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CORRESP
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  CORRESP

  June 2, 2022

  Karl Hiller

  Branch Chief

  Office of Energy & Transportation

  Division of Corporate Finance

  United States Securities and Exchange Commission

  100 F. Street, N.E.

  Washington, D.C. 20549

  RE:	Core Laboratories N.V.

  	Form 10-K for Fiscal Year Ended December 31, 2021

  	Filed February 10, 2022

  	File No.: 001-14273

  Dear Mr. Karl Hiller:

  Thank you for the letter dated May 18, 2022, from the staff of the Division of Corporate Finance (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) regarding our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “Form 10-K”) and our subsequent interim report. Set forth below are the responses of Core Laboratories N.V. (“Core Laboratories” or the “Company”) to your comments in the order in which they were presented in the letter from the Staff. For your convenience, each response is prefaced by the exact text of the corresponding comment.

  Form 10-K for Fiscal Year Ended December 31, 2021

  Business

  International Operations, page 7

  •We note your disclosure indicating that revenues associated with the former Soviet Union represented about 7% of your total revenues for 2021, and we see that you have provided disclosures in various parts of your subsequent interim report regarding certain implications of the Russia-Ukraine conflict on your business. We understand that you have suspended operations in Ukraine although you continue operating in Russia, as you indicate that future sanctions may require you to cease or wind down operations in Russia, and you explain that if this occurs your assets in Russia could become impaired.

  You further clarify that if sanctions change or are expanded, this could further hinder your ability to do business in Russia or with certain Russian entities, and this could have a material adverse impact on your financial condition and results of operations. You also indicate that your employees, contractors, and agents may not abide by the policies and procedures that you have established to comply with applicable sanctions and trade restrictions and that if you are held responsible for any such instances of non-compliance, the penalties could have a material adverse effect on your business.

  Given your disclosures referencing the possibility of material adverse effects, expand your disclosures to more clearly describe how the Russia-Ukraine conflict may impact your operations.  As part of your expanded disclosure, address the following points.

  oDescribe the extent to which you have operations, facilities, fixed assets, inventories, business relationships, and transactions within Russia, Belarus, and Ukraine, or with entities or persons related to these countries, and describe the particular role and significance of your subsidiary in Russia.

  RESPONSE:  We respectfully acknowledge the Staff’s comment, and acknowledge the Staff is primarily referring to expanded disclosures the Company included under Item 1 A. Risk Factors in its Quarterly Report on Form 10-Q filed with the Commission on April 28, 2022 (the “Form 10-Q”), for the three-month period ending March 31, 2022. The Company operates in Russia through its subsidiary, JSC Petroleum Analysts, and our operations in Russia and Ukraine are primarily conducted in a laboratory environment performing reservoir fluid analysis services associated with crude-oil assay deliverables. Crude-oil assays are generally performed for clients who are involved with the trading and transportation of crude oil and products derived from crude oil. The Company also has historically delivered well-perforating products into Ukraine.  These well-perforating products are manufactured by our U.S. operation and shipped from the U.S. into Ukraine. The Company does not have any operations in, or any revenue attributable to, Belarus. Revenue attributable to the Company’s operations in Russia and Ukraine for the twelve-month period ending December 31, 2021, and three-month period ending March 31, 2022, are provided in the table below.

  Table 1: Total Revenue (in million US dollars)

    Twelve-Months

Ended

December 31, 2021

% of Company

Total Revenue

    Three-months

Ended

March 31, 2022

% of Company

Total Revenue

    Russia

    $28.6

    6.1%

    $7.4

    6.4%

    Ukraine

    $4.7

    1.0%

    $0.8

    0.7%

    Total Company

    $470.3

    100%

    $115.3

    100%

  As of March 31, 2022, values reflected in the Company’s Balance Sheet for facilities, fixed assets and inventory are as follows:

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  Table 2: Asset Value (in million US dollars)

Russia

    % of Company Total Assets

Ukraine

    % of Company Total Assets

    Leased facilities (“Leased assets”)

    $3.4

    0.6%

    $0.1

    0.02%

    Fixed Assets

    $4.2

    0.7%

    $0.1

    0.01%

    Inventory

    -

    -

    -

    -

    Total

    $7.6

    1.3%

    $0.2

    0.03%

  The Company will file revised risk factor disclosure related to its operations in Russia and Ukraine on a Current Report on Form 8-K or other future filing of the Company. For the convenience of the Staff, the revised and expanded risk factor disclosure is also set forth below with underlining provided to show revisions to the disclosure included in the Company’s Form 10-K and Form 10-Q:

  REVISED DISCLOSURE:

  Risk factors associated with our international presence

  We depend on the results of our international operations, which expose us to risks inherent in doing business abroad.

  We conduct our business in over 50 countries. Our operations, and those of our clients, are subject to the various laws, regulations and other legal requirements of those respective countries as well as various risks peculiar to each country, which may include, but are not limited to:

  ▪global economic conditions;

  ▪political actions and requirements of national governments including trade restrictions, embargoes, seizure, detention, nationalization and expropriations of assets;

  ▪interpretation of tax statutes and requirements of taxing authorities worldwide, including the United States, routing examination by taxing authorities and assessment of additional taxes, penalties and/or interest;

  ▪trade and economic sanctions, tariffs or other restrictions imposed by the European Union, the United Kingdom, the United States or other countries;

  ▪civil unrest;

  ▪acts of terrorism;

  ▪fluctuations and changes in currency exchange rates (see section below);

  ▪the impact of inflation;

  ▪difficulty in repatriating foreign currency received in excess of the local currency requirements;

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  ▪current conditions in oil producing countries such as Venezuela, Nigeria, Libya, Iran and Iraq considering their potential impact on the world markets; and

  ▪geopolitical conflicts in the countries or regions we operate in, including the Russia-Ukraine conflict.

  Historically, economic downturns and political events have resulted in lower demand for our services and products in certain markets. The continuing instability in the Middle East, North Africa, and Ukraine, and the potential for activity from terrorist groups that the U.S. government has cautioned against have further heightened our exposure to international risks. The global economy is highly influenced by public confidence in the geopolitical environment and the situation in the Middle East, North Africa, Russia and Ukraine continues to be highly fluid; therefore, in addition to suspension of local operations in Ukraine and delivery of products into Ukraine and Russia, we expect to experience heightened international risks, which may include further suspension of local operations and delivery of products into the impacted countries.

  From time to time, certain geopolitical conflicts may lead to imposition of economic sanctions and associated export controls by the U.S. government. These sanctions may be imposed against certain countries, companies and individuals that may restrict or prohibit transactions involving the countries, companies and individuals identified, which may also further restrict or prohibit us in conducting sales and maintaining operations in any of these jurisdictions.

  Our operations may be adversely affected by sanctions, export controls, and similar measures targeting Russia and other countries and territories as well as other responses to Russia’s military conflict in Ukraine.

  The recent geopolitical conflict between Russia and Ukraine has resulted in the U.S. government, European Union, the United Kingdom and other countries imposing broad-ranging and coordinated economic sanctions and export control measures against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic, including, among others:

  ▪a prohibition on doing business with certain Russian companies, large financial institutions, officials and oligarchs;

  ▪a prohibition on commercial activities in the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic;

  ▪a commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications (“SWIFT”), the electronic banking network that connects banks globally;

  ▪a ban on imports of Russian crude oil, liquefied natural gas and coal to the United States;

  ▪a ban on new investment in the Russian energy sector; and

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  ▪enhanced export controls and trade sanctions targeting Russia’s importation of certain goods and technology, including restrictive measures on the export and re-export of dual-use goods, stricter licensing policy with respect to issuing export licenses, and increased use of “end-use” controls to block or impose licensing requirements on exports.

  Due to the international scope of our operations, the Company is subject to various laws and regulations, including regulations issued by the U.S. Department of Treasury, the U.S. Department of State, the Bureau of Industry and Security (“BIS”) and Office of Foreign Asset Control (“OFAC”), as well as the counterparts of these agencies in foreign countries. The Company actively monitors changes in these regulations as they pertain to the goods and services we provide and their impact on our business, including our business partners and customers.

  As the conflict in Ukraine continues, these sanctions may change and be expanded, which could further hinder the Company’s ability to do business in Russia or with certain Russian entities, which could have an adverse impact on the Company’s financial condition and results of operations. Furthermore, in retaliation against new international sanctions and as part of measures to stabilize and support the volatile Russian financial and currency markets, Russian authorities imposed significant currency control measures aimed at restricting the outflow of foreign currency and capital from Russia, imposed various restrictions on transacting with non-Russian parties, banned exports of various products and other economic and financial restrictions.

  The Company continuously screens existing business partners globally against Specially Designated National / Restricted Persons lists. All new engagements with business partners are screened prior to the beginning of any business relationship. Individuals or entities that become subject to applicable sanctions are immediately blocked from further commercial activity with the Company until confirmed by the Company’s legal counsel whether permissible to proceed pursuant to a general or special license or other exemption, or a change in facts.

  Furthermore, while we have policies, procedures and internal controls in place designed to ensure compliance with applicable sanctions and trade restrictions, and though the current effects from the Russia-Ukraine conflict have, thus far, not resulted in a material adverse impact to the Company’s financial condition or results of operations, our employees, contractors, and agents may take actions in violation of such policies and applicable law and we could be held ultimately responsible. We rely on our employees to adhere to the policies, procedures and internal controls we have established to maintain compliance with evolving sanctions and export controls. To that end, we have implemented training programs, both in person and online, to educate our employees on applicable sanctions and export controls laws. If we are held responsible for a violation of U.S. or other countries’ sanctions laws, we may be subject to various penalties, any

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  of which could have a material adverse effect on our business, financial condition or results of operations.

  Should future sanctions require us to cease or wind down our Russian operations, our assets located there may be impacted and could become subject to impairment. As of March 31, 2022, the Company’s fixed assets in Russia were approximately $4.2 million, or less than 4% of the Company’s total fixed assets and less than 1% of the Company’s total assets. For the year-ended December 31, 2021 and the three-month period ending March 31, 2022, our operations in Russia represent approximately 6% of the Company’s total revenue. Additionally, at March 31, 2022, we released $600 thousand of accrued withholding tax associated with $12 million of undistributed earnings from our Russian subsidiary, which are not expected to be distributed in the foreseeable future. Also, cessation of our Russian operations resulting from future sanctions may cause us to incur employee severance and other associated costs statutorily required under local labor laws.

  On March 16, 2022, we suspended our local operations in Ukraine to minimize risk to our employees. Revenue attributable to the Company’s local Ukraine operations were less than $600 thousand for the year-ended December 31, 2021, were less than $200 thousand for the three-month period ending March 31, 2022, and as of March 31, 2022 fixed assets located in Ukraine were less than $50 thousand.

  We are actively monitoring the situation in Ukraine and assessing its impact on our operations in the region, including our business partners and customers. We have not experienced any material interruptions in our infrastructure, supplies or networks needed to support our operations. However, the situation is rapidly evolving and the United States, the European Union, the United Kingdom and other countries may implement additional sanctions, export controls or other measures against Russia, Belarus and other countries, regions, officials, individuals or industries in the respective territories. We have no way to predict the progress or outcome of the conflict in Ukraine or its impacts in Ukraine, Russia or Belarus as the conflict, and any resulting government responses, are fluid and beyond our control.

  The Russia-Ukraine conflict may also heighten many other risks disclosed in our 2021 Annual Report, any of which could materially and adversely affect our business and results of operations. Such risks include, but are not limited to, adverse effects on global macroeconomic conditions, including increased inflation; increased volatility in the price and demand of oil and natural gas, increased exposure to cyberattacks; limitations in our ability to implement and execute our business strategy; risks to employees and contractors that we have in the region; disruptions in global supply chains; exposure to foreign currency fluctuations and potential nationalizations and assets seizures in Russia, constraints or disruption in the capital markets and our sources of liquidity; our potential inability to service our remaining performance obligations and potential contractual breaches and litigation.

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  oDescribe the sanctions and trade restriction