Core 'Not Affected' By Falling Oil: CEO
Unlike most of the oil sector, Core Laboratories isn’t levered to the price of oil and natural gas the way analysts say it is. So the stock shouldn’t be down just because energy costs are falling.
Speaking to Cramer via satellite Tuesday, Core Labs CEO David Demshur said the orders keep coming in as long as oil’s above $70 and natural gas is above $6.
“These high commodity prices,” Demshur said, “we’re not affected by that at all.”
He called the demand for CBL’s services “very inelastic” because so much of the work the company does is long term. That’s why Core Labs guided for record third-quarter and full-year revenues and profits
“So if we keep on putting up the good numbers,” the CEO said, “the stock price will take care of itself.”
For those analysts who doubt Core Labs’ ability to outperform during times of falling commodity prices, “Just look at our past 21 quarters,” Demshur said, half of which produced record profits.
Core Labs uses proprietary technology to analyze the rock in and around oil fields, and then uses that information to show clients how best to extract the oil. Natural gas is no different. In fact, Demshur his firm even has a bundle of new products for clients that helps them get higher initial production rates and produce more gas over the life of an asset, like the shales Cramer’s been talking so much about recently.
And nat gas is the future.
“I don’t’ think there’s any question about it,” Demshur said, “that nat gas will push out crude oil” as our main energy source. It’s just too cheap.
“Natural gas will be a commodity for the future,” he continued. “And at its price today, it’s very, very much undervalued.”
Demshur also commented on drilling offshore, a hot topic in Washington these days, and other ecologically sensitive areas. If the U.S. were able to develop oil deposits in Alaska’s Arctic National Wildlife Refuge that produced as much as Prudhoe Bay did at its height, he said, we could eliminate all of our imports from the Middle East. Demshur called it a “crime” that those sources are going untapped, especially because drilling is cleaner and safer today, all at the expense of the American consumer.
Demshur said more oil ends up in the ocean from automobiles than offshore rigs, “so it’s unrealistic to say that we put our beaches at risk with offshore drilling.”
“I know oil’s going lower,” Cramer said. “This is the kind of company, Core Labs, you buy.”
“I want to buy this company right into the oil weakness,” he said. “And you should too.”
Questions for Cramer? email@example.com
Questions, comments, suggestions for the Mad Money website? firstname.lastname@example.org