Core Laboratories Inc. /DE/ — Interim / Quarterly Report 2015

Aug 31, 2015

CORE LABORATORIES N.V.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IAS 34, "INTERIM FINANCIAL REPORTING"

Semi-Annual Report for June 30, 2015

Strawinskylaan 913 Tower A, Level 9 1077 XX Amsterdam The Netherlands

CORE LABORATORIES N.V.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS SEMI-ANNUAL REPORT FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2015

TABLE OF CONTENTS

Semi-Annual Report of the Directors Interim Balance Sheets (Unaudited) as of June 30, 2015 and December 31, 2014 Interim Income Statements (Unaudited) for the Six Months Ended June 30, 2015 and 2014 Interim Statements of Other Comprehensive Income (Unaudited) for the Six Months Ended June 30, 2015 and 2014 Interim Statements of Changes in Equity (Unaudited) for the Six Months Ended June 30, 2015 and 2014 Interim Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2015 and 2014 Notes to the Condensed Consolidated Interim Financial Statements

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Semi-Annual Report of the Directors

Currency - United States Dollars (“$”)

Business review

Core Laboratories N.V. is a limited liability company incorporated in The Netherlands. It was established in 1936 and is one of the world's leading providers of proprietary and patented reservoir description, production enhancement and reservoir management services and products to the oil and gas industry. These services and products can enable our clients to improve reservoir performance and increase oil and gas recovery from their producing fields. Core Laboratories N.V. has over 70 offices in more than 50 countries and employs approximately 4,400 people worldwide.

References to "Core Lab", "we", "our" and similar phrases are used throughout this Semi-Annual Report and relate collectively to Core Laboratories N.V. and its consolidated affiliates.

We operate our business in three reportable segments. These complementary segments provide different services and products and utilize different technologies for improving reservoir performance and increasing oil and gas recovery from new and existing fields.

• Reservoir Description: Encompasses the characterization of petroleum reservoir rock, fluid and gas samples. We provide analytical and field services to characterize properties of crude oil and petroleum products to the oil and gas industry.

• Production Enhancement: Includes services and products relating to reservoir well completions, perforations, stimulations and production. We provide integrated services to evaluate the effectiveness of well completions and to develop solutions aimed at increasing the effectiveness of enhanced oil recovery projects.

• Reservoir Management: Combines and integrates information from reservoir description and production enhancement services to increase production and improve recovery of oil and gas from our clients' reservoirs.

Financial Review

Revenue

Services Revenue

Services revenue decreased to $319.8 million for the six months ended June 30, 2015, down 15% when compared to $377.0 million for the same period of 2014. Prices at the end of the first half of 2015 for WTI and Brent crude oil have declined 44% and 46%, respectively, compared to June 30, 2014. As a result, the global rig count fell by 38%, primarily in North America, resulting in only a 15% decrease in demand for our analytical, diagnostic, and completion services. Our continued focus on worldwide crude oil related and large natural gas liquefaction projects, especially those related to the development of deepwater fields off West and East Africa and the eastern Mediterranean, kept services revenue from declining further.

Product Sales Revenue

Revenue associated with product sales decreased to $97.7 million for the six months ended June 30, 2015 compared to $153.4 million during the same period in 2014. Although rig count at the end of the first half of 2015 for the US and Canada declined 54% and 46%, respectively, compared to June 30, 2014, our revenue decreased only 36% as a result of our differentiated well completion products.

Operating expenses

Cost of Services

Cost of services expressed as a percentage of services revenue was 66% for the six months ended June 30, 2015, up from 61% during the same period in 2014. The increase is primarily due to our not being able to absorb as much of our fixed costs structure due to lower revenues in 2015 when compared to 2014. We took actions to reduce our cost structure in response to the sharp decline in global activity during the first half of 2015.

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Cost of Product Sales

Cost of product sales expressed as a percentage of product sales revenue was 83% for the six months ended June 30, 2015, up from 73% during the same period in 2014. This increase was primarily due to our not being able to absorb as much of our fixed costs structure due to lower revenue in 2015 when compared to 2014. We took actions to reduce our cost structure in response to the sharp decline in North America activity during the first half of 2015.

Operating margin

Operating margin for the six month period ended June 30, 2015 decreased to 22.1%, compared to 31.5% for the same period of 2014, primarily due to our fixed costs structure being absorbed on lower revenue in 2015 when compared to 2014.

Cash Flow

The following table summarizes cash flows for the six months ended June 30, 2015 and 2014 (in thousands):

Cash provided by/(used in): Operating activities Investing activities Financing activities Net change in cash and cash equivalents	Six Months Ended June 30,	Six Months Ended June 30,	% Change
	2015	2014
	$ 125,697 (27,376) (99,091)	$ 132,494 (23,367) (104,667)	(5)% (17)% 5 % (117)%
	$ (770)	$ 4,460

Cash flows from operating activities decreased for the first six months of 2015 compared to the same period in 2014, primarily due to lower net income in 2015 offset by improved working capital and a reduction in cash taxes paid in 2015.

Cash flows used in investing activities were higher during the first six months of 2015 when compared to the same period in 2014, primarily due to the acquisition in 2015, offset by lower capital expenditures in 2015.

Cash flows used in financing activities decreased for the first six months of 2015 when compared to the same period in 2014. In the first six months of 2015, we repurchased 1,043,022 shares of our common stock for an aggregate purchase price of $115.8 million compared to the repurchase of 709,559 shares for an aggregate purchase price of $125.3 million during the same period in 2014. We increased the amount of our quarterly dividend from $0.50 per share to $0.55 per share, resulting in dividend payments of $47.5 million during the first six months of 2015, compared to $44.9 million during the first six months of 2014.

Equity

During the six months ended June 30, 2015, we repurchased 1,043,022 of our common shares for $115.8 million. Included in this total were rights to 18,478 shares valued at $2.0 million that were surrendered to us pursuant to the terms of a stock-based compensation plan in consideration of the participants' tax burdens that may result from the issuance of common shares under that plan. Such common shares, unless canceled, may be reissued for a variety of purposes such as future acquisitions, nonemployee director stock awards or employee stock awards. During the six months ended June 30, 2015, 62,774 treasury shares were distributed upon vesting of stock-based awards.

At the annual meeting of shareholders on May 21, 2015, the shareholders approved the cancellation of 1,250,000 shares of our common stock then held as treasury stock. These treasury shares were cancelled on August 5, 2015, after the expiration of the waiting period required under Dutch law. We charged the excess of the cost of the treasury stock over its par value to additional paid-in capital and retained earnings.

In February and May 2015, we paid quarterly dividends of $0.55 per share of common stock. In addition, on July 7, 2015, we declared a quarterly dividend of $0.55 per share of common stock which was paid on August 17, 2015 to shareholders of record on July 17, 2015.

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Segment Analysis

We operate our business in three reportable segments - Reservoir Description, Production Enhancement and Reservoir Management. These complementary segments provide different services and products and utilize different technologies for improving reservoir performance and increasing oil and gas recovery from new and existing fields. The following tables summarize our results by operating segment for the six months ended June 30, 2015 and 2014 (in thousands):

Revenue: Reservoir Description Production Enhancement Reservoir Management Consolidated Operating income (loss): Reservoir Description Production Enhancement Reservoir Management Corporate and Other1 Consolidated	Six Months Ended June 30,	Six Months Ended June 30,	% Change
	2015	2014
	$ 240,670 145,734 31,128	$ 255,845 221,273 53,347	(6)% (34)% (42)% (21)% (15)% (67)% (62)% NM (45)%
	$ 417,532	$ 530,465
	$ 60,274 24,947 7,596 (481)	$ 70,952 74,757 20,235 1,288
	$ 92,336	$ 167,232

(1) "Corporate and Other" represents those items that are not directly related to a particular segment

"NM" means not meaningful

Reservoir Description

Revenue from the Reservoir Description segment decreased 6% to $240.7 million for the six months ended June 30, 2015, compared to $255.8 million in the same period of 2014. The decrease in revenue is primarily related to the strengthening of the US dollar against certain currencies such as the Euro, Australian dollar, Canadian dollar, British pound, and Russian ruble, in which we invoice a portion of our revenue. This segment’s operations continue to work on large-scale, long-term crude-oil and LNG projects with an emphasis on deepwater developments and international markets. We continue to focus on large-scale core analyses and reservoir fluids characterization studies in the Asia-Pacific areas, offshore West and East Africa, the Eastern Mediterranean region and the Middle East, including Kuwait and the United Arab Emirates.

Operating income decreased to $60.3 million for the six months ended June 30, 2015, compared to $71.0 million for the same period of 2014, primarily due to our fixed costs structure, which included additional charges for severance and other items, being absorbed on lower revenue in 2015 when compared to 2014. Operating margin for the six months ended June 30, 2015 was 25%. This segment emphasizes technologically demanding services on internationally-based development and production-related crude oil projects rather than the more cyclical exploration-related projects.

Production Enhancement

Revenue from the Production Enhancement segment decreased to $145.7 million for the six months ended June 30, 2015, compared to $221.3 million in the same period of 2014. Revenue decreased 34% primarily in the US where the horizontal rig count fell 55% during the first half of 2015. This significantly reduced demand for our products associated with land-based completion of oil wells in US unconventional developments.

Operating income decreased to $24.9 million for the six months ended June 30, 2015 compared to $74.8 million during the same period of 2014 primarily due to decreased revenue caused by reduced spending in North America by our clients in 2015. Operating margin was 17% for the six months ended June 30, 2015.

Reservoir Management

Revenue from the Reservoir Management segment decreased to $31.1 million for the six months ended June 30, 2015, compared to $53.3 million for the same period of 2014, primarily due to the decrease of the oil commodity price resulting in reduced spending from our oil and gas clients. We continue to have interest in our existing multi-client reservoir studies such as the Duvernay Shale Project in Canada and the Tight Oil Reservoirs of the Midland Basin study as well as our new joint-

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industry projects in the Williston Basin targeting the tight oil of the entire Three Forks sections and a study in the Appalachian Basin of the emerging Devonian shales in the liquids window.

Operating income decreased to $7.6 million for the six months ended June 30, 2015 compared to $20.2 million for the same period of 2014, due primarily to decreased revenue. We are still focused on our joint industry projects, including the Utica, Duvernay, Montney, Wilrich, Mississippi Lime and Central Atlantic studies and the Marcellus, Niobrara, Wolfcamp, Eaglebine and Eagle Ford plays. Operating margin was 24% in the six months ended June 30, 2015. Although operating margins for Reservoir Management can fluctuate due to sales of fully completed studies, which generate significant incremental margins, the lower margin during the first half of 2015 was primarily attributable to the fixed costs associated with product sales being absorbed by lower product sales revenue.

Outlook

As part of our long-term growth strategy, we continue our long-term efforts to expand our market presence by opening or expanding facilities in strategic areas and realizing synergies within our business lines subject to client demand and market conditions. We believe our market presence provides us a unique opportunity to service clients who have global operations whether they are international oil companies, national oil companies, or independent oil companies.

During the second half of 2014, the prices for both WTI and Brent crude oil began to fall sharply, particularly after the OPEC meeting held on November 27, 2014. Average prices for the majority of the 2014 calendar year were in excess of $99 per barrel for WTI and in excess of $105 per barrel for Brent; however, they were down to approximately $50 per barrel by year’s end. These depressed prices have caused a significant decrease in the activities associated with both the exploration and production of oil during 2015.

The North American land-based activity has been impacted more significantly with the average rig count decreasing by more than 56% in 2015 when compared to 2014 year-end levels. If the WTI crude oil price remains near its current level, we believe the significantly lower levels of industry activity experienced in the first half of 2015 may continue through the remainder of 2015, which could negatively impact our North America operations.

Outside of North America, activities associated with the exploration and production of oil have also decreased from 2014 levels, although not as significantly as the land-based activities in North America. The average international rig count in the first half 2015 is down approximately 13% as compared to year-end 2014. These reduced international activities have impacted most regions, except the Middle East, where we continue to see sustained levels and some potential growth in 2015. As with North America land-based activity, we believe international activities will also remain at reduced levels, without a meaningful improvement in the current Brent crude oil prices.

We saw the U.S. production start to decline in the second quarter of 2015 which we believe is an indication that the balancing of worldwide crude-oil markets is underway. Additionally, the most recent International Energy Agency estimates project worldwide demand to increase in 2015 by 1.6 million barrels of oil per day in response to low commodity prices. With the very steep decline curves associated with the unconventional tight oil reservoirs in the U.S., we now believe that U.S. supply growth rolled over in April of 2015 and that year-over-year crude-oil production will be down several hundreds-of-thousands of barrels per day. Therefore, at current activity levels, U.S. production could fall significantly in 2015 and 2016, while worldwide oil production continues to stagnate or decrease slightly because recent international production gains may not be sustainable over the long term.

Cautionary Statement Regarding Forward-Looking Statements

This Semi-Annual Report contains forward-looking statements. In addition, from time to time, we may publish forwardlooking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products, research and development activities and similar matters. Forward-looking statements can be identified by the use of forward-looking terminology such as "may", "will", "believe", "expect", "anticipate", "estimate", "continue", or other similar words, including statements as to the intent, belief, or current expectations of our directors, officers, and management with respect to our future operations, performance, or positions or which contain other forward-looking information. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, no assurances can be given that the future results indicated, whether expressed or implied, will be achieved. While we believe that these statements are and will be accurate, our actual results and experience may differ materially from the anticipated results or other expectations expressed in our statements due to a variety of risks and uncertainties.

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Statement of Directors' Responsibilities

In accordance with the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht), section 5:25d, paragraph 2 sub c, we confirm that, to the best of our knowledge:

• the condensed consolidated interim financial statements for the six months ended June 30, 2015 have been prepared in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union and give a true and fair view of the assets, the liabilities, the financial position and the profits or the loss of Core Laboratories N.V. and its consolidated companies; and

• the interim management report for the six months ended June 30, 2015 gives a true and fair view of the information required pursuant to section 5:25d, subsection 8 and, as far as applicable, subsection 9 of the Dutch Act on Financial Supervision.

Amsterdam, The Netherlands, August 25, 2015

/s/ Richard L. Bergmark Richard L. Bergmark Executive Vice President, Chief Financial Officer, and Supervisory Director

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CORE LABORATORIES N.V. INTERIM BALANCE SHEET (In thousands of USD, except share data)

ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangible assets Investment in associates Deferred income tax asset Other financial assets Other assets TOTAL NON-CURRENT ASSETS CURRENT ASSETS Inventories Prepaid expenses and other current assets Income tax receivable Accounts receivable Cash and cash equivalents TOTAL CURRENT ASSETS TOTAL ASSETS SHAREHOLDERS' EQUITY Common shares, EUR 0.02 par value in 2015 and in 2014; 200,000,000 shares authorized, 45,600,002 issued and 42,656,736 outstanding at 2015 and 45,600,002 issued and 43,636,984 outstanding at 2014 Additional paid-in capital Retained earnings Other reserves Treasury shares (at cost), 2,943,266 at 2015 and 1,963,018 at 2014 TOTAL SHAREHOLDERS' EQUITY Non-controlling interest TOTAL EQUITY LIABILITIES NON-CURRENT LIABILITIES Borrowings Income tax payable Deferred income tax liabilities Employee benefit obligations Derivative financial instruments Provisions TOTAL NON-CURRENT LIABILITIES CURRENT LIABILITIES Accounts payable Borrowings Income tax payable Other taxes payable Payroll and social security contributions Unearned revenues Other accrued expenses TOTAL CURRENT LIABILITIES TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES	Ref. 6 8 10 11 11 11 12 8, 14 9 13 12	June 30, 2015 (Unaudited) $ 148,452 237,966 2,415 22,205 37,168 4,823 $ 453,029 $ 47,585 21,406 13,836 155,112 22,580 260,519 $ 713,548 $ 1,174 — 498,518 (17,177) (421,633) 60,882 6,139 $ 67,021 $ 419,254 14,262 22,167 69,446 999 3,135 $ 529,263 $ 42,323 114 8,602 (2,496) 38,753 15,057 14,911 117,264 646,527 $ 713,548	December 31, 2014
			$ 149,014 221,686 2,336 20,593 36,886 4,304
			$ 434,819 $ 43,371 20,829 10,980 197,163 23,350
			295,693
			$ 730,512
			$ 1,174 — 479,858 (16,982) (317,613)
			146,437 6,420
			$ 152,857 $ 353,672 14,262 17,546 69,471 1,082 3,556
			$ 459,589 $ 47,084 — 8,615 (431) 34,958 11,309 16,531
			118,066
			577,655
			$ 730,512

The accompanying notes are an integral part of these Consolidated Interim Financial Statements.

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CORE LABORATORIES N.V. INTERIM INCOME STATEMENT (In thousands of USD, except share and per share data)

REVENUES: Services Product sales TOTAL REVENUES: OPERATING EXPENSES: Cost of services Cost of product sales TOTAL OPERATING EXPENSES: GROSS PROFIT General and administrative expenses Other (income) expense, net Severance and other charges OPERATING PROFIT Finance income Finance costs Finance costs, net Share of profit (loss) of associates PROFIT (LOSS) BEFORE INCOME TAX EXPENSE Income tax expense PROFIT (LOSS) FOR THE PERIOD Attributable to: Equity holders of the parent Non-controlling interest EARNINGS PER SHARE INFORMATION: Basic earnings (loss) per share Diluted earnings (loss) per share WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (in thousands): Basic Diluted	Ref. 5 15 16 16 16 16	Six Months Ended June 30,	Six Months Ended June 30,
		2015 2014 (Unaudited) $ 319,835 $ 377,034 97,697 153,431 417,532 530,465 209,701 230,001 80,897 111,287 290,598 341,288 126,934 189,177 25,294 22,570 2,214 (625) 7,090 — 92,336 167,232 (1) (186) 5,519 5,157 5,518 4,971 80 130 86,898 162,391 19,400 36,555 $ 67,498 $ 125,836 $ 67,779 $ 125,385 (281) 451 $ 67,498 $ 125,836 $ 1.57 $ 2.80 $ 1.57 $ 2.78 43,063 44,783 43,214 45,045	2014
			530,465 230,001 111,287
			341,288 189,177 22,570 (625) —
			167,232 (186) 5,157
			4,971 130
			162,391 36,555
			$ 125,836
			$ 125,385 451
			$ 125,836
			$ 2.80
			$ 2.78
			44,783
			45,045

The accompanying notes are an integral part of these Consolidated Interim Financial Statements.

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CORE LABORATORIES N.V. INTERIM STATEMENT OF OTHER COMPREHENSIVE INCOME (In thousands of USD)

Profit (loss) for the period Items that will not be reclassified to profit or loss Remeasurements of post-employment benefit obligations Income taxes on post-employment benefit obligations Items that may be subsequently reclassified to profit or loss Cash flow hedges Income taxes on cash flow hedges Net income (loss) recognized directly in equity Total comprehensive income (loss) for the period Attributable to: Equity holders of the parent Non-controlling interest	Ref. 14 14 9 9	Six Months Ended June 30,	Six Months Ended June 30,
		2015 2014 (Unaudited) $ 67,498 $ 125,836 (500) (1,436) 125 359 83 — 97 — (195) (1,077) $ 67,303 $ 124,759 $ 67,584 $ 124,308 (281) 451 $ 67,303 $ 124,759	2014
			(1,077)
			$ 124,759
			$ 124,308 451
			$ 124,759

The accompanying notes are an integral part of these Consolidated Interim Financial Statements.

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CORE LABORATORIES N.V. INTERIM STATEMENTS OF CHANGES IN EQUITY (In thousands of USD, except share data)

(Unaudited) Ref. Number of Shares Outstanding BALANCE, January 1, 2014 45,101,389 Comprehensive income: Profit (loss) for the period — Other comprehensive income: Pension remeasurement 14 Total other comprehensive income Total comprehensive (loss) Transactions with owners: Stock-based compensation 11 88,189 Stock-based awards issued 11 — Tax benefit related to stock-based awards — Repurchases of common shares 11 (709,559) Non-controlling interest - dividend — Dividends paid 11 — BALANCE, June 30, 2014 44,480,019 (Unaudited) Ref. Number of Shares Outstanding BALANCE, January 1, 2015 43,636,984 Comprehensive income: Profit (loss) for the period — Other comprehensive income: Pension remeasurement 14 Cash flow hedges 9 Total other comprehensive income Total comprehensive (loss) Transactions with owners: Stock-based awards issued 11 62,774 Tax benefit related to stock-based awards — Repurchases of common shares 11 (1,043,022) Dividends paid 11 — BALANCE, June 30, 2015 42,656,736	Common Shares	Additional Paid-In Capital $ 4,597 — 11,509 (9,404) 1,449 — — — $ 8,151 Additional Paid-In Capital $ — — 315 (315) — — $ —	Retained Earnings	Other Reserves $ (10,068) — (1,077) — — — — — — $ (11,145) Other Reserves $ (16,982) — (375) 180 — — — — $ (17,177)	Treasury Stock $ (245,184) — — 9,404 — (125,294) — — $ (361,074) Treasury Stock $ (317,613) — 11,773 — (115,793) — $ (421,633)	Non- controlling Interest $ 6,066 451 — — — — (394) — $ 6,123 Non- controlling Interest $ 6,420 (281) — — — — $ 6,139	Total Equity
	$ 1,203 —		$ 476,355 125,385				$ 232,969 125,836 (1,077)
							(1,077) 124,759
	— — — — — —		— — — — — (44,938)				11,509 — 1,449 (125,294) (394) (44,938)
	$ 1,203		$ 556,802				$ 200,060
	Common Shares		Retained Earnings				Total Equity
	$ 1,174 —		$ 479,858 67,779				$ 152,857 67,498 (375) 180
							(195) 67,303
	— — — —		(1,611) — (47,508)				10,477 (315) (115,793) (47,508)
	$ 1,174		$ 498,518				$ 67,021

The accompanying notes are an integral part of these Consolidated Interim Financial Statements.

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CORE LABORATORIES N.V. INTERIM STATEMENT OF CASH FLOWS (In thousands of USD)

CASH FLOWS FROM OPERATING ACTIVITIES: Profit (loss) before income tax expense Adjustments to reconcile income to net cash provided by operating activities: Depreciation Amortization Equity in (earnings) loss of associates Stock-based compensation Finance costs (Gain) loss on sale of assets Fair value (gains)/losses on other financial assets Changes in assets and liabilities: Accounts receivable Inventories Other assets Accounts payable Accrued expenses Other long-term liabilities Cash provided by operating activities Interest paid Income tax paid Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures Patents and other intangibles Acquisitions, net of cash acquired Proceeds from sale of assets Interest received Premiums on life insurance Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of debt borrowings Proceeds from debt borrowings Repurchase of common shares Dividends paid Non-controlling interest - (dividends)/capital contributions Net cash used in financing activities NET CHANGE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, beginning of period CASH AND CASH EQUIVALENTS, end of period	Ref. 14 10 6 12 12 11 11	Six Months Ended June 30,	Six Months Ended June 30,
		2015 2014 (Unaudited) $ 86,898 $ 162,391 13,097 12,369 399 582 80 130 10,162 11,508 5,518 4,971 (262) (298) (657) (1,497) 42,430 901 (3,622) (4,571) (1,546) (9,927) (4,594) 1,464 7,417 6,851 (4,140) 1,273 151,180 186,147 (5,629) (3,285) (19,854) (50,368) $ 125,697 $ 132,494 $ (12,310) $ (19,787) (512) (304) (13,824) (1,200) 833 604 1 186 (1,564) (2,866) $ (27,376) $ (23,367) $ (27,000) $ (37,042) 91,000 103,000 (115,583) (125,294) (47,508) (44,937) — (394) (99,091) (104,667) (770) 4,460 23,350 25,088 $ 22,580 $ 29,548	2014
			186,147 (3,285) (50,368)
			$ 132,494
			$ (19,787) (304) (1,200) 604 186 (2,866)
			$ (23,367)
			$ (37,042) 103,000 (125,294) (44,937) (394)
			(104,667)
			4,460 25,088
			$ 29,548

The accompanying notes are an integral part of these Consolidated Interim Financial Statements.

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CORE LABORATORIES N.V. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IAS 34 JUNE 30, 2015

1. DESCRIPTION OF BUSINESS

Core Laboratories N.V. ("Core Laboratories", "we", "our" or "us") is a limited liability company incorporated and domiciled in The Netherlands. The address of the registered office is Strawinskylaan 913, Tower A, Level 9, 1077 XX Amsterdam, The Netherlands. We were established in 1936 and are one of the world's leading providers of proprietary and patented reservoir description, production enhancement and reservoir management services to the oil and gas industry. These services are directed toward enabling our clients to improve reservoir performance and increase oil and gas recovery from their producing fields. We have over 70 offices in more than 50 countries and had approximately 4,400 and 5,000 employees in 2015 and 2014, respectively. We are listed on the New York Stock Exchange ("NYSE") and on the Euronext Amsterdam Stock Exchange.

We operate our business in three reportable segments. These complementary segments provide different services and products and utilize different technologies for improving reservoir performance and increasing oil and gas recovery from new and existing fields.

• Reservoir Description : Encompasses the characterization of petroleum reservoir rock, fluid and gas samples. We provide analytical and field services to characterize properties of crude oil and petroleum products to the oil and gas industry.

• Production Enhancement : Includes services and products relating to reservoir well completions, perforations, stimulations and production. We provide integrated services to evaluate the effectiveness of well completions and to develop solutions aimed at increasing the effectiveness of enhanced oil recovery projects.

• Reservoir Management : Combines and integrates information from reservoir description and production enhancement services to increase production and improve recovery of oil and gas from our clients' reservoirs.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these condensed consolidated interim financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated and are consistent with those of the previous financial year.

Basis of Preparation

Our condensed consolidated interim financial statements for the six months ended June 30, 2015 have been prepared in accordance with IAS 34, "Interim Financial Reporting" ("IAS 34"). The condensed consolidated interim financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities at fair value through profit or loss. The condensed consolidated interim financial statements have not been audited and should be read in conjunction with the annual financial statements for the year ended December 31, 2014, which were prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS") and with Part 9 Book 2 of The Netherlands Civil Code.

The accounting policies adopted are consistent with those of the previous financial year except as described below.

Estimates

The preparation of financial statements in conformity with IAS 34 requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying our accounting policies. The significant judgments made by management in applying our accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2014, with the exception of changes in estimates that are required in determining the provision for income taxes.

Current and Deferred Income Taxes

Income tax expense is recognized based on management's estimate of the weighted average annual income tax rate expected for the full financial year. See Note 15 - Income Taxes .

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New and Amended Standards

There are no new standards, amendments, or interpretations to existing standards which are effective for accounting periods beginning on or after January 1, 2015 that have been applied in preparing these consolidated financial statements.

3. FINANCIAL RISKS AND RISK MANAGEMENT

The condensed consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with our annual financial statements as of December 31, 2014.

4. SEASONALITY OF OPERATIONS

Our operations are only slightly impacted by seasonality effects from period to period.

5. SEVERANCE AND OTHER CHARGES

In response to lower commodity pricing and reduced spending by our clients related to oil and gas producing fields in 2015, we decided during the first half of 2015 to reduce our cost structure, primarily through a reduction in our workforce, to better align with anticipated activity levels for 2015, which is summarized below. As a result of these cost reductions, we recorded a charge of $7.1 million in the six months ended June 30, 2015. Depending on how the market situation evolves, further actions may be necessary, which could result in additional charges in future periods.

• Reduction in Force ($6.4 million): termination benefits expensed and paid or accrued at March 31, 2015,

• Facility Exit Costs ($0.5 million), and

• Asset Write-Offs ($0.2 million): write-off of assets that have no associated future cash flows.

We continue to closely monitor rig counts, crude oil and natural gas prices, and activity levels within the industry.

6. ACQUISITIONS

In June 2015, we acquired a business providing additional reservoir fluids technology for $17.2 million in cash. We have accounted for this acquisition by allocating the purchase price to the net assets acquired based on their estimated fair values at the date of acquisition, resulting in an increase to goodwill of $14.3 million and an increase of $1.9 million in intangible assets. The acquisition was recorded in the Reservoir Description business segment.

The acquisition of this entity did not have a material impact on our Balance Sheet or Income Statement.

7. SEGMENT REPORTING

We operate our business in three reportable segments. These complementary segments provide different services and products and utilize different technologies for improving reservoir performance and increasing oil and gas recovery from new and existing fields.

• Reservoir Description : Encompasses the characterization of petroleum reservoir rock, fluid and gas samples. We provide analytical and field services to characterize properties of crude oil and petroleum products to the oil and gas industry.

• Production Enhancement : Includes services and products relating to reservoir well completions, perforations, stimulations and production. We provide integrated services to evaluate the effectiveness of well completions and to develop solutions aimed at increasing the effectiveness of enhanced oil recovery projects.

• Reservoir Management : Combines and integrates information from reservoir description and production enhancement services to increase production and improve recovery of oil and gas from our clients' reservoirs.

Results for these business segments are presented below. We use the same accounting policies to prepare our business segment results as are used to prepare our condensed consolidated interim financial statements. We evaluate performance based on income or loss from continuing operations before income tax, interest and other non-operating income (expense).

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Summarized financial information concerning our segments is shown in the following table (in thousands):

June 30, 2015 Revenues from unaffiliated customers Inter-segment revenues Segment income (loss) Finance costs Share of profit (loss) of associates Total assets Capital expenditures Intangible asset expenditures Depreciation and amortization June 30, 2014 Revenues from unaffiliated customers Inter-segment revenues Segment income (loss) Finance costs Share of profit (loss) of associates Total assets Capital expenditures Intangible asset expenditures Depreciation and amortization	Reservoir Description $ 240,670 5,187 60,274 — 91 352,723 8,734 23 8,015 $ 255,845 5,532 70,952 — 190 343,073 11,096 78 7,783	Production Enhancement $ 145,734 1,369 24,947 — (11) 246,907 2,512 463 3,410 $ 221,273 1,181 74,757 — (139) 283,050 2,830 199 3,775	Reservoir Management $ 31,128 207 7,596 — — 42,841 266 — 853 $ 53,347 767 20,235 — — 57,401 367 7 605	Corporate & Other(1) $ — (6,763) (481) 5,518 — 71,077 798 26 1,218 $ — (7,480) 1,288 4,971 79 69,108 5,494 20 788	Consolidated
					$ 417,532 — 92,336 5,518 80 713,548 12,310 512 13,496 $ 530,465 — 167,232 4,971 130 752,632 19,787 304 12,951

(1)"Corporate and other" represents those items that are not directly related to a particular segment and eliminations.

Inter-segment transfers or transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third parties.

Segment assets consist primarily of cash and cash equivalents, trade and other receivables, inventories, property, plant and equipment and intangible assets. Unallocated assets in Corporate and Other is comprised of deferred taxation and miscellaneous assets related to the corporate function.

Capital expenditures comprise additions to property, plant and equipment.

Our general and administrative costs are allocated to the segments on a proportional basis relative to each segment's costs of sales.

8. OTHER FINANCIAL ASSETS

The Company's only financial assets relate to certain aspects of the Company's employee benefit plans, such as the fair value of life insurance policies, and our derivative instruments. The fair value of the life insurance policies increased by $0.7 million during the six months ended June 30, 2015.

We use the market approach to value certain assets and liabilities at fair value using significant other observable inputs (Level 2) with the assistance of a third party specialist. We do not have any assets or liabilities measured at fair value on a recurring basis using quoted prices in an active market (Level 1) or significant unobservable inputs (Level 3). Gains and losses related to the fair value changes in the deferred compensation assets and liabilities are recorded in General and administrative

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expense in the Income Statement. Gains and losses related to the fair value of the interest rate swaps are recorded in Other comprehensive income (loss). The following table summarizes the fair value balances (in thousands):

Assets: Deferred compensation trust assets(1) Liabilities: Benefit plans 5 year interest rate swap 10 year interest rate swap Assets: Deferred compensation trust assets(1) Liabilities: Benefit plans 5 year interest rate swap 10 year interest rate swap	Total	Fair Value Measurement at June 30, 2015	Fair Value Measurement at June 30, 2015	Fair Value Measurement at June 30, 2015
		Level 1	Level 2	Level 3
	$ 37,168	$ —	$ 37,168	$ —
	$ 57,636 335 664	$ — — —	$ 57,636 335 664	$ — — —
	$ 58,635	$ —	$ 58,635	$ —
	Total
		Level 1	Level 2	Level 3
	$ 36,886	$ —	$ 36,886	$ —
	$ 57,661 201 881	$ — — —	$ 57,661 201 881	$ — — —
	$ 58,743	$ —	$ 58,743	$ —

(1) Trust assets consist of the cash surrender value of life insurance policies intended to assist in the funding of the deferred compensation plans and are included in Other assets in the Balance Sheet.

9. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We are exposed to market risks related to fluctuations in interest rates. To mitigate these risks, we utilize derivative instruments in the form of interest rate swaps. We do not enter into derivative transactions for speculative purposes.

Interest Rate Risk

Our Credit Facility bears interest at variable rates from LIBOR plus 1.25% to a maximum of LIBOR plus 2.00%. We are subject to interest rate risk on the debt carried through our Credit Facility.

In 2014, we entered into two interest rate swap agreements for a total notional amount of $50 million to hedge changes in the variable rate interest expense on $50 million of our existing or replacement LIBOR-priced debt. Under the first swap agreement of $25 million, we have fixed the interest rate at 2.98% through August 29, 2019, and under the second swap agreement of $25 million, we have fixed the interest rate at 3.75% through August 29, 2024. Each swap is measured at fair value and recorded in our Balance Sheet as a liability. They are designated and qualify as cash flow hedging instruments and are highly effective. Unrealized gains/losses are deferred to shareholders' equity as a component of accumulated other comprehensive income/loss and are recognized in income as a decrease/increase to interest expense in the period in which the related cash flows being hedged are recognized in expense.

At June 30, 2015, we had fixed rate debt aggregating $200 million and variable rate debt aggregating $220 million, after taking into account the effect of the swaps.

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The fair values of outstanding derivative instruments are as follows:

Fair Value of Derivatives

Derivatives designated as hedges: 5 year interest rate swap 10 year interest rate swap	June 30, 2015	December 31, 2014 $ 201 881 $ 1,082	Balance Sheet Classification Other long-term liabilities Other long-term liabilities
	$ 335 664
	$ 999

The fair value of all outstanding derivatives was determined using a model with inputs that are observable in the market (Level 2) or can be derived from or corroborated by observable data.

The effect of the interest rate swaps on the Income Statement was as follows:

Six Months Ended

		June 30, 2015		June 30, 2014		Income Statement Classification
Derivatives designated as hedges:
5 year interest rate swap	$	195	$		—	Increase to interest expense
10 year interest rate swap		293			—	Increase to interest expense
	$	488	$		—

10. INVENTORIES

Inventories consisted of the following at June 30, 2015 and December 31, 2014 (in thousands):

Finished goods Parts and materials Work in progress Inventories, net	June 30, 2015 $ 34,298 10,817 2,470 $ 47,585	December 31, 2014
		$ 32,249 9,147 1,975
		$ 43,371

The balances above are net of valuation reserves of $3.4 million and $2.6 million at June 30, 2015 and December 31, 2014, respectively.

11. EQUITY

Share capital

The authorized share capital of the Company as at June 30, 2015 amounts to EUR 4 million and consists of 200,000,000 ordinary shares with a par value of EUR 0.02 each.

Issued and paid in share capital is $1.2 million and consists of 45,600,002 issued ordinary shares with a par value of EUR 0.02 each. Repurchased ordinary shares amounts to $421.6 million and consists of 2,943,266 ordinary shares with a par value of EUR 0.02 each.

The movements in the number of shares for the six months ended June 30, 2015 and 2014 are as follows:

Balance at January 1, 2015 Issue of ordinary shares for stock based-awards Repurchased own shares Balance at June 30, 2015	Ordinary Shares 45,600,002 — — 45,600,002	Repurchased Ordinary Shares (1,963,018) 62,774 (1,043,022) (2,943,266)	Shares Outstanding
			43,636,984 62,774 (1,043,022)
			42,656,736

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Balance at January 1, 2014 Issue of ordinary shares for stock based-awards Repurchased own shares Balance at June 30, 2014	Ordinary Shares 46,750,002 — — 46,750,002	Repurchased Ordinary Shares (1,648,613) 88,189 (709,559) (2,269,983)	Shares Outstanding
			45,101,389 88,189 (709,559)
			44,480,019

Treasury Shares

During the six months ended June 30, 2015, we repurchased 1,043,022 of our common shares for $115.8 million, at an average price of $111.02 per share which included rights to 18,478 shares valued at $2.0 million, or $110.47 per share, that were surrendered to us pursuant to the terms of a stock-based compensation plan in consideration of the participants' personal tax burdens that may result from the issuance of common shares under this plan. Subsequent to June 30, 2015, we have repurchased [132,449] shares at a total cost of approximately [$14.4 million].

Dividends

In February and May of 2015, we paid quarterly dividends of $0.55 per share of common stock totaling $47.5 million. On July 7, 2015, we declared a quarterly dividend of $0.55 per share of common stock which was paid on August 17, 2015 to shareholders of record on July 17, 2015.

12. BORROWINGS

We have two series of senior notes outstanding with an aggregate principal amount of $150 million ("Senior Notes") issued in a private placement transaction. Series A consists of $75 million in aggregate principal amount of notes that bear interest at a fixed rate of 4.01% and are due in full on September 30, 2021. Series B consists of $75 million in aggregate principal amount of notes that bear interest at a fixed rate of 4.11% and are due in full on September 30, 2023. Interest on each series of the Senior Notes is payable semi-annually on March 30 and September 30.

On March 13, 2015, we entered into an agreement to amend our revolving credit facility (the "Credit Facility") to increase the aggregate borrowing capacity from $350 million to $400 million and to keep the uncommitted availability of an additional $50 million to bring the total borrowings available to $450 million if certain prescribed conditions are met by the Company. The Credit Facility bears interest at variable rates from LIBOR plus 1.25% to a maximum of LIBOR plus 2.00%. Any outstanding balance under the Credit Facility is due August 29, 2019, when the Credit Facility matures. Our available capacity at any point in time is reduced by borrowings outstanding at the time and outstanding letters of credit which totaled $26.1 million at June 30, 2015, resulting in an available borrowing capacity under the Credit Facility of $103.9 million. In addition to those items under the Credit Facility, we had $12.5 million of outstanding letters of credit and performance guarantees and bonds from other sources as of June 30, 2015.

Debt at June 30, 2015 and December 31, 2014 is summarized in the following table (in thousands):

Senior notes Credit facility Other borrowings Deferred debt acquisition costs Total borrowings Less - current maturities Borrowings, net	June 30, 2015 $ 150,000 270,000 1,622 (2,254) 419,368 114 $ 419,254	December 31, 2014
		$ 150,000 206,000 — (2,328)
		353,672 —
		$ 353,672

In 2014, we entered into two interest rate swap agreements for a total notional amount of $50 million. See Note 9 - Derivative Instruments and Hedging Activities .

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We do not have any exposure to sub-prime lending or collateralized debt obligations. We believe we are in compliance with the covenants on our existing debt. We believe our future cash flows from operating activities, supplemented by our borrowing capacity under existing facilities and our ability to issue additional equity should be sufficient to meet our contractual obligations, capital expenditures, working capital needs and to finance future acquisitions.

13. PROVISIONS FOR OTHER LIABILITIES AND CHARGES

Provisions consist of accrued amounts related to claims from clients, and amounts due under certain service agreements and contractual commitments.

Claims from clients occur from disputes that may arise from the providing of services. These are investigated and resolved once a determination is made. The timing of any potential settlement varies for each claim.

The movement of provisions for the six months ended June 30, 2015 is as follows (in thousands):

Balance at January 1, 2015 Charged/ (credited) to the income statement: Additional provisions Used during the year Balance at June 30, 2015	$ 3,556 3,851 (4,272)
	$ 3,135

14. PENSIONS AND OTHER POSTRETIREMENT BENEFIT PLANS

Balance sheet obligations for: Pension benefits Post employment benefits - SERP benefits Post employment benefits - deferred compensation Post employment benefits - employee severance Liability on the balance sheet	June 30, 2015 $ 11,810 15,303 29,482 12,851 $ 69,446	December 31, 2014
		$ 11,810 15,940 29,153 12,568
		$ 69,471

Supplemental Executive Retirement Plan (SERP) Benefits

SERP benefits represent an accrual for future payouts guaranteed to employees upon departure from the Company. In 1998, we entered into employment agreements with our senior executive officers that provided for severance benefits. The value of the long-term liability for the benefits due upon severing the employment of these employees is $10.3 million at June 30, 2015. The remaining $5.0 million balance is for the non-executive employees of the Company.

Deferred Compensation

Deferred Compensation relates to additional retirement liabilities for certain employees of the Company. The benefits under these contracts are fully vested and payment of benefits generally commences as of the last day of the month following the termination of services except that the payment of benefits for select executives generally commences on the first working day following a six month waiting period following the date of termination.

Employee Severance

Employee severance relates to payments to be made to certain employees upon departure from the Company. Some of the severance payments are guaranteed in employment contracts totaling approximately $8.4 million at June 30, 2015. The remaining $4.5 million balance is for severance payments to employees required by certain local jurisdictions.

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Defined Benefit Plan

The components of net periodic pension cost under this plan for the six months ended June 30, 2015 and 2014 included (in thousands):

Service cost Interest cost Expected return on plan assets Net periodic pension cost	Six Months Ended June 30,	Six Months Ended June 30,
	2015 $ 903 603 (499) $ 1,007	2014 $ 742 902 (669) $ 975

The net periodic pension cost of $1.0 million and $1.0 million for the six months ended June 30, 2015 and 2014, respectively was recognized in Cost of Services in the consolidated income statement.

15. INCOME TAXES

The effective tax rates for the six months ended June 30, 2015 and 2014 were 22.3% and 22.5%, respectively.

16. EARNINGS PER SHARE

The following table summarizes the calculation of weighted average common shares outstanding used in the computation of diluted earnings per share (in thousands):

Weighted average basic common shares outstanding Effect of dilutive securities: Contingent shares Restricted stock and other Weighted average diluted common and potential common shares outstanding	Six Months Ended June 30,	Six Months Ended June 30,
	2015 43,063 86 65 43,214	2014
		44,783 105 157
		45,045

17. COMMITMENTS AND CONTINGENCIES

We have been and may from time to time be named as a defendant in legal actions that arise in the ordinary course of business. These include, but are not limited to, employment-related claims and contractual disputes or claims for personal injury or property damage which occur in connection with the provision of our services and products. Management does not currently believe that any of our pending contractual, employment-related, personal injury or property damage claims and disputes will have a material effect on our future results of operations, financial position or cash flow.

In connection with an audit of the 2008 and 2009 U.S. federal income tax returns of our U.S. consolidated group, the U.S. Internal Revenue Service has proposed that certain transfer pricing positions taken by the Company be adjusted, which could result in additional federal income tax of approximately $11 million plus interest for this two year audit period. We believe that these transactions are valid as originally recorded, and we are appealing this proposed adjustment. It is our belief that we will prevail on this issue; consequently, we have made no additional income tax accrual for this proposed adjustment.

We do not maintain any off-balance sheet debt or other similar financing arrangements nor have we formed any special purpose entities for the purpose of maintaining off-balance sheet debt.

18. RELATED PARTIES

In 2015 and 2014, 18,478 shares valued at $2.0 million and 25,394 shares valued at $4.7 million, respectively, were surrendered to the Company pursuant to the terms of a stock-based compensation plan, in settlement by the participants of their

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personal tax burdens that may result from the issuance of common shares under this arrangement. These shares were surrendered at the then current market price on the date of settlement.

In 2015 and 2014, we granted stock to each of our non-employee Directors in the amount of 1,436 and 756 shares respectively. These shares will vest, without performance obligations, on March 31, 2018 and 2017, respectively.

We had no other significant related party transactions for the six month period ended June 30, 2015.

19. SUBSEQUENT EVENTS

At the annual meeting of shareholders on May 21, 2015, the shareholders approved the cancellation of 1,250,000 shares of our common stock then held as treasury stock. These treasury shares were canceled on August 5, 2015, after the expiration of the waiting period required under Dutch law. We charged the excess of the cost of the treasury stock over its par value to additional paid-in capital and retained earnings.

On July 7, 2015, we declared a quarterly dividend of $0.55 per share of common stock which was paid on August 17, 2015 to shareholders of record on July 17, 2015.

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