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What changed in RPC INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of RPC INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+238 added−280 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-27)

Top changes in RPC INC's 2023 10-K

238 paragraphs added · 280 removed · 181 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

73 edited+8 added−27 removed46 unchanged
Biggest changeThe Company rents specialized equipment for use with onshore and offshore oil and gas well drilling, completion and workover activities. The drilling and subsequent operation of oil and gas wells generally require a variety of equipment. The equipment needed is in large part determined by the geological features of the production zone and the size of the well itself.
Biggest changeRental tools accounted for five percent of revenues in 2023 and four percent of revenues in both 2022 and 2021. The Company rents specialized equipment for use with onshore and offshore oil and gas well completion, drilling and workover activities.
Availability of Filings RPC makes available, free of charge, on its website, rpc.net, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports on the same day they are filed with the Securities and Exchange Commission. ​ 10 ​
Availability of Filings RPC makes available, free of charge, on its website, rpc.net, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports on the same day they are filed with the Securities and Exchange Commission. ​
Specifically, these types of wells require RPC’s pressure pumping and coiled tubing services, as well as our downhole tools and services. Since 2016, unconventional oil and gas wells have comprised greater than 80 percent of U.S. domestic drilling and RPC believes that they will continue to comprise the majority of drilling activity because of their high initial production rates.
Specifically, these types of wells require RPC’s pressure pumping and coiled tubing services, as well as our downhole tools and services. Since 2016, unconventional oil and gas wells have comprised greater than 80% of U.S. domestic drilling and RPC believes that they will continue to comprise the majority of drilling activity because of their high initial production rates.
Demand for RPC’s services in the U.S. is extremely volatile and fluctuates with current and projected price levels of oil and natural gas and activity levels in the oil and gas industry. Customer activity levels are influenced by their decisions about capital investment toward the development and production of oil and gas reserves.
Demand for RPC’s services in the U.S. is volatile and fluctuates with current and projected price levels of oil and natural gas and activity levels in the oil and gas industry. Customer activity levels are influenced by their decisions about capital investment toward the development and production of oil and gas reserves.
We also have escalation policies in place to address various issues including employee discrimination. The Company also provides a wide variety of opportunities for professional growth for all employees with in-classroom and online training, on-the-job experience and counseling.
We also have escalation policies in place to address various issues including employee 9 ​ discrimination. The Company also provides a wide variety of opportunities for professional growth for all employees with in-classroom and online training, on-the-job experience, and counseling.
During 2022, Russia’s invasion of Ukraine destabilized global oil markets, causing prices to rise, while also increasing the attractiveness of the U.S. 8 ​ domestic oilfield due to its oil and natural gas reserves, political stability and downstream energy infrastructure.
During 2022, Russia’s invasion of Ukraine destabilized global oil markets, causing prices to rise, while also increasing the attractiveness of the U.S. domestic oilfield due to its oil and natural gas reserves, political stability and downstream energy infrastructure.
The equipment and 3 ​ services offered include rental tools, drill pipe and related tools, pipe handling, pipe inspection and storage services, and oilfield training services. The demand for these services tends to be influenced primarily by customer drilling-related activity levels.
The equipment and services offered include rental tools, drill pipe and related tools, pipe handling, pipe inspection and storage services, and oilfield training services. The demand for these services tends to be influenced primarily by customer drilling-related activity levels.
RPC intends to focus on specific market segments in which it believes that it has a competitive advantage and on potential large customers who have a long-term need for our services in markets in which we operate. RPC seeks to expand its service capabilities through a combination of internal growth, acquisitions, joint ventures and strategic alliances.
RPC intends to focus on specific market segments in which it believes that it has a competitive advantage and on potential new customers who have a long-term need for our services in markets in which we operate. RPC seeks to expand its service capabilities through a combination of internal growth, acquisitions, joint ventures and strategic alliances.
The uses for coiled tubing in directional and horizontal wells have been enhanced by improved fabrication techniques and higher-diameter coiled tubing which allows coiled tubing units to be used effectively over greater distances, thus allowing them to function in more of the completion activities currently taking place in the U.S. domestic market.
The uses for coiled tubing in directional and horizontal wells have been enhanced by improved fabrication techniques and larger-diameter coiled tubing which allows coiled tubing units to be used effectively over greater distances, thus allowing them to function in more of the completion activities currently taking place in the U.S. domestic market.
We sell our equipment and services in highly competitive markets, and the revenues and earnings generated are affected by changes in prices for our services, fluctuations in the level of customer activity in major markets, general economic conditions and governmental regulation. RPC competes with many large and small oilfield industry competitors, including the largest integrated oilfield services companies.
We offer our services and equipment in highly competitive markets, and the revenues and earnings generated are affected by changes in prices for our services, fluctuations in the level of customer activity in major markets, general economic conditions and governmental regulation. RPC competes with many large and small oilfield industry competitors, including the largest integrated oilfield services companies.
The Code is updated annually and certain employees at the supervisory level and above are required to review the code; any reported non-compliance is followed up on and resolved, as appropriate. In addition, the Company provides annual training for preventing, identifying, reporting and ending any type of unlawful discrimination.
The Code is updated annually and certain employees at the supervisory level and above are required to review the code each year and any reported non-compliance is followed up on and resolved, as appropriate. In addition, the Company provides annual training for preventing, identifying, reporting, and ending any type of unlawful discrimination.
We continue to believe in the long-term importance of our business due to continued worldwide demand for hydrocarbons generally and the high production of oil in the domestic U.S. market. Unconventional wells are drilled in a direction other than a straight vertical direction from the Earth’s surface.
We continue to believe in the long-term importance of our business due to continued worldwide demand for hydrocarbons and the high production of oil in the domestic U.S. market. 7 ​ Unconventional wells are drilled in a direction other than a straight vertical direction from the Earth’s surface.
Growth strategies are focused on selected customers and markets in which we believe there exist opportunities for higher growth, customer and market penetration, or enhanced returns achieved through consolidations or through providing proprietary value-added equipment and services.
Growth strategies are focused on selected customers and markets in which we believe there exist opportunities for higher growth, customer and market penetration, or enhanced returns achieved through acquisitions or through providing proprietary value-added equipment and services.
Acidizing entails pumping large volumes of specially formulated acids into reservoirs to dissolve barriers and enlarge crevices in the formation, thereby eliminating obstacles to the flow of oil and natural gas. Acidizing services can also enhance production in limestone formations. Acid is also frequently used in the beginning of a fracturing operation.
Acidizing entails pumping large volumes of specially formulated acids into reservoirs to dissolve barriers and enlarge crevices in the formation, thereby eliminating obstacles to the flow of oil and natural gas. Acidizing services can also enhance production in limestone formations. Acid is also frequently used in the beginning of a fracturing operation. 4 ​ Downhole Tools .
The industry also includes a number of other publicly traded peers whose operations are more similar to RPC, including Liberty Oilfield Services, Mammoth Energy Services, Inc., NCS Multistage Holdings, Inc., NexTier Oilfield Solutions, Nine Energy Services, Patterson-UTI Energy, Inc., ProFrac and ProPetro Holding Corporation, as well as numerous smaller, locally owned competitors.
The industry also includes a number of other publicly traded peers whose operations are more similar to RPC, including Liberty Energy, Inc, Mammoth Energy Services, Inc., NCS Multistage Holdings, Inc., Nine Energy Services, Patterson-UTI Energy, Inc., ProFrac and ProPetro Holding Corporation, as well as numerous smaller, locally owned competitors.
RPC has a revolving credit facility which can be used to fund working capital and other capital requirements. The borrowing base for this credit facility is $100 million, including a $35 million letter of credit sublimit, and a $35 million swingline sublimit. There was no outstanding balance on this credit facility as of December 31, 2022.
RPC has a revolving credit facility which can be used to fund working capital and other capital requirements, as needed. The borrowing base for this credit facility is $100 million, including a $35 million letter of credit sublimit, and a $35 million swingline sublimit. There was no outstanding balance on this credit facility as of December 31, 2023.
There are several manufacturers of flexible steel pipe used in coiled tubing, and the Company believes that its sources of supply are adequate. Snubbing .
There are several manufacturers of flexible steel pipe used in coiled tubing, and the Company believes that its sources of supply are adequate. Cementing.
Development and Training - The Company’s management team and all its employees are expected to exhibit and promote honest, ethical and respectful conduct in the workplace. We have implemented and maintained a corporate compliance program to provide guidance for everyone associated with the Company, including its employees, officers and directors (the "Code").
Development and Training - The Company’s management team and all its employees are expected to exhibit and promote honest, ethical and respectful conduct in the workplace. We have implemented and maintained a Code of Conduct to provide guidance for everyone associated with the Company, including its employees, officers, and directors (the Code).
Electric line services lower an electrical conductor line into a well allowing the use of electrically-operated tools such as perforators, bridge plugs and logging tools. Wireline services can be an integral part of the plug and abandonment process near the end of the life cycle of a well. Fishing .
Electric line services lower 5 ​ an electrical conductor line into a well allowing the use of electrically-operated tools such as perforators, bridge plugs and logging tools. Wireline services can be an integral part of the plug and abandonment process near the end of the life cycle of a well. Support Services Rental Tools .
Nitrogen accounted for two percent of revenues in 2022, four percent of revenues in 2021 and five percent of revenues in 2020. There are a number of uses for nitrogen, an inert, non-combustible element, in providing services to oilfield customers and industrial users outside of the oilfield.
Nitrogen accounted for three percent of revenues in 2023, two percent of revenues in 2022 and four percent of revenues in 2021. There are a number of uses for nitrogen, an inert, non-combustible element, in providing services to oilfield customers and industrial users outside of the oilfield.
A brief description of the primary services conducted within each of the operating segments follows: Technical Services Pressure Pumping . Pressure pumping services, which accounted for 53 percent of 2022 revenues, 43 percent of 2021 revenues and 37 percent of 2020 revenues are provided to customers throughout Texas, and the mid-continent regions of the United States.
A brief description of the primary services conducted within each of the operating segments follows: Technical Services Pressure Pumping . Pressure pumping services, which accounted for 48% of 2023 revenues, 53% of 2022 revenues and 43% of 2021 revenues are provided to customers throughout Texas, and the mid-continent regions of the United States.
RPC purchases oilfield service equipment from a limited number of manufacturers. These manufacturers may not be able to meet our requests for timely delivery during periods of high demand which may result in delayed deliveries of equipment and higher prices for equipment.
Most of this equipment is Company owned. RPC purchases oilfield service equipment from a limited number of manufacturers. These manufacturers may not be able to meet our requests for timely delivery during periods of high demand which may result in delayed deliveries of equipment and higher prices for equipment.
Human Capital The table below shows the number of employees at December 31, 2022 and 2021: ​ ​ ​ ​ ​ At December 31, 2022 2021 Employees 2,732 2,250 ​ The Company operates in a cyclical business where financial performance and headcount is influenced by, among other things, changes in oil and natural gas prices.
Human Capital The table below shows the number of employees at December 31, 2023 and 2022: ​ ​ ​ ​ ​ At December 31, 2023 2022 Employees 2,691 2,732 ​ The Company operates in a cyclical business where financial performance and headcount are influenced by, among other things, changes in oil and natural gas prices.
RPC believes that its facilities are adequate for its current operations. For additional information with respect to RPC’s lease commitments, see Note 16 of the consolidated financial statements.
RPC believes that its facilities are adequate for its current operations. For additional information with respect to RPC’s lease commitments, see note to the consolidated financial statements titled Leases.
Support Services include all of the services that provide (i) equipment offered off the well site without RPC personnel and (ii) services that are provided in support of customer operations off the well site such as classroom and computer training.
Technical Services are provided in all of RPC’s principal geographical markets. Support Services include all of the services that provide (i) equipment offered off the well site without RPC personnel and (ii) services that are provided in support of customer operations off the well site such as classroom and computer training.
As of December 31, 2022, RPC had 2,732 employees. Business Segments RPC manages its business as either services offered on the well site with equipment and personnel (Technical Services) or services and equipment offered off the well site (Support Services).
As of December 31, 2023, RPC had 2,691 employees. 3 ​ Business Segments RPC manages its business as either services offered on the well site with equipment and personnel (Technical Services), or services and equipment offered off the well site (Support Services).
TTS provides services and proprietary downhole motors, fishing tools and other specialized downhole tools and processes to operators and service companies in drilling and production operations, including casing perforation and bridge plug drilling at the completion stage of an oil or gas well. The services that TTS provides are especially suited for unconventional drilling and completion activities.
TTS provides services and proprietary downhole motors, fishing tools and other specialized downhole tools and processes to operators and service companies in drilling and production operations, including casing perforation and bridge plug drilling at the completion stage of an oil or gas well.
RPC has historically operated in several countries outside of the United States, and international revenues accounted for two percent of RPC’s consolidated revenues in 2022, four percent in 2021 and six percent in 2020.
RPC has historically operated in several countries outside of the United States, and international revenues accounted for approximately two percent of RPC’s consolidated revenues in both 2023 and 2022 and four percent in 2021.
Our locations in Channelview, Texas and Morgan City, Louisiana are equipped with large capacity cranes, specially designed forklifts and a computerized inventory system to serve a variety of storage and handling services for both oilfield and non-oilfield customers. Well Control School .
Our locations in Channelview, Texas and Morgan City, Louisiana are equipped with large capacity cranes, specially designed forklifts and a computerized inventory system to serve a variety of storage and handling requirements. Well Control School .
These regulations are subject to change, and new regulations may curtail or eliminate our customers’ activities. We cannot determine the extent to which new legislation may impact our customers’ activity levels, and ultimately, the demand for our services. Intellectual Property RPC uses several patented items in its operations which management believes are important, but are not indispensable, to RPC’s success.
We cannot determine the extent to which new legislation may impact our customers’ activity levels, and ultimately, the demand for our services. 10 ​ Intellectual Property RPC uses several patented items in its operations which management believes are important, but are not indispensable, to RPC’s success.
Refer to Note 15 in the consolidated financial statements for further information on our international operations. Growth Strategies RPC’s primary objective is to generate excellent long-term returns on investment through the effective and conservative management of its invested capital to generate strong cash flow.
Refer to note in the consolidated financial statements titled Business Segment and Entity wide Disclosures for further information on our international operations. Growth Strategies RPC’s primary objective is to generate attractive long-term returns on investment through the effective and conservative management of its invested capital to generate strong cash flow.
The oil and gas services industry includes dominant global competitors including, among others, Halliburton Energy Services Group, a division of Halliburton Company, Baker Hughes Company, and Schlumberger Ltd.
The oil and gas services industry includes dominant global competitors including, among others, Halliburton Company, Baker Hughes Company, and Schlumberger Ltd.
Coiled tubing services, which accounted for nine percent of revenues in 2022, ten percent of revenues in 2021 and nine percent of revenues in 2020, involve the injection of coiled tubing into wells to perform various applications and functions for use principally in well-servicing operations and to facilitate completion of horizontal wells.
Coiled tubing services, which accounted for nine percent of revenues in both 2023 and 2022 and ten percent of revenues in 2021, involve the injection of coiled tubing into wells to perform various applications and functions for use principally to facilitate completion of unconventional wells, and to a lesser extent, in well-servicing operations of existing wells.
Oil and gas industry activity levels have historically been volatile, experiencing multiple cycles, including seven down cycle troughs between 1981 and 2020, with August 2020 marking the lowest U.S. domestic rig count in U.S. oilfield history. Between August 2020 and the fourth quarter of 2022, the U.S. domestic rig count rose by approximately 206 percent.
Oil and gas industry activity levels have historically been volatile, experiencing multiple cycles, including seven down cycle troughs between 1981 and 2020, with August 2020 marking the lowest U.S. domestic rig count in U.S. oilfield history, following the onset of the COVID pandemic.
Snubbing (also referred to as hydraulic workover services), which accounted for two percent of revenues in both 2022 and 2021 and one percent of revenues in 2020, involves using a hydraulic workover rig that permits an operator to repair damaged casing, production tubing and downhole production equipment in a high-pressure environment.
The Company’s cementing revenues increased during 2023 primarily due to the acquisition of Spinnaker. Snubbing . Snubbing (also referred to as hydraulic workover services), which accounted for two percent of revenues in 2023, 2022 and 2021, involves using a hydraulic workover rig that permits an operator to repair damaged casing, production tubing and downhole production equipment in a high-pressure environment.
Following the cyclical trough in oilfield activity which occurred in the third quarter of 2020, commodity prices and the U.S. domestic rig count began to recover, and by the end of 2021, the U.S. domestic rig count was more than 100 percent higher than the historic low level recorded in 2020.
Following the cyclical trough in oilfield activity in the third quarter of 2020, commodity prices and the U.S. domestic rig count began to recover, and by the end of 2022, the U.S. domestic rig count had more than doubled compared to the historic low level recorded in 2020.
During the first decade of the twenty-first century, natural gas-directed drilling rigs comprised most of the U.S. drilling rig count. Beginning in 2010, the percentage of drilling rigs drilling for natural gas began to decline, and since that time has consistently comprised less than 50 percent of total U.S. drilling.
Beginning in 2010, the percentage of drilling rigs drilling for natural gas began to decline, and since that time has consistently comprised less than 50% of total U.S. drilling.
A snubbing unit makes it possible to remove and replace downhole equipment while maintaining pressure on the well. Customers benefit because these operations can be performed without removing the pressure from the well, which stops production and can damage the formation, and because a snubbing unit can perform many applications at a lower cost than other alternatives.
Customers benefit because these operations can be performed without removing the pressure from the well, which stops production and can damage the formation, and because a snubbing unit can perform many applications at a lower cost than other alternatives. Nitrogen .
Since these events ordinarily arise from equipment failures or human error, it is impossible to predict accurately the timing or scope of this work. Additionally, less critical events frequently occur in connection with the drilling of new wells in high-pressure reservoirs.
The Company’s professional firefighting staff has many years of aggregate industry experience in responding to well fires and blowouts. Since these events ordinarily arise from equipment failures or human error, it is impossible to predict accurately the timing or scope of this work. Additionally, less critical events frequently occur in connection with the drilling of new wells in high-pressure reservoirs.
Thru Tubing Solutions’ (“TTS”) downhole tools division accounted for 23 percent of revenues in 2022, 29 percent of revenues in 2021 and 33 percent of 2020 revenues.
Thru Tubing Solutions’ (TTS) downhole tools division accounted for 25% of revenues in 2023, 23% of revenues in 2022 and 29% of revenues in 2021.
Refer to Note 15 in the consolidated financial statements for additional financial information on our business segments. Industry United States .
Refer to note in the consolidated financial statements titled Business Segment and Entity Wide Disclosures for additional financial information on our business segments. 6 ​ Industry United States.
Increasingly, snubbing units are used for unconventional completions at the outer reaches of long wellbores which cannot be serviced by coiled tubing because coiled tubing has a more limited range than drill pipe conveyed by a snubbing unit. Nitrogen .
Increasingly, snubbing units are used for unconventional completions at the outer reaches of long wellbores which cannot be serviced by coiled tubing because coiled tubing has a more limited range than pipe conveyed by a snubbing unit. A snubbing unit makes it possible to remove and replace downhole equipment while maintaining pressure on the well.
It also can be used to create a fire-retardant environment in hazardous blowout situations and as a fracturing medium for our fracturing service. In addition, nitrogen can be complementary to our snubbing and coiled tubing services, because it is a non-corrosive medium and is frequently injected into a well using coiled tubing.
In addition, nitrogen can be complementary to our snubbing and coiled tubing services, because it is a non-corrosive medium and is frequently injected into a well using coiled tubing.
Due to the short lead time between ordering services or equipment and providing services or delivering equipment, there is no significant sales backlog. Competition RPC operates in highly competitive areas of the oilfield services industry.
We monitor closely the financial condition of these customers, their capital expenditure plans, and other indications of their drilling and completion activities. Due to the short lead time between ordering services or equipment and providing services or delivering equipment, there is no significant sales backlog. Competition RPC operates in highly competitive areas of the oilfield services industry.
RPC is making technology and process investments which reduce the number of employees on a job location and change the roles of the remaining employees in ways that reduce their exposure to safety hazards.
We monitor our workplace safety record and compare it to industry benchmarks and our internal metrics to find areas for improvement. RPC is making technology and process investments which reduce the number of employees on a job location and change the roles of the remaining employees in ways that reduce their exposure to safety hazards.
Cementing — Cementing services are used at the completion stage of an oil or natural gas well to seal the wellbore after the casing string has been run.
Cementing services, which accounted for four percent of revenues in 2023 and one percent of revenues in both 2022 and 2021 are used at the completion stage of an oil or natural gas well to seal the wellbore after the casing string has been run.
The Board of Directors has a Human Capital Management and Compensation Committee that monitors compliance with applicable non-discrimination laws related to race, gender and other protected classes. The Committee provides a report of such incidences to the Board on an annual basis.
We have long been dedicated to recruiting and hiring recently discharged military personnel. The Board of Directors has a Human Capital Management and Compensation Committee that monitors compliance with applicable non-discrimination laws related to race, gender, and other protected classes. The Committee provides an update of such incidents to the Board, as needed, at least on an annual basis.
As a result, operators and drilling contractors often find it more economical to supplement their tool and tubular assets with rental items instead of owning a complete set of assets.
The equipment needed is in large part determined by the geological features of the production zone and the size of the well itself. As a result, operators and drilling contractors often find it more economical to supplement their tool and tubular assets with rental items instead of owning a complete set of assets.
In addition to completion uses, cementing can also be used to seal a lost circulation zone in an existing well, and to plug a well at the end of its life cycle. Downhole Tools .
In addition to completion uses, cementing can also be used to seal a lost circulation zone in an existing well, and to plug a well at the end of its life cycle. Effective July 1, 2023, the Company acquired Spinnaker, a leading provider of oilfield cementing services in the Permian and Mid-Continent basins.
Rising U.S. domestic demand for natural gas and the advent of U.S. exports of liquified natural gas have been offset by increasing production, thus preventing the price of natural gas from rising.
Rising U.S. domestic demand for natural gas and the advent of U.S. exports of liquified natural gas have been offset by increasing production, thus preventing the price of natural gas from rising. The Russian invasion of Ukraine during the first quarter of 2022 prompted Western European countries to curtail or eliminate their purchases of natural gas from Russia.
During the oilfield downturn that began in 2015, a number of oilfield services companies reduced the scope of their operations or became insolvent. During the most recent downturn that began in 2019, fewer oilfield services companies became insolvent than in the previous downturn, partially because of COVID-19 – related Federal stimulus that supported operations that would otherwise have become insolvent.
During the most recent downturn that began in 2019, fewer oilfield service companies became insolvent than in previous downturns. This was due in part to COVID-19 – related Federal stimulus that supported businesses that would otherwise have become insolvent.
In addition, improving completion services efficiency has served to increase effective capacity and impose another catalyst for declining pricing and utilization. The combination of a large number of oilfield services companies and the increased efficiency with which these companies provide services have caused the oilfield services business to remain competitive.
The combination of a large number of oilfield services companies and the increased efficiency with which these companies provide services has caused the oilfield services business to remain highly competitive.
For our oilfield customers, nitrogen can be used to clean drilling and production pipe and displace fluids in various drilling applications. Increasingly, it is used as a displacement medium to increase production in older wells in which production has depleted.
For our oilfield customers, nitrogen can be used to clean drilling and production pipe and displace fluids in various drilling applications. It also can be used to create a fire-retardant environment in hazardous blowout situations and as a fracturing medium for our fracturing service.
Cudd Pressure Control specializes in responding to and controlling oil and gas well emergencies, including blowouts and well fires, domestically and internationally. In connection with these services, Cudd Pressure Control, along with Patterson Services, has the capacity to supply the equipment, expertise and personnel necessary to restore affected oil and gas wells to production.
In connection with these services, Cudd Pressure Control, along with Patterson Services, has the capacity to supply the equipment, expertise and personnel necessary to restore affected oil and gas wells to production. During the past several years, the Company has responded to numerous well control situations in the domestic U.S. oilfield and in various international locations.
RPC’s principal customers consist of major and independent oil and natural gas producing companies. During 2022, RPC provided oilfield services to several hundred customers. Of these customers, only one customer, a private exploration and production company, accounted for approximately 11 percent of the Company’s revenues in 2022 with no other customers exceeding 10 percent of revenues in 2022.
RPC’s principal customers consist of major and independent oil and natural gas producing companies. There was no customer in 2023 that accounted for 10% or more of revenues. RPC provided oilfield services to several hundred customers during each of the past three years.
We have participated in the United Way Campaign in the city in which our corporate headquarters is located for more than 30 years.
We have participated in the United Way Campaign in the city in which our corporate headquarters is located for more than 30 years. In addition, we have sponsored several emergency relief efforts following natural disasters, such as hurricanes and tornados, in communities in which our field offices are located.
Since the majority of RPC’s services are utilized at the completion stage of an oil or gas well’s life cycle, the Company closely monitors well completion trends in the U.S. domestic oilfield. As recently reported by the U.S. Energy Information Administration, annual well completions fell from a cyclical peak of 21,382 in 2014 to 8,135 in 2016.
Between August 2020 and the fourth quarter of 2023, the U.S. domestic rig count rose by approximately 149%. Since the majority of RPC’s services are utilized at the completion stage of an oil or gas well’s life cycle, the Company closely monitors well completion trends in the U.S. domestic oilfield. As recently reported by the U.S.
Patterson Rental Tools offers a broad range of rental tools including drill pipe and associated handling tools, blowout preventers and a variety of tool assemblages that provide well control. ​ Oilfield Pipe Inspection Services, Pipe Management and Pipe Storage. Pipe inspection services include Full Body Electromagnetic and Phased Array Ultrasonic inspection of pipe used in oil and gas wells.
The Company offers a broad range of rental tools including drill pipe and associated handling tools, blowout preventers and a variety of tool assemblages that provide well control. The drilling and subsequent operation of oil and gas wells generally require a variety of equipment.
Fluctuations in the prices of these commodities, particularly the price of oil, significantly impact RPC’s financial results. The average price of natural gas increased by approximately 64.1 percent during 2022 as compared with 2021.
The Company anticipates oilfield activity to remain consistent with 2023 levels during 2024. Fluctuations in the prices of these commodities, particularly the price of oil, significantly impact RPC’s financial results. The average price of natural gas decreased by approximately 61% during 2023 as compared with 2022 (source: U.S. Energy Information Administration).
Due to improved drilling technology, the drilling rig count in the U.S. has declined dramatically since the early 1980’s (source: Baker Hughes, Inc.).
Due to improved drilling technology, the drilling rig count in the U.S. has declined dramatically since the early 1980’s (source: Baker Hughes, Inc.). While oil and gas industry demand is influenced by many factors, the rig count is often used as a proxy for current and future industry activity.
Early in the first quarter of 2023, the price of natural gas was approximately 15.6 percent lower than the price at the end of 2022 (source: U.S. Energy Information Administration). RPC believes that the recent decrease in the price of natural gas may discourage drilling and completion of natural gas-directed wells during the near term.
RPC believes that the recent decrease in the price of natural gas may discourage drilling and completion of natural gas-directed wells during the near term. During the first decade of the twenty-first century, natural gas-directed drilling rigs comprised most of the U.S. drilling rig count.
In 2022, we also estimate that 77 percent of our revenues were related to drilling and production activities for oil, while 23 percent of revenues were related to drilling and production activities for natural gas.
In 2023, we estimate that 74% of our revenues were related to drilling and production activities for oil, while 26% of revenues were related to drilling and production activities for natural gas. During 2023, approximately five percent of RPC’s consolidated revenues were generated from offshore operations in the U.S. Gulf of Mexico.
We have consummated relatively few acquisitions in recent years, however, due to high seller valuation expectations and the risk of integrating acquired businesses into our existing operations. We will continue to consider the acquisitions of existing businesses but will also continue to maintain a conservative capital structure, which may limit our ability to consummate large transactions.
In the third quarter of 2023 we successfully completed the acquisition of Spinnaker Oilwell Services, thereby expanding our cementing service line. We will continue to consider the acquisitions of existing businesses but will also continue to maintain a conservative capital structure, which may limit our ability to consummate large transactions.
This program complies with applicable regulatory guidelines for oilfield operations and is enhanced by our analysis of workplace-related incidents and evolving preventative measures. We monitor our workplace safety record and compare it to industry benchmarks and our internal metrics to find areas for improvement.
Safety - The Company adheres to a comprehensive safety program to promote a safe working environment for its employees, contractors and customers at its operational locations and active job sites. This program complies with applicable regulatory guidelines for oilfield operations and is enhanced by our analysis of workplace-related incidents and evolving preventative measures.
The primary drivers of operational success for services and equipment provided off the well site without RPC personnel are offering safe, high quality and in-demand equipment appropriate for the well design characteristics. The drivers of operational success for the other Support Services relate to meeting customer needs off the well site and competitive marketing of such services.
The primary drivers of operational success for Support Services are offering safe, high quality and in-demand equipment, as well as meeting customer needs and competitive marketing of such services. Customers primarily include domestic operations of independent oil and gas producers and major multi-nationals and selected nationally owned oil companies. Support Services are provided in all of RPC’s principal geographical markets.
We believe that this reduced exposure to active areas of a job location has led to fewer safety incidents in a service line which has a high concentration of employees. In response to the COVID-19 pandemic, we implemented a response plan that we believe was in the best interest of our employees and the communities in which we operate.
We believe that this reduced exposure to active areas of a job location has led to fewer safety incidents in a service line which has a high concentration of employees. Facilities/Equipment RPC’s equipment consists primarily of oil and gas services equipment used either in servicing customer wells or provided on a rental basis for customer use.
Beginning in the first quarter of 2022, the U.S domestic rig count continued to rise as customer activities increased due to higher oil process and global uncertainty caused by Russia’s invasion of 6 ​ Ukraine.
During early 2022 the industry also experienced volatility, with higher oil process and global uncertainty caused by Russia’s invasion of Ukraine. During 2023, the U.S. domestic average rig count decreased to 688 compared to 723 in the prior year, in part due to continued productivity and efficiency improvements of oilfield assets.
There was no customer in 2021 that accounted for 10 percent or more of revenues. Sales are generated by RPC’s sales force and through referrals from existing customers. We monitor closely the financial condition of these customers, their capital expenditure plans, and other indications of their drilling and completion activities.
Of these customers, only one customer, a private exploration and production company, accounted for approximately 11% of the Company’s revenues in 2022 with no other customers exceeding 10% of revenues during 2022 or 2021. 8 ​ Sales are generated by RPC’s sales force and through referrals from existing customers.
The Company’s facilities are strategically located to serve the major staging points for oil and gas activities in Texas, the Gulf of Mexico, mid-continent region, Rocky Mountain and the Appalachian region.
The Company’s facilities are strategically located to serve the major staging points for oil and gas activities. Oilfield Pipe Inspection Services, Pipe Management and Pipe Storage. Pipe inspection services include Full Body Electromagnetic and Phased Array Ultrasonic inspection of pipe used in oil and gas wells.
During 2022, reported well completions increased to 11,451, an increase of approximately 22 percent compared to 2021.
Energy Information Administration, reported well completions increased to 12,250 in 2023, an increase of approximately 8.0% compared to 2022.
A coiled tubing unit can accomplish this type of operation because its flexibility allows 4 ​ it to be steered in a direction other than vertical, which is necessary in this type of wellbore. At the same time, the strength of the coiled tubing string allows various types of tools or motors to be conveyed into the well effectively.
Coiled tubing is attractive because its flexibility allows it to be steered through wellbores that are other than vertical, while also being strong enough to convey tools or motors at the end of the coiled tubing string. Since it is hollow, it can convey fluid which powers a motor or may be needed to clean out a wellbore.
RPC’s allocation of growth capital over the last several years have emphasized domestic rather than international expansion because of higher domestic activity levels and expected financial returns. International revenues increased 4.3 percent in 2022 compared to the prior year primarily due to higher customer activity levels in Canada.
RPC’s allocation of growth capital over the last several years has emphasized domestic rather than international expansion because of higher domestic activity levels and expected financial returns. RPC provides services to its international customers through branch locations or wholly owned foreign subsidiaries. The international market is prone to political uncertainties, including the risk of civil unrest and conflicts.
RPC stores and transports nitrogen and has a number of pumping unit configurations that inject nitrogen in its various applications. Some of these pumping units are set up for use on offshore platforms or inland waters. RPC purchases its nitrogen in liquid form from several suppliers and believes that these sources of supply are adequate. Well Control .
RPC purchases its nitrogen in liquid form from several suppliers and believes that these sources of supply are adequate. Well Control . Cudd Pressure Control specializes in responding to and controlling oil and gas well emergencies, including blowouts and well fires, domestically and internationally.
Removed
The businesses under Support Services are primarily able to generate revenues through equipment or services offered off the well site. During 2022, approximately five percent of RPC’s consolidated revenues were generated from offshore operations in the U.S. Gulf of Mexico.
Added
The services that TTS provides are often proprietary solutions developed by the Company, for which the Company maintains an active intellectual property and patent program. Management believes Downhole Tools represents a differentiated service line. Coiled Tubing .
Removed
The Company considers all of these services to be closely integrated oil and gas well servicing businesses, and makes resource allocation and performance assessment decisions based on this operating segment as a whole across these various services.
Added
Coiled tubing is a flexible steel pipe thousands of feet in length which is wound or coiled around a large reel and conveyed into a wellbore to conduct a variety of downhole tasks.
Removed
The principal markets for this business segment include the United States, including the southwest, mid-continent, Gulf of Mexico, Rocky Mountain and Appalachian regions, and selected international markets.
Added
During 2020, oil prices suffered a historic decrease due to the global economic disruption and uncertainty following the COVID-19 outbreak, with our customers facing a potential collapse in global oil demand.
Removed
The principal markets for this segment include the United States, including the Gulf of Mexico, mid-continent, Rocky Mountain and Appalachian regions and project work in selected international locations. Customers primarily include domestic operations of independent oil and gas producers and major multi-nationals and selected nationally owned oil companies.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOne of our customers, a private exploration and production company, accounted for approximately 11 percent of the Company’s revenues in 2022 with no other customers exceeding 10 percent of revenues in 2022. There was no customer that accounted for 10 percent or more of the Company’s revenues in 2021 or 2020.
Biggest changeThere was no customer that accounted for 10% of revenues in 2023. One of our customers, a private exploration and production company, accounted for approximately 11% of the Company’s revenues in 2022, with no other customers in 2022 and no customers in 2021 exceeding 10% of revenues.
Companies that do not comport with, or do not adapt to, these evolving investor and stakeholder ESG-related expectations and standards, or that are assessed as not having responded appropriately to the growing focus on ESG matters, may have their brand and reputation harmed, and we or our stock price may be adversely affected even though we may be in full compliance with all relevant laws and regulations.
Companies that do not comport with, or do not adapt to, these evolving investor and stakeholder ESG-related expectations and standards, or that are assessed as not having responded appropriately to the growing focus on ESG matters, may have their brand and reputation harmed, and the Company or our stock price may be adversely affected even though we may be in full compliance with all relevant laws and regulations.
The Controlling Group may from time to time and at any time, in their sole discretion, acquire or cause to be acquired, additional equity or other instruments of the Company, its subsidiaries or affiliates, or derivative instruments the value of which is linked to Company securities, or dispose or cause to be disposed, such equity or other securities or instruments, in any amount that the Controlling Group may determine in their sole discretion, through open market transactions, privately negotiated transactions or otherwise.
The Controlling Group may from time to time and at any time, in their sole discretion, acquire or cause to be acquired, additional equity or other instruments of the Company, its subsidiaries or affiliates, or derivative instruments the value of which is linked to Company securities, or dispose or cause to be disposed, such equity or other securities or instruments, in any amount that the 15 ​ Controlling Group may determine in their sole discretion, through open market transactions, privately negotiated transactions or otherwise.
We compete with the oil and gas industry’s 11 ​ many large and small industry competitors, including the largest integrated oilfield service providers. We believe that the principal competitive factors in the market areas that we serve are product and service quality and availability, reputation for safety, technical proficiency and price.
We compete with the oil and gas industry’s many large and small industry competitors, including the largest integrated oilfield service providers. We believe that the principal competitive factors in the market areas that we serve are product and service quality and availability, reputation for safety, technical proficiency and price.
In response to the risk of cyber-attacks, we regularly review and update processes to prevent unauthorized access to our networks and assets and misuse of data. We provide regular security awareness training for all employees, simulate phishing attempts and closely manage the accounts and privileges of all employees and contractors.
In response to the risk of cyber attacks, we regularly review and update processes to prevent unauthorized access to our networks and assets and misuse of data. We provide regular security awareness training for appropriate employees, simulate phishing attempts and closely manage the accounts and privileges of all employees and contractors.
The price of oil, a world-wide commodity, is affected by, among other things, the potential of armed conflict in politically unstable areas such as the Middle East as well as the actions of OPEC, an oil cartel which controls approximately 40 percent of global oil production.
The price of oil, a world-wide commodity, is affected by, among other things, the potential of armed conflict in politically unstable areas such as the Middle East as well as the actions of OPEC, an oil cartel which controls approximately 40% of global oil production.
Their ability to raise outside capital depends upon, among other things, the availability of capital, near-term operating prospects of oil and gas companies, current and projected prices of oil and natural gas, and relative attractiveness of competing investments for available investment capital.
Their ability to raise outside capital depends upon, among other things, the availability of capital, near-term operating prospects of oil and gas companies, current and projected prices of oil and natural gas, and relative attractiveness of competing 11 ​ investments for available investment capital.
There are a limited number of suppliers for certain materials used in pressure pumping services, our largest service line. While these materials are generally available, supply disruptions can occur due to factors beyond our control.
There are a limited number of suppliers for certain materials used in pressure pumping 12 ​ services, our largest service line. While these materials are generally available, supply disruptions can occur due to factors beyond our control.
Our business requires a great deal of capital to maintain our equipment and increase our fleet of equipment to expand our operations, and we have access to our credit facility to fund our necessary working capital and other capital requirements.
Our business requires a great deal of capital to maintain our equipment and increase our fleet of equipment to expand our operations, and we currently have access to our credit facility to fund our necessary working capital and other capital requirements.
Penalties for noncompliance with these laws may include cancellation of permits, fines, and other corrective actions, which would negatively affect our future financial results. 13 ​ Compliance with federal and state regulations relating to hydraulic fracturing could increase our operating costs, cause operational delays, and could reduce or eliminate the demand for our pressure pumping services.
Penalties for noncompliance with these laws may include cancellation of permits, fines, and other corrective actions, which would negatively affect our future financial results. Compliance with federal and state regulations relating to pressure pumping services, including hydraulic fracturing, could increase our operating costs, cause operational delays, and could reduce or eliminate the demand for our pressure pumping services.
If labor shortages continue or a significant increase in wages occur, our capacity and profitability could be diminished, and our growth potential could be impaired. Some of our equipment and several types of materials used in providing our services are available from a limited number of suppliers.
If labor shortages continue or a significant increase in wages occurs, our capacity and profitability could be diminished, and our growth potential could be impaired. Some of our equipment and several types of materials used in providing our services are available from a limited number of suppliers.
Among these regulatory entities is the White House Council on Environmental Quality, which coordinated a review of hydraulic fracturing practices. In addition, a committee of the United States House of Representatives investigated hydraulic fracturing practices and publicized information regarding the materials used in hydraulic fracturing. The U.S.
Among these regulatory entities is the White House Council on Environmental Quality, which coordinated a review of hydraulic fracturing practices. In addition, a committee of the United States House of Representatives investigated hydraulic fracturing practices and publicized information regarding the materials used in hydraulic fracturing.
A significant increase in the wages paid by competing employers could result in a reduction in our skilled labor force, increases in the wage rates paid by us, or both. The Company and our industry is being affected by shortages of skilled labor.
A significant increase in the wages paid by competing employers could result in a reduction in our skilled labor force, increases in the wage rates paid by us, or both. The Company and our industry are being affected by shortages of skilled labor.
Our credit facility, as amended June 22, 2022, provides a borrowing base of $100 million less the amount of any outstanding letters of credit, and bears interest at a floating rate, which exposes us to market risks as interest rates rise.
Our credit facility provides a borrowing base of $100 million less the amount of any outstanding letters of credit, and bears interest at a floating rate, which exposes us to market risks as interest rates rise.
Our management and directors have a substantial ownership interest, and public stockholders may have no effective voice in the management of the Company. The Company has elected the “Controlled Corporation” exemption under Section 303A of the New York Stock Exchange (“NYSE”) Listed Company Manual. The Company is a “Controlled Corporation” because a group that includes Gary W. Rollins, Pamela R.
Our management and directors have a substantial ownership interest, and public stockholders may have no effective voice in the management of the Company. The Company has elected the Controlled Corporation exemption under Section 303A of the New York Stock Exchange (NYSE) Listed Company Manual. The Company is a Controlled Corporation because a group that includes Gary W. Rollins, Pamela R.
As a “Controlled Corporation,” the Company need not comply with certain NYSE rules including those requiring a majority of independent directors, and independent compensation and nominating committees. RPC’s executive officers, directors and their affiliates hold directly or through indirect beneficial ownership, in the aggregate, 61 percent of RPC’s outstanding shares of common stock.
As a Controlled Corporation, the Company need not comply with certain NYSE rules including those requiring a majority of independent directors, and independent compensation and nominating committees. RPC’s executive officers, directors and their affiliates hold directly or through indirect beneficial ownership, in the aggregate, approximately 60% of RPC’s outstanding shares of common stock.
Many companies are receiving greater attention from stakeholders regarding their ESG practices, as well as their oversight of relevant ESG issues. The various stakeholders are placing growing importance on our potential environmental and social issue risk exposure and the impact of our choices. This trend appears likely to continue.
Many companies are receiving greater attention from stakeholders regarding their ESG practices, as well as their oversight of relevant ESG issues. The various stakeholders are placing growing importance on our potential environmental and social issue risk exposure and the impact of our choices.
Rollins, Amy Rollins Kreisler and Timothy C. Rollins, each of whom is a director of the Company, and certain companies under their control, controls in excess of fifty percent of the Company’s voting power.
Rollins, Amy Rollins Kreisler and Timothy C. Rollins, each of whom is a director of the Company, and certain companies under their control (the Controlling Group), controls in excess of 50% of the Company’s voting power.
These risks could harm our reputation and our relationships with customers, suppliers, employees and other third parties, and may result in claims against us. These risks could have a material adverse effect on our business, consolidated results of operations and consolidated financial condition. ​
These risks could harm our reputation and our relationships with customers, suppliers, employees and other third parties, and may result in claims against us. These risks could have a material adverse effect on our business, consolidated results of operations and consolidated financial condition. ​ General Risks. Our common stock price has been volatile.
If capital generated either by cash provided by operating activities or outside financing is not available or sufficient for our needs, we may be unable to maintain our equipment, expand our fleet of equipment, or take advantage of other potentially profitable business opportunities, which could reduce our future revenues and profits. 12 ​ Our international operations could have a material adverse effect on our business.
If capital generated either by cash provided by operating activities or outside financing is not available or sufficient for our needs, we may be unable to maintain our equipment, expand our fleet of equipment, or take advantage of other potentially profitable business opportunities, which could reduce our future revenues and profits.
General Risks. Our common stock price has been volatile. Historically, the market price of common stock of companies engaged in the oil and gas services industry has been highly volatile. Likewise, the market price of our common stock has varied significantly in the past. Risks Related to our Capital and Ownership Structure.
Historically, the market price of common stock of companies engaged in the oil and gas services industry has been highly volatile. Likewise, the market price of our common stock has varied significantly in the past. ​
In the event the Controlling Group were to engage in any of these actions, our common stock price could be negatively impacted, such actions could cause volatility in the market for our common stock or could have a material adverse effect on our results of operations and our financial condition. 14 ​ Our management and directors have a substantial ownership interest, and the availability of the Company’s common stock to the investing public may be limited.
In the event the Controlling Group were to engage in any of these actions, our common stock price could be negatively impacted, such actions could cause volatility in the market for our common stock or could have a material adverse effect on our results of operations and our financial condition.
Environmental Protection Agency (EPA) also conducted a study of the environmental impact of hydraulic fracturing practices, and in 2015, issued a report which concluded that hydraulic fracturing had not caused a measurable impact on drinking water sources in the U.S. This and similar conclusions from similar investigations carry positive implications for our industry.
Environmental Protection Agency (EPA) also conducted a study of the environmental impact of hydraulic fracturing practices, and in 2015, issued a report which concluded that hydraulic fracturing had not caused a measurable impact on drinking water sources in the U.S.
Our business is significantly affected by stringent environmental laws and other regulations relating to the oil and gas industry and by changes in such laws and the level of enforcement of such laws.
Our operations may be adversely affected if we are unable to comply with regulations and environmental laws. Our business is significantly affected by stringent environmental laws and other regulations relating to the oil and gas industry and by changes in such laws and the level of enforcement of such laws.
In addition, there was no customer as of December 31, 2022 or 2021 that accounted for 10 percent or more of accounts receivable.
In addition, there was one customer that accounted for approximately 10% of accounts receivable as of December 31, 2023. There were no other customers as of December 31, 2023, and no customers as of December 31, 2022, that accounted for 10% or more of accounts receivable.
Although we believe that our reputation for safety and quality service is good, we cannot assure you that we will be able to maintain our competitive position. We may be unable to identify or complete acquisitions. Acquisitions have been and may continue to be a key element of our business strategy.
Although we believe that our reputation for safety and quality service is good, we cannot assure you that we will be able to maintain our competitive position. We may be unable to identify or complete acquisitions, and the completion of significant acquisitions involves integration and other risks.
Risk Management Risks. Our business has potential liability for litigation, personal injury and property damage claims assessments. Our operations involve the use of heavy equipment and exposure to inherent risks, including blowouts, explosions and fires.
Our business has potential liability for litigation, personal injury and property damage claims assessments. Our operations involve the use of heavy equipment and exposure to inherent risks, including blowouts, explosions, and fires. If any of these events were to occur, it could result in liability for personal injury and property damage, pollution or other environmental hazards or loss of production.
We cannot assure you that we will be able to maintain adequate insurance in the future at rates we consider reasonable or that our insurance coverage will be adequate to cover future claims and assessments that may arise. Our operations may be adversely affected if we are unable to comply with regulations and environmental laws.
We maintain what we believe is prudent insurance protection. We cannot assure you that we will be able to maintain adequate insurance in the future at rates we consider reasonable or that our insurance coverage will be adequate to cover future claims and assessments that may arise. 14 ​ Regulatory Risks.
Our operations in various international markets including, but not limited to, Africa, Canada, Argentina, China, Mexico, Latin America and the Middle East are subject to risks. These risks include, but are not limited to, political changes, expropriation, currency restrictions and changes in currency exchange rates, taxes, boycotts and other civil disturbances.
These risks include, but are not limited to, political changes, expropriation, currency restrictions and changes in currency exchange rates, taxes, boycotts and other civil disturbances.
Any inability on our part to integrate and manage the growth from acquired businesses could have a material adverse effect on our results of operations and financial condition. Our operations are affected by adverse weather conditions.
We cannot assure you that we will be able to successfully integrate the operations and assets of any acquired business with our own business. Any inability on our part to integrate and manage the growth of acquired businesses could have a material adverse effect on our results of operations and financial condition.
We cannot assure you that we will be able to identify and acquire acceptable acquisition candidates on terms favorable to us in the future. We may be required to incur substantial indebtedness to finance future acquisitions and also may issue equity securities in connection with such acquisitions.
Acquisitions have been and may continue to be a key element of our business strategy. We cannot assure you that we will be able to identify and acquire acceptable acquisition candidates on terms favorable to us in the future.
These measures increased the Company’s operating expenses, and such higher operating expenses could continue if the COVID-19 pandemic continues during 2023 or a new global pandemic arises. Increasing expectations from customers, investors and other stakeholders regarding our environmental, social and governance (ESG) practices may affect our business, may create additional costs for us, or expose us to related risks.
The occurrence of any one of these events could have a material adverse effect on our operations. 13 ​ Increasing expectations from governments, customers, investors and other stakeholders regarding our environmental, social and governance (ESG) practices may affect our business, may create additional costs for us, or expose us to related risks.
The frequency and severity of such incidents will affect our operating costs, insurability and relationships with customers, employees and regulators. These occurrences could have a material adverse effect on us. We maintain what we believe is prudent insurance protection.
Litigation may arise from a catastrophic occurrence at a location where our equipment and services are used. This litigation could result in large claims for damages. The frequency and severity of such incidents will affect our operating costs, insurability and relationships with customers, employees, and regulators. These occurrences could have a material adverse effect on us.
The issuance of additional equity securities could result in significant dilution to our stockholders. We cannot assure you that we will be able to integrate successfully the operations and assets of any acquired business with our own business.
We may be required to incur substantial indebtedness to finance future acquisitions and also may issue equity securities in connection with such acquisitions. The issuance of additional equity securities could result in significant dilution to our stockholders.
Removed
The occurrence of any one of these events could have a material adverse effect on our operations. Our financial results could continue to be negatively impacted by the COVID-19 pandemic. The oil and gas industry experienced an unprecedented disruption during 2020 due to the substantial decline in global oil demand caused partly by the COVID-19 pandemic.
Added
We completed the acquisition of Spinnaker Oilwell Services in 2023 and may have difficulty and incur anticipated expenses related to integrating information systems, financial reporting activities, employee retention and integrating and retaining management and personnel.
Removed
Although global demand began to rebound in 2021, and has remained strong throughout 2022 and in early 2023, a worsening of the pandemic or a new global pandemic could further impact the economic conditions in the United States, as federal, state and local governments react to the public health crisis, creating uncertainties in the United States, as well as the global economy.
Added
Additionally, we may not be able to achieve the anticipated expansion of our cementing business from its presence in South Texas to basins in which we provide other services. Our operations are affected by adverse weather conditions.
Removed
RPC instituted strict procedures to assess employee health and safety while in its facilities or on operational locations and attempted to hire redundant crews in order to continue to provide services to its customers.
Added
Our international operations could have a material adverse effect on our business. Our operations in various international markets including, but not limited to, Africa, Canada, Argentina, China, Mexico, Latin America and the Middle East are subject to risks.
Removed
If any of these events were to occur, it could result in liability for personal injury and property damage, pollution or other environmental hazards or loss of production. Litigation may arise from a catastrophic occurrence at a location where our equipment and services are used. This litigation could result in large claims for damages.
Added
We are planning to create and publish voluntary disclosures regarding ESG matters from time to time. To the extent that we report Green House Gas (GHG) emissions data, the methodologies that we use to calculate our emissions may change over time based upon changing industry standards.
Removed
In spite of these favorable empirical data, the current administration imposed a temporary suspension of new oil and gas leasing permits on federal oil and gas drilling areas. This suspension has been challenged in court and was blocked in the fourth quarter of 2021. Early in 2023 a final decision was still pending.
Added
We note that standards and expectations regarding the processes for measuring and counting GHG emissions and GHG emission reductions are evolving, and it is possible that our approach to measuring our emissions maybe considered inconsistent with common or best practices with respect to measuring and accounting for such matters.
Removed
This legislation has had a minimal impact on RPC’s Technical Services Segment’s revenues. Furthermore, we do not believe that this ban, or any similar future ban, would impact RPC’s Technical Services Segment’s revenues because this or similar bans would only apply to drilling and completion on Federal lands, which account for less than 10 percent of U.S. oilfield activity.
Added
If our approaches to such matters fall out of step with common or best practice, we may be subject to additional scrutiny, criticism, regulatory and investor engagement or litigation, any of which may adversely impact our business, financial condition or results of operation.
Added
Furthermore, the SEC has announced proposed rules that, among other matters, will establish a framework for reporting climate-related risks. To the extent that any proposed rules impose additional reporting obligations, we could face increased costs.
Added
Separately, the SEC has also announced that it is scrutinizing existing climate change related disclosures in public filings, increasing the potential for enforcement if the SEC were to allege our existing climate disclosures are misleading or deficient. Furthermore, in November 2022, the U.S.
Added
Department of Labor adopted final rules that allow plan fiduciaries to consider climate change and other ESG factors when they select retirement investments and exercise shareholder rights, such as proxy voting. Should plan investors decide to not invest in us based on ESG factors, our business and access to capital may be negatively impacted.
Added
In 2023, the State of California enacted legislation that will require large U.S. companies doing business in California to make broad-based climate-related disclosures starting as early as 2026, and other jurisdictions, domestically and internationally, are also considering various climate change disclosure requirements.
Added
In addition, ESG and climate change issues may cause consumer preference to shift toward other alternative sources of energy, lowering demand for oil and natural gas and consequently lowering demand for our services. In some areas these concerns have caused governments to adopt or consider adopting regulations to transition to a lower-carbon economy.
Added
These measures may include adoption of cap-and-trade programs, carbon taxes, increased efficiency standards, prohibitions on the manufacture of certain types of equipment (such as new automobiles with internal combustion engines), and requirements for the use of alternate energy sources such as wind or solar.
Added
These types of programs may reduce the demand for oil and natural gas and consequently the demand for our services. Approaches to climate change and a transition to a lower-carbon economy, including government regulation, company policies, and consumer behavior, are continuously evolving.
Added
At this time, we cannot predict how such approaches may develop or otherwise reasonably or reliably estimate their impact on our financial condition, results of operations and ability to compete. However, any long-term material adverse effect on the oil and gas industry may adversely affect our financial condition, results of operations and cash flows. Risk Management Risks.
Added
Compliance with federal and state regulations relating to pressure pumping services could increase our operating costs, cause operational delays, and could reduce or eliminate the demand for our pressure pumping services. The U.S.
Added
This and similar conclusions from similar investigations carry positive implications for our industry; however, more stringent regulations could be imposed in the future, which could have a material adverse impact on our costs and our business. Risks Related to our Capital and Ownership Structure.
Added
Our management and directors have a substantial ownership interest, and the availability of the Company’s common stock to the investing public may be limited.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeDescriptions of the major facilities used in our operations are as follows: ​ Owned Locations ​ Broussard, Louisiana — Operations, sales and equipment storage yard ​ Elk City, Oklahoma — Operations, sales and equipment storage yard ​ Houma, Louisiana — Administrative office ​ Channelview, Texas — Pipe storage yard and inspection services ​ Odessa, Texas — Pumping services facility ​ Rock Springs, Wyoming — Operations, sales and equipment storage yard ​ Vernal, Utah — Operations, sales and equipment storage yards ​ Newcastle, Oklahoma — Operations, sales and administrative offices ​ ​ ​ Leased Locations ​ Midland, Texas — Operations, sales and administrative offices ​ Seminole, Oklahoma — Pumping services facility ​ The Woodlands, Texas — Operations, sales and administrative office ​ Odessa, Texas — Pumping services facility ​ ​ ​
Biggest changeDescriptions of the major facilities used in our operations are as follows: Owned Locations Broussard, Louisiana — Operations, sales and equipment storage yard Elk City, Oklahoma — Operations, sales and equipment storage yard Houma, Louisiana — Administrative office Channelview, Texas — Pipe storage yard and inspection services Odessa, Texas — Pumping services facility Vernal, Utah — Operations, sales and equipment storage yards Newcastle, Oklahoma — Operations, sales and administrative offices ​ Leased Locations Midland, Texas — Operations, sales and administrative offices Seminole, Oklahoma — Pumping services facility The Woodlands, Texas — Operations, sales and administrative office Odessa, Texas — Pumping services facility Atlanta, Georgia — Headquarters ​
Item 2. Properties RPC owns or leases approximately 60 offices and operating facilities. The Company leases approximately 21,200 square feet of office space in Atlanta, Georgia that serves as its headquarters, a portion of which is allocated and charged to Marine Products Corporation. See “Related Party Transactions” contained in Item 7.
Item 2. Properties RPC owns or leases approximately 60 offices and operating facilities. The Company leases approximately 21,200 square feet of office space in Atlanta, Georgia that serves as its headquarters, a portion of which is allocated and charged to Marine Products Corporation. See the note titled Related Party Transactions.
As of December 31, 2021, the lease agreement on the headquarters is effective through May 2031. RPC believes its current operating facilities are suitable and adequate to meet current and reasonably anticipated future needs.
The lease agreement on the headquarters is effective through May 2031. RPC believes its current operating facilities are suitable and adequate to meet current and reasonably anticipated future needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhile the outcome of these lawsuits, legal proceedings and claims cannot be predicted with certainty, management believes that the outcome of all such proceedings, even if determined adversely, would not have a material adverse effect on RPC’s business or financial condition. ​
Biggest changeRPC is also subject to sales and use tax audits in various jurisdictions. While the outcome of these lawsuits, legal proceedings and audit claims cannot be predicted with certainty, management believes that the outcome of all such proceedings, even if determined adversely, would not have a material adverse effect on RPC’s business or financial condition. ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities Shares repurchased by the Company and affiliated purchases in the fourth quarter of 2022 are outlined below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number Maximum ​ ​ ​ ​ ​ ​ ​ of Shares (or ​ Number (or ​ ​ ​ ​ Units) Approximate ​ ​ ​ ​ ​ ​ ​ Purchased as ​ Dollar Value) of ​ ​ ​ ​ ​ ​ ​ Part of ​ Shares (or Units) ​ Total Number of Average Price Publicly that May Yet Be ​ Shares ​ Paid Per Announced Purchased Under ​ ​ (or Units) ​ Share Plans or the Plans or Period ​ Purchased ​ (or Unit) Programs (1) Programs (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ October 1, 2022 to October 31, 2022 — ​ $ — — 8,248,184 November 1, 2022 to November 30, 2022 — ​ — — 8,248,184 December 1, 2022 to December 31, 2022 728 (2) 8.71 — 8,248,184 Totals 728 ​ $ 8.71 — 8,248,184 ​ (1) The Company has a stock buyback program initially adopted in 1998 and subsequently amended in 2013 and 2018 that authorizes the repurchase of up to 41,578,125 shares.
Biggest changeIssuer Purchases of Equity Securities Shares repurchased by the Company and affiliated purchasers in the fourth quarter of 2023 are outlined below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Total Number of Shares (or Units) Purchased ​ ​ Average Price Paid Per Share (or Unit) ​ Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2) ​ Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (2) October 1, 2023, to October 31, 2023 314 (1) ​ $ 8.95 ​ — ​ 14,979,128 November 1, 2023, to November 30, 2023 — ​ ​ — — ​ 14,979,128 December 1, 2023, December 31, 2023 1,200 (2) ​ 7.20 1,200,000 ​ 13,779,128 Total 1,514 ​ $ 7.20 1,200,000 ​ 13,779,128 ​ (1) Represents shares repurchased by the Company in connection with taxes related to vesting of certain restricted shares.
The Company is not a component of the OSX, but this index was chosen because it represents a large group of companies that provide the same or similar equipment and services as the Company. The companies included in the Peer Group are Halliburton Company, NexTier Oilfield Solutions, Inc., Oil States International, Inc., and Patterson-UTI Energy, Inc.
The Company is not a component of the OSX, but this index was chosen because it represents a large group of companies that provide the same or similar equipment and services as the Company. The companies included in the Peer Group are Halliburton Company, Oil States International, Inc., Patterson-UTI Energy, Inc and Liberty Energy, Inc.
The companies included in the Peer Group have been weighted according to each respective issuer's stock market capitalization at the beginning of each year. The peer group used in the immediately preceding fiscal year (“the Former Peer Group”) included Oil States International, Inc., Patterson-UTI Energy, Inc. and Halliburton Company.
The companies included in the Peer Group have been weighted according to each respective issuer's stock market capitalization at the beginning of each year. The peer group used in the immediately preceding fiscal year (the Former Peer Group) included Halliburton Company, NexTier Oilfield Solutions, Inc., Oil States International, Inc., and Patterson-UTI Energy, Inc.
The indices included in the following graph are the Russell 2000 Index (“Russell 2000”), the Philadelphia Stock Exchange’s Oil Service Index (“OSX”), and a peer group which includes companies that are considered peers of the Company (the “Peer Group”). The Company has voluntarily chosen to provide both an industry and a peer group index.
The indices included in the following graph are the Russell 2000 Index (Russell 2000), the Philadelphia Stock Exchange’s Oil Service Index (OSX), and a peer group which includes companies that are considered peers of the Company (the Peer Group). The Company has voluntarily chosen to provide both an industry and a peer group index.
The Company was a component of the Russell 2000 during 2022. The Russell 2000 is a stock index measuring the performance of the small-cap segment of the US equity universe. The components of the index had a weighted average market capitalization in 2022 of $2.8 billion, and a median market capitalization of $950 million.
The Company was a component of the Russell 2000 during 2023. The Russell 2000 is a stock index measuring the performance of the small-cap segment of the US equity universe. The components of the index had a weighted average market capitalization in 2023 of $3.3 billion, and a median market capitalization of $965 million.
Currently the program does not have a predetermined expiration date. ​ (2) Represents shares repurchased by the Company in connection with taxes related to vesting of certain shares. 17 ​ ​ Performance Graph The following graph shows a five-year comparison of the cumulative total stockholder return based on the performance of the stock of the Company, assuming dividend reinvestment, as compared with both a broad equity market index and an industry or peer group index.
Currently the program does not have a predetermined expiration date. ​ ​ 19 ​ Performance Graph The following graph shows a five-year comparison of the cumulative total stockholder return based on the performance of the stock of the Company, assuming dividend reinvestment, as compared with both a broad equity market index and an industry or peer group index.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities RPC’s common stock is listed for trading on the New York Stock Exchange under the symbol RES. As of February 17, 2023 there were 217,535,918 shares of common stock outstanding and approximately 22,000 beneficial holders of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information RPC’s common stock is listed for trading on the New York Stock Exchange under the symbol RES. As of February 20, 2024, there were 215,445,398 shares of common stock outstanding and approximately 23,000 beneficial holders of our common stock.
NexTier Oilfield Solutions, Inc. is included for this fiscal year because it operates similar service lines in similar domestic markets as the Company and has sufficient trading history to be included for this fiscal year. ​ ​ ​
Liberty Energy, Inc. is included for this fiscal year because it operates similar service lines in similar domestic markets as the Company and has sufficient trading history to be included for this fiscal year. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, Company/Index ​ 2018 ​ 2019 ​ 2020 ​ 2021 ​ 2022 ​ 2023 ​ ​ Base Period ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ RPC, Inc.
There were no shares repurchased as part of this program during the fourth quarter of 2022. As of December 31, 2022, there are 8,248,184 shares available to be repurchased under the current authorization.
There were 1,200,000 shares purchased on the open market during the fourth quarter of 2023 and 13,779,128 shares remained available to be repurchased under the current authorization as of December 31, 2023.
Added
Dividends On January 23, 2024, the Board of Directors declared a $0.04 per share cash dividend payable March 11, 2024, to stockholders of record at the close of business on February 9, 2024. The Company expects to continue to pay cash dividends to common stockholders, subject to industry conditions and RPC’s earnings, financial condition, and other relevant factors.
Added
(2) The Company has a stock buyback program initially adopted in 1998 (and subsequently amended in 2013, 2021 and 2023) that authorized the repurchase of up to 49,578,125 shares in the aggregate.
Added
Common Stock ​ 100 ​ 54 ​ 32 ​ 47 ​ 90 ​ 78 Russell 2000 Index ​ 100 ​ 123 ​ 146 ​ 166 ​ 131 ​ 150 OSX ​ 100 ​ 99 ​ 54 ​ 65 ​ 104 ​ 104 Peer Group ​ 100 ​ 30 ​ 40 ​ 49 ​ 87 ​ 77 ​ ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

59 edited+29 added−36 removed22 unchanged
Biggest changeThe Company is allocating capital in the coming year to maintain the capacity of its pressure pumping fleet to offset anticipated future fleet retirements. ​ ​ ​ ​ 21 ​ Results of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 ​ Consolidated revenues [in thousands] ​ $ 1,601,762 ​ $ 864,929 ​ $ 598,302 ​ Revenues by business segment [in thousands] : ​ ​ ​ ​ ​ ​ ​ Technical ​ $ 1,516,363 ​ $ 815,046 ​ $ 556,488 ​ Support ​ $ 85,399 ​ $ 49,883 ​ $ 41,814 ​ ​ ​ ​ ​ ​ Consolidated operating income (loss) [in thousands ] ​ $ 287,940 ​ $ 16,291 ​ $ (309,635) ​ Operating income (loss) by business segment [in thousands]: ​ ​ ​ ​ ​ ​ ​ Technical ​ $ 281,622 ​ $ 24,434 ​ $ (82,525) ​ Support ​ 18,095 ​ (5,725) ​ (6,714) ​ Corporate ​ (17,660) ​ (13,300) ​ (12,426) ​ Pension settlement, impairment and other charges (1)(2) ​ ​ (2,921) ​ ​ — ​ ​ (217,493) ​ Gain on disposition of assets, net ​ $ 8,804 ​ $ 10,882 ​ $ 9,523 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) [in thousands] ​ $ 218,363 ​ $ 7,217 ​ $ (212,192) ​ Earnings (loss) per share — diluted ​ $ 1.01 ​ $ 0.03 ​ $ (1.00) ​ Percentage cost of revenues to revenues ​ 68 % 77 % 80 % Percentage selling, general & administrative expenses to revenues ​ 9 % 14 % 21 % Percentage depreciation and amortization expense to revenues ​ 5 % 8 % 16 % Effective income tax rate ​ 24.6 % 56.1 % 31.4 % Average U.S. domestic rig count ​ 723 ​ 478 ​ 436 ​ Average natural gas price (per thousand cubic feet (mcf)) ​ $ 6.44 ​ $ 3.92 ​ $ 2.03 ​ Average oil price (per barrel) ​ $ 94.89 ​ $ 68.13 ​ $ 39.50 ​ ​ (1) Amount in 2022 relates to pension settlement loss.
Biggest changeResults of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Consolidated revenues [in thousands] ​ $ 1,617,474 ​ $ 1,601,762 ​ $ 864,929 Revenues by business segment [in thousands] : ​ ​ ​ ​ ​ ​ Technical ​ $ 1,516,137 ​ $ 1,516,363 ​ $ 815,046 Support ​ $ 101,337 ​ $ 85,399 ​ $ 49,883 ​ ​ ​ ​ ​ Consolidated operating income [in thousands ] ​ $ 244,950 ​ $ 287,940 ​ $ 16,291 Operating income (loss) by business segment [in thousands]: ​ ​ ​ ​ ​ ​ Technical ​ $ 245,904 ​ $ 281,622 ​ $ 24,434 Support ​ 26,461 ​ 18,095 ​ (5,725) Corporate ​ (18,473) ​ (17,660) ​ (13,300) Pension settlement charges ​ ​ (18,286) ​ ​ (2,921) ​ ​ — Gain on disposition of assets, net ​ $ 9,344 ​ $ 8,804 ​ $ 10,882 ​ ​ ​ ​ ​ ​ ​ Average U.S. domestic rig count ​ 688 ​ 723 ​ 478 Average natural gas price (per thousand cubic feet (mcf)) ​ $ 2.54 ​ $ 6.44 ​ $ 3.92 Average oil price (per barrel) ​ $ 77.55 ​ $ 94.89 ​ $ 68.13 ​ Year Ended December 31, 2023, Compared to Year Ended December 31, 2022 Revenues.
If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. If the carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is measured and recorded.
If the estimated fair value of a reporting unit exceeds its carrying amount, the goodwill of the reporting unit is not considered impaired. If the carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is measured and recorded.
In addition to reserves established for specific customers, we establish general reserves by using different percentages depending on the age of the receivables which we adjust periodically based on management judgment and the economic strength of our customers. The net credit loss allowance as a percentage of revenues ranged from 0.4 percent to 0.8 percent over the last three years.
In addition to reserves established for specific customers, we establish general reserves by using different percentages depending on the age of the receivables which we adjust periodically based on management judgment and the economic strength of our customers. The net credit loss allowance as a percentage of revenues ranged from 0.4% to 0.8% over the last three years.
While there are many factors influencing the price of oil, we believe that Russia’s invasion of Ukraine in the first quarter of 2022 destabilized global oil markets, causing prices to rise, while also increasing the attractiveness of the U.S. domestic oilfield due to its oil and natural gas reserves, political stability and downstream energy infrastructure.
While there are many factors influencing the price of oil, we 21 ​ believe that Russia’s invasion of Ukraine in the first quarter of 2022 destabilized global oil markets, causing prices to rise, while also increasing the attractiveness of the U.S. domestic oilfield due to its oil and natural gas reserves, political stability and downstream energy infrastructure.
The Company believes the following critical accounting policies involve estimates that require a higher degree of judgment and complexity: Credit loss allowance for accounts receivable — Substantially all of the Company’s receivables are due from oil and gas exploration and production companies in the United States, selected international locations and foreign, nationally owned oil companies.
The Company believes the following critical accounting policies involve estimates that require a higher degree of judgment and complexity: 26 ​ Credit loss allowance for accounts receivable — Substantially all of the Company’s receivables are due from oil and gas exploration and production companies in the United States, selected international locations and foreign, nationally owned oil companies.
These judgments are based on our historical experience, terms of existing contracts, trends in the industry, and information available from other outside sources, as appropriate. Senior management has discussed the development, selection and disclosure of its critical accounting policies requiring significant judgements and estimates with the Audit Committee of our Board of Directors.
These judgments are based on our historical experience, terms of existing contracts, trends in the industry, and information available from other outside sources, as appropriate. Senior management has discussed the development, selection and disclosure of its critical accounting policies requiring significant judgments and estimates with the Audit Committee of our Board of Directors.
The Company’s decisions about the amount of cash to be used for investing and financing activities are influenced by our capital position, 23 ​ and the expected amount of cash to be provided by operations. RPC does not expect to utilize our revolving credit facility to meet these liquidity requirements in the near term.
The Company’s decisions about the amount of cash to be used for investing and financing activities are influenced by our capital position, and the expected amount of cash to be provided by operations. RPC does not expect to utilize our revolving credit facility to meet these liquidity requirements in the near term.
Our customers’ ability to pay is directly related to their ability to generate cash flow on their projects and is significantly affected by the volatility in the price of oil and natural gas. Credit loss allowance for accounts receivable are recorded in selling, general and administrative expenses.
Our customers’ ability to pay is directly related to their ability to generate cash flow on their projects and is significantly affected by the volatility in the price of oil and natural gas. Credit loss allowance for accounts receivable is recorded in selling, general and administrative expenses.
We record specific provisions when we become aware of a customer's inability to meet its financial obligations, such as in the case of bankruptcy filings or deterioration in the customer's operating results or financial position. If circumstances related to a customer changes, our estimate of the realizability of the receivable would be further adjusted, either upward or downward.
We record specific provisions when we become aware of a customer's inability to meet its financial obligations, such as in the case of bankruptcy filings or deterioration in the customer's operating results or financial position. If circumstances related to a customer change, our estimate of the realizability of the receivable would be further adjusted, either upward or downward.
Accounts are written off against the allowance when the Company determines that amounts are uncollectible and recoveries of amounts previously written off are recorded when collected. Significant recoveries will generally reduce the required provision in the period of recovery, thereby causing credit loss allowance to fluctuate significantly from period to period. Recoveries were insignificant in 2022, 2021 and 2020.
Accounts are written off against the allowance when the Company determines that amounts are uncollectible and recoveries of amounts previously written off are recorded when collected. Significant recoveries will generally reduce the required provision in the period of recovery, thereby causing credit loss allowance to fluctuate significantly from period to period. Recoveries were insignificant in 2023, 2022 and 2021.
(“RPC”) provides a broad range of specialized oilfield services primarily to independent and major oilfield companies engaged in exploration, production and development of oil and gas properties throughout the United States, including the southwest, mid-continent, Gulf of Mexico, Rocky Mountain and Appalachian regions, and in selected international markets.
(RPC) provides a broad range of specialized oilfield services primarily to independent and major oilfield companies engaged in exploration, production and development of oil and gas properties throughout the United States, including the southwest, mid-continent, Gulf of Mexico, Rocky Mountain and Appalachian regions, and in selected international markets.
The Company currently has a $100.0 million revolving credit facility that matures in June 2027 as recently amended. The facility contains customary terms and conditions, including restrictions on indebtedness, dividend payments, business combinations and other related items. In the second quarter of 2022, the Company further amended the revolving credit facility.
The Company currently has a $100.0 million revolving credit facility that matures in June 2027 as recently amended. The facility contains customary terms and conditions, including restrictions on indebtedness, dividend payments, business combinations and other related items. In the second quarter of 2023, the Company further amended the revolving credit facility.
Inflation The Company purchases its equipment and materials from suppliers who provide competitive prices, and employs skilled workers from competitive labor markets. If inflation in the general economy increases, the Company’s costs for equipment, materials and labor could increase as well.
Inflation The Company purchases its equipment and materials from suppliers who provide competitive prices and employ skilled workers from competitive labor markets. If inflation in the general economy increases, the Company’s costs for equipment, materials and labor could increase as well.
For defined benefit plan and Supplemental Executive 24 ​ Retirement Plan (“SERP”) investments measured at net asset value, the values are computed using inputs such as cost, discounted future cash flows, independent appraisals and market based comparable data or on net asset values calculated by the fund when not publicly available.
For defined benefit plan and Supplemental Executive Retirement Plan (SERP) investments measured at net asset value, the values are computed using inputs such as cost, discounted future cash flows, independent appraisals and market based comparable data or on net asset values calculated by the fund when not publicly available.
One result of high natural gas production and steady demand has been a decline in the price of natural gas. The price of natural gas briefly rose to $9.56 per Mcf during the third quarter of 2022 as the market assessed the impact of European sanctions against Russian natural gas imports and the potential of a cold winter.
One result of high natural gas production and steady demand has been a decline in the price of natural gas. The price of natural gas briefly rose to $9.56 per Mcf during the third quarter of 2022 as the market assessed the impact of European sanctions against Russian natural gas imports.
Our key business and financial strategies are: - To focus our management resources on and invest our capital in equipment and geographic markets that we believe will earn high returns on capital. - To maintain a flexible cost structure that can respond quickly to volatile industry conditions and business activity levels. - To maintain capital strength sufficient to allow us to remain a going concern and maintain our operational strength during protracted industry downturns. - To maintain an efficient, low-cost capital structure which includes an appropriate use of debt financing. - To optimize asset utilization with the goal of increasing revenues and generating leverage of direct and overhead costs, balanced against increasingly high maintenance requirements and low financial returns experienced during times of low customer pricing for our services. - To deliver product and services to our customers safely. - To secure adequate sources of supplies of raw materials used in our operations. - To maintain and selectively increase market share. - To maximize stockholder return by optimizing the balance between cash invested in the Company's productive assets, the payment of dividends to stockholders, and the repurchase of our common stock on the open market. - To align the interests of our management and stockholders.
Our key business and financial strategies are: - To focus our management resources on and invest our capital in equipment and geographic markets that we believe will earn high returns on capital. - To maintain a flexible cost structure that can respond quickly to volatile industry conditions and business activity levels. - To maintain capital strength sufficient to allow us to remain a going concern and maintain our operational strength during protracted industry downturns. - To maintain an efficient, low-cost capital structure which includes an appropriate use of debt financing. - To optimize asset utilization with the goal of increasing revenues and generating leverage of direct and overhead costs, balanced against increasingly high maintenance requirements and low financial returns experienced during times of low customer pricing for our services. - To deliver products and services to our customers safely. - To secure adequate sources of supplies of raw materials used in our operations. - To maintain and selectively increase market share. - To explore potential acquisitions that could increase our scale, bolster selected service lines, broaden our customer base and deliver attractive financial returns. - To maximize stockholder return by optimizing the balance between cash invested in the Company's productive assets, the payment of dividends to stockholders, and the repurchase of our common stock on the open market. - To align the interests of our management and stockholders.
Increasing or decreasing the estimated general 25 ​ reserve percentages by 0.50 percentage points as of December 31, 2022 would have resulted in a change of $1.9 million in the recorded provision for current expected credit losses. Insurance expenses —The Company self-insures, up to certain policy-specified limits, certain risks related to general liability, workers’ compensation, vehicle and equipment liability.
Increasing or decreasing the estimated general reserve percentage by 0.50 percentage points as of December 31, 2023, would have resulted in a change of $1.4 million in the recorded provision for current expected credit losses. Insurance expenses —The Company self-insures, up to certain policy-specified limits, certain risks related to general liability, workers’ compensation, vehicle and equipment liability.
Discussions of year-to-year comparisons of 2021 and 2020 items that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 on our Annual report on Form 10-K for the year ended December 31, 2021, which Item is incorporated herein by reference. RPC, Inc.
Discussions of year-to-year comparisons of 2022 and 2021 items that are not included in this Form 10-K can be found in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 on our Annual report on Form 10-K for the year ended December 31, 2022, which Item is incorporated herein by reference. RPC, Inc.
See note 16 of the consolidated financial statements for details regarding RPC’s lease obligations. F air Value Measurements The Company’s assets and liabilities measured at fair value are classified in the fair value hierarchy (Level 1, 2 or 3) based on the inputs used for valuation.
See note to the consolidated financial statements titled Leases for details regarding RPC’s lease obligations. F air Value Measurements The Company’s assets and liabilities measured at fair value are classified in the fair value hierarchy (Level 1, 2 or 3) based on the inputs used for valuation.
Current industry conditions are characterized by oil prices which have risen from less than $20 per barrel in the second quarter of 2020 to approximately $80 per barrel early in the first quarter of 2023.
Current industry conditions are characterized by oil prices which have risen from less than $20 per barrel in the second quarter of 2020 to approximately $73 per barrel early in the first quarter of 2024.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview The following discussion should be read in conjunction with “Selected Financial Data” and the consolidated financial statements included elsewhere in this document. See also “Forward-Looking Statements” on page 2.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview The following discussion should be read in conjunction with Selected Financial Data and the consolidated financial statements included elsewhere in this document. See also Forward-Looking Statements on page 2.
The Company has recorded liabilities at December 31, 2022 of $10.4 million which represents management’s best estimate of probable loss. Long-lived assets including goodwill — RPC carries a variety of long-lived assets on its balance sheet including property, plant and equipment and goodwill.
The Company has recorded liabilities as of December 31, 2023, of $15.5 million which represents management’s best estimate of probable loss. Long-lived assets including goodwill — RPC carries a variety of long-lived assets on its balance sheet including property, plant and equipment and goodwill.
In response to these conditions, the U.S. domestic rig count has risen from a low of 244 in the third quarter of 2020 to 771 early in the first quarter of 2023. In addition, well completions have increased from 1,110 in the third quarter of 2020 to 2,959 in the fourth quarter of 2022.
In response to these conditions, the U.S. domestic rig count has risen from a low of 244 in the third quarter of 2020 to 620 early in the first quarter of 2024. In addition, well completions have increased from 1,308 in the third quarter of 2020 to 2,850 in the fourth quarter of 2023.
The Company has retained an independent third party actuary to assist in the calculation of a range of exposure for these claims. As of December 31, 2022, the Company estimates the range of exposure to be from $8.4 million to $12.4 million.
The Company has retained an independent third-party actuary to assist in the calculation of a range of exposure for these claims. As of December 31, 2023, the Company estimates the range of exposure to be from $12.6 million to $17.1 million.
Our credit loss allowance is determined using a combination of factors to ensure that our receivables are not overstated due to uncollectibility. Our established credit evaluation procedures seek to minimize the amount of business we conduct with higher risk customers.
Our credit loss allowance is determined using a combination of factors to estimate the risk of uncollectibility so that our receivables are appropriately stated. Our established credit evaluation procedures seek to minimize the amount of business we conduct with higher risk customers.
As of December 31, 2022, RPC had no outstanding borrowings under the revolving credit facility, and letters of credit outstanding relating to self-insurance programs and contract bids totaled $17.5 million; therefore, a total of $82.5 million of the facility was available. The Company was in compliance with the credit facility financial covenants as of December 31, 2022.
As of December 31, 2023, RPC had no outstanding borrowings under the revolving credit facility, and letters of credit outstanding relating to self-insurance programs and contract bids totaled $16.6 million; therefore, a total of $83.4 million of the facility was available. The Company is currently in compliance with the credit facility financial covenants.
Off Balance Sheet Arrangements The Company does not have any material off balance sheet arrangements. Related Party Transactions See Note 14 of the consolidated financial statements, which is incorporated herein by reference, for a description of related party transactions.
Off Balance Sheet Arrangements The Company does not have any material off balance sheet arrangements. Related Party Transactions See note of the consolidated financial statements titled Related Party Transactions for a description of related party transactions.
The gain on disposition of assets, net is generally comprised of gains and losses related to various property and equipment dispositions or sales to customers of lost or damaged rental equipment. Other income, net. Other income, net was $1.1 million in 2022 compared to other income, net of $2.0 million in 2021. Interest expense and interest income.
The gain on disposition of assets, net is generally comprised of gains and losses related to various property and equipment dispositions or sales to customers of lost or damaged rental equipment. ​ Other income, net.
We will remain highly disciplined about adding new revenue-producing equipment capacity and will only expand when we believe the projected financial returns of such capital expenditures meet our financial return criteria.
We will remain highly disciplined about adding new incremental revenue-producing equipment capacity and will only expand if we believe the projected financial returns of such capital expenditures meet our financial return criteria. The Company is allocating capital to maintain the capacity of our pressure pumping fleet to offset anticipated future fleet retirements.
Recent Accounting Pronouncements See Note 1 of the consolidated financial statements, which is incorporated herein by reference for a description of recent accounting standards, including the expected dates of adoption and estimated effects on results of operations and financial condition. ​
Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. ​ Recent Accounting Pronouncements See note of the consolidated financial statements titled Significant Accounting Policies, which is incorporated herein by reference for a description of recent accounting standards, including the expected dates of adoption and estimated effects on results of operations and financial condition. ​
The stock buyback program does not have a predetermined expiration date. On January 24, 2023, the Board of Directors declared a regular quarterly cash dividend of $0.04 per share payable March 10, 2023 to common stockholders of record at the close of business on February 10, 2023.
On January 23, 2024, the Board of Directors declared a regular quarterly cash dividend of $0.04 per share payable March 11, 2024, to common stockholders of record at the close of business on February 9, 2024.
No shares were purchased on the open market during the twelve months ended December 31, 2022, and 8,248,184 shares remain available to be repurchased under the current authorization. The Company may repurchase outstanding common shares periodically based on market conditions and our capital allocation strategies considering restrictions under our credit facility.
There were 2,469,056 shares repurchased on the open market during 2023 and 13,779,128 shares remained available to be repurchased under the current authorization as of December 31, 2023. The Company may repurchase outstanding common shares periodically based on market conditions and our capital allocation strategies considering restrictions under our credit facility.
Cash provided by operating activities for the year ended December 31, 2022 includes net income of $218.4 million, less an unfavorable change in accounts receivable of $157.9 million, partially offset by favorable changes in other components of our working capital (accounts payable, accrued payroll and taxes receivable) totaling $69.8 million.
Cash provided by operating activities for the year ended December 31, 2023, includes net income of $195.1 million, coupled with a favorable change in accounts receivable of $104.6 million, partially offset by unfavorable changes in 24 ​ other components of our working capital (accounts payable, inventories and taxes receivable) totaling $56.7 million.
Depreciation and amortization were $83.0 million in 2022, an increase of $10.3 million, compared to $72.7 million in 2021. Depreciation and amortization increased due to capital expenditures in the past year. Gain on disposition of assets, net. Gain on disposition of assets, net was $8.8 million in 2022 compared to $10.9 million in 2021.
Depreciation and amortization increased due to capital expenditures in the past year coupled with amortization of acquired intangible assets expenses related to the acquired Spinnaker business. ​ Gain on disposition of assets, net. Gain on disposition of assets, net was $9.3 million in 2023 compared to a gain on disposition of assets, net of $8.8 million in 2022.
The actual amount of capital expenditures will depend primarily on equipment maintenance requirements, expansion opportunities, and equipment delivery schedules. The Company has ongoing sales and use tax audits in various jurisdictions subject to varying interpretations of statutes. The Company has recorded the exposure from these audits to the extent issues are resolved or can be reasonably estimated.
The Company has ongoing sales and use tax audits in various jurisdictions subject to varying interpretations of statutes. The Company has recorded the exposure from these audits to the extent issues are resolved or are probable and can be reasonably estimated. There are issues that could result in unfavorable outcomes that cannot be currently estimated.
However, the price of natural gas fell during the fourth quarter of 2022 and early 2023. The price of natural gas early in the first quarter of 2023 was $3.46 per Mcf, which was approximately 17.4 percent lower than at the same time in 2022.
The price of natural gas early in the first quarter of 2024 was $2.92 per Mcf, which was approximately 35.1% lower than at the same time in 2023.
For additional information with respect to RPC’s facility, see Note 9 of the consolidated financial statements. Cash Requirements Capital expenditures were $139.6 million in 2022, and we currently expect capital expenditures to be between $250 million to $300 million in 2023, which will be directed towards both capitalized maintenance of our existing equipment and selected growth opportunities.
Cash Requirements Capital expenditures were $181.0 million in 2023, and we currently expect capital expenditures to be between $200 million and $250 million in 2024, which will be directed towards both capitalized maintenance of our existing equipment to improve efficiency and selected growth opportunities.
We have selectively upgraded our existing equipment to operate using multiple fuel sources and to take advantage of advances in technology and data collection. RPC’s response to our industry’s current higher activity levels and improved service pricing is primarily to maintain and upgrade our current fleet capacity of revenue-producing equipment.
We expect demand for our services will remain consistent with 2023 levels during the near term. We have selectively upgraded our existing equipment to operate using multiple fuel sources and to take advantage of advances in technology and data collection. RPC continues to maintain and upgrade our current fleet capacity of revenue-producing equipment.
We believe that most of the feasible efficiency gains have been realized, and a number of our smaller competitors have ceased operations.
The growing efficiency in recent years with which oilfield completion crews are providing services is a catalyst for the oversupplied nature of the oilfield services market. We believe that most of the feasible efficiency gains have been realized, and a number of our smaller competitors have ceased operations.
The Company conducts impairment tests on goodwill annually, during the fourth quarter, or more frequently if events or changes in circumstances indicate an impairment may exist. In addition, the Company conducts impairment tests on long-lived assets, other than goodwill, whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
The Company conducts impairment tests on goodwill annually, during the fourth quarter, or more frequently if events or changes in circumstances indicate an impairment may exist. The Company completes a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill.
In the fourth quarter of 2022, approximately 79 percent of the U.S. domestic rig count was directed towards oil, compared to 82 percent in the prior year. We believe that oil-directed drilling will remain the majority of domestic drilling, and that natural gas-directed drilling will remain a low percentage of U.S. domestic drilling in the near term.
We believe that oil-directed drilling will remain the majority of domestic drilling, and that natural gas-directed drilling will remain a low percentage of U.S. domestic drilling in the near term. However, we believe that natural gas-directed drilling will increase in the future because of favorable long-term market dynamics.
An impairment loss is measured and recorded as the amount by which the asset group's carrying amount exceeds its fair value.
An impairment loss is measured and recorded as the amount by which the asset group's carrying amount exceeds its fair value. 27 ​ Acquisition of business — I n accounting for our acquisitions, we evaluate whether a transaction pertains to an acquisition of assets, or to an acquisition of a business.
We continue to monitor the market for our services and the competitive environment, including the current trends and expectations with regard to environmental concerns and related impact on our equipment fleets. The growing efficiency with which oilfield completion crews are providing services is a catalyst for the oversupplied nature of the oilfield services market.
This projected higher demand for oil and natural gas should drive increased activity in most of the basins in which RPC operates. We continue to monitor the market for our services and the competitive environment, including the current trends and expectations with regard to environmental concerns and related impact on our equipment fleets.
During the past several years, improving drilling and completion activity have caused U.S. domestic oil production to rise to record production levels.
During the past several years, improved drilling and completion techniques have increased productivity and caused U.S. domestic oil production to rise to record production levels, reaching 13.2 million barrels per day in December of 2023. (source: U.S. Energy Information Administration).
However, the Company also believes that the long-term outlook for natural gas-directed drilling and completion activities in the United States is favorable due to global political instability and projected increases in U.S. natural gas export capabilities. The Company’s strategy of utilizing equipment in unconventional basins continued.
The Company believes that despite the decline in price, the favorable long-term outlook for natural gas provided by the U.S. oil and gas industry is sufficient to encourage our customers to maintain their natural gas-directed exploration and production activities. The Company’s strategy of utilizing equipment in unconventional basins has continued.
The average price of oil increased 39.3 percent and the average price of natural gas increased 64.1 percent during 2022 compared to the prior year. The average domestic rig count during 2022 was 51.3 percent higher than 2021.
During 2023, the average price of oil was 18.3% lower, and the average price of natural gas was 60.6% lower, both as compared to the prior year. The average domestic rig count for 2023 was 4.8% lower than the prior year. ​ Technical Services segment revenues were $1.5 billion for both 2023 and 2022.
In addition, the Company ordered a pressure pumping fleet that is expected to be delivered and paid for in the first half of 2023. During 2022, RPC made payments totaling $24.0 million for a pressure pumping fleet under a finance lease which was initiated in 2021.
The actual amount of capital expenditures in 2024 will depend primarily on equipment maintenance requirements, expansion opportunities, and equipment delivery schedules. During 2022, RPC made payments totaling $24.0 million for a pressure pumping fleet under a finance lease which was initiated in 2021.
Cash used for financing activities for 2022 increased by $31.4 million primarily due to cash paid for a finance lease beginning in the third quarter of 2021, coupled with the reinstatement of cash dividends paid to common stockholders in the third quarter of 2022. Financial Condition and Liquidity The Company’s financial condition remains strong.
These uses were partially offset by a decrease in cash paid for finance lease and finance obligations. The Company resumed dividend payments to common stockholders during the third quarter of 2022. Financial Condition and Liquidity The Company’s financial condition remains strong.
Net income for 2022 was $218.4 million, or $1.01 earnings per share compared to net income of $7.2 million, or $0.03 earnings per share in 2021.
Net income for 2023 was $195.1 million, or $0.90 earnings per share compared to net income of $218.4 million, or $1.01 earnings per share in 2022. 2023 net income included $18.3 million of non-cash pension settlement charges. Cash flows from operating activities increased to $394.8 million in 2023 compared to $201.3 million in 2022.
During 2021 and continuing through 2022, the price of labor and raw materials have been increasing due to improving oilfield activity and labor shortages caused by the departure of skilled labor from the domestic oilfield industry in prior years. During 2022, market prices of some raw materials and key equipment components increased significantly and availability has been challenged.
In recent years, the price of labor and raw materials increased due to higher oilfield activity and labor shortages caused by the departure of skilled labor from the domestic oilfield industry in prior years. These cost increases moderated during 2023 but remain high by historical standards.
Technical Services reported operating income of $281.6 million during 2022 compared to an operating income of $24.4 million in the prior year, while Support Services reported an operating income of $18.1 million in 2022 compared to an operating loss of $5.7 million in the prior year.
Technical Services reported operating income of $245.9 million during 2023 compared to operating income of $281.6 million in the prior year. Support Services segment revenues for 2023 increased by 18.7% compared to the prior year, primarily due to higher activity levels within rental tools.
Interest expense includes facility fees on the unused portion of the credit facility and the amortization of loan costs. Interest income increased to $1.2 million in 2022 compared to $0.1 million in 2021 due to a higher average cash balance coupled with an increase in investment yields consistent with higher interest rates. Income tax provision.
Other income, net was $3.0 million in 2023 compared to other income, net of $1.1 million in the prior year. ​ Interest expense and interest income. Interest expense was $341 thousand in 2023 compared to $614 thousand in the prior year. Interest expense includes facility fees on the unused portion of the credit facility and the amortization of loan costs.
The following table sets forth the historical cash flows for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ Net cash provided by operating activities ​ $ 201,286 ​ $ 47,719 ​ $ 77,958 Net cash used for investing activities ​ (123,715) ​ (47,631) ​ (42,659) Net cash used for financing activities ​ (33,580) ​ (2,151) ​ (826) ​ Cash provided by operating activities for the year ended December 31, 2022 increased by $153.6 million compared to the year ended December 31, 2021.
Net income was $195.1 million in 2023, or $0.90 diluted earnings per share, compared to net income of $218.4 million in 2022, or $1.01 diluted earnings per share. ​ Liquidity and Capital Resources Cash and Cash Flows The Company’s cash and cash equivalents were $223.3 million as of December 31, 2023, $126.4 million as of December 31, 2022, and $82.4 million as of December 31, 2021. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) 2023 2022 2021 Net cash provided by operating activities ​ $ 394,763 ​ $ 201,286 ​ $ 47,719 Net cash used for investing activities ​ (241,712) ​ (123,715) ​ (47,631) Net cash used for financing activities ​ (56,165) ​ (33,580) ​ (2,151) ​ Cash provided by operating activities for the year ended December 31, 2023, increased by $193.5 million compared to the year ended December 31, 2022.
The Company is allocating capital to maintain the capacity of its pressure pumping fleet to offset anticipated future fleet retirements. RPC refurbished an existing fleet that was placed into service during 2022 and is currently refurbishing another existing fleet that will be placed in service in early 2023.
The Company is allocating capital to maintain the capacity of its pressure pumping fleet to offset anticipated future fleet retirements. During 2024 the Company will be replacing a Tier 2 diesel fleet with a recently ordered Tier 4 dual-fuel fleet.
The net unfavorable changes in working capital were the result of increased business activity levels. Cash used for investing activities for 2022 increased by $76.1 million compared to 2021, primarily due to an increase in capital expenditures consistent with higher business activity levels and an improved operating environment.
Cash used for investing activities for 2023 increased by $118.0 million compared to 2022, primarily due to cash paid for the acquisition of Spinnaker during the second quarter of 2023, coupled with an increase in capital expenditures primarily due to the timing of new equipment deliveries.
The current and projected prices of oil, natural gas and natural gas liquids are important catalysts for U.S. domestic drilling activity.
As of December 31, 2023, there were no outstanding borrowings under our credit facility. 22 ​ Outlook The current and projected prices of oil, natural gas and natural gas liquids are important catalysts for U.S. domestic drilling activity and can be impacted by economic developments as well as geopolitical disruptions, such as the continuing conflicts in the Middle East as well as Russia and Ukraine.
This increase was primarily due to improved pricing, higher customer activity levels and a larger active fleet of revenue-producing equipment. Cost of revenues increased $424.9 million in 2022 compared to the prior year primarily due to increases in expenses consistent with higher activity levels, such as materials and supplies expenses, employment costs and fuel costs.
This increase was primarily due to an increase in cementing revenues due to the Spinnaker acquisition, partially offset by a decrease in pressure pumping activity. Cost of revenues increased 0.1% compared to the prior year, consistent with the slight increase in revenues. Selling, general and administrative expenses during 2023 totaled $165.9 million, an increase of 11.7% compared to 2022.
The decrease in the effective tax rate resulted from higher pre tax income which diluted the impact of the unfavorable permanent and discrete adjustments. Net income and diluted earnings per share . Net income was $218.4 million in 2022, or $1.01 diluted earnings per share, compared to net income of $7.2 million in 2021, or $0.03 diluted earnings per share.
The decrease in the 2023 effective tax rate is primarily due to a beneficial discrete adjustment compared to a detrimental discrete adjustment in 2022. ​ Net income and diluted earnings per share.
As of December 31, 2022, the Company’s stock buyback program has authorized the aggregate repurchase of up to 41,578,125 shares, including an additional 10,000,000 shares authorized for repurchase by the Board of Directors on February 12, 2018.
During 2023, the Company’s Retirement Income Plan was fully terminated through a liquidation of the assets held in a trust and an additional cash contribution of $5.4 million. 25 ​ The Company has a stock buyback program to repurchase up to 49,578,125 shares in the open market, including an additional 8,000,000 shares authorized for repurchase by the Board of Directors in the second quarter of 2023.
Removed
The oil and gas industry experienced an unprecedented disruption during 2020 due to the substantial decline in global oil demand caused partly by the COVID-19 pandemic.
Added
However, the price of natural gas fell during the fourth quarter of 2022 and remained low throughout 2023 due to warm weather and the idling of a major liquified natural gas facility in the U.S.
Removed
Although global demand began to rebound in 2021, and has remained strong throughout 2022, the pandemic could continue to impact the economic conditions in the United States, as federal, state and local governments react to the public health crisis, creating uncertainties in the United States, as well as the global economy.
Added
During 2023, capital expenditures totaled $181.0 million which included the purchase of a new Tier 4 dual-fuel equipment, coupled with capitalized maintenance and upgrades of our existing equipment. Effective July 1, 2023, the Company acquired Spinnaker Oilwell Services, LLC (Spinnaker), a leading provider of oilfield cementing services in the Permian and Mid-Continent basins.
Removed
RPC instituted strict 19 ​ procedures to assess employee health and safety in its facilities and operational locations and attempted to hire redundant crews in order to continue to provide services to its customers.
Added
The acquisition of Spinnaker expanded RPC’s cementing business from its presence in South Texas to basins in which we currently provide other services. See note titled Business Acquisition for additional information. Revenues during 2023 totaled $1.6 billion, a slight increase of 1.0% compared to 2022.
Removed
Oil production fell during 2020 and 2021 during the downturn caused by the COVID-19 pandemic, but by the fourth quarter of 2022 had increased to within five percent of record oil production recorded during the fourth quarter of 2019 (source: U.S. Energy Information Administration).
Added
The increase was primarily due to costs related to the settlement of a vendor dispute during 2023 coupled with the incremental SG&A expenses from the recently acquired Spinnaker. Income before income taxes was $256.2 million for 2023 compared to $289.6 million in 2022.
Removed
The Company believes that the recent decline in the price of natural gas discourages our customers from conducting natural gas-directed drilling and completion activities during the near term.
Added
Change in working capital generated $57.8 million of cash in 2023, compared to a $122.5 million use of cash in the prior year primarily due to lower business activity levels in the fourth quarter of 2023 compared to the same period in the prior year.
Removed
During 2022, we made capital expenditures, excluding the equipment acquired under a finance lease, totaling $139.6 million, an increase of $72.0 million compared to the prior year. Capital expenditures during 2022 were primarily directed towards capitalized maintenance and selected growth opportunities. Revenues during 2022 totaled $1.6 billion, an increase of 85.2 percent compared to 2021.
Added
This increase in cash flow was partially offset by a decrease in net income, which included the non-cash pension settlement charges referenced above.
Removed
In addition, these costs increased due to higher market prices for materials and supplies, fuel and other raw materials. As a percentage of revenues, cost of revenues decreased to 67.9 percent in 2022 compared to 76.7 percent in 2021 due to improved pricing for our services and leverage of employment costs.
Added
RPC believes that oil prices remain above levels sufficient to motivate our customers to maintain drilling and completion activities. The majority of the U.S. domestic rig count remains directed towards oil. During 2023, approximately 80% of the U.S. domestic rig count was directed towards oil, consistent with the prior year.
Removed
Selling, general and administrative expenses as a percentage of revenues decreased to 9.3 percent in 2022 compared to 14.3 percent in 2021, primarily due to leverage of costs that are relatively fixed during the short term over higher revenues. Income before income taxes was $289.6 million for 2022 compared to $16.4 million in 2021.
Added
During 2023 the Company placed into service a new pressure pumping fleet, replacing existing older equipment sent out for refurbishment. During 2024, the Company will be replacing a Tier 2 diesel fleet with a recently ordered Tier 4 dual-fuel fleet.
Removed
Cash flows from operating activities increased to $201.3 million in 2022 compared to $47.7 million in 2021 primarily due to a significant increase in net income, partially offset by increased working capital requirements in 2022 compared to 2021.
Added
Effective July 1, 2023, the Company acquired Spinnaker Oilwell Services, LLC (Spinnaker), a leading provider of oilfield cementing services in the Permian and Mid-Continent basins. The acquisition of Spinnaker expanded RPC’s legacy cementing business in South Texas to basins in which we currently provide other services. See the note titled Business Acquisition for additional information.
Removed
As of December 31, 2022, there were no outstanding borrowings under our credit facility. 20 ​ Outlook Drilling activity in the U.S. domestic oilfields, as measured by the rotary drilling rig count, reached a cyclical peak of 1,083 during the fourth quarter of 2018 (Source: Baker Hughes, Inc.).
Added
Revenues of $1.6 billion for 2023 increased 1.0% compared to 2022. Domestic revenues in 2023 increased 1.2% compared to the prior year. This increase was primarily due to an increase in cementing revenues due to the Spinnaker acquisition, partially offset by a decrease in pressure pumping activity.
Removed
Between the fourth quarter of 2018 and the third quarter of 2020, the drilling rig count fell by 77 percent. During the third quarter of 2020, the U.S. domestic drilling rig count reached the lowest level recorded up to that time.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−30 removed0 unchanged
Biggest changeHowever, since the majority of the Company’s transactions occur in U.S. currency, this risk is not expected to have a material effect on its consolidated results of operations or financial condition. ​ 26 ​ MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING To the Stockholders of RPC, Inc.: The management of RPC, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.
Biggest changeAdditionally, the Company is exposed to market risk resulting from changes in foreign exchange rates. However, since the majority of the Company’s transactions occur in U.S. currency, this risk is not expected to have a material effect on its consolidated results of operations or financial condition. ​ 28 ​
Item 7A. Quantitative and Qualitative Disclosures about Market Risk The Company is subject to interest rate risk exposure through borrowings on its revolving credit facility. As of December 31, 2022, there were no outstanding interest-bearing advances on our credit facility which bore interest at a floating rate.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk The Company is subject to interest rate risk exposure through borrowings on its revolving credit facility. As of December 31, 2023, there were no outstanding interest-bearing advances on our credit facility which bore interest at a floating rate.
Removed
Additionally, the Company is exposed to market risk resulting from changes in foreign exchange rates.
Removed
RPC, Inc. maintains a system of internal accounting controls designed to provide reasonable assurance, at a reasonable cost, that assets are safeguarded against loss or unauthorized use and that the financial records are adequate and can be relied upon to produce financial statements in accordance with accounting principles generally accepted in the United States of America.
Removed
The internal control system is augmented by written policies and procedures, an internal audit program and the selection and training of qualified personnel. This system includes policies that require adherence to ethical business standards and compliance with all applicable laws and regulations. There are inherent limitations to the effectiveness of any controls system.
Removed
A controls system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the controls system are met. Also, no evaluation of controls can provide absolute assurance that all control issues and any instances of fraud, if any, within the Company will be detected.
Removed
Further, the design of a controls system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. The Company intends to continually improve and refine its internal controls.
Removed
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operations of our internal control over financial reporting as of December 31, 2022 based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Removed
Based on this evaluation, management’s assessment is that RPC, Inc. maintained effective internal control over financial reporting as of December 31, 2022.
Removed
The independent registered public accounting firm, Grant Thornton LLP, has audited the consolidated financial statements as of and for the year ended December 31, 2022, and has also issued their report on the effectiveness of the Company’s internal control over financial reporting, included in this report on page 28. /s/ Ben M. Palmer ​ /s/ Michael L. Schmit Ben M.
Removed
Palmer President and Chief Executive Officer Michael L. Schmit Vice President, Chief Financial Officer and Corporate Secretary ​ ​ ​ ​ ​ ​ Atlanta, Georgia ​ ​ February 27, 2023 ​ ​ ​ ​ ​ 27 ​ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders RPC, Inc.
Removed
Opinion on internal control over financial reporting We have audited the internal control over financial reporting of RPC, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Removed
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
Removed
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2022, and our report dated February 27, 2023 expressed an unqualified opinion on those financial statements.
Removed
Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
Removed
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB.
Removed
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Removed
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Removed
Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Removed
A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Removed
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Removed
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. ​ /s/ GRANT THORNTON LLP ​ ​ ​ Atlanta, Georgia ​ February 27, 2023 ​ ​ ​ 28 ​ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders RPC, Inc.
Removed
Opinion on the financial statements ​ We have audited the accompanying consolidated balance sheets of RPC, Inc.
Removed
(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule included under Item 15(2) (collectively referred to as the “financial statements”).
Removed
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Removed
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 27, 2023 expressed an unqualified opinion.
Removed
Basis for opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
Removed
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB.
Removed
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Removed
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Removed
Critical audit matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Removed
We determined that there are no critical audit matters. ​ /s/ GRANT THORNTON LLP ​ ​ ​ We have served as the Company’s auditor since 2004. ​ ​ ​ Atlanta, Georgia ​ February 27, 2023 ​ ​ ​ 29 ​

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