What happened

Few investors wanted to experience ownership Main laboratories (NYSE:CLB) stock on Thursday. This is because the oil tank service company is looking for new financing, and these investors are not happy about it. As a result, Core Labs stock closed just over 10% lower on the day.

So what

Core Labs announced on Thursday that it has launched an equity offering on the market (ATM). As part of this initiative, the company will sell up to $60 million of its common stock to the public. It will be assisted in this effort by Wells Fargo and Bank of America Securities, both of which must operate under a stock distribution agreement with the company.

In discussing the use of its share of proceeds, Core Labs used the standard language typical of equity issuers citing “broad corporate objectives.” He added that these could include product/technology development, debt repayment and possible acquisitions.

According to data compiled by Yahoo! Finance, the specialty oil services company currently has just over 46.3 million shares outstanding. At the current share price, that $60 million is about 2.2 million shares.

Now what

2.2 million shares added to a bucket of over 46 million isn’t particularly dilutive, so on that basis alone, investors seem to be overreacting to Core Labs news.

But if we zoom out a little on the company, we can see that there is some concern about how quickly its business will grow in the short to medium term. Investors could also worry about an upcoming decline in the current high oil price, a dynamic that does not favor a reservoir service provider like Core Labs.

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in the stocks mentioned. The Motley Fool recommends Core Laboratories. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.