the Russia-Ukraine conflict continued to improve in 2024. The growth in revenue was partially offset by delayed project revenue caused by the fire incident at one of our U.K. facilities. The Company holds insurance policies for both property damage and business interruption, which has minimized the loss to the Company associated with the fire. Revenue from the Reservoir Description operating segment was $333.3 million in 2023, an increase of 8% when compared to $307.7 million in 2022. The increased revenue in 2023 is primarily due to growing client activity for our reservoir core and reservoir fluids analysis services on projects in several regions across the globe, as well as growing demand for CCS projects. Additionally, crude assay services associated with the maritime movement of crude oil and derived products improved in 2023, which were negatively impacted by the Russia-Ukraine conflict that began in 2022.

Operating income for the year ended December 31, 2024 was $51.5 million, an increase of 25% compared to 2023. Operating margins increased to 14.9%15% in 2024 from 12.3%12% in 2023. The increase in operating income and operating margins in 2024 was primarily due to high operating margins associated with the incremental revenue of $12.8 million in 2024 and continued improvement in utilization of our global laboratory network. Operating income in 2023 was $41.0 million, an increase of 79% compared to 2022. Operating margins increased to 12.3% in 2023 compared to 7.4% in 2022. The increase in operating income and operating margin in 2023, correlates to the incremental revenue and the improved utilization of our global laboratory network, as well as the negative impact from the beginning of the Russia-Ukraine conflict in 2022.

Production Enhancement’s operations are largely focused on complex completions in unconventional, tight-oil reservoirs in the U.S. as well as conventional projects across the globe. U.S. onshore drilling and completion activities peaked in 2022, after the COVID-19 pandemic, but declined in 2023 andthrough declined further in 2024.2025. The decline in drilling and completion activity was primarily due to the weakening of both crude oil and natural gas commodity prices in 2023,2023. and oilOil and gas producingoperators companiescontinue to remain focused on return of investment versus growing production, and wereas a result have continued to remain more disciplined with their annual production growth plans. AsIn 2025, the U.S. land based average rig count decreased by 6% from 2024’s level, as a result,result of lower crude oil prices in 2025. However, the average natural gas prices rebounded in 2025 by approximately 61% from 2024, which resulted in some growth in rig count working in natural gas basins and helped offset some of the overall decline in total land-based rig count. The average rig count in the U.S. onshore market declined by 13% in 2024 compared to 2023.

Revenue from the Production Enhancement operating segment of $178.8 million for the year ended December 31, 20242025, was $177.7 million, a slight increase ofincreased 1% compared to 2023,2024. The increase in revenue is primarily due to a higher level of service revenue associated with strong growth in well completion diagnostic services in 2024.2025 Thisas increasenatural wasgas prices rebounded, substantially offset by lower activity and product sales into the U.S. onshore market. Revenue from the Production Enhancement operating segment was $176.4 million in 2023, a decrease of 3% compared to 2022. In 2023, the decrease in drilling and completion activities in the U.S. land market isand primarilycertain dueinternational to operating companies reduced activitymarkets in 2023 as they were ahead of schedule in their annual drilling programs due to efficiencies gained in drilling and completing wells. Operators continue to remain focused on return of investment versus growing production, as discussed above.2025.

Operating income for the year ended December 31, 2024 was $6.6 million, a decrease of 47%.47% when compared to 2023. Operating margins decreased to 3.7%4% in 2024 from 7.1%7% in 2023. The decrease in operating income and operating margin in 2024, was primarily due to 1) a charge of $3.3 million recorded in 2024 associated with inventory and other related asset write-downs, 2) a loss on sales of $0.6 million associated with the disposalsale of a building, and 3) severance and other charges ofas $0.5discussed millionabove incurred in 2024, and no similar transactions in 2023. Operating income was $12.5 million in 2023 compared to $16.4 million in 2022. Operating margin of 7.1% in 2023 decreased from 9.0% in 2022. The decrease in operating income and operating margins in 2023, correlates to the decrease in revenue and higher absorption of fixed costs on a lower revenue base, as well as increased cost associated with inflation on materials and shipping costs.

We have historically financed our activities through cash on hand, cash flows from operations, bank credit facilities, equity financing and the issuance of debt. Cash flows from operating activities provide the primary source of funds to finance our operating needs, capital expenditures, dividends and discretionary share repurchase program.repurchases. Our ability to maintain and grow our operating income and cash flow depends, to a large extent, on continued investing activities. We believe our future cash flows from operations, supplemented by our borrowing capacity and the ability to issue additional equity and debt, should be sufficient to fund our debt requirements, working capital, capital expenditures, dividends, discretionary share repurchase programrepurchases and future acquisitions. The Company will continue to monitor and evaluate the availability of debt and equity markets.

We were a holding company incorporated in the Netherlands, and after the Redomestication Transaction completed in May 2023, we are a holding company incorporated in Delaware.Delaware Therefore, weand conduct substantially all of our operations through our subsidiaries. Our cash availability is largely dependent upon the ability of our subsidiaries to pay cash dividends or otherwise distribute or advance funds to us and on the terms and conditions of our existing and future credit arrangements. There are no restrictions preventing any of our subsidiaries from repatriating earnings, except for the unrepatriated earnings of our Russian subsidiary which are not expected to be distributed in the foreseeable future, and there are no restrictions or income taxes associated with distributing cash to the parent company through loans or advances. As of December 31, 2024,2025, $18.4$22.2 million of our $19.2$22.7 million of cash balances was held by our foreign subsidiaries.

The Company continues to maintainmaintains a quarterly dividend program of $0.01 per share.

Cash used in investing activities for the year ended December 31, 2025 of $2.2 million was driven by $14.6 million of capital expenditures for normal operations and rebuilding of the Aberdeen, U.K. facility, and $1.2 million of net cash used for business acquisitions in 2025. The cash used in investing activities was substantially offset by: 1) $3.0 million of proceeds from sale of assets; and 2) $10.0 million of proceeds recovered through insurance associated with the fire incident at the Aberdeen, U.K. facility. Cash used in investing activities for the year ended December 31, 2024 of $6.4 million was driven primarily by funding capital expenditures of $13.0 million offset by: 1) $1.7 million of proceeds from sale of assets,assets; 2) $2.1 million of insurance recovery proceeds onrecovered property,through plant and equipmentinsurance associated with the fire incident inas onepreviously of our facilities in the U.K.,discussed.; and 3) $2.8 million received on company owned life insurance policies. Cash used in investing activities for the year ended December 31, 2023 of $6.7 million was driven primarily by funding capital expenditures of $10.6 million offset by $3.4 million of net proceeds received on company owned life insurance policies and $0.5 million of proceeds from sales of assets. Cash used by investing activities for the year ended December 31, 2022 of $3.9 million was primarily due to funding capital expenditures of $10.2 million, offset by $2.1 million of proceeds received from sale of assets and net proceeds of $4.2 million received from insurance and company-owned life insurance policies.

Cash used in financing activities for the year ended December 31, 2025 of $31.3 million was driven primarily by: 1) net reduction in debt of $15.0 million; 2) debt issuance cost of $1.7 million in renewing the Company’s credit facility; 3) dividends paid of $1.9 million; and 4) repurchase of common stock of $12.4 million. Cash used in financing activities in 2024 of $46.0 million was primarily due to: 1) a net reduction in debt of $38$38.0 million, 2) dividends paid of $1.9 million, and 3) repurchase of common stock of $5.3 million. Cash used in financing activities in 2023 of $18.4 million was primarily due to: 1) a net reduction in debt of $9.0 million, 2) debt issuance costs of $1.3 million primarily associated with the issuance of the 2023 Senior Notes, 3) cash$4.1 paidmillion for costs incurred in the Redomestication Transaction of $4.1 million,Transaction, 4) dividends paid of $1.9 million, and 5) repurchase of common stock of $2.2 million. Cash used in financing activities in 2022 of $23.4 million was primarily due to: 1) a net reduction in debt of $15.0 million, 2) debt issuance costs incurred of $2.2 million associated with renewing our credit facility in 2022, 3) dividends paid of $1.9 million, and 4) repurchase of common stock of $3.9 million.

During 2024,2025, we repurchasedmade 286,440discretionary repurchases of 1,194,685 shares of our common stock for an aggregate amount of $5.3$15.5 million, or an average price of $18.52$12.96 per share. See Note 1413 - Equity of the Notes to the Consolidated Financial Statements for additional information. We believe our discretionary share repurchaserepurchases program hashave been beneficial to our shareholders over the longer term. Our share price has increased from $4.03 per share in 2002, when we began to repurchase shares, to $17.31$16.03 per share on December 31, 2024,2025, an increase exceedingof approximately 300%. The 1% stock buyback excise tax may apply to theour discretionary shares repurchased under our share purchase program.repurchases. The amount subject to the excise tax generally is the fair market value of stock repurchased by us net of the fair market value of any stock issued by us during such taxable year.

We utilize the non-GAAPnon-generally accepted accounting principles (“GAAP”) financial measure of free cash flow to evaluate our cash flows and results of operations. Free cash flow is defined as net cash provided by operating activities (which is the most directly comparable U.S. GAAP measure) less cash paid for capital expenditures. Management believes that free cash flow provides useful information to investors regarding the cash available in the period that was in excess of our needs to fund our capital expenditures and operating activities. Free cash flow is not a measure of operating performance under U.S. GAAP and should not be considered in isolation nor construed as an alternative to operating income, net income or cash flows from operating, investing or financing activities, each as determined in accordance with U.S. GAAP. Free cash flow does not represent residual cash available for distribution because we may have other non-discretionary expenditures that are not deducted from the measure. Moreover, since free cash flow is not a measure determined in accordance with U.S. GAAP and thus is susceptible to varying interpretations and calculations, free cash flow, as presented, may not be comparable to similarly titled measures presented by other companies. The following table reconciles this non-GAAP financial measure to the most directly comparable measure calculated and presented in accordance with U.S. GAAP (in thousands):

Credit Facility, Senior Notes, Credit FacilityNotes and Available Future Liquidity

We, along with our wholly owned subsidiary Core Laboratories (U.S.) Interests Holdings, Inc. (“CLIH”) as issuer, have senior notes that were issued through private placement transactions. Additionally, we, along with CLIH,, have a secured credit facility, which we renewed on July 22, 2025 as the EighthNinth Amended and Restated Credit Agreement (as amended, the “Credit Facility”) for an aggregate borrowing commitment of $135.0$150.0 million with a $50.0 million “accordion” feature. Draws up to $100.0 million are available in the form of a revolving credit facility, and a single draw of $50.0 million is available in the form of a delayed draw term loan (“DDTL”) through January 12, 2026. As of December 31, 2024,2025, the Credit Facility has an available borrowing capacity of approximately $106.1$136.0 million. Additionally, we, along with CLIH as issuer, have senior notes that were issued through private placement transactions (“Senior Notes”). On January 12, 2026, we made a draw of $50.0 million on the DDTL to repay the 2021 Senior Notes Series A in the amount of $45.0 million, which matured on that date.

OurThese debt instruments are summarized in the following table (in thousands):

See Note 1510 - DerivativeLong-term InstrumentsDebt, and Hedging Activitiesnet of the Notes to the Consolidated Financial Statements for additional information regarding interestthe rateterms swapand agreementsfinancial wecovenants have entered to fixof the underlying risk-free rate on our Credit Facility and the 2023 Senior Notes.

The following discussion highlights the current operating environment and summarizes the financial position of Core Laboratories Inc. and its subsidiaries as of MarchJune 31,30, 2026, and should be read in conjunction with (i) the unaudited interim consolidated financial statements and notes thereto included elsewhere in this Quarterly Report and (ii) the audited consolidated financial statements and accompanying notes thereto included in our 2025 Annual Report on Form 10-K for the year ended December 31, 2025.

Recent geopolitical developments, including the escalation of armed conflict in the Middle East, have dramatically shifted the crude oil supply-demand balance. On February 28, 2026 the United States and Israel initiated air strikes against Iranian military targets and leadership. Since then, retaliation by Iran and action by other military groups against United States and Israeli interestsinterests, including merchant vessels, in the Middle East has been widespread. As of the date of the filing of this Quarterly Report, military activity and hostilities continue to escalate in the Middle East, and the situation throughout the region remains volatile, with the potential for continued escalation into a broader and more sustained regional conflict. While the Company believes the fundamentals for energy-related services remain stable, near-term volatility in commodity prices meaningfully raises the level of uncertainty. The Company is monitoring developments with respect to the ongoing military conflict with Iran, including the impact on global commodity prices and potential shipping and logistics disruptions, which could affect our customers and their activity levels in the region.

The Company believes that activity levels associated with smaller-scale, short-cycle crude oil development projects will be more sensitive to a decrease and/or continued volatility of crude-oil prices. As such, we expect changes in crude oil prices will marginally improve drilling and completion activity levels in the U.S. onshore market which could directly affect demand for our well completion services and products. Outside the U.S., large-scale international oil and gas projects are expected to be more resilient to the near-term volatility of crude-oil prices, and the Company anticipates client projects will continue to be executed as planned, unless directly impacted by the conflicts mentioned above. We continue to focus on large-scale core analyses and reservoir fluids characterization studies in most oil-producing regions across the globe, which include both newly developed fields and brownfield extensions in many offshore developments in both the U.S. and internationally. In the U.S.U.S., we are involved in projects in many of the onshore unconventional basins and offshore projects in the Gulf of Mexico.Mexico and Alaska. Outside the U.S.U.S., we continue to work on many smallersmall and large-scale projects analyzing rock, reservoir fluids, and crude oil and derived products and sell perforating systems and well diagnostic services in every major producing region of the world. Notable larger projects are in locations such as Guyana andGuyana, Suriname located offshore South America, Australia, West Africa and the Middle East. Analysis and measurement of crude oil derived products also occur in every major producing region of the world. Additionally, some of our major clients have increased their investment in projects to capture and sequester carbon dioxide.

Operating Results for the Three Months Ended MarchJune 31,30, 2026 compared to the Three Months Ended MarchJune 31,30, 2025 and DecemberMarch 31, 2026 and for the Six Months Ended June 30, 2026 compared to the Six Months Ended June 30, 2025

Service revenue is primarily tied to activities associated with the exploration, appraisal, development and production of oil, gas and derived products outside the U.S. For the three months ended MarchJune 31,30, 2026, service revenue was $94.3 million, a decrease of 1%2% year-over-year and a decrease of 12%flat sequentially. Year-over-year, revenues decreased primarily due to lower activity levels in the international markets partially offset by increased activity in the U.S. market. RevenueInternational revenue was negatively impacted by the Middle East conflict that began in the first quarter of 2026 and other ongoing geopolitical conflicts in the Middle East,East and between Russia and Ukraine,Ukraine. Sanctions previously discussed have disrupted the movement and expandedtrading sanctionspatterns previouslyof discussed,crude whichoil disruptedand derived products as well as restricted our clientability activity,to fieldperform accessservices and laboratory operations acrossin certain international markets.markets, primarily Russia. The limited transit through the Strait of Hormuz since the conflict began resulted in temporary supply-chain disruptions, delays and rerouting of crude oil and derived productsproducts, throughwhich the Strait of Hormuzhas negatively impacted our laboratory assay services and regional studies. Additionally, severe weather across North America, Europe and the Mediterranean region, negatively impacted certain operations and delayed our client activity.

Product sales are primarily tied to U.S. onshore drilling and completion activities and product sales to international markets. Product sales to international markets are typically sold and shipped in bulk, and revenue can vary from one quarter to another. For the three months ended MarchJune 31,30, 2026, product sales revenue of $27.5$30.3 million decreased 3%11% year-over-year and 12%increased 10% sequentially. Year-over-year, the decrease was primarily due to the non-recurrence of large shipments of manufactured laboratory equipment sales that occurred in the prior year quarter, as well as lower levelbulk ofshipments to certain international markets impacted by the geopolitical conflicts, as discussed above. The decrease in sales revenue was partially offset by increased U.S. onshore drilling and completion activity and lower bulk shipments to international markets primarily due to delayed product shipments intoduring the regionthree impactedmonths byended theJune geopolitical30, conflicts discussed above.2026.

G&A expense for the three months ended MarchJune 31,30, 2026, was $14.7$11.0 million, which increased $1.0$0.5 million, compared to the same period in 2025. The year-over-year increase was primarily due to higherchanges stockin employee compensation expenseand recordedcontract labor costs in 2026these along with increased outside service costs.periods.

G&A expense for the three months ended MarchJune 31,30, 2026, increaseddecreased $4.1$3.8 million compared to the prior quarter primarily due to the acceleration of stock compensation expense for retirement eligible executivesemployees of $3.7 million recorded in the first quarter of 2026.

Depreciation and amortization expense for the three months ended MarchJune 31,30, 2026, was $3.8 million, an increase of 1%4% year-over-year and 3%2% sequentially. Depreciation and amortization expense for the six months ended June 30, 2026, was $7.6 million, an increase of 3% year-over-year. The increaseincreases in depreciation and amortization expense for the three and six months ended June 30, 2026, compared to the prior year periodperiods and sequentially iswere primarily due to 1) additional amortization costs associated with business acquisitions in 2025.the fourth quarter of 2025; and 2) higher spending in capital expenditures in 2026. Sequentially, the slight increase was primarily due to higher spending in capital expenditures during the three months ended June 30, 2026.

During the three months ended March 31, 2026 and 2025, asAs a result of our continuous efforts in consolidating and exiting certain facilities in the U.S. and other international locations for operational efficiency, we sold property in Tulsa, Oklahoma for a net gain of $0.9 million.million during the six months ended June 30, 2026. In addition, we recognized a write-downwrite-downs of the associated leasehold improvements, right of use assets and other assets and incurred lease abandonmenttermination and other exit costs of $0.6 million and $0.7 million,million during the six months ended June 30, 2026 and 2025, respectively.

Interest expense for the three months ended MarchJune 31,30, 2026, was $2.9$2.8 million an increase of 5% year-over-year and a decrease of 2% sequentially. For the six months ended June 30, 2026, interest expense increased $0.3$0.4 million or 11%8%. forFor boththe three and six months ended June 30, 2026, the year-over-year andincrease sequentially.in Theinterest year-over-yearexpense and sequential increases areis primarily due to borrowings of $50.0 million under the delayed draw term loan at higher variable interest rates on the $50.0 million term loan that was used to repayretire the fixed rate $45.0 million 2021 Senior Notes Series A atin athe lowerfirst fixedquarter rate.of Year2026. over year, thisThis was slightlypartially offset by lower average borrowings and lower rates on our revolving credit facility.

Income Tax Expense (Benefit)

The Company recorded an income tax benefitexpense of $(0.3)$0.5 million and $0.3 million for the three and six months ended MarchJune 31,30, 20262026, compared to income tax expense of $1.7$1.9 million and $3.7 million for the three monthsand ended March 31, 2025. The effective tax rate for the threesix months ended MarchJune 31, 2026 and30, 2025, was 25.0% and 96.2%, respectively. The effective tax rate for the three and six months ended MarchJune 31,30, 2026, was 8.0% and 4.8%, respectively. The effective tax rate for the three and six months ended June 30, 2025, was 15.2% and 25.4%, respectively. The effective tax rate for three and six months ended June 30, 2026 was primarily impacted by the jurisdictional earnings mix of jurisdictions subject to tax for the period and itemsdiscrete discretebenefits to the quarter.period. The effective tax rate for the three and six months ended MarchJune 31,30, 2025, was primarily impacted by approximatelythe $1.4jurisdictional millionearnings ofmix additionalsubject to tax expense recorded for items discrete to the quarter. These discrete items are primarily associated with the finalization of certain tax jurisdictions’ return to provision assessments due toperiod, changes in estimates.uncertain tax positions in certain jurisdictions and discrete expenses in the period.

Revenue from the Reservoir Description operating segment of $81.9$160.7 million for the threesix months ended MarchJune 31,30, 2026 increased 1% year-over-year and2026, decreased 11%4% sequentially.from Year-over-yearthe same period in the prior year. The decrease in revenue was slightlyprimarily higherdue forto reservoir1) rockthe andrecent fluidMiddle analysisEast projectsconflict that began in the U.S.first quarter of 2026; 2) decrease in manufactured laboratory equipment sales; and laboratory crude assay services in3) the Europe region. However, sequentially, the recent conflict in the Middle East, coupled with ongoing geopolitical conflict in Russia and Ukraine, andas thewell as expanded sanctions as previously discussed, further disrupted client activity and demand for our crude assay work and regional studies in certain international regions in the three months ended March 31, 2026.discussed.

Operating income of $1.1$3.7 million for the three months ended MarchJune 31,30, 2026, decreased year-over-year by $1.2$8.5 million and decreasedincreased $11.7$2.5 million sequentially. Operating margins were 1%5% for the three months ended MarchJune 31,30, 2026, compared to 3%14% for the same period in the prior year, and 14%1% sequentially. Year-over-year, despite a slight increase in revenue, the decrease in operating income and operating margins was primarily attributable to 1) decremental revenue of $7.5 million primarily caused by the geopolitical conflicts mentioned above; 2) increases in employee compensation and other operating costs caused by unfavorable effects of exchange ratesas discussed above; and 23) a highergain levelon insurance recovery in prior year associated with the fire at the Aberdeen, U.K. facility of Corporate G&A expenses of $0.7 million absorbed in the segment. See discussion of General and Administrative Expense, above. These cost increases were partially offset by lower facility exit costs and certain asset write-downs totaling $0.6$2.5 million recorded duringin the three months ended March 31, 20262025, compared to a total charge of $2.7$0.2 million gain on severance,insurance facilityrecovery exitin costs and asset write-downs recorded for the three months ended March 31, 2025.2026.

Production Enhancement operations are largely focused on complex completions in unconventional oil and gas reservoirs in the U.S. as well as conventional projects across the globe. U.S. onshore drilling and completion activities typically experience a seasonal decline at end of the year with activity levels increasing at the beginning of the year. Average rig count in the U.S. land market for the three months ended MarchJune 31,30, 2026, was downdeclined by 7%3.1% year-over-year but was relativelyhigher flatby 1.5% sequentially. International average rig count was down 1%2.0% year-over-year butand increased by 2%2.5% sequentially.

Revenue from the Production Enhancement operating segment of $39.9$45.9 million for the three months ended MarchJune 31,30, 2026, decreasedincreased 7%5% year-over-year and 13%15% sequentially. Year-over-year, the decrease was primarily due to lower product sales due to the decline in bulk shipments in the international market, while the U.S. land market was relatively flat. Sequentially, the decreaseincrease was primarily driven by continued growth in well diagnostic services in the U.S. and completion product sales in the U.S. land market, despite a decreaselower average rig count in the U.S. land market. Sequentially, the increase was primarily driven by increased product sales associated with large customer bulk shipment orders in the international markets,markets aswhich wellwere asdelayed afrom decreaseprior quarter and higher demand in USU.S. land market activity. Additionally, the demand for our well diagnostic services continued to grow during the second quarter of 2026.

Operating income of $0.8$5.2 million for the three months ended MarchJune 31,30, 2026, decreasedincreased $0.7$2.1 million year-over-year, and decreased $2.2$4.4 million sequentially. Operating margins for the three months ended MarchJune 31,30, 2026, were 2%,11%, compared to operating margins of 4%7% year-over-year and 7%2% sequentially. Year-over-year, the decreaseincrease in operating income and margins was primarily due to 1) a decrease inincremental revenue of $2.8$2.0 million; and 2) continuedpartial increaserefund of tariffs received in certain2026 materialas previously discussed; and logistic3) improved absorption of fixed costs on a higher revenue base during the three months ended MarchJune 31,30, 2026.

As of MarchJune 31,30, 2026, we had $22.8$22.7 million of cash and cash equivalents, compared to $22.7 million of cash and cash equivalents at December 31, 2025. As of MarchJune 31,30, 2026, $22.1$21.8 million of our $22.8$22.7 million of cash was held by our foreign subsidiaries.

Cash flows from operating activities were $4.0$11.8 million for the threesix months ended MarchJune 31,30, 2026.2026, compared to $20.6 million for the same period in the prior year. The decrease compared to the same period in the prior year was primarily due to lower operatingprofitability activityduring and2026, higherwhich operatinghas costs,been primarily impacted by the Middle East conflict which began in the first quarter of 2026, as discussed above. These unfavorable factors were partially offset by improved efficiency in operational working capital management in 2026.