UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September~~June 30, ~~2017~~

2023

Commission File No. ~~1-8726~~001-08726

RPC, INC.

(Exact name of registrant as specified in its charter)

Delaware

~~Delaware~~		58-1550825
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

~~2801 Buford Highway, Suite 520, Atlanta, Georgia 30329~~

2801 Buford Highway, Suite 300, Atlanta, Georgia30329
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code —-- ~~(404)~~ (404) 321-2140

Securities Registered under Section 12(b) of the Act:


Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
Common stock, par value $0.10	RES	New York Stock Exchange

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. Yes x☒ No ¨

☐

Indicate by check mark whether the registrant has submitted electronically, ~~and posted on its corporate Web site,~~ if any, every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation 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). Yesx☒ No ¨

☐

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


Large accelerated filer	☒ ☐	Accelerated filer ☐	☒
	Non-accelerated filer	☐~~(Do not check if a smaller reporting company)~~	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 ¨☐ No x

☒

As of ~~October 20, 2017,~~July 21, 2023, RPC, Inc. had ~~216,585,808~~216,408,974 shares of common stock outstanding.

Table of Contents

RPC, INC. AND SUBSIDIARIES

Table of Contents

		Page No.
Part I. Financial Information

Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheets –As of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~2022		3

	Consolidated Statements of Operations – For the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022		4

	Consolidated Statements of Comprehensive Income ~~(Loss)~~ – For the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022		5

	Consolidated ~~Statement~~Statements of Stockholders’ Equity – For the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2023 and 2022		6

	Consolidated Statements of Cash Flows – For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022		7

	Notes to Consolidated Financial Statements		8 – 18

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19 – 27

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		27

Item 4.	Controls and Procedures		27

Part II. Other Information
~~Item 1.~~	~~Legal Proceedings~~	28
Item 1.	Legal Proceedings		28
~~Item 1A.~~	~~Risk Factors~~	28
Item 1A.	Risk Factors		28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		28

Item 3.	Defaults upon Senior Securities	28	29

Item 4.	Mine Safety Disclosures	28	29

Item 5.	Other Information	28	29

Item 6.	Exhibits		29

Signatures			30

~~RPC, INC. AND SUBSIDIARIES~~

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RPC, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF ~~SEPTEMBER~~JUNE 30, ~~2017~~2023 AND DECEMBER 31, ~~2016~~2022

(In thousands)


	June 30,		December 31,
	2023		2022
ASSETS		(Unaudited)		(Note 1)
Cash and cash equivalents	$	100,535	$	126,424
Accounts receivable, net of allowance for credit losses of $6,574 in 2023 and $7,078 in 2022		393,609		416,568
Inventories		104,194		97,107
Income taxes receivable		53,148		42,403
Prepaid expenses		14,427		17,753
Purchase of business - advance (Note 16)		78,982		—
Other current assets		3,440		3,086
Total current assets		748,335		703,341
Property, plant and equipment, less accumulated depreciation of $782,144 in 2023 and $775,334 in 2022		387,988		333,093
Operating lease right-of-use assets		27,331		28,864
Goodwill		32,150		32,150
Other assets		32,384		31,565
Total assets	$	1,228,188	$	1,129,013
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Accounts payable	$	88,006	$	115,213
Accrued payroll and related expenses		26,099		33,161
Accrued insurance expenses		5,165		3,232
Accrued state, local and other taxes		6,417		4,296
Income taxes payable		404		499
Pension liabilities		—		9,610
Current portion of operating lease liabilities		9,201		10,728
Other accrued expenses		1,807		1,864
Total current liabilities		137,099		178,603
Long-term accrued insurance expenses		9,640		7,149
Long-term retirement plan liabilities		23,526		23,106
Deferred income taxes		47,028		37,473
Long-term operating lease liabilities		19,555		19,517
Other long-term liabilities		3,938		5,430
Total liabilities		240,786		271,278
Commitments and contingencies (Note 9)
STOCKHOLDERS’ EQUITY
Preferred stock, $0.10 par value, 1,000,000 shares authorized, none issued		—		—
Common stock, $0.10 par value, 349,000,000 shares authorized, 216,408,974 and 216,609,191 shares issued and outstanding in 2023 and 2022, respectively		21,641		21,661
Capital in excess of par value		—		—
Retained earnings		968,023		856,013
Accumulated other comprehensive loss		(2,262)		(19,939)
Total stockholders’ equity		987,402		857,735
Total liabilities and stockholders’ equity	$	1,228,188	$	1,129,013

~~(Unaudited)~~

September 30, December 31,
2017 2016
ASSETS (Note 1)

Cash and cash equivalents $ 136,892 $ 131,835
Accounts receivable, net of allowance for doubtful accounts of $3,952 in 2017 and $2,553 in 2016 375,418 169,166
Inventories 113,359 108,316
Income taxes receivable 3,141 57,174
Prepaid expenses 5,587 6,718
Other current assets 8,043 5,848
Total current assets 642,440 479,057
Property, plant and equipment, less accumulated depreciation of $1,643,347 in 2017 and $1,595,508 in 2016 444,662 497,986
Goodwill 32,150 32,150
Other assets 29,374 26,259
Total assets $ 1,148,626 $ 1,035,452

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable $ 121,880 $ 70,536
Accrued payroll and related expenses 25,254 12,130
Accrued insurance expenses 4,224 4,099
Accrued state, local and other taxes 7,706 3,094
Income taxes payable 4,201 4,929
Other accrued expenses 1,098 6,680
Total current liabilities 164,363 101,468
Long-term accrued insurance expenses 10,320 9,537
Long-term pension liabilities 34,934 32,864
Deferred income taxes 53,529 81,466
Other long-term liabilities 3,627 3,318
Total liabilities 266,773 228,653
Common stock 21,658 21,749
Capital in excess of par value — —
Retained earnings 877,320 803,152
Accumulated other comprehensive loss (17,125 ) (18,102 )
Total stockholders' equity 881,853 806,799
Total liabilities and stockholders' equity $ 1,148,626 $ 1,035,452

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

RPC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2017~~2023 AND ~~2016~~2022

(In thousands except per share data)

(Unaudited)


	Three months ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022
Revenues	$	415,858	$	375,507	$	892,526	$	660,131
Cost of revenues		265,786		260,917		571,036		469,754
Selling, general and administrative expenses		43,604		35,879		85,801		72,119
Pension settlement charges		911		—		18,286		—
Depreciation and amortization		26,203		20,094		50,328		39,560
Gain on disposition of assets, net		(3,015)		(1,798)		(5,951)		(4,752)
Operating income		82,369		60,415		173,026		83,450
Interest expense		(73)		(222)		(145)		(400)
Interest income		2,698		128		4,553		143
Other income, net		631		79		1,392		583
Income before income taxes		85,625		60,400		178,826		83,776
Income tax provision		20,612		13,461		42,289		21,758
Net income	$	65,013	$	46,939	$	136,537	$	62,018
Earnings per share
Basic	$	0.30	$	0.22	$	0.63	$	0.29
Diluted	$	0.30	$	0.22	$	0.63	$	0.29

Three months ended Nine months ended
September 30, September 30,
2017 2016   2017 2016
Revenues $ 470,999 $ 175,884 $ 1,167,928 $ 507,977
Cost of revenues (exclusive of items shown below) 294,820 146,615 765,078 434,868
Selling, general and administrative expenses 39,738 34,859 117,183 114,863
Depreciation and amortization 39,587 51,975 125,513 168,891
Gain on disposition of assets, net    (503 ) (1,148 ) (5,779 ) (3,919 )
Operating income (loss) 97,357 (56,417 ) 165,933 (206,726 )
Interest expense (105 ) (115 ) (322 ) (566 )
Interest income 488 169 1,028 296
Other income, net    564 86 2,786 274
Income (loss) before income taxes 98,304 (56,277 ) 169,425 (206,722 )
Income tax provision (benefit)    40,970 (17,335 ) 64,617 (86,583 )
Net income (loss) $ 57,334 $ (38,942 ) $ 104,808 $ (120,139 )

Earnings (loss) per share
Basic $ 0.26 $ (0.18 ) $ 0.48 $ (0.56 )
Diluted $ 0.26 $ (0.18 ) $ 0.48 $ (0.56 )

Dividends per share $ 0.06 $ — $ 0.06 $ —

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

RPC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

FOR THE THREE AND ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2017~~2023 AND ~~2016~~2022

(In thousands)

(Unaudited)


	Three months ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022
Net income	$	65,013	$	46,939	$	136,537	$	62,018
Other comprehensive income:
Pension adjustment and reclassification adjustment, net of taxes		576		195		17,254		390
Foreign currency translation		439		65		423		181
Comprehensive income	$	66,028	$	47,199	$	154,214	$	62,589

Three months ended Nine months ended
September 30, September 30,
2017 2016 2017 2016
Net income (loss) $ 57,334 $ (38,942 ) $ 104,808 $ (120,139 )

Other comprehensive income (loss):
Pension adjustment and reclassification adjustment, net of taxes 135 126 405 380
Foreign currency translation 353 (144 ) 584 712
Unrealized gain (loss) on securities, net of taxes 9 7 (12 ) (2 )
Comprehensive income (loss) $ 57,831 $ (38,953 ) $ 105,785 $ (119,049 )

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

RPC, INC. AND SUBSIDIARIES

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF ~~STOCKHOLDERS'~~STOCKHOLDERS’ EQUITY

FOR THE ~~NINE~~THREE AND SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2017~~2023 AND 2022

(In thousands)

(Unaudited)


	Six months ended June 30, 2023
								Accumulated
				Capital in				Other
	Common Stock			Excess of		Retained		Comprehensive
	Shares	Amount		Par Value		Earnings		Loss		Total
Balance, December 31, 2022	216,609	$	21,661	$	—	$	856,013	$	(19,939)	$	857,735
Stock issued for stock incentive plans, net	1,149		115		1,687		—		—		1,802
Stock purchased and retired	(1,388)		(139)		(1,687)		(9,523)		—		(11,349)
Net income	—		—		—		71,524		—		71,524
Dividends	—		—		—		(8,679)		—		(8,679)
Pension adjustment, net of taxes	—		—		—		—		16,678		16,678
Foreign currency translation	—		—		—		—		(16)		(16)
Balance, March 31, 2023	216,370	$	21,637	$	—	$	909,335	$	(3,277)	$	927,695
Stock issued for stock incentive plans, net	40		4		2,312		—		—		2,316
Stock purchased and retired	(1)		—		(2,312)		2,310		—		(2)
Net income	—		—		—		65,013		—		65,013
Dividends	—		—		—		(8,635)		—		(8,635)
Pension adjustment, net of taxes	—		—		—		—		576		576
Foreign currency translation	—		—		—		—		439		439
Balance, June 30, 2023	216,409	$	21,641	$	—	$	968,023	$	(2,262)	$	987,402

Common Stock Capital in
Excess of Retained Accumulated
Other
Comprehensive
Shares Amount Par Value Earnings Loss Total
Balance, December 31, 2016 217,489 $ 21,749 $ — $ 803,152 $ (18,102 ) $ 806,799
Stock issued for stock incentive plans, net 459 46 8,973 — — 9,019
Stock purchased and retired (1,363 ) (137 ) (8,973 ) (17,614 ) — (26,724 )
Net income — — — 104,808 — 104,808
Dividends — — — (13,026 ) — (13,026 )
Pension adjustment, net of taxes — — — — 405 405
Foreign currency translation — — — — 584 584
Unrealized loss on securities, net of taxes — — — — (12 ) (12 )
Balance, September 30, 2017 216,585 $ 21,658 $ - $ 877,320 $ (17,125 ) $ 881,853


	Six months ended June 30, 2022
								Accumulated
				Capital in				Other
	Common Stock			Excess of		Retained		Comprehensive
	Shares	Amount		Par Value		Earnings		Loss		Total
Balance, December 31, 2021	215,629	$	21,563	$	—	$	640,936	$	(20,708)	$	641,791
Stock issued for stock incentive plans, net	1,037		104		1,393		—		—		1,497
Stock purchased and retired	(190)		(19)		(1,393)		502		—		(910)
Net income	—		—		—		15,079		—		15,079
Pension adjustment, net of taxes	—		—		—		—		195		195
Foreign currency translation	—		—		—		—		116		116
Balance, March 31, 2022	216,476	$	21,648	$	—	$	656,517	$	(20,397)	$	657,768
Stock issued for stock incentive plans, net	186		18		1,677		—		—		1,695
Stock purchased and retired	—		—		(1,677)		1,677		—		—
Net income	—		—		—		46,939		—		46,939
Pension adjustment, net of taxes	—		—		—		—		195		195
Foreign currency translation	—		—		—		—		65		65
Balance, June 30, 2022	216,662	$	21,666	$	—	$	705,133	$	(20,137)	$	706,662

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

RPC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(In thousands)

(Unaudited)


	Six months ended June 30,
	2023		2022
OPERATING ACTIVITIES
Net income	$	136,537	$	62,018
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and other non-cash charges		50,570		39,863
Stock-based compensation expense		4,118		3,192
Gain on disposition of assets, net		(5,951)		(4,752)
Deferred income tax provision		4,401		7,788
Pension settlement charges		18,286		-
(Increase) decrease in assets:
Accounts receivable		23,017		(98,745)
Income taxes receivable		(10,745)		13,027
Inventories		(7,001)		(11,172)
Prepaid expenses		3,327		1,054
Other current assets		(297)		540
Other non-current assets		(833)		5,290
Increase (decrease) in liabilities:
Accounts payable		(30,646)		23,824
Income taxes payable		(95)		(128)
Accrued payroll and related expenses		(7,075)		8,881
Accrued insurance expenses		1,933		(4,530)
Accrued state, local and other taxes		2,121		3,077
Other accrued expenses		(2,938)		(2,351)
Pension and retirement plans liabilities		(5,068)		(4,429)
Long-term accrued insurance expenses		2,491		(1,840)
Other long-term liabilities		1,406		2,246
Net cash provided by operating activities		177,558		42,853

INVESTING ACTIVITIES
Capital expenditures		(104,488)		(50,578)
Proceeds from sale of assets		8,688		7,148
Purchase of business - advance (Note 16)		(78,982)		—
Net cash used for investing activities		(174,782)		(43,430)

FINANCING ACTIVITIES
Payment of dividends		(17,314)		—
Cash paid for common stock purchased and retired		(11,351)		(910)
Cash paid for finance lease		—		(2,713)
Net cash used for financing activities		(28,665)		(3,623)

Net decrease in cash and cash equivalents		(25,889)		(4,200)
Cash and cash equivalents at beginning of period		126,424		82,433
Cash and cash equivalents at end of period	$	100,535	$	78,233

Supplemental cash flows disclosure:
Income tax payments, net	$	48,553	$	872
Interest paid	$	83	$	123
Supplemental disclosure of noncash investing activities:
Capital expenditures included in accounts payable	$	12,769	$	8,248

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

RPC, INC. AND SUBSIDIARIES

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016~~

~~(In thousands)~~

~~(Unaudited)~~

Nine months ended September 30,
2017 2016
OPERATING ACTIVITIES
Net income (loss) $ 104,808 $ (120,139 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and other non-cash charges 127,679 171,642
Stock-based compensation expense 9,019 8,065
Gain on disposition of assets, net (5,779 ) (3,919 )
Deferred income tax benefit (28,163 ) (31,677 )
Excess tax benefits for share-based payments — (360 )
(Increase) decrease in assets:
Accounts receivable (206,201 ) 89,173
Income taxes receivable 54,033 1,488
Inventories (4,730 ) 17,843
Prepaid expenses 1,134 4,436
Other current assets (2,037 ) (378 )
Other non-current assets (3,135 ) (1,251 )
Increase (decrease) in liabilities:
Accounts payable 47,151 (21,603 )
Income taxes payable (728 ) (3,613 )
Accrued payroll and related expenses 13,088 (2,067 )
Accrued insurance expenses 125 636
Accrued state, local and other taxes 4,612 4,154
Other accrued expenses (5,385 ) 52
Pension liabilities 2,708 (2,121 )
Long-term accrued insurance expenses 783 (1,642 )
Other long-term liabilities 309 (14,159 )
Net cash provided by operating activities 109,291 94,560

INVESTING ACTIVITIES
Capital expenditures (75,016 ) (24,917 )
Proceeds from sale of assets 10,532 7,141
Net cash used for investing activities (64,484 ) (17,776 )

FINANCING ACTIVITIES
Payment of dividends (13,026 ) —
Debt issuance costs for notes payable to banks — (35 )
Excess tax benefits for share-based payments — 360
Cash paid for common stock purchased and retired (26,724 ) (3,218 )
Net cash used for financing activities (39,750 ) (2,893 )

Net increase in cash and cash equivalents 5,057 73,891
Cash and cash equivalents at beginning of period 131,835 65,196
Cash and cash equivalents at end of period $ 136,892 $ 139,087

Supplemental cash flows disclosure:
Interest paid, net of amounts capitalized $ 192 $ 373
Income taxes paid (refund), net $ 39,775 $ (39,333 )

Supplemental disclosure of noncash investing activities:
Capital expenditures included in accounts payable $ 7,552 $ 3,002

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~RPC, INC. AND SUBSIDIARIES~~

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

The accompanying unaudited consolidated financial statements include the accounts of RPC, Inc. and its wholly-owned subsidiaries ~~(“RPC”~~(RPC or the ~~“Company”)~~Company) and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These consolidated financial statements have been prepared in accordance with ~~the Financial Accounting Standards Board (FASB)~~ Accounting Standards Codification (ASC) Topic 810, “Consolidation” and Rule 3A-02(a) of Regulation S-X. In accordance with ASC Topic 810 and Rule 3A-02 (a) of Regulation S-X, the Company’s policy is to consolidate all subsidiaries and investees where it has voting control.

In the opinion of management, all adjustments (all of which consisted of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2023 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2017.~~

2023.

The balance sheet at December 31, ~~2016~~2022 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, ~~2016.~~

2022.

A group that includes ~~the Company’s Chairman of the Board, R. Randall Rollins, and his brother~~ Gary W. Rollins, ~~who~~Pamela R. Rollins, Amy Rollins Kreisler and Timothy C. Rollins, each of whom 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.

~~REVENUES~~

2. RECENT ACCOUNTING STANDARDS

Recently Adopted Accounting Standards:

ACCOUNTING STANDARDS UPDATE (ASU) No. 2021-08: Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers: The amendments in this ASU address diversity in practice related to the accounting for revenue contracts with customers acquired in a business combination, by adopting guidance requiring an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer would recognize and measure the acquired contract assets and contract liabilities in the same manner that they were recognized and measured in the acquiree's financial statements before the acquisition. The Company adopted these provisions in the second quarter of 2023 prospectively to future business combinations and the adoption did not have a material impact on its consolidated financial statements.

3. REVENUES

Accounting Policy:

RPC’s contract revenues are generated principally from providing oilfield services. These services ~~and the related equipment. Revenues are recognized when the services are rendered and collectability is reasonably assured. Revenues from services and equipment~~ are based on ~~fixed or determinable priced purchase orders or contracts~~mutually agreed upon pricing with the customer prior to the services being delivered and, given the nature of the services, do not include the right of return. ~~Rates~~Pricing for these services is a function of rates based on the nature of the specific job, with consideration for the extent of equipment, labor, and ~~equipment~~consumables needed for the job. RPC typically satisfies its performance obligations over time as the services are ~~priced~~performed. RPC records revenues based on ~~a per day, per unit of measure, per man hour or similar basis.~~ the transaction price agreed upon with its customers.

Sales tax charged to customers is presented on a net basis within the ~~consolidated statement~~accompanying Consolidated Statements of ~~operations~~Operations and therefore excluded from revenues.

~~RECENT ACCOUNTING PRONOUNCEMENTS~~

Nature of services:

~~The Financial Accounting Standards Board (FASB) issued the following applicable Accounting Standards Updates (ASU):~~

~~Recently Adopted Accounting Pronouncements:~~

~~Accounting Standards Update (ASU) No. 2015-11, Inventory (Topic 330): Simplifying the Measurement~~RPC provides a broad range of ~~Inventory.~~~~Current requirements are~~specialized oilfield services to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximated normal profit margin. These amendments allow inventory to be measured at lower of cost or net realizable valueindependent and ~~eliminates the market requirement. Net realizable value is the estimated selling price~~major oil and gas companies engaged in the ~~ordinary course~~exploration, production and development of ~~business, less reasonably predictable costs~~oil and gas properties throughout the United States and in selected international

Table of completion, disposal, and transportation. The Company adopted these provisions in the first quarter of 2017 on a prospective basis. The adoption of these provisions did not have a material impact on the Company’s consolidated financial statements.

Contents

~~ASU No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.~~The amendments simplify several aspects of the accounting for share-based payment award transactions, requiring excess tax benefits and deficiencies to be recognized as a component of income tax expense rather than equity. This guidance also requires excess tax benefits and deficiencies to be presented as an operating activity on the statement of cash flows and allows an entity to make an accounting policy election to either estimate expected forfeitures or to account for them as they occur. The Company will continue to estimate expected forfeitures. The Company adopted these provisions in the first quarter of 2017 on a prospective basis. See Notes on Stock-Based Compensation and Income Taxes for the effect of adoption on the financial statements.

RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~Recently Issued Accounting Pronouncements Not Yet Adopted:~~

~~To be adopted in 2018:~~

markets. RPC manages its business as either (1) services offered on the well site with equipment and personnel (Technical Services) or (2) services and tools offered off the well site (Support Services). For more detailed information about operating segments, see Note 6.
~~REVENUE RECOGNITION:~~RPC contracts with its customers to provide the following services by reportable segment:
Technical Services
~~The Financial Accounting Standards Board~~
●Includes pressure pumping, downhole tools services, coiled tubing, nitrogen, snubbing and ~~International Accounting Standards Board issued their converged standard on revenue recognition in May 2014. The standard provides a comprehensive, industry-neutral revenue recognition model intended~~other oilfield related services including wireline, well control, fishing, pump down services and cementing.
Support Services
●Rental tools – RPC rents tools to ~~increase financial statement comparability across companies~~its customers for use with onshore and ~~industries~~offshore oil and ~~significantly reduce the complexity inherent in today's revenue recognition guidance. The various ASUs related to~~~~Revenue from Contracts~~gas well drilling, completion and workover activities.
●Other support services include oilfield pipe inspection services, pipe management and pipe storage, well control training and consulting.
Our contracts with ~~Customers (Topic 606)~~ ~~have been listed below:~~
· ~~ASU No. 2014-09,~~~~the core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to~~ customers ~~in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services using a five-step process.~~
· ~~ASU No. 2015-14,~~ ~~deferred the effective date of ASU 2014-09 for all entities by one year to the first quarter of 2018 with early application permitted.~~
· ~~ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net).~~~~The amendments provide guidance on whether an entity is a principal or agent when providing services to a customer along with another party.~~
· ~~ASU No. 2016-10, Identifying Performance Obligations and Licensing.~~~~The amendments clarify the earlier guidance on identifying performance obligations and licensing implementation.~~
· ~~ASU No. 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting.~~~~This ASU rescinds certain SEC guidance related to issues that are currently codified under various topics.~~
· ~~ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients.~~The amendments provide clarifying guidance on certain aspects of the five step process and practical expedients regarding the effect of modifications and status of completed contracts under legacy GAAP and disclosures related to the application of this guidance using the modified retrospective or retrospective transition method.
· ~~ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers.~~The amendments in ASU 2016-20 affect narrow aspects of the guidance issued in ASU 2014-09 and includes among others, loan guarantees, impairment testing of contract costs, performance obligations disclosures and accrual of advertising costs.
~~Current Status of implementation:~~
~~The Company is currently analyzing the effect of the standard~~across all of its revenue streams to evaluate the impact of the new standard on its revenue contracts. This includes reviewing current accounting policies and practices to identify potential differences that would result from applying the requirements under the new standard. ~~Most of the Company’s services~~ are ~~primarily~~generally short-term in nature and generally consist of a single performance obligation – the ~~assessment at this stage~~provision of oilfield services.
Payment terms:
RPC’s contracts with customers state the final terms of the sales, including the description, quantity, and price of each service to be delivered. The Company’s contracts are generally short-term in nature and in most situations, RPC provides services ahead of payment - i.e., RPC has fulfilled the performance obligation prior to submitting a customer invoice. RPC invoices the customer upon completion of the specified services and collection is ~~that~~generally expected between 30 to 60 days after invoicing. As the Company does not expect the adoption of the new revenue recognition standard to have a material impact on its financial statements. As part of its preparation to adopt the standard, the Company established an initial project governance framework, selected a working group and hired a third party service provider to assist with the evaluation. The Company has completed a preliminary review of a representative sample ofenters into contracts with its customers, ~~and identified~~it generally expects there to be no significant timing difference between the ~~variable consideration provisions~~date the services are provided to the customer (satisfaction of the ~~new guidance~~performance obligation) and the date cash consideration is received. Accordingly, there is no financing component to our arrangements with customers.
Significant judgments:
RPC believes the output method is a reasonable measure of progress for the satisfaction of our performance obligations, which are satisfied over time, as ~~potentially having~~it provides a faithful depiction of (1) our performance toward complete satisfaction of the ~~most impact on~~performance obligation under the contract and (2) the value transferred to the customer of the services performed under the contract. RPC has elected the right to invoice practical expedient for recognizing revenue related to its performance obligations.
Disaggregation of revenues:
See Note 6 for disaggregation of revenue by operating segment and services offered in each of them and by geographic regions.
Contract balances:
Contract assets representing the Company’s method of recognizing revenue. In the next phases of solution development and implementation, the Company will prepare technical accounting memorandums, draft new formal accounting policies, outline and refine required disclosures, identify new IT system requirements, as well as assess the needrights to consideration for ~~additional contract reviews to ensure a representative sample of how the Company contracts with its customers has been chosen. The Company plans to adopt the standard~~work completed but not billed are included in accounts receivable, net in the ~~first quarter~~accompanying Consolidated Balance Sheets are shown below:

June 30,

December 31,
(in thousands)

2023

2022
Unbilled trade receivables

$
60,139

$
103,498

Substantially all of ~~2018 using~~ the ~~modified retrospective method by recognizing~~unbilled trade receivables disclosed were or are expected to be invoiced during the ~~cumulative effect of initially applying the new standard as an adjustment to the opening balance of retained earnings.~~following quarter.
9
9

Table of Contents

RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~OTHER PRONOUNCEMENTS:~~

~~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 amendments are effective starting in the first quarter of 2018, with early adoption permitted for certain provisions. The Company is currently evaluating the impact of these provisions 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 amendments are effective starting in the first quarter of 2018 with early adoption permitted. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company is currently evaluating the impact of adopting these provisions 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. Two common examples of assets included in the scope of the amendments are intellectual property and property, plant, and equipment. The amendments do not include new disclosure requirements; however, existing disclosure requirements might be applicable when accounting for the current and deferred income taxes for an intra-entity transfer of an asset other than inventory. The amendments are effective starting in the first quarter of 2018 with early adoption permitted. The amendments are required to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact of adopting these provisions 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. They also provide more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable. The amendments are effective beginning in the first quarter of 2018 with early application permitted under certain circumstances. The Company expects to adopt these provisions as it completes future acquisitions and plans to evaluate the impact of adoption on its consolidated financial statements as acquisitions are completed.

~~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 amendments are effective beginning in the first quarter of 2018 with early application permitted under certain circumstances. The Company is currently evaluating the impact of adopting these provisions on its consolidated financial statements.

4.    EARNINGS PER SHARE
~~RPC, INC. AND SUBSIDIARIES~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~
~~To be adopted in 2019 and later:~~
~~ASU No. 2016-02, Leases (Topic 842).~~Under the new guidance, lessees will need to recognize a right-of-use asset and a lease liability for virtually all of their leases (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 adjustment, such as for initial direct costs. The amendments in this standard are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Lessees and lessors may not apply a full retrospective transition approach. The Company is currently evaluating the impact of adopting these provisions on its consolidated financial statements.
~~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 should 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.
4. ~~EARNINGS (LOSS) PER SHARE~~
Basic and diluted earnings ~~(loss)~~ per share are computed by dividing net income ~~(loss)~~ by the weighted average number of shares outstanding during the respective periods. In addition, the Company has periodically issued share-based payment awards that contain non-forfeitable rights to dividends and are therefore considered participating securities. Restricted shares of common stock (participating securities) outstanding and a reconciliation of weighted average shares outstanding is as follows:

Three months ended
September 30,

Nine months ended
September 30,

(In thousands) 2017 2016 2017 2016
Net income (loss) available for stockholders: $ 57,334 $ (38,942 ) $ 104,808 $ (120,139 )
Less: Adjustments for earnings attributable to participating securities (732 ) - (1,392 ) -
Net income (loss) used in calculating losses per share $ 56,602 $ (38,942 ) $ 103,416 $ (120,139 )

Weighted average shares outstanding (including participating securities) 216,958 217,531 217,401 217,511
Adjustment for participating securities (2,829 ) (3,265 ) (2,936 ) (3,298 )
Shares used in calculating basic and diluted earnings (loss) per share 214,129 214,266 214,465 214,213

Three months ended

Six months ended

June 30

June 30

(in thousands)

2023

2022

2023

2022

Net income available for stockholders

$
65,013

$
46,939

$
136,537

$
62,018

Less: Adjustments for earnings attributable to participating securities

(1,056)

(695)

(2,193)

(886)

Net income used in calculating earnings per share

$
63,957

$
46,244

$
134,344

$
61,132

Weighted average shares outstanding (including participating securities)

216,398

216,565

216,762

216,403

Adjustment for participating securities

(3,584)

(3,206)

(3,544)

(3,090)

Shares used in calculating basic and diluted earnings per share

212,814

213,359

213,218

213,313

5.

5.    STOCK-BASED COMPENSATION
In April 2014, the Company reserved 8,000,000 shares of common stock under the 2014 Stock Incentive Plan with a term of 10 years expiring in April 2024. This plan provides for the issuance of various forms of stock incentives, including, among others incentive and non-qualified stock options and restricted shares. As of ~~September~~June 30, ~~2017,~~2023, there were ~~5,757,734~~866,487 shares available for grant.
11
In the first quarter of 2023, the Company issued time-lapse restricted shares to certain employees that will vest ratably over a period of four years. In addition, the Company granted performance share unit awards to its executive officers and certain other employees that vest based on the achievement of pre-established financial performance targets and relative total shareholder return performance. The awards will be issued at different levels based on the performance achieved with a cliff vesting at the end of fiscal year ending 2025. The Company evaluated the portion of the award that are probable to vest and has accrued compensation expense at 100 percent of the target award.
~~RPC, INC. AND SUBSIDIARIES~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~
Stock-based employee compensation expense for the three and six months ended June 30, 2023 was as ~~follows for the periods indicated:~~follows:

Three months ended Nine months ended
September 30, September 30

Three months ended

Six months ended

June 30,

June 30,
(in thousands) 2017 2016 2017 2016

2023

2022

2023

2022
Pre-tax expense $ 3,007 $ 2,703 $ 9,019 $ 8,065

$
2,316

$
1,695

$
4,118

$
3,192
After tax expense $ 1,909 $ 1,716 $ 5,727 $ 5,121

$
1,744

$
1,279

$
3,126

$
2,409
~~Restricted Stock~~

The following is a summary of the changes in non-vested restricted shares for the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2023:

Shares Weighted Average
Grant-Date Fair
Value
Non-vested shares at December 31, 2016 3,217,075 $ 12.91

Weighted Average


Shares

Grant-Date Fair Value
Non-vested shares at January 1, 2023

3,248,728

$
6.87
Granted 563,065 21.66

1,235,728

9.50
Vested (894,042 ) 13.34

(858,425)

8.60
Forfeited (103,933 ) 14.05

(47,276)

8.22
Non-vested shares at September 30, 2017 2,782,165 $ 14.50
Non-vested shares at June 30, 2023

3,578,755

$
7.35

Table of Contents

RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The total fair value of shares vested was ~~approximately $19,271,000~~$7.8 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~$9,611,000~~$2.8 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. Excess tax benefits or deficits realized from tax compensation deductions in excess of, or lower than, compensation expense ~~have been reflected~~are recorded as ~~follows:~~

$2,562,000 for the nine months ended September 30, 2017 has been recorded as a discrete income tax adjustment and classified within operating activities in the consolidated statements of cash flows; and

$360,000 for the nine months ended September 30, 2016 were credited to capital in excess of par value and classified within financing activities as an inflow in addition to being disclosed as an outflow within operating activities in the consolidated statements of cash flows.

either a beneficial or detrimental discrete income tax adjustment. This was a favorable adjustment of $165 thousand for the six months ended June 30, 2023 and a detrimental adjustment of $669 thousand for the six months ended June 30, 2022. The ~~change in classification beginning in~~table above does not include any of the ~~first quarter of 2017 was in accordance with the amendments of ASU 2016-09.~~

~~As of September 30, 2017, total unrecognized compensation cost~~activity related to ~~non-vested restricted shares was $41,850,000, which is expected to be recognized over a weighted-average period of 3.5 years~~.performance share unit awards since they are not currently issued or vested.

6. BUSINESS SEGMENT INFORMATION

RPC’s reportable segments are the same as its operating segments. RPC manages its business ~~as either services offered~~under Technical Services and Support Services. Technical Services is comprised of service lines that generate revenue based on equipment, personnel or materials at the well site and are closely aligned with ~~equipment~~completion and ~~personnel (Technical Services) or~~production activities of the customers. Support Services is comprised of service lines which generate revenue from services and ~~equipment~~tools offered off the well site ~~(Support Services).~~and are more closely aligned with the customers’ drilling activities. Selected overhead including certain centralized support services and regulatory compliance are classified ~~under~~as Corporate.

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 well, 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. The services offered under Technical Services are high capital and personnelintensivebusinesses. 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 segment include the United States, including the Gulf of Mexico, the mid-continent, southwest, Rocky Mountain and Appalachian regions, and international locations including primarily Argentina, Canada, China, Gabon, Colombia and the Middle East. Customers include major multi-national and independent oil and gas producers, and selected nationally-owned oil companies.

~~RPC, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Support Services ~~include all~~consist primarily of the services that provide (i) equipment for customers’ use on 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 equipment provided for customers’ use on 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 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 equipment and services offered include drill pipe and related tools, pipe handling, inspection and storage services, and oilfield training services. The principal markets for this segment include the United States, including the Gulf of Mexico, the mid-continent and Appalachian regions, and selected international locations. Customers include domestic operations of major multi-national and independent oil and gas producers, and selected nationally-owned oil companies.

The Company’s Chief Operating Decision Maker (“CODM”) assesses performance and makes resource allocation decisions regarding, among others, staffing, growth and maintenance capital expenditures and key initiatives based on the operating segments outlined above.

Segment Revenues:

RPC’s operating segment revenues by major service lines are shown in the following table:

Three months ended

Six months ended

June 30,

June 30,

(in thousands)

2023

2022

2023

2022

Technical Services:









Pressure Pumping

$
209,820

$
194,641

$
474,621

$
314,539

Downhole Tools

101,589

89,927

208,993

170,997

Coiled Tubing

38,355

36,315

78,421

63,165

Nitrogen

12,719

10,789

24,816

18,392

Snubbing

7,672

7,025

14,763

13,237

All other

19,863

17,406

40,395

42,122

Total Technical Services

$
390,018

$
356,103

$
842,009

$
622,452

Support Services:









Rental Tools

$
18,334

$
14,314

$
36,010

$
27,377

All other

7,506

5,090

14,507

10,302

Total Support Services

$
25,840

$
19,404

$
50,517

$
37,679

Total revenues

$
415,858

$
375,507

$
892,526

$
660,131

Table of Contents

RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following summarizes revenues for the United States and separately for all international locations combined for the three and six months ended June 30, 2023 and 2022. The revenues are presented based on the location of the use of the equipment or services. Assets related to international operations are less than 10 percent of RPC’s consolidated assets, and therefore are not presented.


Three months ended

Six months ended

June 30,

June 30,

(in thousands)

2023

2022

2023

2022

United States revenues

$
409,431

$
368,824

$
878,818

$
644,169

International revenues

6,427

6,683

13,708

15,962

Total revenues

$
415,858

$
375,507

$
892,526

$
660,131

The accounting policies of the reportable segments are the same as those referenced in Note 1 to these consolidated financial statements. RPC evaluates the performance of its segments based on revenues, operating profits and return on invested capital. Gains or losses on disposition of assets are reviewed by the CODM on a consolidated basis, and accordingly the Company does not report gains or losses ~~on disposition of assets~~ at the segment level. Inter-segment revenues are generally recorded in segment operating results at prices that management believes approximate prices for arm’s length transactions and are not material to operating results.
13
~~RPC, INC. AND SUBSIDIARIES~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~
Summarized financial information with respect RPC’s reportable segments for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2023, and ~~2016~~2022 are shown in the following table:

Three months ended
September 30

Nine months ended
September 30

Three months ended

Six months ended

June 30,

June 30,
(in thousands) 2017 2016 2017 2016

2023

2022

2023

2022
Revenues:








Technical Services $ 455,719 $ 163,331 $ 1,127,379 $ 470,020

$
390,018

$
356,103

$
842,009

$
622,452
Support Services 15,280 12,553 40,549 37,957

25,840

19,404

50,517

37,679
Total revenues $ 470,999 $ 175,884 $ 1,167,928 $ 507,977

$
415,858

$
375,507

$
892,526

$
660,131
Operating income (loss):
Operating income:

Technical Services $ 104,349 $ (48,627 ) $ 184,455 $ (177,581 )

$
77,017

$
59,827

$
180,550

$
81,638
Support Services (2,062 ) (5,541 ) (10,622 ) (19,340 )

7,920

3,334

14,564

6,114
Corporate (5,433 ) (3,397 ) (13,679 ) (13,724 )
Corporate expenses

(4,672)

(4,544)

(9,753)

(9,054)
Pension settlement charges

(911)

—

(18,286)

—
Gain on disposition of assets, net 503 1,148 5,779 3,919

3,015

1,798

5,951

4,752
Total operating income (loss) $ 97,357 $ (56,417 ) $ 165,933 $ (206,726 )
Total operating income

$
82,369

$
60,415

$
173,026

$
83,450
Interest expense (105 ) (115 ) (322 ) (566 )

(73)

(222)

(145)

(400)
Interest income 488 169 1,028 296

2,698

128

4,553

143
Other income, net 564 86 2,786 274

631

79

1,392

583
Income (loss) before income taxes $ 98,304 $ (56,277 ) $ 169,425 $ (206,722 )
Income before income taxes

$
85,625

$
60,400

$
178,826

$
83,776
As of and for the nine months ended
September 30, 2017
(in thousands)
Technical
Services Support
Services Corporate Total
Depreciation and amortization $ 111,567 $ 13,599 $ 347 $ 125,513
Capital expenditures 66,445 7,669 902 75,016
Identifiable assets $ 894,714 $ 75,550 $ 178,362 $ 1,148,626

As of and for the nine months ended
September 30, 2016
(in thousands)

Technical
Services Support
Services Corporate Total

As of and for the six months ended

Technical

Support

June 30, 2023

Services

Services

Corporate

Total
(in thousands)








Depreciation and amortization $ 148,880 $ 19,657 $ 354 $ 168,891

$
45,580

$
4,723

$
25

$
50,328
Capital expenditures 20,596 1,953 2,368 24,917

97,317

5,285

1,886

104,488
Identifiable assets $ 749,721 $ 78,471 $ 224,700 $ 1,052,892

853,837

87,972

286,379

1,228,188

7.

As of and for the six months ended

Technical

Support

June 30, 2022

Services

Services

Corporate

Total
(in thousands)

Depreciation and amortization

$
34,682

$
4,752

$
126

$
39,560
Capital expenditures

43,418

7,066

94

50,578
Identifiable assets

702,162

76,205

186,712

965,079

12
Table of Contents
RPC, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7.    CURRENT EXPECTED CREDIT LOSSES
The Company utilizes an expected credit loss model for valuing its accounts receivable, a financial asset measured at amortized cost. The Company is exposed to credit losses primarily from providing oilfield services. The Company’s expected allowance for credit losses for accounts receivable is based on historical collection experience, current and future economic and market conditions and a review of the current status of customers’ account receivable balances. Due to the short-term nature of such receivables, the estimated amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. The Company’s monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of customers’ financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible and recoveries of amounts previously written off are recorded when collected.
The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected:

Six months ended June 30,

2023

2022
(in thousands)

Beginning balance

$
7,078

$
6,765
Provision for current expected credit losses

1,678

762
Write-offs

(2,300)

(1,708)
Recoveries collected (net of expenses)

118

12
Ending balance

$
6,574

$
5,831

8.    INVENTORIES
Inventories consist of ~~$113,359,000 at September 30, 2017~~(i) raw materials and ~~$108,316,000 at December 31, 2016 consist~~supplies that are consumed providing services to the Company’s customers, (ii) spare parts for equipment used in providing these services and (iii) components and attachments for manufactured equipment used in providing services. In the table below, spare parts and components are included as part of raw materials ~~parts~~ and ~~supplies.~~supplies; tools that are assembled using components are reported as finished goods. Inventories are recorded at the lower of cost or net realizable value. Cost is determined using first-in, first-out method or the weighted average cost method.

14

June 30,

December 31,
(in thousands)

2023

2022
Raw materials and supplies

$
102,391

$
95,384
Finished goods

1,803

1,723
Ending balance

$
104,194

$
97,107

9.     COMMITMENTS AND CONTINGENCIES
Sales and Use Taxes - The Company has ongoing sales and use tax audits in various jurisdictions and may be subjected to varying interpretations of statute that could result in unfavorable outcomes. In accordance with ASC 450-20, Loss Contingencies, any probable and reasonable estimate of assessment costs have been included in Accrued state, local and other taxes.
The Company has received a state tax notification of audit results related to sales and use tax and with its outside legal counsel has evaluated the perceived merits of this tax assessment. The Company believes the likelihood of a material loss related to this contingency is remote and cannot be reasonably estimated at this time. Therefore, no loss has been recorded and the Company currently does not believe the resolution of this claim will have a material impact on its consolidated financial position, results of operations or cash flows.

13

Table of Contents

RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~EMPLOYEE BENEFIT PLAN~~

10.    PENSION AND RETIREMENT PLANS LIABILITIES
The following represents the net periodic benefit cost and related components of the Company’s ~~multiple employers~~multiemployer Retirement Income ~~Plan:~~Plan (Plan), a trusteed defined benefit pension plan:

Three months ended
September 30

Nine months ended
September 30

Three months ended June 30,

Six months ended June 30,

December 31,

2023

2022

2023

2022

(in thousands) 2017 2016 2017 2016

Interest cost $ 483 $ 502 $ 1,449 $ 1,505

$
1

$
243

$
41

$
486

Expected return on plan assets (589 ) (533 ) (1,767 ) (1,599 )
Expected return on Plan assets

—

—

—

—

Amortization of net losses 213 200 638 599

4

252

224

505

Settlement loss

911

—

18,286

—

Net periodic benefit cost $ 107 $ 169 $ 320 $ 505

$
916

$
495

$
18,551

$
991

During the second quarter of 2023, as part of the termination of the Plan, the Company transferred approximately $1.2 million to a government agency for participants that were not included in the first quarter transfer of liabilities to a commercial annuity provider. The Company made a total cash contribution to the plan of $5.4 million during the six months ended June 30, 2023. As part of this transfer, the Company recognized a pre-tax, non-cash settlement charge of $911 thousand in the second quarter of 2023, which represents the accelerated recognition of actuarial losses. In addition, the Company paid $482 thousand to Marine Products, during the second quarter of 2023, to reimburse funds paid using Marine Product’s assets in the Plan to settle its participant liabilities. The Company did not ~~make a contribution~~contribute to this ~~plan~~Plan during the ~~nine~~six months ended ~~September~~June 30, ~~2017; however, a contribution of $4,300,000 was made during the nine months ended September 30, 2016.~~2022.

The Company permits selected highly compensated employees to defer a portion of their compensation into the non-qualified Supplemental Retirement Plan ~~(“SERP”)~~(SERP). The Company maintains certain securities primarily in mutual funds and company-owned life insurance policies as a funding source to satisfy the obligation of the SERP ~~assets~~that have been classified as trading and are ~~marked to market and totaled $21,788,000~~stated at fair value totaling $25.4 million as of ~~September~~June 30, ~~2017~~2023 and ~~$18,367,000~~$24.2 million as of December 31, ~~2016.~~2022. Trading gains related to the SERP assets totaled approximately $808 thousand during the three months ended June 30, 2023, compared to trading losses of approximately $2.6 million during the three months ended June 30, 2022. Trading gains related to the SERP assets totaled approximately $1.2 million during the six months ended June 30, 2023, compared to trading losses of approximately $4.1 million during the six months ended June 30, 2022. The SERP assets are reported in non-current ~~other~~Other assets onin the ~~consolidated balance sheets~~accompanying Consolidated Balance Sheets and changes in the fair value of these assets are reported in the ~~consolidated statements~~accompanying Consolidated Statements of ~~operations~~Operations as compensation cost in ~~selling,~~Selling, general and administrative expenses. ~~Trading gains (losses) related to the SERP assets were approximately as follows:~~

Three months ended
September 30

Nine months ended
September 30

(in thousands) 2017 2016 2017 2016
Trading gains (losses), net $ 428 $ 977 $ 1,981 $ 713

The SERP ~~liability includes~~liabilities include participant deferrals, net of distributions, and ~~is recorded on~~are stated at fair value of approximately $23.5 million as of June 30, 2023 and $23.1 million as of December 31, 2022. The SERP liabilities are reported in the ~~consolidated balance sheets~~accompanying Consolidated Balance Sheets in ~~long-term pension~~Long-term retirement plan liabilities ~~with~~and any change in the fair value ~~of the liabilities~~is recorded as compensation cost within ~~selling,~~Selling, general and administrative expenses in the ~~consolidated statements~~accompanying Consolidated Statements of ~~operations.~~Operations. Changes in the fair value of the SERP liabilities resulted in unrealized gains of approximately $872 thousand during the three months ended June 30, 2023, compared to unrealized losses of approximately $2.5 million during the three months ended June 30, 2022. Changes in the fair value of the SERP liabilities resulted in unrealized gains of approximately $1.3 million during the six months ended June 30, 2023, compared to unrealized losses of approximately $3.9 million during the six months ended June 30, 2022.

9.
11.    NOTES PAYABLE TO BANKS
The Company has a revolving ~~credit facility~~Credit Agreement with ~~Banc~~Bank of America ~~Securities, LLC, SunTrust Robinson Humphrey, Inc.,~~ and ~~Regions Capital Markets as Joint Lead Arrangers and Joint Book Managers, and a syndicate of~~ four other ~~lenders. The facility has a general term of five years ending January 17, 2019 and~~lenders which provides for a line of credit of up to ~~$125~~$100.0 million, including a ~~$50~~$35.0 million letter of credit subfacility, and a ~~$35~~$35.0 million swingline subfacility. The ~~revolving credit~~ facility contains customary terms and conditions, including restrictions on indebtedness, dividend payments, business combinations and other related items. The revolving credit facility includes a full and unconditional guarantee by the Company's 100 percent owned domestic subsidiaries whose assets equal substantially all of the consolidated assets of the Company and its subsidiaries. ~~Certain~~The Credit Agreement has a maturity date of ~~the Company’s minor subsidiaries are not guarantors.~~June 22, 2027.
On June 30, 2016, the Company amended the revolving credit facility to (1) establish a borrowing base to be 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, (2) secure payment obligationsThe Credit Agreement contains three financial covenants. When RPC’s trailing four quarter EBITDA (as calculated under the ~~credit facility with a security interest in~~Credit Agreement) is equal to or greater than $50.0 million: (i) the consolidated ~~accounts receivable,~~leverage ratio cannot exceed 2.50:1.00 and ~~(3) replace~~(ii) the ~~financial covenants related to minimum leverage and~~ debt service coverage ~~ratios with a covenant~~ratio must be equal to ~~maintain a~~or greater than 2.00:1.00; otherwise, the minimum tangible net worth must be greater than or equal to $400.0 million.

Table of ~~not less than $700 million.~~ Contents

RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of ~~September~~June 30, ~~2017,~~2023, the Company was in compliance with ~~this covenant.~~
all covenants.
Revolving loans under the amended revolving credit facility bear interest at one of the following two rates at the Company’s election:
·● Term SOFR; plus, a margin ranging from 1.25% to 2.25%, based on a quarterly consolidated leverage ratio calculation, and an additional SOFR Adjustment ranging from 0.10% to 0.30% depending upon maturity length; or
● the Base Rate, which is a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 0.50%, (b) Bank of America’s publicly announced, “prime rate,” ~~and~~ (c) the ~~Eurodollar Rate~~Term SOFR plus 1.00%, or (d) 1.00%; in each case plus a margin that ranges from ~~0.125%~~0.25% to ~~1.125%~~1.25% based on a quarterly consolidated leverage ratio ~~calculation; or~~calculation.
15
~~RPC, INC. AND SUBSIDIARIES~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~
· the Eurodollar Rate, which is the rate per annum equal to the London Interbank Offering Rate (“LIBOR”) plus, a margin ranging from 1.125% to 2.125%, based upon a quarterly debt covenant calculation.
In addition, the Company pays an annual fee ranging from ~~0.225%~~0.20% to ~~0.325%~~0.30%, based on a quarterly consolidated leverage ratio calculation, on the unused portion of the credit facility.
The Company has incurred total loan origination fees and other debt related costs associated with ~~the~~this revolving credit facility in the aggregate of approximately ~~$3.0~~$3.7 million. These costs ~~net of amounts written off as a result of a reduction in the size of the revolving credit facility in 2015,~~ are being amortized to interest expense over the remaining term of the ~~five-year~~ loan, and the remaining ~~net~~unamortized balance of ~~$0.2 million~~approximately $300 thousand at ~~September~~June 30, ~~2017~~2023 is classified as part of non-current ~~other~~Other assets.
On January 4, 2016, the Company entered into a separate one year $35 million uncommitted letter of credit facility with Bank of America, N.A. Under the terms of the letter of credit facility, the Company paid 0.75% per annum on outstanding letters of credit. This letter of credit facility expired on January 3, 2017. All letters of credit are currently issued under RPC’s $125 million credit facility.
As of ~~September~~June 30, ~~2017,~~2023, RPC had no outstanding borrowings under the revolving credit facility, and letters of credit outstanding relating to self-insurance programs and contract bids totaled ~~$19.1~~$16.4 million; therefore, a total of ~~$105.9~~$83.6 million of the facility was available.
Interest incurred, which includes facility fees on the unused portion of the revolving credit facility and the amortization of loan costs, ~~was~~and interest paid on the credit facility were as ~~follows:~~follows for the periods indicated:

Three months ended
September 30

Nine months ended
September 30

(in thousands except interest rate data) 2017 2016 2017 2016

Three months ended

Six months ended

June 30,

June 30,

(in thousands)

2023

2022

2023

2022

Interest incurred $ 104 $ 115 $ 311 $ 334

$
61

$
63

$
120

$
128

Interest paid

42

80

83

123

~~10.~~

12.  INCOME TAXES
The Company generally determines its periodic income tax ~~benefit~~expense or ~~expense~~benefit based upon the current period income or loss and the annual estimated tax rate for the Company adjusted for discrete items including changes to prior period estimates. In certain instances, the Company uses the discrete method when it believes the actual year-to-date effective rate provides a more reliable estimate of its income tax rate for the period. The estimated tax rate is revised, if necessary, as of the end of each successive interim period during the fiscal year to the ~~Company's~~Company’s current annual estimated tax rate.

For the three months ended ~~September~~June 30, ~~2017,~~2023, the effective ~~tax~~ rate reflects ~~an income tax~~a provision of ~~41.7~~24.1 percent compared to ~~an income tax benefit~~a provision of ~~30.8~~22.3 percent for the comparable period in the prior year. For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, the effective ~~tax~~ rate reflects ~~an income tax~~a provision of ~~38.1~~23.6 percent compared to ~~an effective tax benefit rate~~a provision of ~~41.9~~26.0 percent for the comparable period in the prior year. The 2017 effective rate includes detrimental discrete adjustments related to state taxes and net operating losses, partially offset by a beneficial discrete adjustment resulting from the recently adopted provisions of ASU 2016-09 that requires excess tax benefits and deficiencies related to share based payment awards to be recognized as a component of income tax expense rather than stockholders’ equity. Accordingly, a net detrimental discrete adjustment of $1.1 million is reflecteddecrease in the ~~2017 nine-month~~comparative effective ~~rate. The 2016 income~~ tax ~~benefit and associated benefit~~ rate was the result of operational losses and the one-time beneficial impact of a resolution of a tax matter with a state taxing authority totaling $15.7 million, offset by the detrimental effect of non-deductible permanentyear to date is primarily due to favorable discrete items.
16

~~RPC, INC. AND SUBSIDIARIES~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~
~~11.~~ 13.  FAIR VALUE DISCLOSURES
The various inputs used to measure assets at fair value establish a hierarchy that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three broad levels as follows:
1.Level 1 – Quoted market prices in active markets for identical assets or liabilities.
2.Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

~~Level 1 – Quoted market prices in active markets for identical assets or liabilities.~~

Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

~~Level 3 – Unobservable inputs developed using the Company’s estimates and assumptions, which reflect those that market participants would use.~~

Table of Contents

RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.Level 3 – Unobservable inputs developed using the Company’s estimates and assumptions, which reflect those that market participants would use.
The following table summarizes the valuation of financial instruments measured at fair value on a recurring basis in the balance sheets as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016:~~2022:

Fair Value Measurements at September 30, 2017
with:

Fair Value Measurements at June 30, 2023 with:

Quoted prices in

Significant

active markets

other

Significant

for identical

observable

unobservable
(in thousands) Total Quoted prices
in active
markets for
identical assets Significant
other
observable
inputs Significant
unobservable
inputs

Total

assets

inputs

inputs
(Level 1) (Level 2) (Level 3)



(Level 1)

(Level 2)

(Level 3)
Assets:

Available-for-sale securities – equity securities $ 289 $ 289 $ — $ —
Investments measured at net asset value – trading securities $ 21,788
Equity securities

$
284

$
284

$
—

$
—
Investments measured at net asset value

$
25,385







Fair Value Measurements at December 31, 2016
with:

Fair Value Measurements at December 31, 2022 with:

Quoted prices in

Significant

active markets

other

Significant

for identical

observable

unobservable
(in thousands) Total Quoted prices
in active
markets for
identical assets Significant
other
observable
inputs Significant
unobservable
inputs

Total

assets

inputs

inputs
(Level 1) (Level 2) (Level 3)



(Level 1)

(Level 2)

(Level 3)
Assets:

Available-for-sale securities – equity securities $ 264 $ 264 $ — $ —
Investments measured at net asset value – trading securities $ 18,367
Equity securities

$
305

$
305

$
—

$
—
Investments measured at net asset value

$
24,175







The Company determines the fair value of ~~marketable~~equity securities ~~classified as available-for-sale~~that have a readily determinable fair value through quoted market prices. The total fair value is the final closing price, as defined by the exchange in which the asset is actively traded, on the last trading day of the period, multiplied by the number of units held without consideration of transaction costs. Marketable securities ~~classified as trading are~~ comprised of the SERP assets, ~~as described in Note 8, and~~ are recorded primarily at their net cash surrender values, calculated using their net asset values, which approximates fair value, as provided by the issuing insurance or investment company. Significant observable inputs, in addition to quoted market prices, were used to value the ~~trading~~equity securities. The Company’s policy is to recognize transfers between levels at the beginning of quarterly reporting periods. For the ~~period~~quarter ended ~~September~~June 30, ~~2017,~~2023, there were no significant transfers in or out of levels 1, 2 or 3.
17
~~RPC, INC. AND SUBSIDIARIES~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~
Under the Company’s revolving credit facility, there was no balance outstanding at ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016.~~2022. Borrowings under our revolving credit facility are typically based on the quote from the lender (level 2 inputs), which approximates fair value, and bear variable interest rates as described in Note 9.11. The Company is subject to interest rate risk, to the extent there are outstanding borrowings on the variable component of the interest rate.
The carrying amounts of other financial instruments reported in the balance sheet for current assets and current liabilities approximate their fair values because of the short maturity of these instruments. The Company currently does not use the fair value option to measure any of its existing financial instruments and has not determined whether it will elect this option for financial instruments acquired in the future.

~~12.~~ ~~ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME~~

Table of Contents

RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

14.  ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated other comprehensive (loss) income consists of the following (in thousands):

Pension
Adjustment Unrealized
Gain (Loss) On
Securities Foreign
Currency
Translation Total
Balance at December 31, 2016 $ (15,503 ) $ 39 $ (2,638 ) $ (18,102 )

Foreign

Pension

Currency


Adjustment

Translation

Total
Balance at December 31, 2022

$
(17,307)

$
(2,632)

$
(19,939)
Change during the period:

Before-tax amount — (19 ) 584 565

3,897

423

4,320
Tax benefit — 7 — 7
Tax expense

(896)

—

(896)
Pension settlement charges, net of taxes

14,080

—

14,080
Reclassification adjustment, net of taxes:

Amortization of net loss⁽¹⁾ 405 — — 405

173

—

173
Total activity for the period 405 (12 ) 584 977

17,254

423

17,677
Balance at September 30, 2017 $ (15,098 ) $ 27 $ (2,054 ) $ (17,125 )
Balance at June 30, 2023

$
(53)

$
(2,209)

$
(2,262)
(1) Reported as part of Selling, general and administrative expenses.
~~(1)~~

Foreign

Pension

Currency


Adjustment

Translation

Total
Balance at December 31, 2021

$
(18,071)

$
(2,637)

$
(20,708)
Change during the period:

Before-tax amount

—

181

181
Reclassification adjustment, net of taxes:



Amortization of net loss ⁽¹⁾

390

—

390
Total activity for the period

390

181

571
Balance at June 30, 2022

$
(17,681)

$
(2,456)

$
(20,137)
(1)
Reported as part of Selling, general and administrative expenses.

15. CASH PAID FOR COMMON STOCK PURCHASED AND RETIRED

The Company has a stock buyback program to repurchase up to 49,578,125 shares in the open market, including an additional 8,000,000 shares authorized for repurchase by the Board of Directors in the second quarter of 2023. As of June 30, 2023, 15,115,820 shares remained available to be repurchased. The program does not have a preset expiration date. Repurchases of shares of the Company’s common stock may be made from time to time in the open market, by block purchases, in privately negotiated transactions or in such other manner as ~~part~~determined by the Company. The timing of ~~selling,~~the repurchases and the actual amount repurchased will depend on a variety of factors, including the market price of the Company's shares, general market and economic conditions, and other factors. The stock repurchase program does not obligate the Company to acquire any particular amount of common stock, and it may be suspended or discontinued at any time.

Shares purchased for withholding taxes represent taxes due upon vesting of time-lapse restricted shares granted to employees. Total share repurchases for 2023 and 2022 year to date are detailed below:

Six months ended

Six months ended

June 30, 2023

June 30, 2022


No. of shares

Avg. price

Total cost

No. of shares

Avg. price
Total cost
Shares purchased for withholding taxes

256,309
$
9.24
$
2,367,178

157,720
$
5.77
$
909,912
Open market purchases

1,132,364

7.93

8,983,973

—

—

—
Total

1,388,673
$
8.17
$
11,351,151

157,720
$
5.77
$
909,912

Table of Contents

RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

16. SUBSEQUENT EVENTS

Acquisition of Spinnaker Oilwell Services, LLC.

Effective July 1, 2023, the Company completed its acquisition of all of the outstanding equity interests in Spinnaker Oilwell Services, LLC ("Spinnaker"), pursuant to a Merger Agreement ("Merger Agreement") with Catapult Energy Services Group, LLC, as the representative of the Sellers.

Spinnaker, which is headquartered in Oklahoma City, Oklahoma, is a leading provider of oilfield cementing services in the Permian and Mid-Continent basins. Spinnaker operates two facilities located in El Reno, OK and Hobbs, NM and maintains 18 full-service cementing spreads. This acquisition will significantly expand RPC's cementing business from its presence in South Texas to basins in which we currently provide other services.

The purchase price was $79.5 million for 100 percent of Spinnaker’s equity. The acquisition was effective July 1, 2023 and amounts advanced as of June 30, 2023, consisted of approximately $77.0 million in cash and a $2.0 million pay-off of capital lease liabilities. Additionally, the Company assumed $518 thousand of capital lease liabilities effective July 1, 2023. The agreement contains a post-closing adjustment window for an agreed-upon level of Spinnaker’s working capital, as well as other usual and customary items, which we expect to finalize during the third quarter of 2023. Spinnaker will be included in the Technical Services Segment, post-acquisition.

As of June 30, 2023, $79.0 million, representing the cash portion of the purchase price, has been recorded as Purchase of business – advance in the current assets section of the Consolidated Balance Sheets. The assumption of $518 thousand in capital lease liabilities was effective on July 1, 2023, and is therefore not reflected in the June 30, 2023 financial statements. In addition, the Company recorded $243 thousand related to representations and warranties, and directors’ and officers’ insurance in Prepaid expenses on the Consolidated Balance Sheets as of June 30, 2023. Acquisition-related transaction costs of $616 thousand were recorded during the second quarter of 2023 and are included in Selling, general and administrative ~~expenses.~~expenseson the Consolidated Statements of Operations.

Pension
Adjustment Unrealized
Gain (Loss) On
Securities Foreign
Currency
Translation Total
Balance at December 31, 2015 $ (14,715 ) $ 36 $ (3,290 ) $ (17,969 )
Change during the period:
Before-tax amount — (3 ) 712 709
Tax benefit — 1 — 1
Reclassification adjustment, net of taxes:
Amortization of net loss⁽¹⁾ 380 — — 380
Total activity for the period 380 (2 ) 712 1,090
Balance at September 30, 2016 $ (14,335 ) $ 34 $ (2,578 ) $ (16,879 )
~~(1) Reported~~The Company will account for this transaction as ~~part~~a purchase of ~~selling, general and administrative expenses.~~business under the acquisition method of accounting. The required disclosures under ASC 805, "Business Combinations" will be included in the Quarterly Report on Form 10-Q for the period ended September 30, 2023.
~~13.~~ ~~SUBSEQUENT EVENT~~

Dividends

On ~~October 24, 2017,~~July 25, 2023, the Board of Directors declared a regular quarterly cash dividend of ~~$0.07~~$0.04 per share ~~and a special year-end dividend of $0.07 per share. Both dividends are~~ payable ~~December~~September 11, ~~2017~~2023 to common stockholders of record at the close of business ~~November~~on August 10, ~~2017.~~2023.

18

18

Table of Contents

RPC, INC. AND SUBSIDIARIES

ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~
Overview
The following discussion should be read in conjunction with the Consolidated Financial Statements included elsewhere in this document. See also ~~“Forward-Looking Statements”~~Forward-Looking Statements on page 26.
RPC, Inc. ~~(“RPC”)~~(RPC or the Company) 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 Gulf of Mexico, mid-continent, southwest, Rocky Mountain and Appalachian regions, and in selected international locations. 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. We continuously monitor factors that impact current and expected customer activity levels, such as the ~~price~~prices 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, the actions of the OPEC oil cartel, overall economic conditions and weather in the United States, the prices of oil and natural gas, and our customers’ drilling and production activities.
The discussion of our key business and financial strategies set forth under the Overview section in the Company’s annual report on Form 10-K for the fiscal year ended December 31, ~~2016~~2022 is incorporated herein by reference. In ~~2017,~~2023, the Company’s strategy of utilizing equipment in unconventional basins has continued. During the ~~three~~six months ended ~~September~~June 30, ~~2017,~~2023, capital expenditures totaled ~~$44.4~~$104.5 million, primarily for new tier four dual fuel equipment that was placed into service during the quarter, coupled with capitalized maintenance and upgrades of our existing equipment. We currently expect capital expenditures to be $200 to $250 million during 2023 and to be directed ~~toward both~~primarily towards capitalized maintenance of our existing equipment and ~~initial payments on new revenue-producing equipment.~~selected growth opportunities.
During the ~~third~~second quarter of ~~2017,~~2023, revenues of $415.9 million increased ~~167.8~~by $40.4 million or 10.7 percent ~~to $471.0 million~~ compared to the same period in the prior year. The increase in revenues is due to improved pricing, higher customer activity levels and ~~pricing for our services, higher service intensity, and continued activation~~a larger active fleet of ~~previously idled~~ revenue-producing equipment. International revenues for the ~~third~~second quarter of ~~2017 increased 26.6~~2023 decreased 3.8 percent to ~~$13.6~~$6.4 million compared to the same period in the prior year. We continue to pursue international growth opportunities, but the nature of this work is unpredictable and we believe that international revenues will continue to ~~represent a low percentage~~be less than ten percent of RPC’s consolidated revenues in the foreseeable future.
Cost of revenues increased ~~during~~in the ~~third~~second quarter of ~~2017 in comparison~~2023 compared to the same period ofin the prior year, primarily due to increases in expenses consistent with higher activity levels, such as materials and ~~service intensity. As~~supplies expenses, maintenance and repairs expenses, employment costs and fuel costs. Cost of revenues as a percentage of revenues ~~cost of revenues~~ decreased primarily due to improved pricing for our services as well as ~~leverage~~reduced maintenance expenses due to a decrease in the average age of ~~higher revenues over direct employment costs.~~our equipment.
Selling, general and administrative expenses ~~were $39.7~~increased to $43.6 million in the ~~third~~second quarter of ~~2017 compared to $34.9~~2023 from $35.9 million in the ~~third~~second quarter of ~~2016. The increase in these expenses was~~2022 primarily due to ~~higher compensation~~ costs ~~primarily incentive compensation, as well as other~~related to the settlement of a vendor dispute and the acquisition of Spinnaker Oilwell Services. Selling, general and administrative expenses ~~consistent with higher activity levels. As a percentage~~increased from 9.6 percent of revenues ~~these costs decreased to 8.4 percent~~ in the ~~third~~second quarter of ~~2017 compared~~2022 to ~~19.8~~10.5 percent of revenues in the ~~third~~second quarter of ~~2016, due to the leverage of higher revenues over primarily fixed costs.~~2023.
Income before income taxes was ~~$98.3~~$85.6 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to ~~a loss~~$60.4 million during the same period of ~~$56.3 million~~2022. Diluted earnings per share were $0.30 for the three months ended June 30, 2023 compared to $0.22 per share in the same period of ~~2016. Diluted earnings per share were $0.26 for the three months ended September 30, 2017 compared to a loss per share of $0.18 in the same period of 2016.~~2022. Cash provided by operating activities increased to ~~$109.3~~$177.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$94.6~~$42.9 million in the same period of ~~2016~~2022 primarily due to ~~higher earnings partially offset by an unfavorable change~~a significant increase in ~~working capital.~~earnings.
We expect capital expenditures during full year 2017 will be approximately $150 million, and will be directed primarily towards new revenue-producing equipment and capitalized maintenance of our existing equipment.
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RPC, INC. AND SUBSIDIARIES

Outlook
Drilling activity in the U.S. domestic oilfields, as measured by the rotary drilling rig count, reached a cyclical peak of ~~1,931~~1,083 during the fourth quarter of 2018 (Source: Baker Hughes, Inc.). Between the fourth quarter of 2018 and the third quarter of ~~2014. Between the third quarter of 2014 and the second quarter of 2016,~~2020, the drilling rig count fell by ~~approximately 79~~77 percent. During the ~~second~~third quarter of ~~2016,~~2020, the U.S. domestic drilling rig count reached the lowest level ~~ever recorded.~~recorded up to that time. The principal catalyst for this steep rig count decline was the decrease in the price of oil in the world markets resulting from the decline in global oil demand associated with the COVID-19 pandemic which began in the ~~second~~first quarter of ~~2014.~~2020. 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. domesticdrilling rig count began to increase, and increased steadily throughout the remainder of 2016 and through the third quarter of 2017. As of the beginning of the fourth quarter of 2017, the U.S. domestic rig count was more than 100 percent higher than the historically low rig count reported during the second quarter of ~~2016. RPC believes that U.S. oilfield well completion activity will continue~~2023 was relatively unchanged compared to ~~increase, although improvements in drilling rig efficiencies will cause drilling rig count increases to moderate during~~ the ~~near term.~~second quarter of 2022.
The current and projected prices of oil, natural gas and natural gas liquids are important catalysts for U.S. domestic drilling activity. ~~During~~Following the ~~first two quarters~~trough of ~~2016,~~ the ~~prices~~most recent oilfield downturn in the second quarter of 2020, the price 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 increased during the third and fourth quarters of 2016 and into the first and second quarters of 2017, although the prices of these commodities has not changed materially duringrose by more than 250 percent in the third quarter of ~~2017. We believe that~~2022 compared to the average price of oil ~~has risen to a level that provides adequate financial returns to our customers and encourages increased drilling and production activities~~ in ~~many domestic oil-producing basins. However,~~ the second quarter of 2020. The price of natural gas has ~~not~~ risen toby over 300 percent during the same time period. Following a ~~level that encourages our customers to increase their drilling and production activities, and we remain discouraged that U.S. production of natural gas remains high in spite of historically~~ low ~~drilling activities. The average~~ price of $0.23 per gallon in the second quarter of 2020, the price of benchmark natural gas liquids ~~increased by 61.2 percent during~~rose to $1.25 per gallon in the third quarter of ~~2017 as compared~~2022 (Source: U.S. Energy Information Administration). In addition, oil and gas prices experienced increases beginning in February 2022 due to concerns about potential world-wide supply constraints resulting from the Russian invasion of Ukraine. Although the price increases in these commodities have recently moderated from their highs, RPC believes that they remain above levels sufficient to motivate our customers to maintain drilling and completion activities.
The Russian invasion of Ukraine during the first quarter of 2022 prompted Western European countries to curtail or eliminate their purchases of natural gas from Russia. As a result, the demand for liquified natural gas from the United States increased significantly, which increased the price for natural gas in the United States to its highest level since 2008 and encouraged additional investment in liquified natural gas production facilities in the United States. These factors have been offset by warm weather and the idling of a major liquified natural gas facility in the U.S. contributing to the ~~prior year,~~recent decline in price of natural gas. Despite the recent decline in price, we believe the favorable long-term outlook for natural gas provided by the U.S. oil and ~~by 21.8 percent compared~~gas industry is sufficient to ~~the second quarter of 2017. Prevailing commodity prices early in the fourth quarter of 2017 have moderately positive implications for RPC’s near-term activity levels.~~encourage our customers to maintain their natural gas-directed exploration and production activities.
The majority of the U.S. domestic rig count remains directed towards oil. AtIn the ~~end of the third~~second quarter of ~~2017,~~2023, approximately 8079 percent of the U.S. domestic rig count was directed towards oil, ~~consistent with~~compared to 82 percent in the same quarter of 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. WeHowever, we believe that ~~this relationship~~natural gas-directed drilling will ~~continue due to relatively low prices~~increase in the future because of favorable long-term market dynamics. This projected higher demand for oil and natural gas ~~high production from existing natural gas wells, and industry projections~~should drive increased activity in most of ~~limited increases~~the basins in ~~domestic natural gas demand during the near term.~~which RPC operates.
We continue to monitor the market for our services and the competitive environment, including the current trends and expectations with regard to environmental concerns and related impact on our equipment fleets. The growing efficiency in recent years with which oilfield completion crews are providing services is a catalyst for the oversupplied nature of the oilfield services market. We believe that most of the feasible efficiency gains have been realized, and a number of our smaller competitors have ceased operations. These factors, combined with the increase in drilling and completion activities and the improvement in commodity prices, leads us to believe that the competitive market for our services improved during ~~2017. The U.S. domestic rig count has increased sharply since~~2022 and early 2023, and despite what we believe is a temporary moderation of customer drilling and completion activity we expect demand will continue to improve over the ~~historical low recorded~~next several quarters.

During 2022, RPC completed payment under a finance lease arrangement for a new Tier 4 dual-fuel pressure pumping fleet that went to work during the fourth quarter of 2021 and refurbished an existing fleet that was placed into service during 2022. Additionally, during the second quarter of ~~2016, which has increased demand~~2023 the Company placed into service another pressure pumping fleet, replacing existing older equipment sent out for refurbishment. We have selectively upgraded our existing equipment to operate using multiple fuel sources and to take advantage of advances in technology and data collection. RPC’s response to our industry’s recent higher activity levels and improved service pricing ~~for our services. We believe that pricing for our services has reached a level that provides financial returns that will allow the industry~~is primarily to maintain ~~its~~and upgrade our current fleet ~~of revenue-producing equipment and hire additional personnel to operate idle equipment. For this reason, we continue to monitor our competitors’ potential additions~~capacity of revenue-producing equipment. We ~~are encouraged by~~will remain highly disciplined about adding new incremental revenue-producing equipment capacity and will only expand when we believe the ~~fact that drilling and completion activities continue~~projected financial returns of such capital expenditures meet our financial return criteria. The Company is allocating capital to ~~be highly service-intensive and require~~maintain the capacity of our pressure pumping fleet to offset anticipated future fleet retirements.
Effective July 1, 2023, the Company acquired Spinnaker, a ~~large amount~~leading provider of ~~equipment and raw materials. Furthermore, we note that some wells~~oilfield cementing services in the ~~U.S. domestic market have been drilled but not completed. We believe that many~~Permian and Mid-Continent basins. The Company expects the acquisition of ~~our customers have started~~Spinnaker will expand RPC’s cementing business from its presence in South Texas to ~~complete these wells, and that they~~basins in which we currently provide ~~potential revenue for RPC’s completion-directed services during the near term. Finally, we are encouraged by our belief that many~~other services.

Table 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 levels and pricing for our services by reducing costs and employee headcount and closed selected operational locations. During the fourth quarter of 2016, however, we started recruiting and hiring operational personnel to respond to increased industry activity levels.Contents

RPC, INC. AND SUBSIDIARIES

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 placed us in a more favorable competitive position, they were 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. Several competitors have announced plans to increase their fleets of revenue-producing equipment during the fourth quarter of 2017 and 2018. We monitor these developments closely, but believe that demand for revenue-producing service capacity will continue to exceed supply during the near term. RPC also monitors the financial stability of our customers, because many of them rely on the debt and equity markets as a source of capital to conduct their operations, and if these sources of capital do not continue, our customers may have to curtail their drilling and completion operations. RPC does not plan to increase the size of its fleet of revenue-producing equipment during 2017, although in the third quarter of 2017 we announced that we have placed orders for new revenue-producing equipment to be delivered during the first and second quarters of 2018. Our consistent response to the industry's potential uncertainty is to maintain sufficient liquidity and a conservative capital structure and monitor our discretionary spending. We intend to maintain a financial structure that includes little or no debt during the near term. An additional benefit of our financial liquidity that we have been able to take advantage of is our ability to maintain our equipment during the recent industry downturn, which allowed us to benefit immediately when industry activity levels increased and we were able to return our idle revenue-producing equipment to service quickly and at minimal cost.

Results of Operations

	Three months ended						Nine months ended
	September 30						September 30
	2017			2016			2017			2016


													Three months ended						Six months ended
													June 30,						June 30,
													2023			2022			2023			2022
Consolidated revenues [in thousands]	$	470,999		$	175,884		$	1,167,928		$	507,977		$	415,858		$	375,507		$	892,526		$	660,131
Revenues by business segment [in thousands]:
Revenues by business segment [in thousands]:
Technical	$	455,719		$	163,331		$	1,127,379		$	470,020		$	390,018		$	356,103		$	842,009		$	622,452
Support		15,280			12,553			40,549			37,957			25,840			19,404			50,517			37,679

Consolidated operating income (loss) [in thousands]	$	97,357		$	(56,417	)	$	165,933		$	(206,726	)

Consolidated operating income [in thousands]													$	82,369		$	60,415		$	173,026		$	83,450
Operating income (loss) by business segment [in thousands]:
Technical	$	104,349		$	(48,627	)	$	184,455		$	(177,581	)	$	77,017		$	59,827		$	180,550		$	81,638
Support		(2,062	)		(5,541	)		(10,622	)		(19,340	)		7,920			3,334			14,564			6,114
Corporate		(5,433	)		(3,397	)		(13,679	)		(13,724	)		(4,672)			(4,544)			(9,753)			(9,054)
Pension settlement charges														(911)			—			(18,286)			—
Gain on disposition of assets, net		503			1,148			5,779			3,919			3,015			1,798			5,951			4,752


Percentage cost of revenues to revenues		62.6	%		83.4	%		65.5	%		85.6	%		63.9	%		69.5	%		64.0	%		71.2	%
Percentage selling, general & administrative expenses to revenues		8.4	%		19.8	%		10.0	%		22.6	%		10.5	%		9.6	%		9.6	%		10.9	%
Percentage depreciation and amortization expense to revenues		8.4	%		29.6	%		10.7	%		33.2	%		6.3	%		5.4	%		5.6	%		6.0	%
Average U.S. domestic rig count		946			483			862			482			719			719			740			678
Average natural gas price (per thousand cubic feet (mcf))	$	2.95		$	2.88		$	3.01		$	2.34		$	2.2		$	7.5		$	2.4		$	6.1
Average oil price (per barrel)	$	48.09		$	44.93		$	49.32		$	41.57		$	73.5		$	109.0		$	74.8		$	102.0

THREE MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2017~~2023 COMPARED TO THREE MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2016~~

2022

Revenues.Revenues of $415.9 million for the three months ended ~~September~~June 30, ~~2017~~2023 increased ~~167.8~~10.7 percent compared to the three months ended ~~September~~June 30, ~~2016.~~2022. Domestic revenues of ~~$457.4~~$409.4 million increased ~~177.0~~11.0 percent for the three months ended June 30, 2023 compared to the same period in the prior year. The increase in revenues iswas primarily due to improved pricing, higher customer activity levels and ~~pricing for our services, higher service intensity, and continued activation~~a larger active fleet of ~~previously idled revenue-producing~~pressure pumping equipment. International revenues of ~~$13.6~~$6.4 million ~~increased 26.6~~decreased 3.8 percent for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the same period in the prior year. ~~Our international revenues are impacted by~~

During the ~~timing~~second quarter of ~~project initiation~~2023, the average price of oil was 32.5 percent lower and ~~their ultimate duration and can be difficult to predict.~~
21
~~RPC, INC. AND SUBSIDIARIES~~
~~The~~the average price of natural gas was ~~2.4~~71.2 percent ~~higher and the average price of oil was 7.0 percent higher during the third quarter of 2017~~lower, both as compared to the same period in the prior year. Oil and gas prices have moderated since the price increases in the prior year due to the Russian invasion of Ukraine but remain at sufficient levels to encourage customer drilling and completion activities. The average domestic rig count during the ~~current~~second quarter of 2023 was ~~95.9 percent higher than~~unchanged compared to the same period in ~~2016.~~
2022.
The Technical Services segment revenues for the ~~third~~second quarter of ~~2017~~2023 increased ~~179.0~~by 9.5 percent compared to the same period of the prior year due to higher customer activity levels, improved pricing and a larger fleet of pressure pumping equipment in service. Technical Services reported operating income of $77.0 million during the second quarter of 2023 compared to operating income of $59.8 million in the second quarter of 2022. The Support Services segment revenues for the second quarter of 2023 increased by 33.2 percent compared to the same period in the prior year, primarily due to ~~improved pricing,~~ higher activity levels and ~~a larger active fleet of revenue-producing equipment, particularly~~improved pricing within ~~our pressure pumping service line, which is the largest service line within Technical Services. The~~rental tools. Support Services segment revenues for the third quarter of 2017 increased by 21.7 percent compared to the same period in the prior year. This increase was due principally to improved activity levels in the rental tool service line, which is the largest service line within this segment. Technical Services reported operating income of ~~$104.3~~$7.9 million for the ~~third~~second quarter of ~~2017~~2023 compared to an operating ~~loss~~income of ~~$48.6~~$3.3 million infor the ~~third~~second quarter of 2022. Second quarter 2023 Support Services operating profit increased by $4.6 million compared to the second quarter of the prior year while Support Services reported operating losses of $2.1 million for the third quarter of 2017 and $5.5 million for the third quarter of 2016. Corporate expenses increased during the third quarter of 2017 in comparison to the prior year due to ~~expenses that vary with~~ higher activity levels, improved pricing, and ~~profitability, such as incentive compensation.~~
leverage of higher revenues over costs that are fixed during the short term.
Cost of revenues. Cost of revenues increased ~~101.1~~1.9 percent to ~~$294.8~~$265.8 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$146.6~~$260.9 million for the three months ended ~~September~~June 30, ~~2016.~~2022. Cost of revenues increased primarily due to increases in expenses consistent with higher activity levels, such as materials and ~~service intensity. As~~supplies expenses, maintenance and repairs expenses, employment costs and fuel costs. Cost of revenues, as a percentage of revenues, ~~cost~~decreased from 69.5 percent in the second quarter of ~~revenues decreased~~2022 to 63.9 percent in the

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second quarter of 2023 primarily due to improved pricing for our services as well as ~~leverage~~reduced maintenance expense due to a decrease in the average age of ~~higher revenues over direct employment costs.~~

our equipment.

Selling, general and administrative expenses.Selling, general and administrative expenses ~~were $39.7~~increased to $43.6 million for the three months ended ~~September~~June 30, ~~2017 and $34.9~~2023 compared to $35.9 million for the three months ended ~~September~~June 30, ~~2016. The increase in these expenses was~~2022, primarily due to ~~higher compensation~~ costs ~~primarily incentive compensation, as well as other~~related to the settlement of a vendor dispute and the acquisition of Spinnaker Oilwell Services. Selling, general and administrative expenses ~~consistent with higher activity levels. As a percentage~~increased from 9.6 percent of revenues ~~these costs decreased to 8.4 percent~~ in the ~~third~~second quarter of ~~2017 compared~~2022 to ~~19.8~~10.5 percent of revenues in the ~~third~~second quarter of ~~2016, due~~2023.

Pension settlement charges. Pension settlement charges were $911 thousand for the three months ended June 30, 2023. There were no pension settlement charges for the three months ended June 30, 2022. See note 10 of the notes to the ~~leverage of higher revenues over primarily fixed costs.~~

consolidated financial statements for more information.

Depreciation and amortization.Depreciation and amortization ~~decreased 23.8~~increased 30.4 percent to ~~$39.6~~$26.2 million for the three months ended ~~September~~June 30, ~~2017,~~2023, compared to ~~$52.0~~$20.1 million for the ~~quarter~~three months ended ~~September~~June 30, ~~2016~~2022. Depreciation and amortization increased due to ~~lower~~ capital expenditures ~~over~~in the ~~previous two years.~~

past year.

Gain on disposition of assets, net. Gain on disposition of assets, net was ~~$0.5~~$3.0 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$1.1~~a gain on disposition of assets, net of $1.8 million for the three months ended ~~September~~June 30, ~~2016.~~2022. The gain on disposition of assets, net is generally comprised of gains and losses related to various property and equipment dispositions or sales to customers of lost or damaged rental equipment.

Other income, ~~(expense),~~ net.Other income, net was ~~$564~~$631 thousand for the three months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$86~~other income, net of $79 thousand for the same period in the prior year.

Interest ~~expense.~~expense and interest income. Interest expense was ~~$105~~$73 thousand for the three months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$115~~$222 thousand for the three months ended ~~September~~June 30, ~~2016.~~2022. Interest expense ~~during the third quarters of 2017 and 2016 consists of~~includes facility fees on the unused portion of the credit facility and the amortization of loan costs.

Interest income increased to $2.7 million compared to $128 thousand in the prior year due to a higher average cash balance coupled with higher investment yields.

Income tax ~~provision (benefit).~~provision.Income tax provision was ~~$41.0~~$20.6 million during the three months ended ~~September~~June 30, ~~2017~~2023 compared to ~~an income~~$13.5 million tax ~~benefit of $17.3 million~~provision for the same period in ~~2016.~~2022. The effective tax rate was ~~41.7~~24.1 percent for the three months ended ~~September~~June 30, ~~2017~~2023 compared to ~~an effective beneficial tax rate of 30.8~~a 22.3 percent for the three months ended ~~September~~June 30, ~~2016.~~2022. The ~~2017 third quarter provision reflects a detrimental discrete tax adjustment of $4.1 million primarily related to a change~~increase in ~~estimates for prior year state taxes and net operating losses. The 2016 beneficial~~the 2023 effective tax rate ~~was the result~~is primarily due to unfavorable permanent items.

SIX MONTHS ENDED JUNE 30, 2023 COMPARED TO SIX MONTHS ENDED JUNE 30, 2022

Revenues. Revenues of ~~operational losses offset by the detrimental effect of non-deductible permanent items and the detrimental tax adjustment of $1.7~~$892.5 million for ~~state taxes and net operating losses.~~

~~NINE MONTHS ENDED SEPTEMBER 30, 2017 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2016~~

~~Revenues.~~~~Revenues for~~ the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 increased ~~129.9~~35.2 percent compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. Domestic revenues of ~~$1.1 billion~~$878.8 million increased ~~140.5~~36.4 percent for the six months ended June 30, 2023 compared to the same period in the prior year. The increase in revenues ~~resulted~~was primarily ~~from~~due to improved pricing, higher customer activity levels and ~~pricing for our services, higher service intensity, and continued activation~~a larger active fleet of ~~previously idled revenue-producing~~pressure pumping equipment. International revenues of ~~$38.4~~$13.7 million ~~increased 0.3~~decreased 14.1 percent for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the same period in the prior year. ~~Our international revenues are impacted by~~

During the ~~timing~~first six months of ~~project initiation~~2023, the average price of oil was 26.7 percent lower, and ~~their ultimate duration and can be difficult to predict.~~

~~The~~the average price of natural gas was ~~28.8~~60.4 percent ~~higher and the average price of oil was 18.7 percent higher during the nine months ended September 30, 2017~~lower, both as compared to the same period in the prior year. The average domestic rig count ~~during~~for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 was ~~78.8~~9.1 percent higher than the same period in ~~2016.~~

~~RPC, INC. AND SUBSIDIARIES~~

2022.

The Technical Services segment revenues for the ~~nine~~first six months ~~ended September 30, 2017~~of 2023 increased ~~139.9~~by 35.3 percent compared to the same period of the prior year due to higher customer activity levels, improved pricing and a larger fleet of pressure pumping equipment in service. Technical Services reported operating income of $180.6 million during the first six months of 2023 compared to operating income of $81.6 million in the same period of 2022. The Support Services segment revenues for the first six months of 2023 increased by 34.1 percent compared to the same period in the prior year, primarily due to ~~improved pricing,~~ higher activity levels and ~~a larger active fleet of revenue-producing equipment, particularly~~improved pricing within ~~our pressure pumping service line, which is the largest service line within Technical Services. The~~rental tools. Support ~~Services segment revenues for the nine months ended September 30, 2017 increased 6.8 percent compared to the same period in the prior year. Technical~~ Services reported operating income of ~~$184.5~~$14.6 million for the ~~nine~~first six months ~~ended September 30, 2017~~of 2023 compared to an operating ~~loss~~income of ~~$177.6~~$6.1 million infor the same period of ~~the prior year. Support Services reported lower operating losses of $10.6 million during the nine months ended September 30, 2017 compared to $19.3 million in the prior year of the same period.~~

2022.

Cost of revenues. Cost of revenues increased ~~75.9~~21.6 percent to ~~$765.1~~$571.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$434.9~~$469.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. Cost of revenues increased primarily due to increases in expenses consistent

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with higher activity levels, such as materials and ~~service intensity. As~~supplies expenses, maintenance and repairs expenses, employment costs and fuel costs. Cost of revenues, as a percentage of revenues, ~~cost of revenues~~ decreased from 71.2 percent for the six months ended June 30, 2022 to 64.0 percent for the six months ended June 30, 2023 primarily due to improved pricing for our services, as well as ~~leverage~~reduced maintenance expense due to a decrease in the average age of ~~higher revenues over direct employment costs.~~

our equipment.

Selling, general and administrative expenses.Selling, general and administrative expenses increased to ~~$117.2~~$85.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$114.9~~$72.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016. This increase is~~2022, primarily due to ~~higher compensation~~ costs related to the settlement of a vendor dispute and the acquisition of Spinnaker Oilwell Services, as well as ~~other expenses~~increases in variable employee compensation costs consistent with ~~higher activity levels partially offset by lower bad debt expense~~improved financial operating results. Selling, general and ~~professional fees. As~~administrative expenses, as a percentage of revenues, ~~these costs~~ decreased ~~to 10.0~~from 10.9 percent in the ~~nine~~first six months ~~ended September 30, 2017 compared~~of 2022 to ~~22.6~~9.6 percent in the same period of ~~the prior year,~~2023 primarily due to ~~lower expenses and improved~~the leverage of costs that are relatively fixed during the short term over higher revenues, ~~over fixed costs.~~partially offset by the impact of the acquisition of Spinnaker Oilwell Services.

Pension settlement charges. Pension settlement charges were $18.3 million for the six months ended June 30, 2023. There was no pension settlement charge for the six months ended June 30, 2022. See note 10 of the notes to the consolidated financial statements for more information.

Depreciation and amortization.Depreciation and amortization ~~decreased 25.7~~increased 27.2 percent to ~~$125.5~~$50.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, compared to ~~$168.9~~$39.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022. Depreciation and amortization increased due to ~~lower~~ capital expenditures in the ~~prior~~past year.

Gain on disposition of assets, net. Gain on disposition of assets, net was ~~$5.8~~$6.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$3.9~~a gain on disposition of assets, net of $4.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016. The increase is due to the sale of operating equipment related to its oilfield pipe inspection service line during the second quarter of 2017.~~2022. The gain on disposition of assets, net is generally comprised of gains and losses related to various property and equipment dispositions or sales to customers of lost or damaged rental equipment.

Other income, net.Other income, net was ~~$2.8~~$1.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$274~~other income, net of $583 thousand for the same period in the prior year.

Interest ~~expense.~~expense and interest income. Interest expense ~~of $322~~was $145 thousand for the ~~nine~~six months ended ~~September~~June 30, ~~2017 decreased~~2023 compared to ~~$566~~$400 thousand for the ~~nine~~six months ended ~~September~~June 30, ~~2016 and primarily consists of~~2022. Interest expense includes facility fees on the unused portion of the credit facility and the amortization of loan costs.

Interest income increased to $4.6 million compared to $143 thousand in the prior year due to a higher average cash balance coupled with higher investment yields.

Income tax ~~provision (benefit).~~ provision. Income tax provision. Income tax provision was ~~$64.6~~$42.3 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to ~~an income~~$21.8 million tax ~~benefit of $86.6 million~~provision for the same period in ~~2016.~~2022. The effective tax rate was ~~38.1~~23.6 percent for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to ana 26.0 percent effective tax ~~benefit~~ rate ~~of 41.9 percent~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. The ~~2017~~decrease in the 2023 effective tax rate ~~includes the detrimental~~is primarily due to favorable discrete tax adjustments related to a change in estimates for prior year state taxes and net operating losses, partially offset by a beneficial discrete tax adjustment resulting from the recently adopted provisions of ASU 2016-09 that requires excess tax benefits and deficiencies relating to share based payment awards to be recognized as a component of income tax expense rather than stockholders’ equity. The 2016 income tax benefit and associated benefit rate was the result of operational losses and the one-time beneficial impact of a resolution of a tax matter with a state taxing authority totaling $15.7 million, offset by the detrimental effect of non-deductible permanent items.

~~RPC, INC. AND SUBSIDIARIES~~

adjustments.

Liquidity and Capital Resources

Cash Flows

The Company’s cash and cash equivalents decreased $25.9 million to $100.5 million as of ~~September~~June 30, ~~2017 were $136.9 million.~~ 2023 compared to cash and cash equivalents of $126.4 million as of December 31, 2022. This decrease is primarily due to the advance of cash to fund the purchase of business on June 30, 2023, partially offset by an increase in net income during 2023 compared to the prior year.

The following table sets forth the historical cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016:~~2022:

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RPC, INC. AND SUBSIDIARIES

Nine months ended September 30,
(In thousands) 2017 2016
Net cash provided by operating activities $ 109,291 $ 94,560
Net cash used for investing activities (64,484 ) (17,776 )
Net cash used for financing activities (39,750 ) (2,893 )

Six months ended June 30,

(In thousands)

2023

2022

Net cash provided by operating activities

$
177,558

$
42,853

Net cash used for investing activities

(174,782)

(43,430)

Net cash used for financing activities

28,665

(3,623)

Cash provided by operating activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 increased by ~~$14.7~~$134.7 million compared to the ~~same period in~~six months ended June 30, 2022. Cash provided by operating activities for the ~~prior year. This increase is due primarily to a net improvement in~~six months ended June 30, 2023 includes net income of ~~$224.9~~$136.5 million, ~~and other long-term liabilities~~coupled with favorable changes in accounts receivable of ~~$14.5~~$23.0 million primarily ~~related~~due to ~~the favorable settlement of a state income tax matter partially~~improved collections, offset by ~~net~~ unfavorable changes in other components of our working capital ~~of $189.1~~(accounts payable and accrued payroll) totaling $37.7 million ~~coupled with a decrease in depreciation and amortization expenses of $44.0 million. The net unfavorable change in working capital is~~ primarily due to unfavorable changes of $295.4 million in accounts receivable and $22.6 million in inventories due to higher business activity levels, $5.0 million in prepaid expenses and other current assets and $5.4 in accrued expenses. This unfavorable change was partially offset by favorable changes in working capital of $68.8 million in accounts payable, $55.4 million in net income taxes receivable/ payable and $15.2 million in accrued payroll and related expenses consistent with higher business activity levels coupled with the timing of ~~payments and receipts of tax refunds.~~
payments.
Cash used for investing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 increased by ~~$46.7~~$131.4 million compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2022, primarily ~~because~~due to the advance of cash to fund the purchase of business on June 30, 2023, coupled with an increase in capital expenditures primarily due to the timing of new equipment deliveries and consistent with higher ~~capital expenditures.~~
business activity levels.
Cash used for financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 increased by ~~$36.9~~$25.0 million primarily ~~as a result~~due to the resumption of ~~higher cost~~cash dividends paid to common stockholders beginning in the third quarter of 2022, coupled with repurchases during the first quarter of 2023 of the Company’s common shares on the open market and repurchases for taxes related to the vesting of ~~certain~~ restricted ~~shares coupled with a cash dividend to common stockholders in the third quarter of 2017.~~shares.
Financial Condition and Liquidity
The Company’s financial condition as of ~~September~~June 30, ~~2017~~2023 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’s decisions relating to the amount of cash to be used for investing and financing activities are influenced by our capital position, and the expected amount of cash to be provided by operations. RPC does not currently expect to utilize our revolving credit facility to meet these liquidity requirements.
The majority of our cash and cash equivalents are held at a single financial institution and are in excess of amounts insured by the Federal Deposit Insurance Corporation (FDIC). This financial institution is among the largest in the United States and we believe it is a safe place to hold our deposits.
The Company currently has a ~~$125~~$100.0 million revolving credit facility that matures in ~~January 2019.~~June 2027 as recently amended. The facility contains customary terms and conditions, including restrictions on indebtedness, dividend payments, business combinations and other related items. ~~On June 30, 2016,~~In the second quarter of 2022, the Company amended the revolving credit ~~facility~~facility. Among other matters, the amendment (1) extends the termination date for revolving loans from July 26, 2023 to ~~establish~~June 22, 2027, (2) replaces LIBOR with Term SOFR as an interest rate option in connection with revolving loan borrowings and reduces the applicable rate margins by approximately 0.25% at each pricing level, (3) introduces a ~~borrowing~~1.00% per annum floor for base ~~to be~~rate borrowings, (4) permits the ~~lesser~~issuance of ~~$125 million or a specified percentage of eligible accounts receivable less the amount of any outstanding~~ letters of ~~credit.~~credit in currencies other than U.S. dollars. As of ~~September~~June 30, ~~2017,~~2023, RPC had no outstanding borrowings under the revolving credit facility, and letters of credit outstanding relating to self-insurance programs and contract bids totaled ~~$19.1~~$16.4 million; therefore, a total of ~~$105.9~~$83.6 million of the facility was available. The Company was in compliance with the credit facility financial covenants as of June 30, 2023. For additional information with respect to RPC’s facility, see Note 911 of the ~~Notes to Consolidated Financial 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. 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. In addition, the Company's decisions about the amount of cash to be used for investing and financing activities may also be influenced by theconsolidated 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.~~statements.
Cash Requirements
The Company currently expects ~~that~~ capital expenditures ~~will be approximately $150 million during 2017, of which $75.0 million has been spent as of September 30, 2017. We expect capital expenditures for the remainder of 2017~~ to be ~~primarily~~$200 million to $250 million in 2023 and to be directed towards ~~new revenue-producing fleets and~~both capitalized maintenance of our existing ~~equipment.~~equipment and selected growth opportunities. The Company is allocating capital to maintain the capacity of its pressure pumping fleet to offset anticipated future fleet retirements. During the second quarter of 2023 the Company placed into service a new pressure pumping fleet, replacing existing older equipment sent out for refurbishment. The actual amount of ~~2017~~ capital expenditures in 2023 will depend primarily on equipment maintenance requirements, expansion opportunities, and equipment delivery schedules.
24
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RPC, INC. AND SUBSIDIARIES

The Company has ongoing sales and use tax audits in various jurisdictions subject to varying interpretations of statutes. The Company has recorded the exposure from these audits to the extent issues are resolved or are reasonably estimable. There are issues that could result in unfavorable outcomes that cannot be currently estimated. See Note 9 of the Notes to Consolidated Financial Statements for additional information.

~~The Company’s~~During the first six months of 2023, the Company made cash contributions of $5.4 million to its Retirement Income Plan and currently expects to make minimal contributions for the remainder of the year.
Effective July 1, 2023, the Company acquired Spinnaker, a ~~multiple employer trusteed defined benefit pension plan, provides monthly benefits upon retirement at age 65 to eligible employees.~~leading provider of oilfield cementing services in the Permian and Mid-Continent basins. The purchase price was $79.5 million for 100 percent of Spinnaker’s equity. The acquisition was effective July 1, 2023 and amounts advanced as of June 30, 2023, consisted of approximately $77.0 million in cash and a $2.0 million pay-off of capital lease liabilities. Additionally, the Company ~~does not~~assumed $518 thousand of capital lease liabilities effective July 1, 2023. The agreement contains a post-closing adjustment window for an agreed-upon level of Spinnaker’s working capital, as well as other usual and customary items, which we expect to ~~contribute to the plan during 2017.~~
~~As of September 30, 2017, the Company’s stock buyback program authorizes the repurchase of up to 31,578,125 shares. There were 726,889 shares repurchased on the open market~~finalize during the third quarter of ~~2017, and 975,265~~2023.
The Company has a stock buyback program to repurchase up to 49,578,125 shares ~~remain~~in the open market, including an additional 8,000,000 shares authorized for repurchase by the Board of Directors in the second quarter of 2023. As of June 30, 2023, 15,115,820 shares remained available to be repurchased. During the three months ended June 30, 2023 there were no shares repurchased ~~under~~in the ~~current authorization as~~open market primarily due to our self-imposed trading blackout pending the closing of ~~September 30, 2017.~~the Spinnaker acquisition. During the first quarter of 2023 the Company repurchased 1,132,364 shares on the open market. 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 ~~October 24, 2017,~~July 25, 2023, the Board of Directors declared a regular quarterly cash dividend of ~~$0.07~~$0.04 per share ~~and a special year-end dividend of $0.07 per share. Both dividends are~~ payable ~~December~~September 11, ~~2017~~2023 to common stockholders of record at the close of business ~~November~~on August 10, ~~2017.The~~2023. The Company expects to continue to pay cash dividends to common stockholders, subject to industry conditions and RPC’s earnings, financial condition, and other relevant factors.
INFLATION
~~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. 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 as~~especially if employment in the general economy increases. Also, activity increases ~~in the~~can cause supply disruptions and higher costs of certain materials and key equipment components used to provide services to the Company’s customers. ~~Since~~In recent years, the price of labor and raw materials increased due to higher oilfield activity ~~began to increase~~and labor shortages caused by the departure of skilled labor from the domestic oilfield industry in prior years. These cost increases moderated in the second quarter of 2016, the Company has experienced upward pressure on the price of labor due to the shortage of skilled employees coupled with increases in the prices of certain raw materials used in providing our services. During the third quarter of 2017, the Company experienced price increases and shortages of certain raw materials due to supply disruptions caused2023 but remain high by several hurricanes in the Gulf Coast and Southeastern United States. The Company believes that these supply disruptions are temporary. Thus far in this period of increasing activity and during these weather-related raw materials shortages, the Company has successfully increased pricing for our services to compensate for these price increases, although no assurance can be given that the Company will continue to be able to do so in the future.historical standards.
OFF BALANCE SHEET ARRANGEMENTS
The Company does not have any material off balance sheet arrangements.
RELATED PARTY TRANSACTIONS
Marine Products Corporation
~~Effective February 28, 2001,~~In conjunction with the ~~Company spun-off the business~~spin-off of its former power boat manufacturing segment conducted through Chaparral Boats, Inc., ~~RPC’s former powerboat manufacturing segment. In conjunction with the spin-off,~~ RPC and Marine Products Corporation (Marine Products) entered into various agreements that define the companies’ relationship. ~~During the nine months ended September 30, 2017,~~ RPC charged Marine Products ~~Corporation~~ for its allocable share of administrative costs incurred for services rendered on behalf of Marine Products Corporation totaling ~~$630,000~~$526 thousand for the ~~nine~~six months ended ~~September~~June 30, ~~2017 compared to $559,000~~2023 and $473 thousand for the comparable period in ~~2016.~~2022.
As part of the termination of the Retirement income plan, The Company paid $482 thousand to Marine Products, during the second quarter of 2023, to reimburse funds paid using Marine Product’s assets in the Plan to settle its participant liabilities.

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~~Other~~RPC, INC. AND SUBSIDIARIES

Other

The Company periodically purchases, in the ordinary course of business, products or services from suppliers ~~who~~that are owned by officers or significant stockholders of, or affiliated with the directors of RPC. The total amounts paid to these affiliated parties were ~~$1,121,000~~$1.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~$676,000~~$740 thousand for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~

~~RPC, INC. AND SUBSIDIARIES~~

2022.

RPC receives certain administrative services and rents office space from Rollins, Inc. (a company of which Mr. ~~R. Randall~~Gary W. Rollins is ~~also~~ Chairman, and which is controlled by Mr. Rollins and his affiliates). The service agreements between Rollins, Inc. and the Company provide for the provision of services on a cost reimbursement basis and are terminable on ~~nine~~three months’ notice. The services covered by these agreements include ~~office space,~~ selected ~~administration~~administrative services for 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 aggregated ~~$70,000~~$3 thousand for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~$74,000~~$52 thousand for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022.

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. RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of $100 thousand for each of the six months ended June 30, 2023 and June 30, 2022.

CRITICAL ACCOUNTING POLICIES

The discussion of Critical Accounting Policies is incorporated herein by reference from the Company’s annual report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2022. There have been no significant changes in the critical accounting policies since year-end.

IMPACT OF RECENT ACCOUNTING ~~PRONOUNCEMENTS~~

STANDARDS

See Note 32 of the Notes to Consolidated Financial Statements for a description of recent accounting ~~pronouncements,~~standards, including the expected dates of adoption and estimated effects on results of operations and financial condition.

SEASONALITY

Oil and natural gas prices affect demand throughout the oil and natural gas industry, including the demand for the Company’s products and services. The Company’s business depends in large part on the economic conditions of the oil and gas industry, and specifically on the capital expenditures of its customers related to the exploration and production of oil and natural gas. There is a positive correlation between these expenditures and customers’ demand for the Company’s services. As such, when these expenditures fluctuate, customers’ demand for the Company’s services fluctuates as well. These fluctuations depend on the current and projected prices of oil and natural gas and resulting drilling activity, and are not seasonal to any material degree.

FORWARD-LOOKING STATEMENTS

Certain statements made in this report that are not historical facts are “forward-looking statements” under ~~Section 21E of the Securities Exchange Act of 1934 and~~ the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, statements ~~regarding the effect of recent accounting pronouncements on the Company’s consolidated financial statements; our plans~~that relate to continue to pursue international growth opportunities and our belief that international revenues will continue to represent a low percentage of our consolidated revenues in the future; our expectation for the amount and focus of our capital expenditures during 2017; our belief about increases in U.S. oilfield activity; the belief that the price of oil has risen to a level that provides our customers financial returns that will encourage drilling and production activities; ~~the belief that the price of natural gas has not risen to a level that encourages our customers to increase their drilling and production activities~~;the belief that current commodity prices have moderately positive implications for near term activity levels; the belief 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; the belief that the pricing for our services has reached a level that will allow for the industry to maintain its fleet of revenue-producing equipment and hire additional personnel to operate idle equipment; our belief that many customers have started to complete drilled but previously incomplete wells and the potential impact of this trend; the 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; the belief that demand for revenue-producing service capacity will continue to exceed supply; our plans to maintain our financial structure which includes little or no debt during the near term; our plan to maintain sufficient liquidity and a conservative capital structure and monitor our discretionary spending; our business strategy, plans and objectives; market risk exposure; adequacy of capital resources and funds; opportunity for growth and expansion; anticipated pension funding payments and capital expenditures; our expectation that we will continue to pay cash dividends, subject to the earnings and financial condition of the Company and other relevant factors; the possible unfavorable outcome of sales and use tax audits; the impact of inflation and related trends on the Company’s financial position and operating results; our beliefs regarding oil field activity and the related impact on wages for skilled labor and the prices of raw material used in providing our services; our belief that changes in foreign exchange rates are not expected to have a material effect on our consolidated results of operations or financial condition; our belief that the outcome of litigation will not have a material adverse effect upon our financial position or results of operations;objectives, and our beliefs and expectations regarding future demand for our ~~products~~equipment and services and other events and conditions that may influence the oilfield services market and our performance in the future. ~~The Company does not undertake~~Forward-looking statements made elsewhere in this report include, without limitation, statements regarding: our ability to ~~update its forward-looking statements.~~continue to monitor factors that impact current and expected customer activity levels, such as the prices of oil and natural gas, changes in pricing for our services and equipment, and utilization of our equipment and personnel; the effect of geopolitical factors such as political instability in the petroleum-producing regions of the world, the actions of the OPEC oil cartel, overall economic conditions and weather in the United States, the prices of oil and natural gas, and our customers’ drilling and production activities on our financial results; our strategy of utilizing equipment in unconventional basins; our expectation that capital expenditures will be $200 million to $250 million during 2023 and our expectation that such expenditures will be directed primarily towards capitalized maintenance of our existing equipment and selected growth opportunities; our plans to continue to pursue international growth opportunities; our belief that international revenues will continue to be less than ten percent of our consolidated revenues in the foreseeable future; our belief that current and projected prices of oil, natural gas and natural gas liquids are important catalysts for U.S. domestic drilling activity; our belief that oil and gas price increases motivate our customers to maintain drilling and completion activities; our belief that the favorable long-term outlook for natural gas provided by the U.S. oil and gas industry is sufficient to encourage our customers to maintain their natural gas-directed exploration and production activities; our belief that oil-directed drilling will remain the majority of domestic drilling and that

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natural gas-directed drilling will remain a low percentage of U.S. domestic drilling in the near-term; our belief that natural gas-directed drilling will increase in the future because of favorable long-term market dynamics and our belief that this projected higher demand should drive increased activity in most of the basins in which we operate; our plans to continue to monitor the market for our services and the competitive environment and related impact on our equipment fleets; our belief that the growing efficiency with which oilfield completion crews are providing services is a catalyst for the oversupplied nature of the oilfield services market; our belief that most of the feasible efficiency gains have been realized and that a number of our smaller competitors have ceased operations; our belief that the competitive market for our services improved during 2022 and early 2023 and will continue to improve during the near term; our plans to remain highly disciplined for about adding new incremental revenue-producing equipment capacity and to expand only when we believe the projected financial returns of such capital expenditures meet our financial return criteria; our plans to allocate capital to maintain the capacity of our pressure pumping fleet to offset anticipated fleet requirements; our plans to refurbish an existing fleet that will be activated in 2023 and our expectations regarding the delivery of a pressure pumping fleet in the second half of 2023; the strength of our financial condition; our plans with respect to our stock buyback program; our belief that 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; our belief that we will not need our revolving credit facility to meet our liquidity requirements; our expectations to continue to pay cash dividends to common stockholders, subject to industry conditions and RPC earnings, financial condition and other relevant factors; estimates made with respect to our critical accounting policies; the effect of new accounting standards; the effect of the changes in foreign exchange rates on our consolidated results of operations or financial condition; and the impact of lawsuits, legal proceedings and claims on our financial position and results of operation.

The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “estimate,” “focus,” “plan,” 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. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of RPC to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. Risk factors that could cause such future events not to occur as expected include ~~those described~~the following: the volatility of oil and natural gas prices; our concentration of customers in the ~~Company's Annual Report~~energy industry and periodic downturns; our business depends on ~~Form 10-K for~~capital spending by our customers, many of whom rely on outside financing to fund their operations; dependence on our key personnel; our ability to identify or complete acquisitions; our ability to attract and retain skilled workers; some of our equipment and several types of materials used in providing our services are available from a limited number of suppliers; whether outside financing is available or favorable to us; increasing expectations from customers, investors and other stakeholders regarding our environmental, social and governance practices; our compliance with regulations and environmental laws; the ~~fiscal year ended December 31, 2016, its other SEC filings~~combined impact of the OPEC disputes and the ~~following: the~~COVID-19 pandemic on our operating results; possible declines in the price of oil and natural gas, which tend to result in a decrease in drilling activity and therefore a decline in the demand for our ~~services, the actions of the OPEC cartel,~~services; the ultimate impact of current and potential political unrest and armed conflict in the oil producing regions of the world, which could impact drilling activity, adverse weather conditions in oil or gas producing regions, including the Gulf of ~~Mexico,~~Mexico; competition in the oil and gas ~~industry,~~industry; the Company’s ability to implement price ~~increases,~~increases; the potential impact of possible future regulations on hydraulic fracturing on our ~~business,~~business; risks of international ~~operations, and~~operations; reliance on large ~~customers~~.customers; our operations rely on digital systems and processes that are subject to cyber-attacks or other threats; and our cash and cash equivalents are held primarily at a single financial institution. Additional discussion of factors that could cause actual results to differ from management’s projections, forecasts, estimates and expectations is contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and in this 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is subject to interest rate risk exposure through borrowings on its credit facility. As of ~~September~~June 30, ~~2017,~~2023, there were no outstanding interest-bearing advances on our credit facility, which ~~bears~~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.

ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures – The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to its

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management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, ~~September~~June 30, ~~2017~~2023 (the “Evaluation Date”), the Company carried out an evaluation, under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at a reasonable assurance level as of the Evaluation Date.

Changes in internal control over financial reporting – Management’s evaluation of ~~changes in internal control~~the effectiveness of the design and operation of its disclosure controls and procedures described above did not identify any changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~RPC, INC. AND SUBSIDIARIES~~

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
RPC is involved in litigation from time to time in the ordinary course of its business. RPC does not believe that the outcome of such litigation will have a material adverse effect on the financial position or results of operations of RPC.

ITEM 1A. RISK FACTORS
~~See~~There have been no material changes from the risk factors ~~described~~previously disclosed in the Company’s Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2016.~~2022, as updated in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
~~Shares repurchased~~Purchases of Equity Securities by the ~~Company~~Issuer and ~~affiliated purchases in the third quarter of 2017 are outlined below.~~Affiliated Purchasers.
Period Total
Number of
Shares
(or Units)
Purchased Average Price
Paid Per Share
(or Unit) Total Number of
Shares (or Units)
Purchased as
Part of Publicly
Announced
Plans or
Programs Maximum
Number (or
Approximate
Dollar Value) of
Shares (or Units)
that May Yet Be
Purchased Under
the Plans or
Programs⁽¹⁾
July 1, 2017 to July 31, 2017 — $ — — 1,702,154
August 1, 2017 to August 31, 2017 726,889 ⁽¹⁾ 19.63 726,889 975,265
September 1, 2017 to September 30, 2017 — — — 975,265
Totals 726,889 $ 19.63 726,889 975,265

Period

Total Number of Shares (or Units) Purchased

Average Price Paid Per Share (or Unit)

Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1)

Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1)
April 1, 2023 to April 30, 2023

306
(2)
$
7.39

—

15,115,820
May 1, 2023 to May 31, 2023

—

—

—

15,115,820
June 1, 2023 to June 30, 2023

—

—

—

15,115,820
Total

306

$
7.39

—

15,115,820
⁽¹⁾ The Company has a stock buyback program ~~initially adopted in 1998 and subsequently amended in 2013 that authorizes the~~to repurchase of up to ~~31,578,125 shares. There~~49,578,125 shares in the open market, including an additional 8,000,000 shares authorized for repurchase by the Board of Directors in the second quarter of 2023. As of June 30, 2023, 15,115,820 shares remained available to be repurchased. During the three months ended June 30, 2023 there were ~~726,889~~no shares purchased in the open market.
(2) Represent shares repurchased ~~as part~~by the Company in connection with taxes related to vesting of this program during the third quarter of 2017. As of September 30, 2017, there are 975,265 shares available for repurchase under the current authorization. Currently the program does not have a predetermined expiration date.certain restricted shares.

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RPC, INC. AND SUBSIDIARIES

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.

ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
~~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-Q.~~
ITEM 5. OTHER INFORMATION
During the three months ended June 30, 2023, no director or officer, as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended, of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
~~None.~~

28
~~RPC, INC. AND SUBSIDIARIES~~
ITEM 6. EXHIBITS
Exhibit

Number
Description
3.1(a)
Restated certificate of incorporation of RPC, Inc. (incorporated herein by reference to Exhibit 3.1 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999).
3.1(b)
Certificate of amendment of the certificate of incorporation of RPC, Inc. (incorporated by reference to Exhibit 3.1(b) to Registrant’s Quarterly Report on Form 10-Q filed on May 8, 2006).
3.1(c)
Certificate of amendment of the certificate of incorporation of RPC, Inc. (incorporated by reference to Exhibit 3.1(c) to the Registrant’s Quarterly Report on Form 10-Q filed on August 2, 2011).
3.2
Amended and Restated Bylaws of RPC, Inc. effective October 26, 2021 (incorporated by reference to Exhibit 3.2 toof the Registrant’s Quarterly Report on Form 10-Q filed on ~~April 28, 2017)~~October 29, 2021).
4
Form of Stock Certificate (incorporated herein by reference to Exhibit 4 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
~~31.1~~
10.25*

Merger agreement between Catapult services.
31.1
Section 302 certification for Chief Executive Officer.
31.2
Section 302 certification for Chief Financial Officer.
32.1
Section 906 certifications for Chief Executive Officer and Chief Financial Officer.
~~95.1~~
101.INS
~~Mine Safety Disclosures.~~
~~101.INS~~
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
104

*

Cover Page Interactive Data File (formatted as Inline XBRL)

Portions of this Exhibit have been omitted pursuant to Item 601(a)(6) of Regulation S-K

29

29

Table of Contents

RPC, INC. AND SUBSIDIARIES

~~SIGNATURES~~

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

RPC, INC.

/s/ ~~Richard A. Hubbell~~Ben M. Palmer
Date:  ~~October 31, 2017~~July 28, 2023
~~Richard A. Hubbell~~

Ben M. Palmer

President and Chief Executive Officer

(Principal Executive Officer)
~~/s/ Ben M. Palmer~~
~~Date:  October 31, 2017~~

~~Ben M. Palmer~~

/s/ Michael L. Schmit
Date:  July 28, 2023

Michael L. Schmit

Vice President, Chief Financial Officer and ~~Treasurer~~Corporate Secretary

(Principal Financial and Accounting Officer)