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## ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION 

Core Laboratories N.V. is a Netherlands limited liability company. 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 and products to the oil and gas industry, primarily through client relationships with many of the world’s major, national and independent oil companies. 

Our business units have been aggregated into three complementary segments: 

• 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. 

## General Overview 

We provide services and design and produce products which enable our clients to evaluate reservoir performance and increase oil and gas recovery from new and existing fields. These services and products are generally in higher demand when our clients are investing capital in their field development programs that are designed to increase productivity from existing fields or when exploring for new fields. Our clients’ investment in capital expenditure programs tends to correlate over the longer term to oil and natural gas commodity prices. During periods of higher, stable prices, our clients generally invest more in capital expenditures and, during periods of lower or volatile commodity prices, they tend to invest less. Consequently, the level of capital expenditures by our clients impacts the demand for our services and products. 

Average prices for West Texas Intermediate (“WTI”) crude oil and natural gas increased during 2013 while the average Brent crude oil price per barrel and the average rig count both in North America and worldwide decreased during 2013. 

The following table summarizes the average worldwide and U.S. rig counts for the years ended December 31, 2013, 2012 and 2011, as well as the annual average spot price of a barrel of WTI crude, Europe Brent crude and an MMBtu of natural gas: 

<img src='content_image/271738.jpg'>

(1) Twelve month average rig count as reported by Baker Hughes Incorporated - Worldwide Rig Count. 

(2)  Y ear-end rig count as reported by Baker Hughes Incorporated - Worldwide Rig Count. 

(3)  Average daily West Texas Intermediate crude spot price as reported by the U.S. Energy Information Administration. 

(4)  Average daily Europe Brent crude spot price as reported by the U.S. Energy Information Administration. 

(5)  Average daily Henry Hub natural gas spot price as reported by the U.S. Energy Information Administration. 

