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RPC, Inc. Reports First Quarter 2013 Financial Results

            RPC, Inc. Reports First Quarter 2013 Financial Results

PR Newswire

ATLANTA, April 24, 2013

ATLANTA, April 24, 2013 /PRNewswire/ -- RPC, Inc. (NYSE: RES) today announced
its unaudited results for the first quarter ended March 31, 2013. RPC
provides a broad range of specialized oilfield services and equipment
primarily to independent and major oilfield companies engaged in the
exploration, production and development of oil and gas properties throughout
the United States, and in selected international markets.

For the quarter ended March 31, 2013, revenues decreased 15.3 percent to
$425.8 million compared to $502.6 million in the first quarter of last year.
Revenues decreased compared to the prior year due to competitive pricing and
lower activity levels in many of our service lines. Operating profit for the
quarter was $57.2 million compared to operating profit of $130.9 million in
the prior year. Net income was $35.1 million or $0.16 diluted earnings per
share, compared to $80.8 million or $0.37 diluted earnings per share last
year. Earnings before interest, taxes, depreciation and amortization (EBITDA)
decreased by 39.7 percent to $110.6 million compared to $183.3 million in the
prior year. [1]

Cost of revenues was $268.2 million, or 63.0 percent of revenues, during the
first quarter of 2013, compared to $273.8 million, or 54.5 percent of
revenues, in the prior year. Cost of revenues decreased due to the variable
nature of these expenses. However, cost of revenues increased as a percentage
of revenues due to increasingly competitive pricing for our services, coupled
with continued relatively high activity levels.

Selling, general and administrative expenses were $44.9 million in the first
quarters of both 2013 and 2012. As a percentage of revenues, however, these
costs increased to 10.5 percent in 2013 compared to 8.9 percent last year due
to the relatively fixed nature of many of these expenses over the short term.
Depreciation and amortization increased only slightly to $52.8 million during
the quarter compared to $51.6 million last year.

Interest expense decreased from $596,000 last year to $340,000 in 2013 due to
a lower average balance during the quarter on RPC's syndicated revolving
credit facility as compared to the prior year.

"During the first quarter of 2013, RPC faced increasingly competitive pricing
pressures in all of our markets," stated Richard A. Hubbell, RPC's President
and Chief Executive Officer. "Competition remains fierce, as additional
competitors continue to negatively impact the market rates for our services.
Most of the contractual arrangements in our pressure pumping service line
expired during 2012, and we now operate the majority of our fleets in the spot
market. In the current operating environment, this change has resulted in
lower utilization and pricing. The average U.S. domestic rig count during the
first quarter was 1,758, an 11.7 percent decrease compared to the same period
in 2012 and a 2.8 percent decrease compared to the fourth quarter of 2012.
The average price of natural gas was $3.50 per Mcf, a 45.2 percent increase
compared to the prior year, and a 4.2 percent increase compared to the fourth
quarter of 2012. The average price of oil during the quarter was $94.40 per
barrel, an 8.3 percent decrease compared to the prior year. However, the
average price of oil increased 7.2 percent compared to the fourth quarter of
2012. The average price of benchmark natural gas liquids was $0.87 during the
first quarter of 2013, a 31.3 percent decrease compared to the first quarter
of 2012, and a 3.3 percent decrease compared to the fourth quarter of 2012.
The unconventional rig count, which remains an important indicator of the
demand for RPC's services, decreased by 5.2 percent compared to the prior
year, and during the first quarter of 2013 represented 74.9 percent of U.S.
domestic drilling activity. RPC's revenues declined more than the decline in
domestic rig count compared to both the prior quarter and the prior year due
to our increased exposure to spot market pricing and our significant exposure
to the pressure pumping market, which has endured more pricing weakness than
many other service lines.

"RPC's quality and safety standards mandate that we continue to serve our
customers with well-maintained fleets of equipment, highly trained crews, and
quality materials. In spite of the pricing and competitive environment in
this part of the current oilfield cycle, we have chosen not to compromise
these standards. We did not relocate any equipment fleets during the first
quarter, and are satisfied with the geographic distribution of our equipment
and personnel at this time. We are encouraged by our large presence in
markets with growing horizontal and directional drilling, because these
activities are characterized by complex completions, requiring more equipment
and time to perform.

"During the first quarter, we invested $53.0 million in capitalized
maintenance and new equipment, a decline of $68.4 million compared to the
first quarter of 2012. We continue to maintain our fleet of revenue-producing
equipment to very high standards, but our planned capital expenditures for new
equipment in 2013 are lower than in 2012. The balance on our syndicated
credit facility at the end of the quarter was $87.6 million, a decline of
$19.4 million compared to the end of 2012 and a decline of $93.2 million
compared to the first quarter of 2012," concluded Hubbell.

Summary of Segment Operating Performance

RPC's business segments are Technical Services and Support Services.

Technical Services includes RPC's oilfield service lines that utilize people
and equipment to perform value-added completion, production and maintenance
services directly to a customer's well. These services are generally directed
toward improving the flow of oil and natural gas from producing formations or
to address well control issues. The Technical Services segment includes
pressure pumping, coiled tubing, hydraulic workover services, nitrogen,
downhole tools, surface pressure control equipment, well control, and fishing
tool operations.

Support Services includes RPC's oilfield service lines that provide equipment
for customer use or services to assist customer operations. The equipment and
services offered include rental of drill pipe and related tools, pipe
handling, inspection and storage services and oilfield training services.

Technical Services revenues decreased 14.6 percent for the quarter compared to
the prior year due to increasingly competitive pricing and lower activity
levels. Support Services revenues decreased by 22.5 percent during the
quarter compared to the prior year due principally to lower utilization and
pricing in the rental tool service line, which is the largest service line
within this segment. Operating profit in both Technical and Support Services
declined due to lower revenues caused primarily by more competitive pricing
for our services.

------------------------------------------------------------------------------

[1] EBITDA is a financial measure which does not conform to generally accepted
accounting principles (GAAP). Additional disclosure regarding this non-GAAP
financial measure is disclosed in Appendix A to this press release.



(in thousands)                          Three Months Ended March 31
                                        2013             2012
Revenues:
 Technical services                 $ 394,011     $    461,521
 Support services                     31,810           41,036
Total revenues                        $ 425,821     $    502,557
Operating Profit:
 Technical services                 $ 58,501      $    123,531
 Support services                     6,258            13,985
 Corporate expenses                   (4,900)          (5,255)
 Loss on disposition of assets, net   (2,640)          (1,404)
Total operating profit                $ 57,219      $    130,857
Other Income, net                       555              920
Interest Expense                        (340)            (596)
Interest Income                         5                5
Income before income taxes            $ 57,439      $    131,186

RPC, Inc. will hold a conference call today, April 24, 2013 at 9:00 a.m. ET to
discuss the results of the first quarter. Interested parties may listen in by
accessing a live webcast in the investor relations section of RPC, Inc.'s
website at www.rpc.net. The live conference call can also be accessed by
calling (888) 556-4997 or (719) 457-2664 and using the access code #1464470.
For those not able to attend the live conference call, a replay of the
conference call will be available in the investor relations section of RPC,
Inc.'s website (www.rpc.net) beginning approximately two hours after the
call.

RPC provides a broad range of specialized oilfield services and equipment
primarily to independent and major oilfield companies engaged in the
exploration, production and development of oil and gas properties throughout
the United States, including the Gulf of Mexico, mid-continent, southwest,
Appalachian and Rocky Mountain regions, and in selected international
markets. RPC's investor website can be found at www.rpc.net.

Certain statements and information included in this press release constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, including all statements that look forward in
time or express management's beliefs, expectations or hopes. In particular,
such statements include, without limitation, the impact of the expiration of
contractual arrangements in our pressure pumping service line during 2012; our
exposure to spot market pricing in our pressure pumping service line; the
appropriateness of the geographic distribution of our equipment and personnel;
and our belief that our capital expenditures for new equipment in 2013 will be
lower than in 2012. These statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of RPC to be materially different from any future
results, performance or achievements expressed or implied in such
forward-looking statements. Such risks include changes in general global
business and economic conditions; drilling activity and rig count; risks of
reduced availability or increased costs of both labor and raw materials used
in providing our services; the impact on our operations if we are unable to
comply with regulatory and environmental laws; turmoil in the financial
markets and the potential difficulty to fund our capital needs; the
potentially high cost of capital required to fund our capital needs; the
possibility that the recent growth in unconventional exploration and
production activities may cease or change in nature so as to reduce demand for
our services; the actions of the OPEC cartel, the ultimate impact of current
and potential political unrest and armed conflict in the oil-producing regions
of the world, which could impact drilling activity; adverse weather conditions
in oil or gas producing regions, including the Gulf of Mexico; competition in
the oil and gas industry; an inability to implement price increases; risks of
international operations; and our reliance upon large customers. Additional
discussion of factors that could cause the actual results to differ materially
from management's projections, forecasts, estimates and expectations is
contained in RPC's Form 10-K filed with the Securities and Exchange Commission
for the year ended December 31, 2012.

For information about RPC, Inc., please contact:

Ben M. Palmer
Chief Financial Officer
(404) 321-2140
irdept@rpc.net

Jim Landers
Vice President, Corporate Finance
(404) 321-2162
jlanders@rpc.net



RPC INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data)
Periods ended March 31, (Unaudited)             First Quarter
                                                2013       2012     % BETTER
                                                                    (WORSE)
REVENUES                                      $ 425,821  $ 502,557  (15.3)   %
COSTS AND EXPENSES:
Cost of revenues                                268,227    273,799  2.0
Selling, general and administrative expenses    44,914     44,927   0.0
Depreciation and amortization                   52,821     51,570   (2.4)
Loss on disposition of assets, net              2,640      1,404    (88.0)
Operating profit                               57,219     130,857  (56.3)
Interest expense                                (340)      (596)    43.0
Interest income                                 5          5        0.0
Other income, net                               555        920      (39.7)
Income before income taxes                      57,439     131,186  (56.2)
Income tax provision                           22,363     50,431   55.7
NET INCOME                                   $ 35,076   $ 80,755   (56.6)   %
EARNINGS PER SHARE
 Basic                                      $ 0.16     $ 0.37     (56.8)   %
 Diluted                                    $ 0.16     $ 0.37     (56.8)   %
AVERAGE SHARES OUTSTANDING
 Basic                                     216,194    215,620
 Diluted                                   217,525    217,350



RPC INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
At March 31, (Unaudited)                        (In thousands)
                                                2013         2012
ASSETS
Cash and cash equivalents                     $ 10,283     $ 5,734
Accounts receivable, net                        375,126      425,766
Inventories                                     132,682      111,813
Deferred income taxes                           5,952        10,035
Income taxes receivable                         11,996       561
Prepaid expenses                               10,516       7,325
Other current assets                            4,110        30,393
 Total current assets                          550,665      591,627
Property, plant and equipment, net              758,587      736,888
Goodwill                                       24,093       24,093
Other assets                                    19,231       16,399
 Total assets                                $ 1,352,576  $ 1,369,007
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable                              $ 122,797    $ 132,383
Accrued payroll and related expenses            24,976       26,751
Accrued insurance expenses                      6,404        6,138
Accrued state, local and other taxes            5,026        5,701
Income taxes payable                            777          35,403
Other accrued expenses                          1,397        384
 Total current liabilities                     161,377      206,760
Long-term accrued insurance expenses            10,714       9,254
Notes payable to banks                          87,600       180,800
Long-term pension liabilities                   27,798       22,418
Other long-term liabilities                     2,388        1,938
Deferred income taxes                           150,210      147,439
 Total liabilities                             440,087      568,609
Common stock                                   22,056       21,949
Capital in excess of par value                  -            -
Retained earnings                               904,860      790,893
Accumulated other comprehensive loss            (14,427)     (12,444)
 Total stockholders' equity                    912,489      800,398
 Total liabilities and stockholders' equity $ 1,352,576  $ 1,369,007

Appendix A

RPC has used the non-GAAP financial measure of earnings before interest,
taxes, depreciation and amortization (EBITDA) in today's earnings release, and
anticipates using EBITDA in today's earnings conference call. EBITDA should
not be considered in isolation or as a substitute for operating income, net
income or other performance measures prepared in accordance with U.S. GAAP.
RPC uses EBITDA as a measure of operating performance because it allows us to
compare performance consistently over various periods without regard to
changes in our capital structure. We are also required to use EBITDA to report
compliance with financial covenants under our revolving credit facility. A
non-GAAP financial measure is a numerical measure of financial performance,
financial position, or cash flows that either 1) excludes amounts, or is
subject to adjustments that have the effect of excluding amounts, that are
included in the most directly comparable measure calculated and presented in
accordance with GAAP in the statement of operations, balance sheet or
statement of cash flows, or 2) includes amounts, or is subject to adjustments
that have the effect of including amounts, that are excluded from the most
directly comparable measure so calculated and presented. Set forth below is a
reconciliation of EBITDA with Net Income, the most comparable GAAP measure.
This reconciliation also appears on RPC's investor website, which can be found
on the Internet at www.rpc.net.

Periods ended March 31, (Unaudited)       First Quarter       % BETTER
                                          2013       2012     (WORSE)
Reconciliation of Net Income to EBITDA
Net Income                              $ 35,076   $ 80,755   (56.6)   %
Add:
Income tax provision                      22,363     50,431   55.7
Interest expense                          340        596      43.0
Depreciation and amortization             52,821     51,570   (2.4)
Less:
Interest income                           5          5        0.0
EBITDA                                  $ 110,595  $ 183,347  (39.7)   %
EBITDA PER SHARE
Basic                                   $ 0.51     $ 0.85     (40.0)   %
Diluted                                 $ 0.51     $ 0.84     (39.3)   %

SOURCE RPC, Inc.

Website: http://www.rpc.net
 
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