UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

For the fiscal year ended December 31, 20162018

Commission File No. 1-8726

RPC, INC.

2801 BUFORD HIGHWAY NE, SUITE 520

ATLANTA, GEORGIA 30329

(404) 321-2140

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.xYes¨No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.¨YesxNo

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesxNo¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YesxNo¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filerx

Accelerated filer¨

Non-accelerated filer¨

x      Accelerated filer¨      Non-accelerated filer¨Smaller reporting company¨

Emerging growth company¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes¨Nox

The aggregate market value of RPC, Inc. Common Stock held by non-affiliates on June 30, 2016,2018, the last business day of the registrant’s most recently completed second fiscal quarter, was $905,616,000$814,644,000 based on the closing price on the New York Stock Exchange on June 30, 201629, 2018 of $15.53$14.57 per share.

RPC, Inc. had 217,792,539215,210,657 shares of Common Stock outstanding as of February 17, 2017.15, 2019.

Documents Incorporated by Reference

Portions of the Proxy Statement for the 20172019 Annual Meeting of Stockholders of RPC, Inc. are incorporated by reference into Part III, Items 10 through 14 of this report.

PART I

Throughout this report, we refer to RPC, Inc., together with its subsidiaries, as “we,” “us,” “RPC” or “the Company.”

Forward-Looking Statements

Certain statements made in this report that are not historical facts are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, statements that relate to our business strategy, plans and objectives, and our beliefs and expectations regarding future demand for our productsequipment and services and other events and conditions that may influence the oilfield services market and our performance in the future. Forward-looking statements made elsewhere in this report include without limitation statements regarding natural gas prices, production levels and drilling activities; our belief that oil-directed drilling will continue to represent the majority of the total drilling rig activity; our belief that the long-term demand outlook for natural gas is favorable and that natural gas-directed drilling will increase over the long-term; our belief that oil-directed drilling will continue to represent the majority of the total drilling rig activity; our continued belief in the long-term growth opportunities for our business; our expectation to continue to focus on the development of international business opportunities in current and other international markets; our expectations regarding acquisition targets in our industry; the adequacy of our insurance coverage; the impact of lawsuits, legal proceedings and claims on our business and financial condition; our expectations regarding payment of cash dividends to common stockholders; our belief that industry factors will continue to depress natural gas directed drilling activity during the near-term; our belief that U.S. oilfield activity will continue to increaseremain at its current level or decline during the near term;near-term; our belief that recovering commodity prices will have moderately positivethe price of oil early in the first quarter of 2019 carries negative implications for RPC’s near-term activity level, revenues and earnings; our near-termbelief 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; our belief that indications early in 2019 are that the rig count will decline during the near-term; the fact that drilling and completion activities continue to be highly service-intensive and require a large amount of equipment and raw materials carries favorable implications for our activity levels; our belief that operators will complete many of previously drilled but not completed wells in the U.S. domestic rig count will continuenear-term and that this may provide potential revenue for our completion-directed services; higher industry efficiencies have caused the market for several oil completion services including pressure pumping to recover moderatelybe oversupplied and that this development carries negative consequences for pricing of our services, utilization of our equipment and our financial results during the near term;near-term; our belief regarding potential revenue relatedthat newly acquired and ordered equipment will provide acceptable financial returns when placed in service; our plans to uncompleted wells; our expectations regarding competition in our market; our expectations regarding the return of assets to service when markets improve; our statement that we plan minimal increases in ourundertake moderate fleet of revenue-producing equipment during 2017; our abilityexpansions which will allow us to maintain sufficient liquiditya strong balance sheet; our belief that declining activity levels may reduce the costs of providing our services and a conservative capital structure;reduce logistical constraints; our expectations about contributions to the defined benefit pension plan in 2017;2019; our ability to fund capital requirements in the future; the estimated amount of our capital expenditures and contractual obligations for future periods; our expectations to continue to pay regular quarterly cash dividends; our expectations regarding the costs of skilled labor and many of the raw materials used in providing our services; our belief that it will be difficult to increase prices for our services; estimates made with respect to our critical accounting policies; the effect of new accounting standards; and the effect of the changes in foreign exchange rates on our consolidated results of operations or financial condition.

The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “estimate,” and similar expressions generally identify forward-looking statements. Such statements are based on certain assumptions and analyses made by our management in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes to be appropriate. We caution you that such statements are only predictions and not guarantees of future performance and that actual results, developments and business decisions may differ from those envisioned by the forward-looking statements. See “Risk Factors” contained in Item 1A. for a discussion of factors that may cause actual results to differ from our projections.

Item 1. Business

Organization and Overview

RPC is a Delaware corporation originally organized in 1984 as a holding company for several oilfield services companies and is headquartered in Atlanta, Georgia.

RPC provides a broad range of specialized oilfield services and equipment primarily to independent and major oil and gas companies engaged in the 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 acts as a holding company for its operating units:the following legal entity groupings: Cudd Energy Services, Thru Tubing Solutions and Patterson Services. Selected overhead including centralized support services and regulatory compliance are classified underas Corporate. RPC is further organized into Technical Services and Support Services which are its operating segments. As of December 31, 2016,2018, RPC had approximately 2,5003,600 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). The businesses under Technical Services generate revenues based on equipment, personnel operating the equipment and the materials utilized to provide the service. They are all managed, analyzed and reported based on the similarities of the operational characteristics and costs associated with providing the service. The businesses under Support Services are primarily able to generate revenues through one source, which is either a hard assetequipment or a personnel resource.services offered off the well site. During 2016, less than one2018, approximately three percent of RPC’s consolidated revenues were generated from offshore operations in the U.S. Gulf of Mexico. WeIn 2018, we also estimate that 7085 percent of our 2016 revenues were related to drilling and production activities for oil, and 30while 15 percent of revenues were related to drilling and production activities for natural gas.

Technical Services include RPC’s oil and gas services that utilize people and equipment to perform value-added completion, production and maintenance services directly to a customer’s well. The demand for these services is generally influenced by customers’ decisions to invest capital toward initiating production in a new oil or natural gas well, improving production flows in an existing formation, or to address well control issues. This operating segment consists primarily of pressure pumping, downhole tools, coiled tubing, snubbing, nitrogen, well control, wireline and fishing. Customers include major multi-national and independent oil and gas producers, and selected nationally owned oil companies. The services offered under Technical Services are high capital and personnel intensive businesses. The common drivers of operational and financial success of these services include diligent equipment maintenance, strong logistical processes, and appropriately trained personnel who function well in a team environment. 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. 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 in selected international markets.

Support Services include all of the services that provide (i) equipment for customers’ use onoffered 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, and other consulting services. The primary drivers of operational success for services and equipment provided for customers’ use onoff 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 equipment and services offered include rental tools, drill pipe and related tools, pipe handling, pipe inspection and storage services, and oilfield training and consulting services. The demand for these services tends to be influenced primarily by customer drilling-related activity levels. 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 in the last three years, including primarily Canada, Latin America and the Middle East. Customers primarily include domestic operations of major multi-national and independent oil and gas producers and major multi-nationals and selected nationally owned oil companies.

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 approximately55 percent of 2018 revenues, 62 percent of 2017 revenues and 46 percent of 2016 revenues, 54 percent of 2015 revenues and 57 percent of 2014 revenues are provided to customers throughout Texas, and the mid-continent and Rocky Mountain regions of the United States. We primarily provide these services to customers in order to enhance the initial production of hydrocarbons in formations that have low permeability. Pressure pumping services involve using complex, truck or skid-mounted equipment designed and constructed for each specific pumping service offered. The mobility of this equipment permits pressure pumping services to be performed in varying geographic areas. Principal materials utilized in the pressure pumping businessoperations include fracturing proppants, acid and bulk chemical additives. Generally, these items are available from several suppliers, and the Company utilizes more than one supplier for each item. Pressure pumping services offered include:

Fracturing — Fracturing services are performed to stimulate production of oil and natural gas by increasing the permeability of a formation. Fracturing is particularly important in shale formations, which have low permeability, and unconventional completion, because the formation containing hydrocarbons is not concentrated in one area and requires multiple fracturing operations. The fracturing process consists of pumping fluid gel and sometimes nitrogen into a cased well at sufficient pressure to fracture the formation at desired locations and depths. Sand, ceramics, or synthetic materials, which are often coated with a material to increase their resistance to crushing, are pumped into the fracture. When the pressure is released at the surface, the fluid gel returns to the well surface, but the proppant remains in the fracture, thus keeping it open so that oil and natural gas can flow through the fracture into the production tubing and ultimately to the well surface. In some cases, fracturing is performed in formations with a high amount of carbonate rock by an acid solution pumped under pressure without a proppant or with small amounts of proppant.

Acidizing — Acidizing services are also performed to stimulate production of oil and natural gas, but they are used in wells that have undergone formation damage due to the buildup of various materials that block the formation. 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.

Downhole Tools. Thru Tubing Solutions (“TTS”) accounted for approximately25 percent of 2018 revenues, 19 percent of 2017 revenues and 23 percent of 2016 revenues, 18 percent of 2015 revenues and 15 percent of 2014 revenues. 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’ experience providing reliable tool services allows it to work in a pressurized environment with virtually any coiled tubing unit or snubbing unit.

Coiled Tubing. Coiled tubing services, which accounted for approximatelysix percent of revenues in 2018, seven percent of revenues in 2017 and 10 percent of revenues in 2016, and nine percent in 2015 and 2014, 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 is a flexible steel pipe with a diameter of less than four inches manufactured in continuous lengths of thousands of feet and wound or coiled around a large reel. It can be inserted through existing production tubing and used to perform workovers without using a larger, costlier workover rig. Principal advantages of employing coiled tubing in a workover operation include: (i) not having to “shut-in” the well during such operations, (ii) the ability to reel continuous coiled tubing in and out of a well significantly faster than conventional pipe, (iii) the ability to direct fluids into a wellbore with more precision, and (iv) enhanced access to remote or offshore fields due to the smaller size and mobility of a coiled tubing unit compared to a workover rig. Increasingly, coiled tubing units are also used to support completion activities in directional and horizontal wells. Such completion activities usually require multiple entrances in a wellbore in order to complete multiple fractures induring a pressure pumping operation. A coiled tubing unit can accomplish this type of operation because its flexibility allows 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. 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. There are several manufacturers of flexible steel pipe used in coiled tubing services, and the Company believes that its sources of supply are adequate.

Snubbing. Snubbing (also referred to as hydraulic workover services), which accounted for approximatelyone percent of revenues in 2018, two percent of revenues in 2017 and three percent of revenues in 2016, 2015 and 2014, 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. 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. Because this service involves a very hazardous process that entails high risk, the snubbing segment of the oil and gas services industry is limited to a relative few operators who have the experience and knowledge required to perform such services safely and efficiently. 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. Nitrogen accounted for approximatelythree percent of revenues in 2018, two percent of revenues in 2017 and five percent of revenues in 2016, four percent of revenues in 2015 and three percent of revenues in 2014.2016. 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. 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. 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. Nitrogen is complementary to our pressure pumping service as well, because foam-based nitrogen stimulation is appropriate in certain sensitive formations in which the fluids used in fracturing or acidizing would damage a customer’scustomer's well.

For non-oilfield industrial users, nitrogen can be used to purge pipelines and create a non-combustible environment. 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. Cudd Energy Services 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 Energy Services, 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.

The Company’s professional firefighting staff has many years of aggregate industry experience in responding to well fires and blowouts. This team of experts responds to well control situations where hydrocarbons are escaping from a wellbore, regardless of whether a fire has occurred. In the most critical situations, there are explosive fires, the destruction of drilling and production facilities, substantial environmental damage and the loss of hundreds of thousands of dollars per day in well operators’ production revenue. 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. In these situations, the Company is called upon to supervise and assist in the well control effort so that drilling operations can resume as promptly as safety permits.

Wireline Services. Wireline is classified into two types of services: slick or braided line and electric line. In both, a spooled wire is unwound and lowered into a well, conveying various types of tools or equipment. Slick or braided line services use a non-conductive line primarily for jarring objects into or out of a well, as in fishing or plug-setting operations. 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.

Pump Down Services. Pump down services are an integral part of the well completion process and are critical in multiple-stage, unconventional well completions which use various types of bridge plugs and perforation techniques. Pump down services use fluids and low-capacity pressure pumping equipment, and work in coordination with wireline services, to place completion equipment at the desired location in a well bore. This process is repeated for each stage, moving from the most distant end of the wellbore to the end that is closest to the wellhead.

Fishing. Fishing involves the use of specialized tools and procedures to retrieve lost equipment from a well drilling operation and producing wells. It is a service required by oil and gas operators who have lost equipment in a well. Oil and natural gas production from an affected well typically declines until the lost equipment can be retrieved. In some cases, the Company creates customized tools to perform a fishing operation. The customized tools are maintained by the Company after the particular fishing job for future use if a similar need arises.

Support Services

Rental Tools. Rental tools accounted for approximately three percent of revenues in 2016 and four2018, two percent of revenues in 20152017 and 2014.three percent of revenues in 2016. The 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. 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 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, Appalachian region and the Rocky Mountains.

Patterson Rental Tools offers a broad range of rental tools including:

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. These services are provided at both the Company’s inspection facilities and at independent tubular mills in accordance with negotiated sales and/or service contracts. Our customers are major oil companies and steel mills, for which we provide in-house inspection services, inventory management and process control of tubing, casing and drill pipe. 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. Well Control School provides industry and government accredited training for the oil and gas industry both in the United States and in limited international locations. Well Control School provides training in various formats including conventional classroom training, interactive computer training including training delivered over the internet, and mobile simulator training.

Energy Personnel International. Energy Personnel International provides drilling and production engineers, well site supervisors, project management specialists, and workover and completion specialists on a consulting basis to the oil and gas industry to meet customers’ needs for staff engineering and well site management.

Refer to Note 1213 in the Notes to the Consolidated Financial Statements for additional financial information on our business segments.

Industry

United States. RPC provides its services to its domestic customers through a network of facilities strategically located to serve oil and gas drilling and production activities of its customers in Texas, the Gulf of Mexico, the mid-continent, the southwest, the Rocky Mountains and the Appalachian regions. Demand for RPC’s services in the U.S. tends to be 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.

Due to aging oilfields and lower-cost sources of oil internationally, the drilling rig count in the U.S. has declined by approximately 8377 percent from its peak in 1981. However, due to continuously enhanced technology,rig and other technologies, more wells are drilled during periods of strong industry activity, and these wells are increasingly productive. For these reasons, the domestic production of natural gas rose to record levels in the third quarter of 2015, and domestic production of crude oil in the third quarter of 2015 reached its highest level since the third quarter of 1971. Due toWith the decline in domestic drilling and completion activities beginning in early 2015, domestic production of both natural gas and oil began to decline during the third and fourth quarters of 2015, although production continues to remain high in comparison to historical levels. Oil and gas industry activity levels have historically been volatile, experiencing multiple cycles, including six down cycle troughs between 1981 and 2016, with May 2016 marking the lowest U.S. domestic rig count in U.S. oilfield history. The rig count during the peak of the most recent cycle occurred at the end of the third quarter of 2014, and began to decline sharply during the fourth quarter of 2014. The rig count continued to decline in 2015 and 2016, until June of 2016 when it stabilized and began to increase. Early in 2017,2019, the rig count had recovered by approximately 87159 percent from the historical low set during the second quarter of 2016, but was still approximately 6246 percent lower than the most recent cyclical peak in the third quarter of 2014.

Because of the increased efficiency of drilling rigs, the Company also monitors well completions in the U.S. domestic oilfield. Well completions are particularly important to RPC because the majority of its services are utilized during the completion stage of an oil or gas well’s life cycle, so they are an important indicator of the demand for RPC’s services. As reported by the U.S. Energy Information Administration during the first quarter of 2019, annual well completions fell from a cyclical peak of 21,370 in 2014 to 8,106 in 2016. Between 2016 and 2018, annual well completions increased by 6,456 or 79.7 percent. In spite of the increase in well completions during the past two years, annual well completions in 2018 were 31.9 percent lower than the 2014 cyclical peak.

The fluctuations in domestic drilling activity since the most recent peak in the third quarter of 2014 peak are consistent with global supply of and demand for oil, the domestic supply of and demand for natural gas, U.S. domestic storage levels of oil and natural gas, fluctuations in the value of the U.S. dollar on world currency markets, and projected near-term economic growth. During 2015 and into the first quarter of 2016, the price of oil fell by approximately 78 percent from its most recentthe cyclical peak in the third quarter of 2014. From its low price in early 2016, the price of oil had risen by approximately 80155 percent to its recent cyclical peak early in the fourth quarter of 2018. Between this cyclical peak and early in the first quarter of 2017.2019, the price of oil fell by approximately 28 percent. RPC believes that the decreaseincrease in the price of oil during this periodbetween 2016 and 2018 was caused by the actions of the Organization of the Petroleum Exporting Countries (OPEC) cartel, increased supply from the domestic U.S. market, weakdue to increasing global demand and a perceived moderation of global supply, and that the strength of the U.S. dollar on global currency markets and high storage levels of oil. The precipitousrecent decline in the price of oil that took place between the third quarter of 2014was due to a change in sentiment regarding supply and the second quarter of 2016 caused a significant decrease in oil-directed drilling activity.demand. The average price of natural gas fell during this time as well, decliningincreased by approximately 426.4 percent from the beginning of 2015 to the second quarter of 2016. Earlyduring 2018 as compared with 2017 and early in the first quarter of 2017, however,2019, the price of natural gas had risen by approximately 77 percent from the low recorded in the second quarter of 2016, and was approximately 1918 percent higherlower than its price early in 2015. Early in 2017, the price at the end of oil was high enough to encourage increased drilling and production activity, but2018. RPC does not believe that the current price of natural gas had not reached levels that were adequateis sufficient to encourage natural gas-directed drilling, activity in the U.S. domestic oilfield.and we note that many oil-directed wells produce a great deal of natural gas and natural gas liquids as well. In addition to oil and natural gas, the price of natural gas liquids isplays a determinant ofminor role in determining our customers’ activity levels, since it is produced in many of the shale resource plays which also produce oil, and production of various natural gas liquids has increased to a level comparable to that of natural gas. During 2015 the average price of natural gas liquids decreased by approximately 56 percent compared to 2014, but during 20162018 the average price of natural gas liquids increased by approximately six15 percent compared to 2015.with 2017. Early in the first quarter of 2017,2019, the price of natural gas liquids had increased by approximately 6529 percent compared to the average price in 2016.2018. During 2018, the price of oil was high enough to encourage increased drilling and production activity, but the unexpected and significant drop in the price of oil during the fourth quarter of 2018 has caused many of RPC’s customers to delay or curtail their drilling and completion plans for the near term. The fluctuations in the prices of these commodities, and in particular, the extreme volatility in the price of oil, significantly impact RPC’s financial results.

From 2001 to 2009, gas drilling rigs represented over 80 percent of the drilling rig count. In 2010, the percentage of drilling rigs drilling for natural gas began to decline, and by early in the first quarter of 2015 had fallen to approximately 18 percent of total drilling activity. In absolute terms, the natural gas drilling rig count in the third quarter of 2016 was the lowest natural gas drilling rig count ever recorded. Early inDuring 2018 and early into the first quarter of 2017,2019, the natural gas drilling rig count had risen byas a percentage of the total rig count remained steady at approximately 7918 percent although it remains very low by historical standards.of total drilling. Although the demand for natural gas has remained stable, the price of natural gas has fallen in recent years due to increased domestic reserves, productivity of new wells, and high associated natural gas production from oil-directed wells. In spite of these unfavorable near-term dynamics, the long-term demand outlook for natural gas is still favorable because, unlike oil, foreign imports of natural gas do not compete with domestic production to a meaningful degree, and in the fourth quarter of 2015,for several years, the United States began to exporthas exported increasing volumes of natural gas for the first time.to other countries. We anticipate that oil-directed drilling will continue to represent the majority of the total drilling rig count during the near term. Over the long term, we believe that natural gas-directed drilling will increase due to the lack of natural gas production from oil-directed drilling and increased natural gas demand from U.S. exports of natural gas andin addition to changes in demand due to increased use of natural gas as a transportation fuel or for other purposes. We continue to believe in the long-term growth opportunities for our business due to the continued high demand for hydrocarbons generally and the growing production of oil in the domestic U.S. market in particular. Furthermore, we note that the techniques used to extract oil and natural gas in the U.S. domestic market increasingly require the types of services that RPC provides to its customers.

Unconventional wells generate a higher demand for RPC’s services because they are difficult and costly to complete. They comprise the majority of U.S. domestic drilling and during the fourth quarter of 2018 and early in the first quarter of 2019, have reached a historical high of approximately 9094 percent of total drilling during the first quarter of 2017.drilling. Because they are drilled through a typically narrow and relatively impermeable formation such as shale, they require additional stimulation when they are completed. Also, many of these formations require high pumping rates of stimulation fluids under high pressures, which in turn require a great deal of pressure pumping horsepower on location to complete the well. Furthermore, since they are not drilled in a straight vertical direction from the Earth’s surface, they require tools and drilling mechanisms that are flexible, rather than rigid, and can be steered once they are downhole. Specifically, these types of wells require RPC’s pressure pumping and coiled tubing services, as well as our downhole tools and services.

International. RPC has historically operated in several countries outside of the United States, and international revenues accounted for approximately sevenfive percent of RPC’s consolidated revenues in 2016, six percent in 2015 and2018, four percent in 2014.2017 and seven percent in 2016. 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 decreased 29increased 61.9 percent in 20162018 compared to the prior year primarily due to lowerhigher customer activity levels in Australia, Gabon, Equatorial Guinea, ChinaArgentina and Argentinato a lesser extent, Mexico and Pakistan, partially offset by increasedlower activity in Bolivia.Gabon. During 2016,2018, RPC provided snubbing, well control and oilfield training services in several countries including Gabon and Australia. We also provided downhole motors and tools in Argentina, Canada, ChinaMexico and Oman, andas well as rental tools in Equatorial Guinea.Pakistan. We also provided snubbing services in Gabon. We continue to focus on the selected development of international opportunities in these and other markets, although we believe that it will continue to be less than ten percent of total revenues in 2017.2019.

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. However, due to the significant investment requirement and complexity of international projects, customers’ drilling decisions relating to such projects tend to be evaluated and monitored with a longer-term perspective with regard to oil and natural gas pricing, and therefore have the potential to be more stable than most U.S. domestic operations. Additionally, the international market is dominated by major oil companies and national oil companies which tend to have different objectives and more operating stability than the typical independent oil and gas producer in the U.S. Predicting the timing and duration of contract work is not possible. Refer to Note 1213 in the Notes to 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. This objective continues to be pursued through strategic investments and opportunities designed to enhance the long-term value of RPC while improving market share, product offerings and the profitability of existing businesses. 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 productsequipment and services. 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. Historically, we have found that we generate higher financial returns from organic growth with our services and geographical locations in which we have experience. Because of the fragmented nature of the oil and gas services industry, RPC believes a number of acquisition opportunities exist, and we frequently consider such opportunities. We have consummated relatively few acquisitions, however, due to high seller valuation expectations and the risk of integrating acquired businesses into our existing operations. As the current industry downturn continues, we believe that many financial investors who have provided capital to smaller oilfield service companies in the past several years are seeking to liquidate their investments. This development, along with continued depressed financial results in our industry, may make valuations for acquisition targets more attractive. 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.

RPC has a revolving credit facility which can be used to fund working capital requirements. The borrowing base for this credit facility is the lesser of $125 million or a specified percentage of eligible accounts receivable less the amount of any outstanding letters of credit. There was no outstanding balance on this credit facility as of December 31, 2016.2018. Our capital structure is more conservative than that of many of our peers.

Customers

Demand for RPC’s services and productsequipment depends primarily upon the number of oil and natural gas wells being drilled, the depth and drilling conditions of such wells, the number of well completions and the level of production enhancement activity worldwide. RPC’s principal customers consist of major and independent oil and natural gas producing companies. During 2016,2018, RPC provided oilfield services to several hundred customers. Of these customers, there werewas no customerscustomer in 2016 and only one, Anadarko Petroleum Corporation (Anadarko) at 23 percent of revenues in 2015,2018 or 2017 that accounted for more than 10 percent 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. Due to the short lead time between ordering services or equipment and providing services or delivering equipment, there is no significant sales backlog in most of our services.backlog.

Competition

RPC operates in highly competitive areas of the oilfield services industry. We sell our productsequipment 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. During the past several years,oilfield downturn of 2015 and 2016, a number of smallsmaller oilfield services companies as well as several of our publicly traded peers have become insolventreduced the scope of their operations or became insolvent. During 2017, however, an improving industry environment and either been forced to liquidate or undergo bankruptcy proceedings. During the thirdpositive outlook on the industry from the financial markets facilitated the formation of new companies and fourth quarters of 2016, however, the availability of capital and high public equity valuations have allowed many insolventexisting companies to resume operationsexpand their operations. RPC believes that these expanded or continue operations as the result of a business combination. As of the first quarter of 2017, RPC has not experiencednewly formed companies increased competition from these entities, but we assume that the financial capabilities of these competitors will increase competitive pressures induring the future.near term, since they began to provide services to our existing customers at lower prices, and hired experienced personnel from more established companies such as RPC. Pricing for our services has been extremely competitive overimproved significantly during 2017, but began to decline during the past several years due to the severe industry downturnfourth quarter of 2017 and the oversupply of equipment and crews operating in the U.S. domestic oilfield.throughout 2018. RPC believes that the principal competitive factors in the market areas that it serves are product availability and quality of our equipment and raw materials used to provide our services, service quality, reputation for safety and technical proficiency, and price.

The oil and gas services industry includes dominant global competitors including, among others, Halliburton Energy Services Group, a division of Halliburton Company, Baker Hughes, a GE Company, and Schlumberger Ltd. The industry also includes a number of other publicly traded peers whose operations are more similar to RPC, including Basic Energy Services, C&J Energy Services, Keane Group, Inc., Liberty Oilfield Services, Mammoth Energy Services, Inc., NCS Multistage Holdings, Inc., Nine Energy Service, Patterson-UTI Energy, Inc., ProPetro Holding Corporation and Superior Energy Services, Weatherford International, Inc., Mammoth Energy Services, Inc. and Keane Group, Inc., as well as numerous smaller, locally owned competitors.

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. Substantially all of this equipment is Company owned. RPC purchases oilfield service equipment from a limited number of manufacturers. These manufacturers of our oilfield service equipment 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.

RPC both owns and leases regional and district facilities from which its oilfield services are provided to land-based and offshore customers. RPC’s principal executive offices in Atlanta, Georgia are leased. The Company has two primary administrative buildings, one it leasesleased facility in The Woodlands, Texas that includes the Company’s operations, engineering, sales and marketing headquarters, and one it ownsowned facility in Houma, Louisiana that includes certain administrative functions. RPC believes that its facilities are adequate for its current operations. For additional information with respect to RPC’s lease commitments, see Note 910 of the Notes to Consolidated Financial Statements.

Governmental Regulation

RPC’s business is affected by state, federal and foreign laws and other regulations relating to the oil and gas industry, as well as laws and regulations relating to worker safety and environmental protection. RPC cannot predict the level of enforcement of existing laws and regulations or how such laws and regulations may be interpreted by enforcement agencies or court rulings, whether additional laws and regulations will be adopted, or the effect such changes may have on it, its businesses or financial condition.

In addition, our customers are affected by laws and regulations relating to the exploration for and production of natural resources such as oil and natural gas. These regulations are subject to change, and new regulations may curtail or eliminate our customers’ activities in certain areas where we currently operate.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. Although RPC anticipates seeking patent protection when possible, it relies to a greater extent on the technical expertise and know-how of its personnel to maintain its competitive position.

Availability of Filings

RPC makes available, free of charge, on its website, www.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 as they are filed with the Securities and Exchange Commission.

Item 1A. Risk Factors

Demand for our productsequipment and services is affected by the volatility of oil and natural gas prices.

Oil and natural gas prices affect demand throughout the oil and gas industry, including the demand for our productsequipment and services. Our business depends in large part on the conditions of the oil and gas industry, and specifically on the capital investments of our customers related to the exploration and production of oil and natural gas. When these capital investments decline, our customers’ demand for our services declines.

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 slightly less than 40 percent of global oil production. OPEC’s actions have historically been unpredictable and can contribute to the volatility of the price of oil on the world market.

Although the production sector of the oil and gas industry is less immediately affected by changing prices, and, as a result, less volatile than the exploration sector, producers react to declining oil and gas prices by curtailing capital spending, which would adversely affect our business. A prolonged low level of customer activity in the oil and gas industry has adversely affectedaffects the demand for our productsequipment and services and our financial condition and results of operations.

Reliance upon a large customer may adversely affect our revenues and operating results.

At times our business has had a concentration of one or more major customers. There werewas no customerscustomer that accounted for more than 10 percent of the Company’s revenues in 2016 and 2014. However, one of our customers,Anadarko,accounted for approximately 23 percent of revenues in 2015 with no other customers exceeding 10 percent of revenues in 2015.2018, 2017 or 2016. In addition, there was no customer as of December 31, 20162018 or 2017 that accounted for more than 10 percent of accounts receivable, while Anadarkoaccounted for approximately 14 percent of accounts receivable as of December 31, 2015.receivable. The reliance on a large customer for a significant portion of our total revenues exposes us to the risk that the loss or reduction in revenues from this customer, which could occur unexpectedly, could have a material and disproportionate adverse impact upon our revenues and operating results.

Our concentrationbusiness depends on capital spending by our customers, many of customers in one industry and periodic downturns may impact our overall exposurewhom rely on outside financing to credit risk and cause us to experience increased losses for doubtful accounts.fund their operations.

Substantially allMany of our customers operaterely on their ability to raise equity capital and debt financing from capital markets to fund their operations. 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. These factors are outside of our control, and in the energy industry. This concentrationevent our customers cannot continue to raise outside capital to fund their operations, RPC’s financial results would be negatively impacted.

Our business depends on capital spending by our customers, many of customers in one industry may impact our overall exposurewhom rely on outside financing to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economicfund their operations.

Many oil and industry conditions. We perform ongoing credit evaluationsgas companies do not generate sufficient operating cash flow to cover their capital expenditures. Because of this deficiency, many of our customers rely on their ability to raise equity capital and do not generally require collateraldebt financing from capital markets in supportorder to continue their operations. Their ability to raise outside capital to fund their operations 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 attractiveness of competing investments for available investment capital. These factors are outside of our trade receivables.The periodic downturnscontrol, and in the event that our industry experiencescustomers cannot continue to raise outside capital to fund their operations, RPC’s financial results would be negatively impacted.

RPC’s success will depend on its key personnel, and the loss of any key personnel may adversely affect our customers’its revenues.

RPC’s success will depend to a significant extent on the continued service of key management personnel. The loss or interruption of the services of any senior management personnel or the inability to attract and retain other qualified management, sales, marketing and technical employees could disrupt RPC’s operations which couldand cause us to experience increased losses for doubtful accounts.  a decrease in its revenues and profit margins.

We may be unable to compete in the highly competitive oil and gas industry in the future.

We operate in highly competitive areas of the oilfield services industry. The productsequipment and services in our industry segments are sold in highly competitive markets, and our revenues and earnings have in the past been affected by changes in competitive prices, fluctuations in the level of activity in major markets and general economic conditions. 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. 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. 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. 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. 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.

Our operations are directly affected by the weather conditions in several domestic regions, including the Gulf of Mexico, the Gulf Coast, the mid-continent, the Rocky Mountains and the Appalachian region. Hurricanes and other storms prevalent in the Gulf of Mexico and along the Gulf Coast during certain times of the year may also affect our operations, and severe hurricanes may affect our customers’customers' activities for a period of several years. While the impact of these storms may increase the need for certain of our services over a longer period of time, such storms can also decrease our customers’customers' activities immediately after they occur. Such hurricanes may also affect the prices of oil and natural gas by disrupting supplies in the short term, which may increase demand for our services in geographic areas not damaged by the storms. Prolonged rain, snow or ice in many of our locations may temporarily prevent our crews and equipment from reaching customer work sites. Due to seasonal differences in weather patterns, our crews may operate more days in some periods than others. Accordingly, our operating results may vary from quarter to quarter, depending on the impact of these weather conditions.

Our ability to attract and retain skilled workers may impact growth potential and profitability.

Our ability to be productive and profitable will depend substantially on our ability to attract and retain skilled workers. Our ability to expand our operations is, in part, impacted by our ability to increase our labor force. 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. If either of these events occurred, our capacity and profitability could be diminished, and our growth potential could be impaired.

Our business has potential liability for litigation, personal injury and property damage claims assessments.

RPC’s subsidiaries have a number of agreements of various types in place with our customers. In general, these agreements indemnify RPC and its subsidiaries against damage or liabilities that arise from the actions of our employees or the operation of our equipment. The provisions in these agreements do not make a distinction among the types of services that RPC provides or the location of the work. These agreements also require that RPC maintain a certain level and type of insurance coverage against any claims that are determined to be our responsibility. RPC has insurance coverage in place with several well-capitalized insurance companies for accidental environmental claims.

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. 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. 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.

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. We are unable to predict the level of enforcement of existing laws and regulations, how such laws and regulations may be interpreted by enforcement agencies or court rulings, or whether additional laws and regulations will be adopted. The adoption of laws and regulations curtailing exploration and development of oil and gas fields in our areas of operations for economic, environmental or other policy reasons would adversely affect our operations by limiting demand for our services. We also have potential environmental liabilities with respect to our offshore and onshore operations, and could be liable for cleanup costs, or environmental and natural resource damage due to conduct that was lawful at the time it occurred, but is later ruled to be unlawful. We also may be subject to claims for personal injury and property damage due to the generation of hazardous substances in connection with our operations. We believe that our present operations substantially comply with applicable federal and state pollution control and environmental protection laws and regulations. We also believe that compliance with such laws has had no material adverse effect on our operations to date. However, such environmental laws are changed frequently. We are unable to predict whether environmental laws will, in the future, materially adversely affect our operations and financial condition. 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 hydraulic fracturing and designation of economic development zones related to natural gas-directed drilling from shale formations could increase our operating costs, cause operational delays, and could reduce or eliminate the demand for our pressure pumping services.

RPC’s pressure pumping services are the subject of continuing federal, state and local regulatory oversight. This scrutiny is prompted in part by public concern regarding the potential impact on drinking and ground water and other environmental issues arising from the growing use of hydraulic fracturing. 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. Environmental Protection Agency (EPA) has also undertaken a study of the environmental impact of hydraulic fracturing practices. In the second quarter of 2015, the EPA issued a report which concluded that hydraulic fracturing had not caused a measureable impact on drinking water sources in the U.S. While this conclusion and other conclusions from similar efforts are favorable for our industry, we are unable to predict whether future scrutiny of RPC’s pressure pumping business and any resulting regulatory change will impact our business through increased operational costs, operational delays, or a reduction in demand for hydraulic fracturing services.

Our international operations could have a material adverse effect on our business.

Our operations in various countriesinternational markets including, but not limited to, Africa, Canada, Argentina, China, Mexico, Eastern Europe, 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. The occurrence of any one of these events could have a material adverse effect on our operations.

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.

Our management has 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 the Company’s Chairman of the Board, R. Randall Rollins and his brother, Gary W. Rollins, who is also a director of the Company, and certain companies under their control, controls in excess of fifty percent of the Company’s voting power. As a “Controlled Corporation,” the Company need not comply with certain NYSE rules including those requiring a majority of independent directors.

RPC’s executive officers, directors and their affiliates hold directly or through indirect beneficial ownership, in the aggregate, approximately 7374 percent of RPC’s outstanding shares of common stock. As a result, these stockholders effectively control the operations of RPC, including the election of directors and approval of significant corporate transactions such as acquisitions and other matters requiring stockholder approval. This concentration of ownership could also have the effect of delaying or preventing a third party from acquiring control over the Company at a premium.

Our management has a substantial ownership interest, and the availability of the Company’s common stock to the investing public may be limited.

The availability of RPC’s common stock to the investing public may be limited to those shares not held by the executive officers, directors and their affiliates, which could negatively impact RPC’s stock trading prices and affect the ability of minority stockholders to sell their shares. Future sales by executive officers, directors and their affiliates of all or a portion of their shares could also negatively affect the trading price of our common stock.

Provisions in RPC’sRPC's certificate of incorporation and bylaws may inhibit a takeover of RPC.

RPC’s certificate of incorporation, bylaws and other documents contain provisions including advance notice requirements for stockholder proposals and staggered terms for the Board of Directors. These provisions may make a tender offer, change in control or takeover attempt that is opposed by RPC’s Board of Directors more difficult or expensive.

Some of our equipment and several types of materials used in providing our services are available from a limited number of suppliers.

We purchase equipment provided by a limited number of manufacturers who specialize in oilfield service equipment. During periods of high demand, these manufacturers may not be able to meet our requests for timely delivery, resulting in delayed deliveries of equipment and higher prices for equipment. There are a limited number of suppliers for certain materials used in pressure pumping services, our largest service.service line. While these materials are generally available, supply disruptions can occur due to factors beyond our control. Such disruptions, delayed deliveries, and higher prices may limit our ability to provide services, or increase the costs of providing services, which could reduce our revenues and profits.

We have used outside financing in prior years to accomplish our growth strategy, and outside financing may become unavailable or may be unfavorable to us.

Our business requires a great deal of capital in order 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 equipment requirements. Our credit facility, as amended June 30, 2016,July 26, 2018, provides a borrowing base at the lesser of (a) $125 million or (b) the difference between (i) a specified percentage (ranging from 70% to 80%) of eligible accounts receivable less (ii) 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. If our existing capital resources become unavailable, inadequate or unfavorable for purposes of funding our capital requirements, we would need to raise additional funds through alternative debt or equity financings to maintain our equipment and continue our growth. Such additional financing sources may not be available when we need them, or may not be available on favorable terms. If we fund our growth through the issuance of public equity, the holdings of stockholders will be diluted. 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.

Our operations are subject to cyber-attacks that could have a material adverse effect on our business, consolidated results of operations and consolidated financial condition.

Our operations are increasingly dependent on digital technologies and services. We use these technologies for internal purposes, including data storage, processing and transmissions, as well as in our interactions with customers and suppliers. Digital technologies are subject to the risk of cyber-attacks. If our systems for protecting against cybersecurity risks prove to be insufficient, we could be adversely affected by, among other things, loss of or damage to intellectual property, proprietary or confidential information, or customer, supplier, or employee data, as well as, interruption of our business operations, and increased costs required to prevent, respond to, or mitigate cybersecurity attacks. 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.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

RPC owns or leases approximately 120 offices and operating facilities. The Company leases approximately 18,600 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. TheAs of December 31, 2018, the lease agreement on the headquarters is effective through October 2020. Effective January 2019, the Company signed a new lease agreement for the office space at its headquarters that has substantially similar terms as the previous lease and extends the term of the lease from October 2020 to May 2031. RPC believes its current operating facilities are suitable and adequate to meet current and reasonably anticipated future needs. Descriptions of the major facilities used in our operations are as follows:

Owned Locations

Broussard, Louisiana — Operations, sales and equipment storage yards

Vilonia, Arkansas — Maintenance and rebuild facilities

Elk City, Oklahoma — Operations, sales and equipment storage yards

Houma, Louisiana — Administrative office

Houston, Texas — Pipe storage terminal and inspection sheds

Kilgore, Texas — Operations, sales and equipment storage yards

Odessa, Texas — Operations, sales and equipment storage yards

Rock Springs, Wyoming — Operations, sales and equipment storage yards

Vernal, Utah — Operations, sales and equipment storage yards

Vilonia, Arkansas — Maintenance and rebuild facilities

Williston, North Dakota — Operations, sales and equipment storage yards

Leased Locations

Canton, PennsylvaniaHobbs, New Mexico — Pumping services facility

Midland, Texas — Operations, sales and equipment storage yards

Hobbs, New MexicoMontgomery, Pennsylvania — Pumping services facilityOperations, sales and administrative office

Oklahoma City, Oklahoma — Operations, sales and administrative office

San Antonio, Texas — Operations, sales and equipment storage yards

Seminole, Oklahoma — Pumping services facility

The Woodlands, Texas — Operations, sales and administrative office

Washington, Pennsylvania — Operations, sales and equipment storage yards

Williston, North Dakota — Operations, sales and equipment storage yards

Item 3. Legal Proceedings

RPC is a party to various routine legal proceedings primarily involving commercial claims, workers’ compensation claims and claims for personal injury. RPC insures against these risks to the extent deemed prudent by its management, but no assurance can be given that the nature and amount of such insurance will, in every case, fully indemnify RPC against liabilities arising out of pending and future legal proceedings related to its business activities. While 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.

Item 4. Mine Safety Disclosures

The information required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this Form 10-K.

Item 4A. Executive Officers of the Registrant

Each of the executive officers of RPC was elected by the Board of Directors to serve until the Board of Directors’ meeting immediately following the next annual meeting of stockholders or until his or her earlier removal by the Board of Directors or his or her resignation. The following table lists the executive officers of RPC and their ages, offices, and terms of office with RPC.

PART II

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, 201715, 2019 there were 217,792,539215,210,657 shares of common stock outstanding and approximately 16,60024,000 beneficial holders of our common stock. The following table sets forth the high and low prices of RPC’s common stock and dividends paid for each quarter in the years ended December 31, 2016 and 2015:

On July 28, 2015, the Board of Directors voted to temporarily suspend RPC’s regular quarterly cash dividend to common stockholders; however, a special year-end cash dividend of $0.05 per share was paid to common stockholders during the fourth quarter of 2016.  Subject to industry conditions and RPC’s earnings, financial condition, and other relevant factors, the Company expects to resume regular quarterly cash dividends to common stockholders sometime in the future.

Issuer Purchases of Equity Securities

Shares repurchased by the Company and affiliated purchases in the fourth quarter of 20162018 are outlined below.

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. The indices included in the following graph are the Russell 1000 Index ("(“Russell 1000"1000”), the Philadelphia Stock Exchange'sExchange’s Oil Service Index ("OSX"(“OSX”), and a peer group which includes companies that are considered peers of the Company (the "Peer Group"“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 1000 during 2016.2018. The Russell 1000 is a stock index representing large capitalization U.S. stocks with high historical growth in revenues and earnings. The components of the index had a weighted average market capitalization in 20162018 of $140$193 billion, and a median market capitalization of $9$9.9 billion. The Russell 1000 was chosen because it represents companies with comparable market capitalizations to the Company, and because the Company is a component of the index. The OSX is a stock index of 15 companies that provide oil drilling and production services, oilfield equipment, support services and geophysical/reservoir services. 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 productsequipment and services as the Company. The companies included in the Peer Group are Weatherford International, Inc., Superior Energy Services, Inc., Patterson-UTI Energy, Inc., and Halliburton Company. Patterson-UTI Energy, Inc. was not previously included in the Peer Group because it conducts exploration and production activities and contract drilling activities as well as providing pressure pumping services. However, during 2016 Patterson-UTI Energy, Inc. eliminated exploration and production activities as an operating segment and announced a significant acquisition in the pressure pumping and rental tools business. Also, Patterson-UTI Energy’s market capitalization was similar to the market capitalization of the Company as of December 31, 2016. For these reasons, the Company added Patterson-UTI Energy to the Peer Group. In addition, the Company eliminated Basic Energy Services, Inc. from the Peer Group because during the third and fourth quarters of 2016, Basic Energy Services announced that it could not fulfill its financial obligations and was entering bankruptcy proceedings. We believe that Basic Energy Services’ stock price performance during 2016 reflected the risk of bankruptcy to its shareholders rather than the financial performance of a peer of the Company. For comparison purposes, the following graph includes the Peer Group as well as a group of companies which includes Weatherford International, Inc., Basic Energy Services, Inc., Superior Energy Services, Inc. and Halliburton Company (the Former Peer Group). The companies included in the Peer Group and the Former Peer Group have been weighted according to each respective issuer's stock market capitalization at the beginning of each year.

Item 6. Selected Financial Data

The following table summarizes certain selected financial data of the Company. The historical information may not be indicative of the Company’s future results of operations. The information set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and the notes thereto included elsewhere in this document.

STATEMENT OF OPERATIONS DATA:Statements of Operations Data:

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.

RPC, Inc. (“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’s revenues and profits are generated by providing equipment and services to customers who operate oil and gas properties and invest capital to drill new wells and enhance production or perform maintenance on existing wells.

Our key business and financial strategies are:

In assessing the outcomes of these strategies and RPC’s financial condition and operating performance, management generally reviews periodic forecast data, monthly actual results, and other similar information. We also consider trends related to certain key financial data, including revenues, utilization of our equipment and personnel, maintenance and repair expenses, pricing for our services and equipment, profit margins, selling, general and administrative expenses, cash flows and the return on our invested capital. Additionally, we compare our trends to those of our peers. We continuously monitor factors that impact current and expected customer activity levels, such as the price of oil and natural gas, changes in pricing for our services and equipment and utilization of our equipment and personnel. Our financial results are affected by geopolitical factors such as political instability in the petroleum-producing regions of the world, overall economic conditions and weather in the United States, the prices of oil and natural gas, and our customers’ drilling and production activities.

Current industry conditions are characterized by oil prices which have risenfallen from a lowcyclical peak of approximately $29$75 per barrel in the fourth quarter of 2018 to $54 per barrel in the first quarter of 2016 to approximately $53 per barrel in the first quarter of 2017. As a result2019. In spite of this moderate increasesignificant decrease in the price of oil, as well as improvements in the prices of natural gas and natural gas liquids, the U.S. domestic rig count has risen from an historic low of 404 inand well completion counts have not fallen significantly during the secondfourth quarter of 2016 to 751 early in2018 and into the first quarter of 2017. We2019. However, many of our customers indicate that they are curtailing or delaying their drilling and completion plans early in 2019, and we believe that this will have a negative impact on RPC’s revenues and earnings during the principal reasonnear term. One catalyst for the increaserecent decrease in the price of oil and the improvement in U.S. domestic oilfield activity relates to global supply and demand for the announcementcommodity. Early in 2019, a potential slowdown in economic growth is perceived to be a catalyst for lower oil prices, a factor which is exacerbated by continued growth in oil production, particularly in the OPEC cartel during the fourth quarter of 2016 that it would impose production quotas on its member countries in order to support the price of oil on the world market.United States. RPC believes that an important catalyst for an increase in world oil prices is declining production in the United States. We believe thisStates has also become an increasingly important determinant of global oil prices, because the United States grew to be the world’s largest producer of oil during the second quarter of 2015, and the increase in oil production was due to the growth of oil-directed drilling in shale formations. These wells produce a large amount of oil immediately following their completion, but typically experience large production declines within two years.2016. Following its recent peak, U.S. oil production has fallenfell by approximately nine25 percent as of the third quarter of 2017. Since that time, however, improving drilling and completion activity have caused U.S. domestic oil production to rise, and as of the most recent monthly reported statisticstatistics, current U.S. oil production has increased to a level that is 42 percent higher than the cyclical low production recorded during the third quarter of 2016. During the fourth quarter of 2016. Therefore,2018, U.S. oil production rose to its highest level on record. We believe that record U.S. oil production is a catalyst for lower oil prices during the declining production of these wells, and the rapid decline in drilling of new wells of this type are additional catalysts for improving industry conditions.near term. Customer activities directed towards natural gas drilling and production have been weak for several years, with the U.S. domestic natural gas rig count during the first quarter of 20162017 falling to the lowest level ever recorded. The U.S. domestic natural gas rig count has increased from this historic low but is still low by historical standards. We believe that customer activities directed towards drilling for natural gas havehas been weak because of the high production of shale-directed natural gas wells, the high amount of natural gas production associated with oil-directed shale wells in the U.S. domestic market, and relatively constant consumption of natural gas in the United States. While natural gas-directed drilling has increased through early in the first quarter of 2017, weWe believe that these factors will continue to depress natural gas-directed drilling during the near term. From a low of $1.72 per Mcf during the second quarter of 2016,2017, the price of natural gas had risen to $3.04$2.65 per Mcf early in the first quarter of 2017. In spite of this increase, we2019. We believe that the price of natural gas remains too low to encourage our customers to conduct exploration and production activities directed exclusively towards natural gas.

In 2016,2018, the Company’s strategy of utilizing equipment in unconventional basins has continued. During 2016,2018, we made capital expenditures totaling $33.9$242.6 million primarily for thenew revenue-producing equipment and capitalized maintenance of our existing revenue-producing equipment.

Revenues during 20162018 totaled $729.0 million, a decrease$1.7 billion, an increase of 42.37.9 percent compared to 20152017 primarily as a result of lower industryhigher activity levels.levels and improved pricing for certain service lines. Cost of revenues decreased $378.3increased $132.2 million in 20162018 compared to the prior year also due to lowerhigher employment costs, maintenance and repairs expenses and other costs, all of which were driven by higher activity levels. As a percentage of revenue,revenues, cost of revenues also increased due to inefficiencies resulting from lower activity levels coupled with continued low pricing for our services. 68.7 percent in 2018 compared to 65.9 percent in 2017.

Selling, general and administrative expenses as a percentage of revenues increaseddecreased slightly to 20.79.8 percent of revenues in 20162018 compared to 12.410.0 percent of revenues in 20152017 due to increases in bad debt expense and professional fees as well as significantly lower revenues.the leverage of higher revenues over primarily fixed expenses.

LossesIncome before income taxes were $239.4was $221.3 million for 20162018 compared to $153.0$232.8 million in 2015.2017. Net lossincome for 20162018 was $141.2$175.4 million, or $0.66 loss$0.82 earnings per share compared to net loss of $99.6$162.5 million, or $0.47 loss$0.75 earnings per share in 2015.2017. Net income in 2018 and 2017 reflect the lower income rates as a result of the Tax Cuts and Jobs Act. Additionally, net income in 2017 includes a discrete tax benefit of $19.3 million, or $0.09 per share, related to the implementation of the Tax Cuts and Jobs Act enacted in 2017.

Cash flows from operating activities decreasedincreased to $101.7$389.0 million in 20162018 compared to $473.8$133.7 million in 20152017 primarily due to unfavorablehigher earnings coupled with favorable changes in working capital coupled with lower earnings.capital. As of December 31, 2016,2018, there were no outstanding borrowings under our credit facility.

Outlook

Drilling activity in the U.S. domestic oilfields, as measured by the rotary drilling rig count, reached a recent cyclical peak of 1,931 during the third quarter of 2014. Between the third quarter of 2014 and the second quarter of 2016, the drilling rig count fell by approximately 79 percent. During the second quarter of 2016, the U.S. domestic drilling rig count reached the lowest level ever recorded. The principal catalyst for this steep rig count decline iswas the decrease in the price of oil in the world markets, which began in the second quarter of 2014. The price of oil began to fall at that time due to the perceived oversupply of oil, weak global demand growth, and the strength of the U.S. dollar on world currency markets. During the second quarter of 2016, the price of oil and the U.S. domestic rig count began to increase, and increased steadily throughout the remainder of 2016, throughout 2017 and into2018. Early in 2019, the beginningU.S. domestic rig count had fallen by approximately three percent compared with the end of 2018. RPC monitors rig count efficiencies and well completion trends because the majority of our services are directed toward well completions. Improvements in drilling rig efficiencies have increased the number of potential well completions for a given drilling rig count; therefore, the statistics regarding well completions are more meaningful indicators of the first quarter of 2017. As ofoutlook for RPC’s activity levels and revenues. Annual well completions in the beginning of the first quarter ofU.S. domestic market fell from 21,355 in 2014 to 8,060 in 2016. Annual well completions increased by approximately 40 percent to 11,277 in 2017, and by approximately 31 percent to 14,756 during 2018. RPC believes that U.S. oilfield well completion activity will continue to increaseremain at its current level or decline during the near term, although our long-term visibility remains limited.term.

The current and projected prices of oil, natural gas and natural gas liquids are important catalysts for U.S. domestic drilling activity. During the first two quarters of 2016, the prices of oil and natural gas remained at low levels that discouraged our customers from undertaking most of their potential exploration and production activities. The prices of oil and natural gas have increased during the third and fourth quarters of 2016, throughout 2017 and continued during the first three quarters of 2018. The price of natural gas continued to rise during the fourth quarter of 2018 and into the first quarter of 2017,2019, due to low natural gas storage levels, cold weather and we believe thatincreasing demand for natural gas exports. In spite of the price of oil has risen to a level that provides adequate financial returns to our customers and encourages increased drilling and production activitiesrecent increase in many domestic oil-producing basins. However, the price of natural gas, we do not believe that it has not risen to a level that encourages our customers to increase their natural gas directed drilling and production activities,activities. By contrast, the price of oil began to fall significantly during the fourth quarter of 2018, and we remain discouraged that U.S. productionat the end of natural gas remains highthe quarter, was approximately 38 percent lower than at the end of the third quarter of 2018. Early in spitethe first quarter of historically low drilling activities.2019, the price of oil had risen by approximately 19 percent when compared with the end of the fourth quarter of 2018. The average price of natural gas liquids during 2016in 2018 increased by approximately six14.7 percent compared to 2015, andthe average price for the full year 2017. The price of oil early in the first quarter of 2017 the price of natural gas liquids rose to levels not recorded since the fourth quarter of 2014. These commodity price trends, if they continue, have moderately positive2019 carries negative implications for ourRPC’s near-term activity levels. As evidence of the impact of recovering commodity prices on our customers’ activity levels, the oil-directed drilling rig count at the beginning of the first quarter of 2017 had increased by approximately 89 percent compared to the lowest oil-directed rig count recorded during the second quarter of 2016, and the natural gas-directed rig count had increased by approximately 79 percent during the same period.

The majority of the U.S. domestic rig count remains directed towards oil. At the beginning of the first quarter of 2017,2019, approximately 8081 percent of the U.S. domestic rig count was directed towards oil, consistent with 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 this relationship will continue due to relatively low prices for natural gas, high production from existing natural gas wells, and industry projections of limited increases in domestic natural gas demand during the near term.

We continue to monitor the market for our services and the competitive environment in 2017. We believe that theenvironment. The U.S. domestic rig count has increased sharply since the historical low recorded during the second quarter of 2016, though there are indications early in 2019 that the rig count will continue to recover moderatelydecline during the near term. However, we believe that in spite of the large percentage increases in oilfield activity during the past several quarters, the pricing for our services has not yet reached a level that provides financial returns that will allow the industry to maintain its fleet of revenue-producing equipment or hire additional personnel to operate idle equipment. Furthermore, our customers during the first quarter of 2017 have thus far been very reluctant to accept increases in pricing for their services in order to compensate us for our increased costs and to allow us to generate higher financial returns. For this reason, we believe that continued near-term expansion in U.S. domestic oilfield activities will be moderate until commodity prices increase significantly. Over the long term, we believe that the steep decline in oil-directed drilling in the U.S. domestic market will reduce U.S. domestic oil production and serve as a catalyst for oil prices to increase. This belief is due to the fact that oil-directed wells drilled in shale resource plays typically exhibit high initial production soon after being completed followed by a decline in production in later years. We note that U.S. domestic oil production has declined by approximately 10 percent since its most recent peak in the third quarter of 2014. We are encouraged by theThe fact that drilling and completion activities continue to be highly service-intensive and require a large amount of equipment and raw materials.materials carries favorable implications for our activity levels. Furthermore, we note that some wells in the U.S. domestic market have been drilled but not completed. At the end of 2018, the number of wells in this category had increased by approximately 15 percent since the beginning of the year. We believe that operators will complete many of our customers have started to complete these wells in the near term, and that they may provide potential revenue for RPC’s completion-directed services. During 2018, we noted that oilfield completion crews and equipment were providing services with increasing efficiency, and we believe that this higher efficiency has caused the market for several oilfield completion services, including pressure pumping, to become oversupplied. We believe that this development carries negative consequences for pricing of our services, utilization of our equipment and our financial results during the near term. Finally, we are encouraged by our belief that many of our competitors have not maintained their equipment to a level that allows them to provide reliable, consistent services to their customers. During 2015 and the first three quarters of 2016, we responded to the significant declines in industry activity

Activity levels and pricing for ouroilfield services by reducing costsreached a level during 2018 that allowed the industry to maintain its equipment and employee headcountencouraged oilfield service providers to expand their fleets of revenue-producing equipment and closed selected operational locations. Duringhire additional personnel. The prospect of improved financial returns also provided access to the capital markets and allowed previously insolvent service companies to resume operations and add equipment. As a result, competition increased during 2018. Increased competition and improved service efficiency, coupled with the significant decline in oil prices during the fourth quarter of 20162018, have become catalysts for lower pricing and activity levels early in 2019. RPC expanded the first quartersize of 2017, however, we have started recruiting and hiring operational personnel to respond to increased industry activity levels.

We note in the current competitive environment that many of our smaller competitors have high levels of debt, higher cost structures, and less-developed logistical capabilities than RPC. During 2015 and through the first three quarters of 2016, a number of smaller competitors ceased operations and sold their businesses or liquidated their assets. During 2016, several of our peers filed for bankruptcy protection. While these developments place us in a more favorable competitive position, they are offset by the fact that the capital markets have recently provided capital to allow several of our competitors to emerge from bankruptcy and several other private equity-funded companies to complete initial public offerings of their common stock. In the fourth quarter of 2015 we initiated a process whereby we more closely scrutinize the maintenance status of our currently idled revenue-producing assets. Through this process, we are attempting to ensure that our idle equipment is prepared to return to service as soon as market conditions encourage us to do so. We believe that this process will allow RPC to return our idle revenue-producing equipment to service quickly and at minimal cost as market conditions improve. In this environment RPC also monitors the financial stability of our customers, due to the fact that many of them have also financed their operations with a large amount of debt, and this type of financing is less available than in previous years, although we also note that many of our customers have recently raised equity to stabilize their capital structures and expand their operations. RPC plans minimal increases in ourits fleet of revenue-producing equipment modestly during 2017.2018 and has placed orders for a small amount of new equipment to be delivered in 2019. The equipment we placed in service in 2018 and the new equipment we have ordered in 2019 is more powerful and efficient than earlier generations of oilfield service equipment, and we believe that it will produce acceptable financial returns when placed in service. Our consistent response to the industry’snear-term potential uncertaintyof lower activity levels and pricing is to maintain sufficient liquidity and a conservative capital structure and monitor our discretionary spending. We intendundertake moderate fleet expansions which will allow us to maintain a financial structure which includes little or no debt duringstrong balance sheet, even if near-term pricing and activity levels generated by such new equipment are modest.

The negative implications for RPC’s near-term activity levels from low oil prices and increased competition are partially offset by improved availability and lower cost for some of the near term.critical raw materials used in providing RPC’s services. In addition, lower activity levels reduce the cost, and increase the availability of, skilled labor. These factors may reduce the cost of providing RPC’s services and reduce logistical constraints.

Results of Operations

Year Ended December 31, 20162018 Compared to Year Ended December 31, 20152017

Revenues.Revenues in 2016 decreased $534.92018 increased $125.8 million or 42.37.9 percent compared to 2015.2017. The Technical Services segment revenues for 2016 decreased $495.6in 2018 increased $108.9 million or 42.27.1 percent compared to the prior yearyear. The increase is due primarily to lowerhigher activity levels and improved pricing in a few of our services lines as compared to the prior year, particularly within our pressure pumping service, which is the largest service within this segment.year. The Support Services segment revenues in 2016 decreased $39.22018 increased $16.9 million or 44.329.7 percent compared to 20152017 due primarily to lower pricing andimproved activity levels and pricing in the majority of our servicesrental tool service line, which is the largest service line within this segment. BothTechnical Services reported an operating profit of $216.7 million during 2018 compared to $251.5 million in the Technical andprior year, while Support Services continuereported an operating income of $4.6 million in 2018 compared to reportan operating losses due to lower levelsloss of revenues, partially offset by cost control efforts undertaken throughout$12.2 million in the Company and lower depreciation and amortization expenses.prior year. The average price of oil decreased 10.8increased 27.9 percent while the average price of natural gas decreased 2.4increased 6.4 percent during 20162018 compared to the prior year. The average domestic rig count during 20162018 was 48.217.7 percent lowerhigher than 2015.2017. International revenues, which decreasedincreased from $72.1$55.9 million in 20152017 to $90.4 million in 2018, were five percent of consolidated revenues in 2018 compared to four percent of consolidated revenues in 2017. International revenues increased primarily due to higher customer activity levels in Argentina and to a lesser extent, Mexico and Pakistan in 2018, partially offset by lower activity in Gabon compared to the prior year. Our international revenues are impacted by the timing of project initiation and their ultimate duration.

Cost of revenues.Cost of revenues in 2018 was $1.2 billion compared to $1.1 billion in 2017, an increase of $132.2 million or 12.6 percent due to higher employment costs, maintenance and repair expenses and other costs, all of which were driven by higher activity levels. As a percentage of revenues, cost of revenues increased to 68.7 percent in 2018 compared to 65.9 percent in 2017.

Selling, general and administrative expenses. Selling, general and administrative expenses increased 5.6 percent to $168.2 million in 2018 compared to $159.2 million in 2017. These expenses increased due to higher salaries and wages expense consistent with higher activity levels as well as an increase in information technology costs. Selling, general and administrative expenses as a percentage of revenues decreased slightly to 9.8 percent of revenues in 2018 compared to 10.0 percent of revenues in 2017 due to the leverage of higher revenues over primarily fixed expenses.

Depreciation and amortization.Depreciation and amortization were $163.1 million in 2018, a decrease of $0.4 million, compared to $163.5 million in 2017 due to lower capital expenditures in the prior year. As a percentage of revenues, depreciation and amortization decreased in 2018 compared to 2017 primarily due to higher revenues.

Gain on disposition of assets, net.Gain on disposition of assets, net was $3.3 million in 2018 compared to $4.5 million in 2017. The decrease is due to the sale of operating equipment related to its oilfield pipe inspection service line during the second quarter of 2017 that did not recur in the current period. The gain on disposition of assets, net is generally comprised of gains or losses related to various property and equipment dispositions or sales to customers of lost or damaged rental equipment.

Other income (expense), net.Other income, net was $9.3 million in 2018 compared to of $5.5 million in 2017. Other income recorded in 2018 includes property insurance proceeds totaling $9.6 million. Income recorded in 2017 included a favorable settlement of $2.0 million associated with the resolution of a sales tax matter, as well as a property insurance proceeds of $1.9 million.

Interest expense and interest income.Interest expense increased to $0.5 million in 2018 compared to $0.4 million in 2017. Interest expense in 2018 and 2017 principally consists of fees on the unused portion of the credit facility. Interest income increased to $2.4 million in 2018 compared to $1.5 thousand in 2017 due to higher investable cash balances.

Income tax provision (benefit). The income tax provision was $45.9 million in 2018 compared to $70.3 million in 2017. The effective tax rate was 20.7 percent in 2018 compared to 30.2 percent in 2017. The decrease in the income tax provision for 2018 primarily reflects the decrease in Federal income tax rates from 35 percent to 21 percent as enacted by the 2017 Tax Cuts and Jobs Act.

Net income and diluted earnings per share. Net income was $175.4 million in 2018, or $0.82 earnings per diluted share, compared to $162.5 million in 2017, or $0.75 earnings per diluted share. This improvement in earnings per share was due to higher net income as average shares outstanding was essentially unchanged.

Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

Revenues. Revenues in 2017 increased $866.3 million or 118.8 percent compared to 2016. The Technical Services segment revenues in 2017 increased $858.7 million or 126.3 percent compared to the prior year. The increase was due primarily to improved pricing, higher service intensity and activity levels and a larger active fleet of revenue-producing equipment as compared to prior year, particularly within our pressure pumping service. The Support Services segment revenues in 2017 increased $7.6 million or 15.3 percent compared to 2016 due primarily to improved activity levels and pricing in the rental tool service line, which is the largest service line within this segment. Technical Services reported an operating profit during 2017 compared to an operating loss in the prior year, while Support Services reported a smaller operating loss in 2017 compared to the prior year. The average price of oil increased 16.9 percent while the average price of natural gas increased 18.8 percent during 2017 compared to the prior year. The average domestic rig count during 2017 was 72.2 percent higher than 2016. International revenues, which increased from $51.2 million in 2016 to $55.8 million in 2017, were three percent of consolidated revenues in 2017 compared to seven percent of consolidated revenues in 2016 and six percent of consolidated revenues in 2015.2016. International revenues decreasedincreased primarily due to lowerhigher customer activity levels in Australia, Gabon, Equatorial Guinea, ChinaCanada and Argentina in 2016,2017, partially offset by increasedlower activity in Gabon and Bolivia compared to the prior year. Our international revenues are impacted by the timing of project initiation and their ultimate duration.

Cost of revenues.Cost of revenues in 20162017 was $1.1 billion compared to $607.9 million compared to $986.1 million in 2015, a decrease2016, an increase of $378.3$442.9 million or 38.472.9 percent due to lowerhigher materials and supplies expenses, employment costs, maintenance and repairs expenses and fuel costs, all of which were driven by higher activity levels coupled with reduced personnel headcount and incentive compensation.levels. As a percentage of revenues, cost of revenues increased in 2016 compared to 2015decreased due to inefficiencies resulting from lower activity levels coupled with continued lowleverage of higher revenues over direct employment costs and improved pricing for our services.

Selling, general and administrative expenses. Selling, general and administrative expenses decreased 3.8 percent to $150.7 million in 2016 compared to $156.6 million in 2015. These expenses decreased due to lower total employment costs due to headcount reductions, as well as other expense reduction efforts partially offset by an increase in bad debt expense and professional fees. The Company recorded a contingent professional fee of $2.0 million during the first quarter of 2016 in connection with the resolution of an open income tax matter. As a percentage of revenues, these costs increased during 2016 compared to 2015 due to increases in bad debt expense and professional fees previously noted as well as significantly lower revenues.

Selling, general and administrative expenses. Selling, general and administrative expenses increased 5.6 percent to $159.2 million in 2017 compared to $150.7 million in 2016. These expenses increased due to higher compensation costs, primarily incentive compensation, as well as other expenses consistent with higher activity levels and improved profitability. Selling, general and administrative expenses as a percentage of revenues decreased to 10.0 percent of revenues in 2017 compared to 20.7 percent of revenues in 2016 due to the leverage of higher revenues over primarily fixed expenses.

Depreciation and amortization.Depreciation and amortization were $217.3$163.5 million in 2016,2017, a decrease of $53.7 million, compared to $271.0$217.3 million in 20152016 due to lower capital expenditures duringin the last two years.prior year. As a percentage of revenues, depreciation and amortization increaseddecreased in 20162017 compared to 20152016 primarily due to significantly lowerhigher revenues.

Gain (loss) on disposition of assets, net.Gain on disposition of assets, net was $4.5 million in 2017 compared to $7.9 million in 2016 compared to a loss on disposition of assets, net of $6.4 million in 2015.2016. RPC recorded a gain on disposition of assets of $4.0 million during the fourth quarter of 2016 resulting from the sale of operating equipment related to its oilfield pipe inspection service. The remaining gain (loss) on disposition of assets, net in 2016 and 2017 is comprised of gains or losses related to various property and equipment dispositions or sales to customers of lost or damaged rental equipment.

Other income (expense) income,, net.Other income, net was $5.5 million in 2017 compared to other expense, net wasof $204 thousand in 2016 compared to other income, net2016. Income recorded in 2017 includes a favorable settlement of $5.2$2.0 million in 2015. Proceeds fromassociated with the resolution of a legal settlement totaling $6.3 million was recorded during 2015.sales tax matter, as well as a property insurance recovery of $1.9 million.

Interest expense and interest income.Interest expense decreased to $0.4 million in 2017 compared to $0.7 million in 2016 compared to $2.0 million in 2015.2016. Interest expense in 2017 and 2016 declined in comparison to the prior year because interest expense in the prior year included the accelerated amortization of loan fees totaling $0.6 million associated with RPC’s voluntary reduction of its syndicated credit facility. The current year expense principally consists of facility fees on the unused portion of the credit facility. Interest income increased to $1.5 million in 2017 compared to $467 thousand in 2016 compareddue to $83 thousand in 2015.higher investable cash balances.

Income tax benefit.provision (benefit). The income tax provision was $70.3 million in 2017 compared to an income tax benefit wasof $98.1 million in 2016 compared to $53.5 million in 2015.2016. The effective tax rate was 30.2 percent in 2017 compared to 41.0 percent in 2016 compared2016. The income tax provision for 2017 includes a discrete benefit of $19.3 million, due to 34.9 percent in 2015.the implementation of the recently enacted “Tax Cuts and Jobs Act.” The income tax benefit in 2016 includes a discrete tax benefit of $15.7 million recorded in connection with the favorable resolution of an open income tax matter.

Net lossincome (loss) and diluted lossearnings (loss) per share. Net income was $162.5 million in 2017, or $0.75 earnings per diluted share, compared to a net loss wasof $141.2 million in 2016, or $0.66 loss per diluted share, compared to a net loss of $99.6 million in 2015, or $0.47 loss per diluted share. This increaseimprovement in lossearnings per share was due to lowerhigher profitability as average shares outstanding was essentially unchanged.

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

Revenues.Revenues in 2015 decreased $1.1 billion or 45.9 percent compared to 2014. The Technical Services segment revenues for 2015 decreased 46.1 percent compared to the prior year due primarily to lower activity levels and pricing as compared to prior year, partially offset by increasing service intensity in our pressure pumping service, which is the largest service within this segment. The Support Services segment revenues for 2015 decreased 43.6 percent compared to 2014 due primarily to lower pricing and activity levels in the rental tool service, which is the largest service within this segment. Both the Technical and Support Services reported operating losses due to lower revenues, partially offset by cost control efforts undertaken throughout the Company. The average price of oil decreased 47.7 percent while the average price of natural gas decreased 39.3 percent during 2015 compared to the prior year. The average domestic rig count during 2015 was 47.3 percent lower than 2014. International revenues, which decreased from $88.2 million in 2014 to $72.1 million in 2015, were as a percentage of consolidated revenues, six percent in 2015 and four percent in 2014. International revenues decreased primarily due to lower customer activity levels in Canada, Australia, Bolivia and Mexico in 2015 partially offset by increased activity in Argentina compared to the prior year. Our international revenues are impacted by the timing of project initiation and their ultimate duration.

Cost of revenues.Cost of revenues in 2015 was $986.1 million compared to $1.5 billion in 2014, a decrease of $506.9 million or 34.0 percent. The decrease in these costs was due to lower costs resulting from lower activity levels, reduced personnel headcount and incentive compensation, and price reductions from suppliers, partially offset by the impact of increasing service intensity. Also during 2015, replacement parts totaling approximately $41.9 million were charged to cost of revenues rather than capitalized as a result of a change in accounting estimate. As a percentage of revenues, cost of revenues increased in 2015 compared to 2014 due to competitive pricing for our services and inefficiencies resulting from lower activity levels.

Selling, general and administrative expenses. Selling, general and administrative expenses decreased 20.6 percent to $156.6 million in 2015 compared to $197.1 million in 2014.  \This decrease was due to lower total employment costs and other cost reduction efforts as well as decreases in expenses which vary with activity and profitability. As a percentage of revenues, selling, general and administrative expenses increased in 2015 compared to 2014 due to the relatively fixed nature of some of these costs during the short term.

Depreciation and amortization.Depreciation and amortization were $271.0 million in 2015, an increase of $40.2 million, compared to $230.8 million in 2014 due to assets placed in service during late 2014 and the first six months of 2015. As a percentage of revenues, depreciation and amortization increased in 2015 compared to 2014.

Loss on disposition of assets, net.Loss on disposition of assets, net was $6.4 million in 2015 compared to $15.5 million in 2014. The loss on disposition of assets, net is comprised of gains or losses related to various property and equipment dispositions or sales to customers of lost or damaged rental equipment. The decrease in losses compared to the prior year resulted from a change in accounting estimate beginning in 2015 whereby the cost of replacing certain pressure pumping unit components was recorded as cost of revenues upon installation rather than being capitalized. During 2014, the remaining net book value of these components damaged beyond repair was recorded as a loss on disposition.

Other income (expense), net.Other income, net was $5.2 million in 2015 compared to other expense, net of $131 thousand in 2014. Proceeds from a legal settlement totaling $6.3 million was recorded during 2015.

Interest expense and interest income.Interest expense was $2.0 million in 2015 compared to $1.4 million in 2014. Interest expense in 2015 included the accelerated amortization of loan fees totaling $0.6 million associated with RPC’s voluntary reduction of the borrowing capacity under its syndicated credit facility from $350 million to $125 million. This cost was partially offset by lower interest expense due to a lower average debt balance on our revolving credit facility. Interest income increased to $83 thousand in 2015 compared to $19 thousand in 2014.

Income tax (benefit) provision.The income tax benefit was $53.5 million in 2015 compared to an income tax provision of $154.2 million in 2014. The benefit in 2015 resulted from the pretax loss. The effective tax rate was 34.9 percent in 2015 compared to 38.6 percent in 2014. The decrease in the effective tax rate in 2015 is due primarily to state tax calculations based on revenues rather than taxable income or losses.

Net (loss) income and diluted (loss) earnings per share. Net loss was $99.6 million in 2015, or $0.47 loss per diluted share, compared to net income of $245.2 million, or $1.14 earnings per diluted share in 2014.

Liquidity and Capital Resources

Cash and Cash Flows

The Company’s cash and cash equivalents were $116.3 million as of December 31, 2018, $91.1 million as of December 31, 2017 and $131.8 million as of December 31, 2016, $65.2 million as of December 31, 2015 and $9.8 million as of December 31, 2014.2016.

The following table sets forth the historical cash flows for the years ended December 31:

2016

Cash provided by operating activities in 2016 decreased2018 increased by $372.1$255.3 million compared to the same period in the prior year. This decreaseincrease is due primarily to an increase in net unfavorableincome of $12.9 million, net favorable changes in working capital of $237.0 million coupled with an increase in net losses of $41.7 million, a decrease in depreciation and amortization expenses of $54.4 million, a decrease in (gains) and losses on sale of assets of $14.3$196.7 million and a decrease in long-term liabilities of $15.7 million primarily related to the positive resolution of andeferred income tax matter.

provision of $64.0 million partially offset by gains due to an insurance recovery and a benefit plan financing arrangement. The net unfavorablefavorable change in working capital is primarily due to unfavorablefavorable changes of $337.0$262.6 million in accounts receivable due to a less significant decline in businesslower activity levels and revenues in 2016 compared to 2015,the third and $6.4fourth quarters 2018, $4.3 million decrease in inventory consistent with lower business activity levels. This unfavorable change wasaccrued expenses and $6.1 million in prepaid expenses/ other current assets. These favorable changes were partially offset by favorableunfavorable working capital changes of $56.2$9.3 million in net income taxes receivable/ payable, $9.4 million in inventories, $36.9 million in accounts payable; $28.6payable, $11.1 million in accrued state and local taxes and $9.2 million in accrued payroll and related expenses; $6.1 million in income taxes payable/ receivable, net; $5.0 million in prepaid expenses and other current assets and $4.2 million in accrued state, local and other taxes consistent with lower business activity levels coupled with the timing of payments.expenses.

Cash used for investing activities for 2016 decreasedin 2018 increased by $136.2$115.3 million, compared to 2015,2017, primarily as a resultbecause of significantly lowerhigher capital expenditures in response to weaker industry conditions.partially offset by property insurance proceeds.

Cash used for financing activities for 2016 decreasedin 2018 increased by $247.1$74.0 million primarily as a result of lower net loan repaymentsprimarily as there has been no outstanding borrowings since the fourth quartera result of 2015 coupled with lower common stockincreased cash dividends during 2016 compared to the same period in the prior year. The Company reduced its common stock dividend during the first quarter of 2015 and then temporarily suspended its regular quarterly common stock dividend beginning in the second quarter of 2015. The Company paid a special year-end cash dividend of $0.05 per share to common stockholders incoupled with the fourth quarterhigher cost of 2016.repurchases of the Company’s shares on the open market and for taxes related to the vesting of restricted shares.

2015

Cash provided by operating activities in 2017 increased $151.0by $32.0 million in 2015 compared to the prior yearyear. This increase is due primarily to aan increase in net income of $303.8 million, and an increase in other long-term liabilities of $15.6 million primarily related to the favorable changeresolution of an income tax matter in 2016. These changes were partially offset by net unfavorable changes in working capital of $506.8$234.7 million partially offset bycoupled with a decrease in net income (loss) of $344.8 million, an increase in depreciation and amortization expenses of $41.3 million, and an$54.5 million. The net unfavorable change in deferred taxes of $45.4 million due to a decrease in tax benefits resulting from lower capital expenditures.

The favorable change in working capital was primarily due to favorableunfavorable changes of $599.8$273.4 million in accounts receivable and $56.4$26.6 million in inventory as a result of lowerinventories due to higher business activity levels, $5.7 million in 2015 compared to the prior year. Also, there was a favorable changeprepaid expenses and other current assets, and $10.4 million in income taxes receivable/payable of $3.9 millionaccrued expenses due to the timing of payments. These favorable changes wereservices performed. This unfavorable change was partially offset by unfavorablefavorable changes in working capital of $35.4 million in accounts payable, of $98.9$23.3 million in income taxes receivable/ payable, net and $15.9 million in accrued payroll of $46.4 million and accrued state, local and other taxes of $5.8 million due to lowerrelated expenses consistent with higher business activity levels coupled with the timing of payments.payments and receipts of tax refunds.

Cash used for investing activities in 2015 decreased2017 increased by $197.8$83.0 million, compared to 2014,2016, primarily as a resultbecause of lowerhigher capital expenditures in response to weakerimproved industry conditions.

Cash used for financing activities in 20152017 increased by $294.4$56.4 million primarily as a result of higher net loan payments funded primarily bycash dividends to common stockholders consistent with improved financial results, and increased repurchases of the favorable changes in working capital, partially offset by lowerCompany’s common stock on the open market share repurchases and common stock dividends during 2015 comparedfor taxes related to the prior year. The Company reduced and then suspended its common stock dividend during 2015.vesting of certain restricted shares.

Financial Condition and Liquidity

The Company’s financial condition as of December 31, 20162018 remains strong. We believe the liquidity provided by our existing cash and cash equivalents and our overall strong capitalization will provide sufficient liquidity to meet our requirements for at least the next twelve months. The Company currently has a $125 million revolving credit facility that matures in January 2019.July 2023. The facility contains customary terms and conditions, including restrictions on indebtedness, dividend payments, business combinations and other related items. On June 30, 2016,July 26, 2018, the Company amended the revolving credit facility to, among other matters, (1) establish areplace the existing minimum tangible net worth covenant, as well as, (2) extend the maturity date of the revolving credit facility to July 26, 2023, (3) eliminate any borrowing base limitations on revolving loans when certain criteria exist, (4) reduce the commitment fees payable by RPC and (5) reduce the letter of credit sublimit from $50 million to be the lesser of $125 million or a specified percentage of eligible accounts receivable less the amount of any outstanding letters of credit.$35 million. As of December 31, 2016, there were30, 2018, RPC had no outstanding borrowings. RPC hadborrowings under the revolving credit facility, and letters of credit outstanding relating to self-insurance programs and contract bids totaling $19.1totaled $19.5 million; therefore, a total of $105.5 million as of December 31, 2016.the facility was available. For additional information with respect to RPC’s facility, see Note 67 of the Notes to Consolidated Financial Statements.Statements included in this report.

The Company’s decisions about the amount of cash to be used for investing and financing purposes are influenced by its capital position, including access to borrowings under our facility, and the expected amount of cash to be provided by operations.operations and access to borrowings under our facility. We believe our liquidity will continue to provide the opportunity to grow our asset base and revenues during periods with positive business conditions and strong customer activity levels. The Company’sIn addition, the Company's decisions about the amount of cash to be used for investing and financing activities couldmay also be influenced by the financial covenants in our credit facility but we do not expect the covenants to restrict our planned activities. The Company is in compliance with these financial covenants.

Cash Requirements

Capital expenditures were $33.9$242.6 million in 2016,2018, and we currently expect capital expenditures to be approximately $70$289 million in 2017.2019. We expect that a majority of these expenditures in 20172019 will be directed towards new revenue-producing equipment and capitalized equipment maintenance.  The remaining capital expenditures will be directed towards the purchasemaintenance of revenue-producingour existing equipment. The actual amount of capital expenditures will depend primarily on equipment maintenance requirements, expansion opportunities, and equipment delivery schedules.

The Company’s Retirement Income Plan, a multiple employer trusteed defined benefit pension plan, provides monthly benefits upon retirement at age 65 to eligible employees. During 2016,2018, the Company contributed $4.3$5.0 million to the pension plan and doesalthough not expect to make any additional contributionsrequired, Company management will evaluate contributing to the pension plan during 2017.2019.

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 31,578,12541,578,125 shares.On February 12, 2018, the Board of Directors increased the number of shares authorized for repurchase by 10 million shares. There were no2,131,496 shares purchased on the open market by the Company during 2016,2018, and 2,050,1548,843,769 shares remain available to be repurchased under the current authorization as of December 31, 2016.2018. The Company may repurchase outstanding common shares periodically based on market conditions and our capital allocation strategies considering restrictions under our credit facility. The stock buyback program does not have a predetermined expiration date.

On July 28, 2015,January 22, 2019, the Board of Directors voted to temporarily suspend RPC’sdeclared a regular quarterly dividend to common stockholders; however, the Board of Directors voted to pay a special year-end cash dividend of $0.05$0.10 per share payable March 11, 2019 to common stockholders duringof record at the fourth quarterclose of 2016. Thebusiness on February 11, 2019. Subject to industry conditions and RPC’s earnings, financial condition, and other relevant factors, the Company expects to resumecontinue to pay regular quarterly cash dividends to common stockholders sometime in the future, subject to the earnings and financial condition of the Company and other relevant factors.stockholders.

Contractual Obligations

The Company’s obligations and commitments that require future payments include our credit facility, certain non-cancelable operating leases, purchase obligations and other long-term liabilities. The following table summarizes the Company’s significant contractual obligations as of December 31, 2016:2018:

Fair 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. Assets and liabilities that are traded on an exchange with a quoted price are classified as Level 1. Assets and liabilities that are valued using significant observable inputs in addition to quoted market prices are classified as Level 2. The Company currently has no assets or liabilities measured on a recurring basis that are valued using unobservable inputs and therefore no assets or liabilities measured on a recurring basis are classified as Level 3. 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 or when not publicly available.

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. Also,In addition, increases in activity in the domestic oilfield can cause upward wage pressures in the labor markets from which it hires employees, as well asespecially if employment in the general economy increases. In addition, activity increases can cause increases in the costs of certain materials and key equipment components used to provide services to the Company’s customers. In previous periods of strongSince oilfield activity we experienced high employment costs duebegan to increase in the demand for skilled labor in our markets as well as high costs for certain raw materials the Company uses to provide its services. During 2015 and 2016, however, supplies of raw materials became more readily available as domestic oilfield activity decreased. In addition, skilled labor became more available, and upward wage pressures subsided. During the thirdsecond quarter of 2016, however, the Company began to experiencehas experienced upward pressure on the price of labor due to increased oilfield activity and athe shortage of skilled employees caused by the industry’s headcount reductions since the first quarter of 2015. Early in the first quarter of 2017, the Company has also started to experienceas well as occasional increases in the prices of certain raw materials used in providing our services. The marketDuring 2018, however, prices for the raw material comprising the Company’s services remains competitive,single largest raw material purchase began to decline due to relatively low commodity prices, so it may be difficult forincreased sources of supply of the Companymaterial, particularly in geographic markets located close to increase the prices chargedlargest U.S. oil and gas basin. In addition, labor cost pressures during the fourth quarter of 2018 began to our customersabate due to compensate for these cost increases. lower oilfield activity.

Off Balance Sheet Arrangements

The Company does not have any material off balance sheet arrangements.

Related Party Transactions

Marine Products Corporation

Effective in 2001, the Company spun off the business conducted through Chaparral Boats, Inc. (“Chaparral”), RPC’s former powerboat manufacturing segment. RPC accomplished the spin-off by contributing 100 percent of the issued and outstanding stock of Chaparral to Marine Products Corporation (a Delaware corporation) (“Marine Products”), a newly formed wholly owned subsidiary of RPC, and then distributing the common stock of Marine Products to RPC stockholders. In conjunction with the spin-off, RPC and Marine Products entered into various agreements that define the companies’ relationship.

In accordance with a Transition Support Services agreement, which may be terminated by either party, RPC provides certain administrative services, including financial reporting and income tax administration, acquisition assistance, etc., to Marine Products. Charges from the Company (or from corporations that are subsidiaries of the Company) for such services were $873,000 in 2018, $849,000 in 2017, and $739,000 in 2016, $753,000 in 2015, and $663,000 in 2014.2016. The Company’s receivable (payable) due to (from)from Marine Products for these services was $60,000$28,000 as of December 31, 20162018 and $(11,000)$47,000 as of December 31, 2015. The2017. Many of the Company’s directors are also directors of Marine Products and all of the executive officers are employees of both the Company and Marine Products.

Other

The Company periodically purchases in the ordinary course of business productsequipment or services from suppliers, who are owned by significant officers or stockholders, or affiliated with the directors of RPC. The total amounts paid to these affiliated parties were $1,467,000 in 2018, $1,372,000 in 2017 and $890,000 in 2016, $1,127,000 in 2015 and $1,092,000 in 2014.2016.

RPC receives certain administrative services and rents office space from Rollins, Inc. (a company of which Mr. R. Randall Rollins is also Chairman and which is otherwise affiliated with RPC). The service agreements between Rollins, Inc. and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months’ notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent totaled $101,000 in 2018, $104,000 in 2017 and $111,000 in 2016, $100,000 in 2015 and $84,000 in 2014.2016.

A group that includes the Company’s Chairman of the Board, R. Randall Rollins and his brother Gary W. Rollins, who is also a director of the Company, and certain companies under their control, controls in excess of fifty percent of the Company’s voting power.

RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. The purchase of the aircraft was completed in January 2015, and the purchase was funded primarily by a $2,554,000 contribution by each company to 255 RC, LLC. Each of RPC and Marine Products is a party to an operating lease agreement with 255 RC, LLC for a period of five years. RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of approximately$199,000 in 2018 and $197,000 in 20162017 and $186,000 in 20152016 for the corporate aircraft. The Company accounts for this investment using the equity method and its proportionate share of income or loss is recorded in selling, general and administrative expenses. As of December 31, 2016,2018, the investment closely approximates the underlying equity in the net assets of 255 RC, LLC.

Critical Accounting Policies

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require significant judgment by management in selecting the appropriate assumptions for calculating accounting estimates. 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 estimates with the Audit Committee of our Board of Directors. The Company believes the following critical accounting policies involve estimates that require a higher degree of judgment and complexity:

Allowance for doubtful accounts — 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. Our allowance for doubtful accounts 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 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. Provisions for doubtful accounts are recorded in selling, general and administrative expenses. Accounts are written off against the allowance for doubtful accounts 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. Therefore, the provision for doubtful accounts can fluctuate significantly from period to period. Recoveries were insignificant in 20162018, 2017 and 2014 and approximately $1.0 million in 2015.2016. We record specific provisions when we become aware of a customer’scustomer's inability to meet its financial obligations to us, such as in the case of bankruptcy filings or deterioration in the customer’scustomer'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.

The estimated allowance for doubtful accounts is based on our evaluation of the overall trends in the oil and gas industry, financial condition of our customers, our historical write-off experience, current economic conditions, and in the case of international customers, our judgments about the economic and political environment of the related country and region. 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 provisions for doubtful accounts as a percentage of revenues have ranged from 0.80.03 percent to (0.2)0.8 percent over the last three years. Increasing or decreasing the estimated general reserve percentages by 0.50 percentage points as of December 31, 20162018 would have resulted in a change of approximately $0.9$1.9 million to the allowance for doubtful accounts and a corresponding change to selling, general and administrative expenses.

Income taxes— The effective income tax rates were 20.7 percent in 2018, 30.2 percent in 2017 and 41.0 percent in 2016, 34.9 percent in 2015 and 38.6 percent in 2014.2016. Our effective tax rates vary due to changes in estimates of our future taxable income or losses, fluctuations in the tax jurisdictions in which our earnings and deductions are realized, and favorable or unfavorable adjustments to our estimated tax liabilities related to proposed or probable assessments. As a result, our effective tax rate may fluctuate significantly on a quarterly or annual basis. The effective tax rate for 2018 reflects the change in Federal income tax rates from 35 percent to 21 percent, as required by the Tax Cuts and Jobs Act (TCJA), as well as other beneficial adjustments.

We establishThe Company establishes a valuation allowance against the carrying value of deferred tax assets when we determineit is determined that it is more likely than not that the asset will not be realized through future taxable income. Such amounts are charged to earnings in the period in which we make such determination.the determination is made. Likewise, if we later determine that it is more likely than not that the net deferred tax assets would be realized, we would reverse the applicable portion of the previously provided valuation allowance. We have consideredallowance is reversed. The Company considers future market growth, forecasted earnings, future taxable income, the mix of earnings in the jurisdictions in which we operate,the Company operates, and prudent and feasible tax planning strategies in determining the need for a valuation allowance.

We calculate ourThe Company calculates the current and deferred tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed during the subsequent year. Adjustments based on filed returns are recorded when identified, which is generally in the third quarter of the subsequent year for U.S. federal and state provisions. Deferred tax liabilities and assets are determined based on the differences between the financial and tax bases of assets and liabilities using enacted tax rates in effect in the year the differences are expected to reverse. In 2017, the Company revalued its deferred tax assets and liabilities to reflect the change in Federal income tax rates, as required by the TCJA. All deferred tax assets and liabilities from December 31, 2017 forward reflect the changed rate.

The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities, which may result in proposed assessments. Our estimate for the potential outcome for any uncertain tax issue is highly judgmental. We believe we haveThe Company believes it has adequately provided for any reasonably foreseeable outcome related to these matters. However, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved or when statutes of limitation on potential assessments expire. Additionally, the jurisdictions in which our earnings or deductions are realized may differ from our current estimates.

Insurance expenses – The—The Company self-insures, up to certain policy-specified limits, certain risks related to general liability, workers’ compensation, vehicle and equipment liability. The cost of claims under these self-insurance programs is estimated and accrued using individual case-based valuations and statistical analysis and is based upon judgment and historical experience; however, the ultimate cost of many of these claims may not be known for several years. These claims are monitored and the cost estimates are revised as developments occur relating to such claims. 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, 2016,2018, the Company estimates the range of exposure to be from $12.1$15.9 million to $15.3$20.8 million. The Company has recorded liabilities at December 31, 20162018 of approximately $13.6$18.3 million which represents management’s best estimate of probable loss.

Depreciable life of assets — RPC’s net property, plant and equipment at December 31, 20162018 was $498.0$518.0 million representing 48.143.2 percent of the Company’s consolidated assets. Depreciation and amortization expenses for the year ended December 31, 20162018 were $217.3$163.1 million. Management judgment is required in the determination of the estimated useful lives used to calculate the annual and accumulated depreciation and amortization expense.

Property, plant and equipment are reported at cost less accumulated depreciation and amortization, which is provided on a straight-line basis over the estimated useful lives of the assets. The estimated useful life represents the projected period of time that the asset will be productively employed by the Company and is determined by management based on many factors including historical experience with similar assets. Assets are monitored to ensure changes in asset lives are identified and prospective depreciation and amortization expense is adjusted accordingly. During 2015 the Company reassessed the useful life of a specific component of its pressure pumping equipment that prior to 2015 had an expected useful life of 18 months. As a result of this reassessment, the Company concluded that this component is no longer a long-lived asset, but instead a consumable supply inventory item. Accordingly, effective January 1, 2015, the cost of this component was expensed as repairs and maintenance as part of cost of revenues at the time of installation. Management deemed the change preferable because it more closely reflects the pattern of consumption of this component as a result of continual increases in wear and tear resulting from harsher geological environments. We did not make any changes to the estimated lives of assets resulting in a material impact in 2016 and 2014.2018 or 2017.

Defined benefit pension plan – In 2002, the Company ceased all future benefit accruals under the defined benefit plan, although the Company remains obligated to provide employees benefits earned through March 2002. The Company accounts for the defined benefit plan in accordance with the provisions of Financial Accounting Standards Board (FASB) ASC 715, “Compensation – Retirement Benefits” and engages an outside actuary to calculate its obligations and costs. With the assistance of the actuary, the Company evaluates the significant assumptions used on a periodic basis including the estimated future return on plan assets, the discount rate, and other factors, and makes adjustments to these liabilities as necessary.

The Company chooses an expected rate of return on plan assets based on historical results for similar allocations among asset classes, the investments strategy, and the views of our investment advisor. Differences between the expected long-term return on plan assets and the actual return are amortized over future years. Therefore, the net deferral of past asset gains (losses) ultimately affects future pension expense. The Company’s assumption for the expected return on plan assets was seven percent for 2016, 20152018, 2017 and 2014.2016.

The discount rate reflects the current rate at which the pension liabilities could be effectively settled at the end of the year. In estimating this rate, the Company utilizes a yield curve approach. The approach utilizes an economic model whereby the Company’s expected benefit payments over the life of the plan are forecasted and then compared to a portfolio of investment grade corporate bonds that will mature at the same time that the benefit payments are due in any given year. The economic model then calculates the one discount rate to apply to all benefit payments over the life of the plan which will result in the same total lump sum as the payments from the corporate bonds. A lower discount rate increases the present value of benefit obligations. The discount rate was 4.454.65 percent as of December 31, 20162018 compared to 4.704.00 percent as of December 31, 20152017 and 4.154.45 percent in 2014.2016.

As set forth in Note 1011 to the Company’s financial statements, included among the asset categories for the Plan’s investments are real estate and alternative/ opportunistic/ special fund investments comprised of real estate funds and private equity funds. These investments are measured at net asset value and are valued using significant non-observable inputs which do not have a readily determinable fair value. These valuations are subject to judgments and assumptions of the funds which may prove to be incorrect, resulting in risks of incorrect valuation of these investments. The Company seeks to mitigate these risks by evaluating the appropriateness of the funds’ judgments and assumptions by reviewing the financial data included in the funds’ financial statements for reasonableness.

As of December 31, 2016,2018, the defined benefit plan was under-funded and the recorded change within accumulated other comprehensive loss decreased stockholders’ equity by approximately $1.3$2.0 million after tax. Holding all other factors constant, a change in the discount rate used to measure plan liabilities by 0.25 percentage points would result in a pre-tax increase or decrease of approximately $1.2$1.1 million to the net loss related to pension reflected in accumulated other comprehensive loss.

The Company recognized pre-tax pension (income) expense of $(0.2) million in 2018, $0.4 million in 2017 and $0.7 million in 2016, $0.4 million in 2015 and $0.2 million in 2014.2016. Based on the under-funded status of the defined benefit plan as of December 31, 2016,2018, the Company expects to recognize pension expense of $0.4 million$261 thousand in 2017.2019. Holding all other factors constant, a change in the expected long-term rate of return on plan assets by 0.50 percentage points would result in an increase or decrease in pension expense of approximately $0.2 million$185 thousand in 2017.2019. Holding all other factors constant, a change in the discount rate used to measure plan liabilities by 0.25 percentage points would result in an increase or decrease in pension expense of an immaterial amount$10 thousand in 2017.2019.

Recent Accounting Pronouncements

During the year ended December 31, 2016, theThe Financial Accounting Standards Board (FASB) issued the following applicable Accounting Standards Updates (ASUs)(ASU):

Recently Adopted Accounting Pronouncements:

Recently Issued Accounting Pronouncements Not Yet Adopted:Standards:

ToAccounting Standards Update (ASU) No. 2014-09, Revenue from Contacts with Customers (Topic 606): On January 1, 2018, the Company adoptedASC 606, Revenue from Contracts with Customersand all the related amendments (“new revenue standard”) for all contracts using the modified retrospective method, with no cumulative-effect adjustment to retained earnings upon adoption since most of the Company’s services are primarily short-term in nature and the pattern of transfer under ASC 605 is consistent with the pattern of transfer when evaluated under ASC 606. The comparative information has not been restated and continues to be adoptedreported under the accounting standards that were in 2017:effect for those periods. The adoption of the new revenue standard did not have a material impact on our consolidated financial statements. See Note 2 for expanded disclosures.

ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.The amendments make targeted improvements to existing U.S. GAAP and affects accounting for equity investments and financial instruments and liabilities and related disclosures. The Company adopted these provisions in the first quarter of 2018 and recognize the change in fair value of its equity securities as part of other income. In addition, as of the beginning of the first quarter of 2018, the Company adjusted opening retained earnings to recognize the cumulative impact of the adoption of these amendments. The Company does not expect the adoption of these provisions to have an ongoing material impact on its consolidated financial statements.

ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.The amendments provide guidance in the presentation and classification of certain cash receipts and cash payments in the statement of cash flows including debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method investees. The Company adopted these provisions in the first quarter of 2018 and has presented the accompanying statements of cash flow in conformity with these provisions. The Company does not expect the adoption of these provisions to have an ongoing material impact on its consolidated financial statements.

ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.The amendments require an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments eliminate the exception for an intra-entity transfer of an asset other than inventory. The Company adopted these provisions in the first quarter of 2018, and since the Company’s intra-entity transfers of property, plant and equipment are carried out at net book values, the adoption did not have a material impact on its consolidated financial statements.

ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments provide a more robust framework to use in determining when a set of assets and activities is a business. The Company adopted these provisions in the first quarter of 2018 and will apply these provisions as it completes future acquisitions. The Company does not expect the adoption of these provisions to have an ongoing material impact on its consolidated financial statements.

ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.The provisions are applicable when there are changes to the terms or conditions of a share-based payment award. The amendments require an entity to apply modification accounting for the effects of changes to the terms and conditions of a share-based payment award unless certain conditions including fair value, vesting conditions and classification are met. The Company adopted these provisions in the first quarter of 2018 and will apply these provisions if changes to the terms or conditions of a share-based payment award are made. The Company does not expect the adoption of these provisions to have an ongoing material impact on its consolidated financial statements.

Recently Issued Accounting Standards Not Yet Adopted:

To be adopted in 2018:2019:

REVENUE RECOGNITION:ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.The amendments provide an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded and require expanded disclosures regarding the Company’s accounting policy decisions on such reclassification. The amendments are effective starting in the first quarter of 2019, with early adoption permitted. The Company is currently evaluating the impact of adopting these provisions on its consolidated financial statements.

ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.The Financial Accounting Standards Boardamendments expand the scope of ASU 718 to include share-based payments issued to nonemployees for goods or services, thereby substantially aligning the accounting for share-based payments to nonemployees and International Accounting Standards Board issuedemployees. The amendments are effective starting in the first quarter of 2019. The Company currently does not expect the adoption of these provisions to have a material impact on its consolidated financial statements.

Leases (Topic 842). Under this guidance, lessees will need to recognize a right-of-use asset and a lease liability for virtually all of their convergedleases (other than leases that meet the definition of a short-term lease), at the commencement of the lease term. The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to certain adjustments, including initial direct costs and lessor provided incentives. The Company adopted the standard on revenue recognitionJanuary 1, 2019 using the optional transition method and the cumulative-effect adjustment to the opening balance of retained earnings was not material. All of the Company’s leases are currently classified as operating leases and the Company expects to record approximately $47 million in May 2014. The standard provides a comprehensive, industry-neutral revenue recognition model intended to increase financial statement comparability across companiesright-of-use assets and industries and significantly reduce the complexity inherent in today’s revenue recognition guidance. The various ASUs related toRevenuelease liabilities from Contracts with Customers (Topic 606) have been listed below:operating leases.

To be adopted in 2020 and later:

ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.The amendments require the credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration to be presented as an allowance rather than a write-down. It also allows recording of credit loss reversals in current period net income. The amendments are effective starting in the first quarter of 2020 with early application permitted a year earlier. The Company is currently evaluating the impact of adopting these provisions on its consolidated financial statements.

ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the amendments eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendments are effective for annual or any interim goodwill impairment tests beginning in 2020 applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of adopting these provisions on its consolidated financial statements.

Current Status of implementation:

The Company is currently analyzing the effect of the standardacross all of its revenue streams to evaluate the impact of the new standard on revenue contracts. This includes reviewing current accounting policiesimplementing a cloud computing service arrangement and practices to identify potential differences that would result from applyingalign the requirements underfor capitalizing implementation costs that are incurred in a hosting arrangement that is a service contract with the new standard. Most of the Company’s servicescosts incurred to develop or obtain internal-use software. The provisions may be applied prospectively or retrospectively. The amendments are primarily short-term in nature, and the assessment at this stage is that the Company does not expect the adoption of the new revenue recognition standard to have a material impact on its financial statements. The Company plans to adopt the standardeffective starting in the first quarter of 2018 using2020, with early adoption permitted. The Company is currently evaluating the modified retrospective method by recognizing the cumulative effectimpact of initially applying the new standard as an adjustment to the opening balance of retained earnings.adopting these provisions on its consolidated financial statements.

To be adopted in 2019 and later:

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The Company is subject to interest rate risk exposure through borrowings on its revolving credit agreement.facility. As of December 31, 2016,2018, there are no outstanding interest-bearing advances on our credit facility which bear interest at a floating rate.

Additionally, 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.

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. 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. 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. 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. 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.

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, 20162018 based on criteria established in the 2013Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management’s assessment is that RPC, Inc. maintained effective internal control over financial reporting as of December 31, 2016.2018.

The independent registered public accounting firm, Grant Thornton LLP, has audited the consolidated financial statements as of and for the year ended December 31, 2016,2018, and has also issued their report on the effectiveness of the Company’s internal control over financial reporting, included in this report on page 34.33.

Atlanta, Georgia

February 28, 20172019

Report of Independent Registered Public Accounting FirmREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

RPC, Inc.

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, 2016,2018, based on criteria established in the 2013Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)(“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in the 2013Internal Control—Integrated Framework issued by COSO.

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, 2018, and our report dated February 28, 2019 expressed an unqualified opinion on those financial statements.

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. 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 Public Company Accounting Oversight Board (United States).PCAOB. 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. 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.

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. 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.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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 28, 2019

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

RPC, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of RPC, Inc.(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedule under Item 15(2) (collectively referred to as the “financial statements”). In our opinion, the Company maintained,financial statements present fairly, in all material respects, effective internal control overthe financial reportingposition of the Company as of December 31, 2016, based on criteria established2018 and 2017, and the results of its operations and its cash flows for each of the three years in the 2013Internal Control—Integrated Framework issued by COSO.period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidatedCompany’s internal control over financial statementsreporting as of December 31, 2018, based on criteria established in the 2013Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Company as of and for the year ended December 31, 2016,Treadway Commission (“COSO”), and our report dated February 28, 20172019 expressed an unqualified opinion on those financial statements.opinion.

/s/ GRANT THORNTON LLPBasis for opinion

Atlanta, Georgia

February 28, 2017

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

RPC, Inc.

We have audited the accompanying consolidated balance sheets of RPC, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2016. Our audits of the basic consolidated financial statements included the financial statement schedule listed in the index appearing under Item 15(2). These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on thesethe Company’s financial statements and financial statement schedule based on our audits. 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 Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesmisstatement, 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. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An auditOur audits also includes assessingincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of RPC, Inc. and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2016, 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 28, 2017 expressed an unqualified opinion thereon.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2004.

Atlanta, Georgia

February 28, 20172019

Item 8. Financial Statements and Supplementary Data

CONSOLIDATED BALANCE SHEETS
RPC, INC. AND SUBSIDIARIES

(in thousands except share information)

The accompanying notes are an integral part of these statements.

CONSOLIDATED STATEMENTS OF OPERATIONS
RPC, INC. AND SUBSIDIARIES

(in thousands except per share data)

The accompanying notes are an integral part of these statements.

CONSOLIDATED STATEMENTS OF OPERATIONS
COMPREHENSIVE INCOME (LOSS)

RPC, INC. AND SUBSIDIARIES

(in thousands except per share data)

The accompanying notes are an integral part of these statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

STOCKHOLDERS’ EQUITY
RPC, INC. AND SUBSIDIARIES

(in thousands except per share data)thousands)