Exhibit 99
FOR IMMEDIATE RELEASE
RPC, Inc. Reports 2006 Second Quarter Financial Results
o Revenues for the Second Quarter Increased 43.3 Percent over Prior
Year
o Diluted EPS for the Second Quarter Increased by 133 Percent to
$0.42, Compared to $0.18 in the Second Quarter of the Prior Year
ATLANTA, July 26, 2006 -- RPC, Inc. (NYSE: RES) today announced its unaudited
results for the second quarter ended June 30, 2006. RPC provides a broad range
of specialized oilfield services and equipment primarily to independent and
major oilfield companies engaged in the exploration, production and development
of oil and gas properties throughout the United States and in selected
international markets.
For the quarter ended June 30, 2006, revenues increased 43.3 percent to
$146,065,000 compared to $101,945,000 in the second quarter last year. Revenues
increased compared to the prior year due to capacity additions made during the
past year and higher pricing. Operating profit for the quarter was $44,350,000
compared to $19,189,000 in the prior year. Net income was $27,614,000 or $0.42
diluted earnings per share, compared to $11,910,000, or $0.18 diluted earnings
per share last year.
Cost of services rendered and goods sold was $69,695,000, or 47.7 percent of
revenues, during the second quarter of 2006, compared to $55,746,000, or 54.7
percent of revenues, in the prior year. The increase in these costs was due to
the variable nature of many of these expenses, including compensation, materials
and supplies expenses, maintenance and repair expenses, and fuel costs. As a
percentage of revenues, however, these costs decreased because of higher
equipment and personnel utilization which leverages fixed costs over higher
revenues, and improved pricing. In addition, insurance expense decreased due to
favorable loss experience compared to the prior year. Selling, general and
administrative expenses increased by 23.1 percent in the second quarter of 2006
to $22,392,000 from $18,188,000 in the prior year. This increase was due
primarily to higher compensation and other operational expenses consistent with
higher activity levels and improved profitability. As a percentage of revenues,
however, these costs decreased to 15.3 percent in 2006 compared to 17.8 percent
last year due to the fixed nature of many of these expenses. Depreciation and
amortization were $11,597,000 during the quarter, compared to $9,607,000 last
year. This increase was due to the higher level of capital expenditures made
during recent quarters.
For the six months ended June 30, 2006, revenues increased 45.2 percent to
$282,089,000 compared to $194,275,000 last year. Net income increased 140.5
percent to $52,514,000, or $0.80 diluted earnings per share compared to net
income of $21,837,000, or $0.33 diluted earnings per share last year.
"RPC's high activity levels continued in the second quarter of 2006," stated
Richard A. Hubbell, RPC's President and Chief Executive Officer. "Our revenue
growth over the prior year is principally due to the impact of increases in our
capacity and pricing increases that have taken effect. The average domestic rig
count during the second quarter was 1,635, 22.1 percent higher than the same
period in 2005. The average price of oil increased 33 percent and the average
price of natural gas decreased by six percent during the quarter compared to the
prior year. Our revenues grew at a greater rate than the domestic rig count due
to increases in capacity and pricing, partially offset by the elimination of
revenues from the service lines that we sold in August 2005. We invested over
$62,000,000 in new equipment and capitalized maintenance of existing equipment
during the first six months of the year, and as we also announced today, we plan
to invest approximately $160,000,000 during the second half of 2006."
Summary of Segment Operating Performance
RPC's business segments are Technical Services and Support Services.
Technical Services includes RPC's oilfield service lines that utilize people and
equipment to perform value-added completion, production and maintenance services
directly to a customer's well. These services are generally directed toward
improving the flow of oil and natural gas from producing formations or to
address well control issues. The Technical Services include pressure pumping,
hydraulic workover services, coiled tubing, nitrogen, wireline, well control,
downhole tools, surface production equipment, and fishing tool operations.
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2nd Quarter 2006 Press Release
Support Services includes RPC's oilfield service lines that provide equipment
for customer use or services to assist customer operations. The equipment and
services offered include rental of drill pipe and related tools, pipe handling,
inspection and storage services and oilfield training services.
Both Technical Services and Support Services experienced stronger results due to
the increased drilling rig count and related customer activity, increased
capacity utilization, and higher pricing. Technical Services revenues rose 39.1
percent for the quarter compared to the prior year, driven by increased capacity
and higher pricing in all of the services that comprise this segment, partially
offset by the elimination of revenues from the operating assets of its hammer,
casing, laydown and casing torque-turn services, which were sold in August 2005.
Support Services revenues rose by 65.7 percent during the quarter compared to
the prior year. This increase was driven primarily by increased capacity in the
rental tool service line, which is the largest service line within Support
Services, as well as improved pricing in the service lines which comprise this
segment.
Three Months Ended June 30 Six Months Ended June 30
-----------------------------------------------------
2006 2005 2006 2005
-----------------------------------------------------
(in thousands)
Revenues:
Technical services $ 119,572 $ 85,959 $ 234,333 $ 163,917
Support services 26,493 15,986 47,756 30,341
Other - - - 17
--------- --------- --------- ---------
Total revenues $ 146,065 $ 101,945 $ 282,089 $ 194,275
--------- --------- --------- ---------
Operating Profit:
Technical services $ 37,044 $ 17,330 $ 73,283 $ 32,118
Support services 8,361 3,311 13,552 5,482
Other - (133) - (298)
Corporate expenses (3,024) (2,104) (5,969) (4,665)
Gain on disposition of assets, net 1,969 785 3,001 1,411
--------- --------- --------- ---------
Total operating profit $ 44,350 $ 19,189 $ 83,867 $ 34,048
--------- --------- --------- ---------
Other income, net 119 193 380 1,463
Interest income, net 94 78 247 170
--------- --------- --------- ---------
Income before income taxes $ 44,563 $ 19,460 $ 84,494 $ 35,681
================================== ========= ========= ========= =========
RPC provides a broad range of specialized oilfield services and equipment
primarily to independent and major oilfield companies engaged in the
exploration, production and development of oil and gas properties throughout the
United States, including the Gulf of Mexico, mid-continent, southwest and Rocky
Mountain regions, and in selected international markets. RPC's investor website
can be found at www.rpc.net.
Certain statements and information included in this press release constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements include
statements regarding the timing and amount of planned future investments. These
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of RPC to be
materially different from any future results, performance or achievements
expressed or implied in such forward-looking statements. Such risks include the
possibility of 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, the ultimate impact of current
and potential political unrest and armed conflict in the oil-producing regions
of the world, which could impact drilling activity, adverse weather conditions
in oil or gas producing regions, including the Gulf of Mexico, competition in
the oil and gas industry, and risks of international operations. Additional
discussion of factors that could cause the actual results to differ materially
from management's projections, forecasts, estimates and expectations is
contained in RPC's Form 10-K filed with the Securities and Exchange Commission
for the year ended December 31, 2005.
For information about RPC, Inc., please contact:
Ben M. Palmer
Chief Financial Officer
404.321.2140
irdept@rpc.net
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2nd Quarter 2006 Press Release
Jim Landers
Corporate Finance
404.321.2162
jlanders@rpc.net
RPC INCORPORATED AND SUBSIDIARIES
- ---------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data)
- --------------------------------------------------------------------------------------------- ------------------------------------
Periods ended June 30, (Unaudited) Second Quarter Six Months
- --------------------------------------------------------------------------------------------- ------------------------------------
% BETTER % BETTER
2006 2005 (WORSE) 2006 2005 (WORSE)
- --------------------------------------------------------------------------------------------- ------------------------------------
REVENUES $ 146,065 $ 101,945 43.3% $ 282,089 $ 194,275 45.2%
COSTS AND EXPENSES:
Cost of services rendered and goods sold 69,695 55,746 (25.0) 135,446 106,157 (27.6)
Selling, general and administrative expenses 22,392 18,188 (23.1) 43,475 36,594 (18.8)
Depreciation and amortization 11,597 9,607 (20.7) 22,302 18,887 (18.1)
Gain on disposition of assets, net (1,969) (785) 150.8 (3,001) (1,411) 112.7
- --------------------------------------------------------------------------------------------- ------------------------------------
Operating profit 44,350 19,189 131.1 83,867 34,048 146.3
Interest income, net 94 78 20.5 247 170 45.3
Other income, net 119 193 (38.3) 380 1,463 (74.0)
- --------------------------------------------------------------------------------------------- ------------------------------------
Income before income taxes 44,563 19,460 129.0 84,494 35,681 136.8
Income tax provision 16,949 7,550 (124.5) 31,980 13,844 (131.0)
- --------------------------------------------------------------------------------------------- ------------------------------------
NET INCOME $ 27,614 $ 11,910 131.9% $ 52,514 $ 21,837 140.5%
============================================================================================= ====================================
EARNINGS PER SHARE
Basic $ 0.43 $ 0.19 126.3% $ 0.83 $ 0.34 144.1%
=================================== ====================================
Diluted $ 0.42 $ 0.18 133.3% $ 0.80 $ 0.33 142.4%
=================================== ====================================
AVERAGE SHARES OUTSTANDING
Basic 63,624 63,348 63,497 63,634
==================== ====================
Diluted 65,756 65,283 65,800 65,688
-------------------- --------------------
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2nd Quarter 2006 Press Release
RPC INCORPORATED AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
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At June 30, (Unaudited) (In thousands)
- --------------------------------------------------------------------------------
2006 2005
- --------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 2,936 $ 10,610
Accounts receivable, net 132,125 81,926
Inventories 16,524 12,684
Deferred income taxes 4,466 4,497
Income taxes receivable - 577
Prepaid expenses and other current assets 2,783 2,775
- --------------------------------------------------------------------------------
Total current assets 158,834 113,069
- --------------------------------------------------------------------------------
Property, plant and equipment, net 180,506 127,887
Goodwill 24,093 24,738
Other assets 4,372 3,274
- --------------------------------------------------------------------------------
Total assets $ 367,805 $ 268,968
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 39,455 $ 26,150
Accrued payroll and related expenses 10,017 8,863
Accrued insurance expenses 3,683 3,271
Accrued state, local and other taxes 2,330 2,222
Income taxes payable 723 -
Short-term debt 2,036 2,000
Other accrued expenses 756 4,814
- --------------------------------------------------------------------------------
Total current liabilities 59,000 47,320
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Accrued insurance expenses 6,280 6,932
Pension liabilities 12,046 11,025
Deferred income taxes 8,074 10,024
Other long-term liabilities 2,170 2,583
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Total liabilities 87,570 77,884
- --------------------------------------------------------------------------------
Common stock 6,492 6,423
Capital in excess of par value 15,589 12,790
Retained earnings 266,008 178,625
Accumulated other comprehensive loss (7,854) (6,754)
- --------------------------------------------------------------------------------
Total stockholders' equity 280,235 191,084
- --------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 367,805 $ 268,968
================================================================================
Certain prior year balances have been reclassified to conform with current year
presentation.
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2nd Quarter 2006 Press Release
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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Six months ended June 30, (Unaudited) (In thousands)
- --------------------------------------------------------------------------------
2006 2005
- --------------------------------------------------------------------------------
Operating Activities:
Net income $ 52,514 $ 21,837
Depreciation, amortization and other non-cash charges 23,776 19,547
Other net changes in operating activities (23,520) (8,866)
- --------------------------------------------------------------------------------
Net cash provided by operating activities 52,770 32,518
- --------------------------------------------------------------------------------
Investing Activities:
Capital expenditures (62,534) (34,066)
Other investing activities 3,951 (1,711)
- --------------------------------------------------------------------------------
Net cash used for investing activities (58,583) (35,777)
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Financing Activities:
Payment of dividends (6,414) (3,400)
Borrowings (payments) on debt, net 2,036 (2,800)
Cash paid for common stock purchased and retired (1,944) (10,211)
Other financing activities 2,262 644
- --------------------------------------------------------------------------------
Net cash used for financing activities (4,060) (15,767)
- --------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (9,873) (19,026)
Cash and cash equivalents at beginning of period 12,809 29,636
- --------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 2,936 $ 10,610
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