The following discussion summarizes the financial position of Core Laboratories N.V. and its subsidiaries as of March 31, 2009 and should be read in conjunction with (i) the unaudited consolidated interim financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q and (ii) the consolidated financial statements and accompanying notes to our Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

General

Core Laboratories N.V. is a Netherlands limited liability company. 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 products and services to the oil and gas industry. These products and services 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 4,900 people worldwide.

References to "Core Lab", "we", "our", and similar phrases are used throughout this Quarterly Report on Form 10-Q and relate collectively to Core Laboratories N.V. and its consolidated affiliates.

Our business units have been aggregated into three complementary segments, which provide products and services 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 products and services 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.

Cautionary Statement Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Certain of the statements contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations section, including those under the headings "Outlook" and "Liquidity and Capital Resources", and in other parts of this Form 10-Q, are forward looking. In addition, from time to time, we may publish forward-looking 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. Our actual results may differ significantly from the results discussed in the forward-looking statements. While we believe that these statements are and will be accurate, a variety of factors could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed in our statements. Such factors include, but are not limited to, the risks and uncertainties summarized below:

- general and economic business conditions;

- prices of oil and natural gas and industry expectations about future prices;

- foreign exchange controls and currency fluctuations;

- political stability in the countries in which we operate;

- the business opportunities (or lack thereof) that may be presented to and pursued by us;

- changes in laws or regulations;

- the validity of the assumptions used in the design of our disclosure controls and procedures; and

- the financial condition of our client base and their ability to fund capital expenditures.

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a more detailed discussion of some of the foregoing risks and uncertainties, see "Item 1A - Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as well as the other reports filed by us with the SEC.

Outlook

We continue our efforts to expand our market presence by opening facilities in strategic areas and realizing synergies within our business lines. We believe our market presence provides us a unique opportunity to service customers who have global operations in addition to the national oil companies.

We have established internal earnings targets for 2009 that are based primarily on market conditions existing at the time our targets are established. Based on discussions late in 2008 with our clients and our view of the oil and gas industry, we anticipated that in 2009, spending by our international clients would soften and we expected North American spending to decrease significantly. Given the recent sharp declines in commodity prices and announced reductions in capital expenditure programs by certain of our clients, oilfield activity levels may not grow at the same rate as earlier expected, and in all likelihood will decrease further on a year-over-year basis. It is too early to determine the impact of these recently announced changes in capital programs by certain of our clients.

Results of Operations

Unaudited results of operations as a percentage of applicable revenue were as
follows (in thousands):

(Unaudited)                                    Three Months Ended March 31,               % Change
                                              2009                       2008             2009/2008
REVENUES:
Services                             $   141,692        79%      $  138,409       77%           2%
Product sales                             37,184        21%          41,028       23%          (9%)
 Total revenues                          178,876       100%         179,437      100%            -
OPERATING EXPENSES:
Cost of services*                         88,296        62%          91,159       66%          (3%)
Cost of sales*                            27,736        75%          28,314       69%          (2%)
 Total cost of services and sales        116,032        65%         119,473       67%          (3%)
General and administrative expenses        9,274         5%           8,289        5%          12%
Depreciation and amortization              5,708         3%           5,239        3%           9%
Other expense, net                         1,243         1%           2,065        1%         (40%)
Operating income                          46,619        26%          44,371       25%           5%
Interest expense                           3,800         2%           4,782        3%         (21%)
Income before income tax expense          42,819        24%          39,589       22%           8%
Income tax expense                        13,580         8%          12,739        7%           7%
Net income                                29,239        16%          26,850       15%           9%
   Net income attributable to
   non-controlling interest                   47         -              103        -          (54%)
Net income attributable to
  Core Laboratories N.V.            $     29,192        16%     $     26,747      15%           9%

*Percentage based on applicable revenue rather than total revenue

Operating Results for the Three Months Ended March 31, 2009 Compared to the Three Months Ended March 31, 2008 (unaudited)

Service Revenues

Service revenues increased to $141.7 million for the first quarter of 2009, up 2% when compared to $138.4 million for the first quarter of 2008. Our service revenues continued to increase due to our significant international operations and projects. Significant projects that continue to provide revenue growth are in the Middle East, Asia-Pacific, the Gulf of Mexico and offshore deepwater regions of the southern-Atlantic margins off the coast of West Africa and Brazil.

Product Sale Revenues

Revenues associated with product sales decreased to $37.2 million for the first quarter of 2009, down 9% from $41.0 million for the first quarter of 2008. Our product sales revenues were impacted by the significant decline in the North American drilling activity; however, our revenues declined at a much lower rate compared to the 27% decrease in the average year-over-year first quarter North American rig count. This was due primarily from the continued market penetration and acceptance of our specialized optimizing technologies introduced in 2007 and 2008, which are focused on high-end well completion and stimulation programs mainly in the Barnett, Haynesville, Fayetteville, Marcellus and Muskwa/Montney shale plays.

Cost of Services

Cost of services expressed as a percentage of service revenue was 62% for the quarter ended March 31, 2009, which was down from 66% for the same period in 2008. The decline in the cost of services relative to service revenue was primarily a result of higher incremental margins earned on revenues over our relatively fixed cost structure from our continued focus on emphasizing higher value and thus higher margin services. Incremental margins are calculated as the change in operating income divided by the change in revenues.

Cost of Sales

Cost of sales as a percentage of product sales revenues was 75% for the quarter ended March 31, 2009, up from 69% for the same period in 2008. The reduction in margins came primarily from a decline in manufacturing efficiencies, which was caused by a reduction in manufacturing due to the significant decline in North American drilling activity.

General and Administrative Expenses

General and administrative expenses totaled $9.3 million for the first quarter of 2009, comparable to the $9.3 million incurred in the fourth quarter of 2008. These costs increased 12% when compared to $8.3 million for the first quarter of 2008, due to an increase in severance expense in 2009 compared to 2008.

Depreciation and Amortization Expense

Depreciation and amortization expense increased to $5.7 million for the first quarter of 2009, up 9% when compared to $5.2 million for the first quarter of 2008. This increase in depreciation and amortization expense was due to the expansion of our capital expenditure program throughout 2008 which funded our operational growth.

Other Expense, Net

Other expense, net consisted of the following at March 31, 2009 and 2008 (in
thousands):

                                              Three Months Ended
                                                   March 31,
                                              2009          2008
                                                  (Unaudited)
              Gain on sale of assets       $      (77)   $   (1,284)
              Foreign exchange loss (gain)      1,888          (746)
              Interest income                     (39)         (108)
              Non-income tax accrual                -         5,030
              Other, net                         (529)         (827)
               Total other expense, net    $    1,243    $    2,065

During the first quarter of 2008, we revised our estimate of a contingent liability associated with non-income related taxes, and as a result, a charge to income of $5.0 million was recorded. Additionally, we recorded a gain of $1.1 million in connection with the sale of a small office building.

Foreign exchange losses (gains) by currency are summarized in the following table (in thousands):

                                           Three Months Ended
                                                March 31,
                                            2009         2008
                                               (Unaudited)
                   Canadian Dollar       $     348    $     215
                   Euro                        163         (586)
                   Mexican Peso                132          (47)
                   Malaysian Ringgit           136          (55)
                   Russian Ruble               596         (157)
                   Kazakhstan Tenge            167           (3)
                   Other currencies, net       346         (113)
                    Total loss (gain)    $   1,888    $    (746)

Income Tax Expense

The effective tax rates for the first quarter of 2009 and 2008 were 31.7% and 32.2%, respectively. The decrease in the effective tax rate for the first quarter of 2009 is primarily a result in a change in activity levels between jurisdictions with different tax rates.