Core Laboratories (CLB), which provides reservoir description and production enhancement services to the oil and gas industry, is hinting that projects once seen as near certainties may be at risk of delay or suspension. In its 2020 10-K, Core Labs reveals that as a result of the global pandemic rig counts outside the U.S. declined nearly 39%. Normally, Core Labs considers larger offshore projects bulletproof as they require a long-term outlook not often negatively impacted by crude oil price volatility.

In it’s latest annual report, Core Labs inserts new language that hints this perception may no longer hold true:

“Long-term international and offshore projects which are commonly announced through Final Investment Decisions and subsequently initiated are not susceptible or at-risk to delay or suspension due to short-term volatility in crude-oil commodity price, however the extreme negative market conditions caused by the COVID-19 pandemic and efforts to reduce the spread of the virus have negatively impacted the entire energy market in 2020.”

Though free cash flow fell by approximately 32% in 2020, Core Labs adjusted its policy to ensure employees would receive bonuses that had not been earned. Core Labs acknowledges it missed 2020 performance targets associated with long-term stock based performance awards. It means employee stock awards above target would not vest and that no bonus would be paid.

However, Core Labs reveals it changed how it calculates bonuses so employees could still receive them despite cutting the shareholder dividend to a penny a share earlier in the year. In its latest 10-K, Core Labs says it:

“...approved a modification to the methodology of measuring performance conditions associated with target level long-term employee stock-based compensation awards, which vested at target levels on December 31, 2020.”

The move resulted in employees receiving $11.3 million in bonus pay.