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Stock Strategist

Core Lab Has the Strongest Moat in the Industry

It has generally bested all its oilfield services peers in returning cash to shareholders.

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We have long believed that Core Laboratories (CLB) is one of the highest-quality oilfield services companies. For one, it possesses the strongest economic moat across our entire oilfield services coverage. The company’s foundational core analysis business in the reservoir description segment, in particular, has been virtually unchallenged over the past three decades. The business passes the Warren Buffett quality test, whereby even an "idiot" could probably run the business with some profitability.

Yet, Core Lab has long been managed with the utmost skill, in our view. The 1998 acquisition of Owen Oil Tools and subsequent repositioning of the business to offer high-quality solutions for fast-growing U.S. shale markets was a stroke of brilliance. The combination of topnotch management plus a strong underlying business has delivered unrivaled returns on capital over the past two decades.

Preston Caldwell does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.