RPC Inc: Form 10-Q for the period ended Jun 30, 2025

Overview

The following discussion should be read in conjunction with the Consolidated Financial Statements included elsewhere in this document. See also Forward-Looking Statements on page 32.

RPC, Inc. (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 America, 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 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, other shifting trends in our industry, 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, 2024, is incorporated herein by reference.

During the second quarter of 2025, total revenues of $420.8 million increased by $56.7 million or 15.6% compared to the same period in the prior year.

Operating profit was $15.5 million for the three months ended June 30, 2025, compared to $35.5 million during the same period of 2024.

Net income for the three months ended June 30, 2025, was $10.1 million or $0.05 diluted earnings per share compared to net income of $32.4 million, or $0.15 diluted earnings per share in the same period of 2024.

Net cash provided by operating activities decreased to $92.9 million for the six months ended June 30, 2025, compared to $184.5 million for the same period of 2024.

On April 1, 2025 (the “Closing Date”), RPC, through its wholly owned subsidiary, Thru Tubing Solutions, Inc., completed its acquisition of Pintail Alternative Energy, L.L.C (“Pintail”). Headquartered in Midland, Texas, Pintail is a leading provider of oilfield wireline perforating services in the Permian Basin and operates more than 30 active fleets, and its conventional and electric wireline units are among the newest in the industry. The acquisition will build on RPC’s diversified oilfield services platform with geographic concentration in the most active oil producing region in the U.S. land market. Pintail is included in our Technical Services Segment.

On the Closing Date, 100% of Pintail’s equity was automatically canceled and converted into the right to receive (i) $170 million in cash, without interest, (ii) $25 million of RPC common stock, which was paid by the issuance of 4,545,454 shares of restricted common stock of RPC to one of the previous owners, and (iii) $50 million in the form of a secured note payable to Houston LP (the “Seller Note”). Interest on the Seller Note accrues at a variable rate equal to the Simple Secured Overnight Financing Rate, for the applicable interest period, plus 2.0% per annum, or where applicable, at a specified default rate. Beginning with second quarter of 2025, the Company has begun interest payments on the Seller Note.

As of June 30, 2025, there were no outstanding borrowings under our credit facility. How We Evaluate Our Operations

We use Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Adjusted EBITDA, Adjusted EBITDA margin and Free cash flow, all non-GAAP measures, to evaluate and analyze the operating performance of our businesses.

We believe that EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Free cash flow are important indicators of performance. Adjusted EBITDA is defined as EBITDA, adjusted for unusual (income)/expenses. Adjusted EBITDA margin reflects Adjusted EBITDA as a percentage of revenues. Management believes that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin enable investors to compare the operating performance of our core business consistently over various time periods without regard to changes in our capital structure. Management believes that Free cash flow, which measures our ability to generate needed cash from business operations, is an important financial measure for evaluating RPC’s financial condition. Our definition of Free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures, since the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions.

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools and should not be considered as an alternative to net income/(loss), operating income/(loss), and related margins, or any other measure of financial performance presented in accordance with accounting principles generally accepted in the United States of America (GAAP). Similarly, Free cash flow should be considered in addition to, rather than as a substitute for GAAP presentation of net cash provided by operating activities, as a measure of our financial condition.

See Non-GAAP Financial Measures below for a reconciliation of EBITDA and Adjusted EBITDA to net income, and Adjusted EBITDA margin to net income margin, the most directly comparable financial measures calculated and presented in accordance with GAAP and a reconciliation of Free Cash Flow to Operating Cash Flow, the most directly comparable financial measure calculated and presented in accordance with GAAP.

Results of Operations

(in thousands, except for percentages)

THREE MONTHS ENDED JUNE 30, 2025 COMPARED TO THREE MONTHS ENDED JUNE 30, 2024

Revenues. Revenues of $420.8 million for the three months ended June 30, 2025, increased 15.6% compared to the three months ended June 30, 2024. The increase in revenues was primarily due to revenues from recently acquired Pintail of $98.9 million, partially offset by lower pressure pumping activity levels compared to the prior year. Pressure pumping results for the second quarter of 2025 were negatively impacted by pricing pressure, weather, third-party non-productive time and customer startup delays. Pressure pumping market remains highly competitive. Management believes the industry continues to be over-supplied and efficiency gains are consistently adding pump hour capacity to the industry. These challenges, as well as a declining rig count, have impacted activity, asset utilization, and pricing. International revenues represented 2.0% of total revenues in the second quarter of 2025 compared to 2.9% in the same period of the prior year. We believe that international revenues will continue to be less than 10% of RPC’s consolidated revenues in the foreseeable future.

During the second quarter of 2025, the average price of oil was 20.8% lower and the average price of natural gas was 54.6% higher, both as compared to the same period in the prior year. The average domestic rig count (Source: Baker Hughes, Inc.) for the three months ended June 30, 2025, was 5.3% lower than in the same period in 2024.

The Technical Services segment revenues for the second quarter of 2025 increased by 16.2% compared to the same period of the prior year due primarily to the addition of Pintail, partially offset by a decrease in pressure pumping revenues. Technical Services reported operating income was $21.1 million during the second quarter of 2025 compared to operating income of $30.2 million in the second quarter of 2024. The decrease in Technical Services operating income was primarily due to lower pricing in pressure pumping. Support Services segment revenues for the second quarter of 2025 increased by 6.1% compared to the same period in the prior year, primarily due to higher activity levels within rental tools. Support Services reported operating income of $4.6 million for the second quarter of 2025 compared to operating income of $4.4 million for the second quarter of 2024. Second quarter 2025 Support Services operating profit increased by $260 thousand compared to the second quarter of the prior year due to higher activity levels.

Cost of revenues. Cost of revenues increased 21.1% to $317.7 million for the three months ended June 30, 2025, compared to $262.3 million for the three months ended June 30, 2024 primarily due to costs from recently acquired Pintail, partially offset by lower pressure pumping activities and change in job mix. In accordance with Staff Accounting Bulletin (SAB) Topic 11.B, cost of revenues presented on the Consolidated Statements of Operations excludes depreciation and amortization totaling $36.6 million for the second quarter of 2025 compared to $29.5 million for the second quarter of 2024.

Selling, general and administrative expenses. Selling, general and administrative expenses increased to $40.8 million for the three months ended June 30, 2025, compared to $37.4 million for the three months ended June 30, 2024, primarily due to acquisition costs, coupled with expenses from recently acquired Pintail.

Acquisition related employment costs. Acquisition related employment costs of $6.6 million represent non-cash accounting adjustments related to the Pintail acquisition consideration that is contingent upon continued employment. We expect to recognize these costs equally over 12 quarters and approximate $78.6 million in the aggregate.

Depreciation and amortization. Depreciation and amortization increased 31.0% to $42.3 million for the three months ended June 30, 2025, compared to $32.3 million for the three months ended June 30, 2024. Depreciation and amortization increased due to additional fixed assets and intangibles related to the Pintail acquisition, coupled with capital expenditures in the past year.

Gain on disposition of assets, net. Gain on disposition of assets, net was $2.2 million for the three months ended June 30, 2025, compared to $3.3 million for the three months ended June 30, 2024. The gain on disposition of assets, net is generally comprised of gains and losses related to various property and equipment dispositions or sales to customers of lost or damaged rental equipment.

Other income, net. Other income, net was $1.2 million for the three months ended June 30, 2025, compared to $732 thousand for the same period in the prior year.

Interest expense and interest income. Interest expense increased to $1.0 million for the three months ended June 30, 2025, compared to $99 thousand for the three months ended June 30, 2024 primarily due to interest on the Seller Note issued in conjunction with the Pintail acquisition. Interest expense includes interest on the Seller Note, facility fees on the unused portion of the credit facility and the amortization of loan costs. Interest income decreased to $1.6 million compared to $3.3 million in the prior year due to a lower average cash balance, primarily due to the acquisition of Pintail on April 1, 2025.

Income tax provision. Income tax provision was $7.2 million during the three months ended June 30, 2025 compared to $7.0 million tax provision for the same period in the prior year. The effective tax rate was 41.3% for the three months ended June 30, 2025 compared to a 17.8% effective tax rate for the same period in the prior year. The increase in effective tax rate is primarily due to Acquisition related employment costs which both contributed to a lower pre-tax income and included a non-deductible component.

Net income, net income margin and diluted earnings per share. Net income was $10.1 million during the three months ended June 30, 2025, or $0.05 diluted earnings per share, compared to net income of $32.4 million during the three months ended June 30, 2024, or $0.15 diluted earnings per share. Net income margin was 2.4% for the three months ended June 30, 2025, compared to 8.9% for the same period in the prior year.

Adjusted EBITDA and Adjusted EBITDA margin. Adjusted EBITDA was $65.6 million, and Adjusted EBITDA margin was 15.6% for the three months ended June 30, 2025 compared to $68.5 million and 18.8%, respectively, for the same period in the prior year.

Cash provided by operating activities and Free cash flow. Cash provided by operating activities was $53.1 million for the three months ended June 30, 2025, compared to $127.9 million for the three months ended June 30, 2024. The decrease in cash provided by operating activities is due primarily to unfavorable changes in working capital, primarily due to a $52.8 million federal refund received in the second quarter of 2024, coupled with lower net income. Free cash flow decreased to $10.0 million for the three months ended June 30, 2025, from $52.9 million for the three months ended June 30, 2024, primarily due to a decrease in cash provided by operating activities, partially offset by lower capital expenditures.

SIX MONTHS ENDED JUNE 30, 2025, COMPARED TO SIX MONTHS ENDED JUNE 30, 2024

Revenues. Revenues of $753.7 million for the six months ended June 30, 2025, increased 1.6% compared to the six months ended June 30, 2024. The slight increase in revenues was primarily due to results from recently acquired Pintail, partially offset by lower pressure pumping activity levels compared to the prior year. Pressure pumping market remains highly competitive. Management believes the industry continues to be over-supplied and efficiency gains are consistently adding pump hour capacity to the industry. These challenges, as well as a declining rig count, have impacted activity, asset utilization, and pricing. International revenues represented 2.2% of total revenues in the first six months of 2025 compared to 2.8% in the same period of the prior year. We believe that international revenues will continue to be less than 10% of RPC’s consolidated revenues in the foreseeable future.

During the first six months of 2025, the average price of oil was 14.2% lower and the average price of natural gas was 73.9% higher, both as compared to the same period in the prior year. The average domestic rig count (Source: Baker Hughes, Inc.) for the six months ended June 30, 2025, was 5.4% lower than in the same period in 2024.

The Technical Services segment revenues for the six months ended June 30, 2025 increased by 1.5% compared to the same period of the prior year due primarily to results from recently acquired Pintail, partially offset by a decrease in Pressure Pumping revenues. Technical Services reported operating income of $35.1 million during the six months ended June 30, 2025 compared to operating income of $62.2 million in the same period of the prior year. The decrease in Technical Services operating income was primarily due to lower pricing in pressure pumping and several other service lines. Support Services segment revenues for the six months ended June 30, 2025 increased by 2.2% compared to the same period in the prior year, primarily due to higher activity levels within rental tools. Support Services reported operating income of $7.3 million for the six months ended June 30, 2025 compared to operating income of $8.0 million for the same period in the prior year. Support Services operating profit for the six months ended June 30, 2025 decreased by $678 thousand compared to the six months ended June 30, 2024.

Cost of revenues. Cost of revenues increased 4.2% to $561.6 million for the six months ended June 30, 2025, compared to $538.9 million for the six months ended June 30, 2024 primarily due to costs from recently acquired Pintail. Excluding results from Pintail, cost of revenues decreased in line with revenues primarily due to a decrease in expenses consistent with lower activity levels, such as materials and supplies, fleet and transportation and maintenance and repairs expenses. In accordance with Staff Accounting Bulletin (SAB) Topic 11.B, cost of revenues presented on the Consolidated Statements of Operations excludes depreciation and amortization totaling $69.0 million for the six months ended June30, 2025 compared to $56.8 million for the same period in the prior year.

Selling, general and administrative expenses. Selling, general and administrative expenses increased to $83.3 million for the six months ended June 30, 2025, compared to $77.5 million for the six months ended June 30, 2024, primarily due to acquisition costs and expenses from recently acquired Pintail, coupled with ERP system implementation costs.

Acquisition related employment costs. Acquisition related employment costs of $6.6 million represent non-cash accounting adjustments related to the Pintail acquisition consideration that is contingent upon continued employment. We expect to recognize these costs equally over 12 quarters and approximate $78.6 million in the aggregate.

Depreciation and amortization. Depreciation and amortization increased 25.1% to $78.0 million for the six months ended June 30, 2025, compared to $62.3 million for the six months ended June 30, 2024. Depreciation and amortization increased due to additional fixed assets and intangibles related to the Pintail acquisition, coupled with capital expenditures in the past year.

Gain on disposition of assets, net. Gain on disposition of assets, net was $3.7 million for the six months ended June 30, 2025, compared to $4.6 million for the six months ended June 30, 2024. 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 $2.0 million for the six months ended June 30, 2025, compared to $1.5 million for the same period in the prior year.

Interest expense and interest income. Interest expense increased to $1.1 million for the six months ended June 30, 2025, compared to $333 thousand for the six months ended June 30, 2024 primarily due to interest on the Seller Note issued in conjunction with the Pintail acquisition. Interest expense includes interest on the Seller Note, facility fees on the unused portion of the credit facility and the amortization of loan costs. Interest income decreased to $5.0 million compared to $6.3 million in the prior year primarily due to a lower average cash balance, primarily due to the acquisition of Pintail on April 1, 2025.

Income tax provision. Income tax provision was $11.7 million during the six months ended June 30, 2025 compared to $15.4 million tax provision for the same period in the prior year. The effective tax rate was 34.5% for the six months ended June 30, 2025 compared to a 20.5% effective tax rate for the same period in the prior year. The increase in effective tax rate is primarily due to Acquisition related employment costs which both contributed to a lower pre-tax income and included a non-deductible component.

Net income, net income margin and diluted earnings per share. Net income was $22.2 million during the six months ended June 30, 2025, or $0.10 diluted earnings per share, compared to net income of $59.9 million during the six months ended June 30, 2024, or $0.28 diluted earnings per share. Net income margin was 2.9% for the six months ended June 30, 2025, compared to 8.1% for the same period in the prior year.

Adjusted EBITDA and Adjusted EBITDA margin. Adjusted EBITDA was $114.5 million, and Adjusted EBITDA margin was 15.2% for the six months ended June 30, 2025, compared to $131.7 million and 17.7% for the same period in the prior year.

Cash provided by operating activities and Free cash flow. Cash provided by operating activities was $92.9 million for the six months ended June 30, 2025, compared to $184.5 million for the six months ended June 30, 2024. The decrease in cash provided by operating activities is due primarily to unfavorable changes in working capital, primarily due to a $52.8 million federal refund received during the first six months of 2024, coupled with lower net income. Free cash flow decreased to $17.6 million for the six months ended June 30, 2025, from $56.7 million for the six months ended June 30, 2024, primarily due to a decrease in cash provided by operating activities, partially offset by lower capital expenditures.

Non-GAAP Financial Measures

Reconciliation of GAAP and non-GAAP Financial Measures

Disclosed herein are non-GAAP financial measures of EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, and Free cash flow. These measures should not be considered in isolation or as a substitute for performance or liquidity measures prepared in accordance with GAAP.

A non-GAAP financial measure is a numerical measure of financial performance, financial position, or cash flows that either 1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statements of operations, balance sheet or statement of cash flows, or 2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.

Set forth below are reconciliations of these non-GAAP measures with their most directly comparable GAAP measures.

(Unaudited)

(1) Net income margin is calculated as net income divided by revenues. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by revenues.

(Unaudited)

(In thousands)

Liquidity and Capital Resources

Cash Flows

The Company’s cash and cash equivalents decreased $163.9 thousand to $162.1 million as of June 30, 2025, compared to cash and cash equivalents of $326.0 million as of December 31, 2024.

The following table sets forth the historical cash flows for the six months ended June 30, 2025 and 2024:

(In thousands)

Cash provided by operating activities for the six months ended June 30, 2025, decreased by $91.5 million compared to the six months ended June 30, 2024, primarily due to unfavorable changes in working capital, primarily due to a $52.8 million tax refund received in the prior year, coupled with a decrease in net income. Change in working capital was a use of cash of $14.8 million during the six months ended June 30, 2025, compared to a $56.5 million source of cash in the same period last year. The most significant working capital related cash flows during the six months ended June 30, 2025, were a cash use of $45.4 million due to a decrease in unearned revenue due to the satisfaction of performance obligations that were associated with a customer cash prepayment we received in the fourth quarter of 2024, a $39.7 million cash source from a decrease in accounts receivable and a $21.4 million use of cash from a decrease in accounts payable, both due to lower business activity levels compared to the prior year coupled with the timing of receipts. The changes in the other components were mainly due to the timing of payments and receipts.

Cash used for investing activities for the six months ended June 30, 2025, increased by $112.6 million compared to the six months ended June 30, 2024, primarily due to cash used to fund the acquisition of Pintail, partially offset by a decrease in capital expenditures primarily related to the timing of new equipment deliveries and consistent with lower business activity levels. Capital expenditures were $75.3 million for the six months ended June 30, 2025, compared to $127.8 million for the six months ended June 30, 2024. In the prior year period, the Company was purchasing components of a new Tier 4 dual fuel pressure pumping fleet.

Cash used for financing activities for the six months ended June 30, 2025, decreased by $2.1 million compared to the six months ended June 30, 2024, primarily due to a decrease in repurchases of the Company’s common shares in the open market, partially offset by the repayment of debt assumed at acquisition.

Financial Condition and Liquidity

The Company’s financial condition 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 about the amount of cash to be used for investing and financing activities are influenced by our capital position, and the expected amount of cash to be provided by operations. RPC does not expect to utilize our revolving credit facility to meet these liquidity requirements in the near term.

The majority of our cash and cash equivalents are held at multiple financial institutions, each of which holds funds in excess of amounts insured by the Federal Deposit Insurance Corporation (FDIC). These financial institutions are among the largest in the United States and we believe are a safe place to hold our deposits.

The Company currently has a $100.0 million revolving credit facility that matures in June 2027. The 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% owned domestic subsidiaries whose assets equal substantially all of the consolidated assets of the Company and its subsidiaries. Certain of the Company’s minor subsidiaries are not guarantors. The Credit Agreement’s maturity date is June 22, 2027, and the interest rate is based on Term Secured Overnight Financing Rate (Term SOFR). In addition, the terms of the agreement have a 1.00% per annum floor for Base Rate borrowings and permits the issuance of letters of credit in currencies other than U.S. dollars. As of June 30, 2025, RPC had no outstanding borrowings under the revolving credit facility, and letters of credit outstanding relating to self-insurance programs and contract bids totaled $15.8 million; therefore, a total of $84.2 million of the facility was available. The Company is currently in compliance with the credit facility financial covenants. For additional information with respect to RPC’s facility, see the note titled Notes Payable of the Consolidated Financial Statements.

In addition, the Company filed a shelf registration statement on Form S-3 on April 23, 2025, which was declared effective on May 5, 2025. The shelf registration includes a base prospectus and allows us to offer any combination of securities described in the prospectus, which include common stock, preferred stock, warrants, rights, depositary shares, purchase contracts and units containing two or more of the foregoing, in one or more offerings in an aggregate amount of up to $300 million. The Form S-3 is intended to provide us flexibility to conduct registered sales of our securities, subject to market conditions and our future capital needs. The terms of any future offering under the shelf registration statement will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to the completion of any such offering.

On July 4, 2025, the United States Congress passed budget reconciliation bill H.R. 1 referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA contains several changes to corporate taxation including modifications to capitalization of research and development expenses, limitations on deductions for interest expense and accelerated depreciation on fixed asset additions. The Company is in the process of evaluating the OBBBA and has not estimated its financial impact at this time.

Cash Requirements

The Company currently expects capital expenditures, inclusive of recently acquired Pintail, to be between $165 million and $215 million in 2025, mostly related to maintenance. This is inclusive of opportunistic asset purchases and technology spend associated with our ERP implementation. As of June 30, 2025, $75.3 million has been spent. The Company is allocating capital to maintain its pressure pumping fleet and continues to evaluate future investments and options to further upgrade our equipment across the business.

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

The Company has a stock buyback program to repurchase up to 49,578,125 shares in the open market. As of June 30, 2025, 12,768,870 shares remained available to be repurchased. During the three months ended June 30, 2025, and the three months ended June 30, 2024, there were no shares repurchased by the Company in 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. For additional information with respect to RPC’s stock buyback program, see note of the Consolidated Financial Statements titled Cash Paid for Common Stock Purchased and Retired.

In the fourth quarter of 2024, the Board of Directors approved the termination of the SERP. Pursuant to the Internal Revenue Service rules, participant balances are required to be distributed between 12 and 24 months after termination. The Company currently plans to distribute the balances within the next 12 months by liquidating assets currently held in the Rabbi Trust. Both the assets and liabilities related to the SERP are now reflected as part of current assets and current liabilities.

During 2024, the Company entered into a multi-year systems transformation program to upgrade our ERP and supply chain systems. We are currently in the early phases and expensed the majority of non-recurring costs incurred in 2024 and the first quarter of 2025. During the second quarter of 2025 the company began capitalizing some costs associated with ERP implementation. We plan to continue the ERP implementation through a phased approach with costs being incurred over the next few years.

During the second quarter of 2025, the Company began making interest payments on the Seller Note and will continue making such payments in accordance with the terms of the Seller Note. In addition, per the terms of the Seller Note, the first principal payment of $20 million is payable within the next 12 months. The remainder of $30 million in principal is payable over two years after the first repayment, per the terms of the agreement.

On July 22, 2025, the Board of Directors declared a regular quarterly cash dividend of $0.04 per share payable September 10, 2025, to common stockholders of record at the close of business on August 11, 2025. 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

The Company purchases its equipment and materials from suppliers who provide competitive prices and employ skilled workers from competitive labor markets. If inflation in the general economy increases, the Company’s costs for equipment, materials and labor could increase as well. In addition, increases in activity in the domestic oilfield can cause upward wage pressures in the labor markets from which it hires employees, especially if employment in the general economy increases. Also, activity increases can cause supply disruptions and higher costs of certain materials and key equipment components used to provide services to the Company’s customers. In recent years, the price of labor and raw materials increased while labor shortages caused by the departure of skilled labor from the domestic oilfield industry in prior years. These cost increases have moderated but remain high by historical standards. Though the ultimate impact is uncertain, the Company does currently expect tariffs on goods imported into the US to result in materially higher costs of equipment.

OUTLOOK

The current and projected prices of oil, natural gas and natural gas liquids are important catalysts for U.S. domestic drilling activity and can be impacted by economic and policy developments as well as geopolitical disruptions. RPC believes that oil prices currently remain at levels sufficient to motivate our customers to maintain drilling and completion activities, however the recent decline of oil prices and potential further volatility could result in the Company’s customers opting to delay completion activity. Long-term, projected higher demand for oil and natural gas should drive increased activity in most of the basins in which RPC operates.

We continue to monitor the supply and demand for our services and the competitive environment, including trends such as increasing customer preferences for lower emission and more efficient equipment. Increased efficiencies in recent years of oilfield completion services and equipment, particularly in pressure pumping, has inherently contributed to oversupply in the Oilfield Services (OFS) market. We believe that competition will remain intense.

OFF BALANCE SHEET ARRANGEMENTS

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

RELATED PARTY TRANSACTIONS

Marine Products Corporation (Marine Products)

In conjunction with RPC’s spin-off of its powerboat manufacturing business, RPC and Marine Products entered into various agreements that define the companies’ relationship. Per the terms of their Transition Support Services agreement, which may be terminated by either party, RPC provides certain administrative services, including financial reporting and income tax administration, acquisition assistance, etc., to Marine Products. Charges from the Company (or from corporations that are subsidiaries of the Company) for such services were $552 thousand for the six months ended June 30, 2025, and $590 thousand for the comparable period in 2024. All of the Company’s directors are also directors of Marine Products, and the executive officers are employees of both the Company and Marine Products.

Other

The Company periodically purchases, in the ordinary course of business, products or services from suppliers that are owned by officers or significant stockholders of or affiliated with certain directors of RPC. The total amounts paid to these affiliated parties were $32 thousand for the six months ended June 30, 2025, and $881 thousand for the six months ended June 30, 2024.

A group that includes Amy R. Kreisler and Timothy C. Rollins, each of whom is a director of the Company, certain of their family members, and certain companies under their and/or their family members’ control, controls in excess of fifty percent of the Company’s voting power.

RPC and Marine Products own 50% 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 $96 thousand for the six months ended June 30, 2025 compared to $100 thousand for the comparable period in 2024.

Pursuant to the registration rights agreement between us and our largest stockholder, LOR, Inc. (LOR) and certain of its affiliates (collectively, the Selling Stockholders) and their permitted transferees, we have we have filed a Form S-3 shelf registration statement on April 23, 2025, which was declared effective on May 5, 2025, that registers the resale of up to 127,235,202 shares of our common stock, and which represents all Company securities held by the Selling Stockholders. In addition, they have the right to require, subject to certain conditions and limitations, certain piggy back registration rights with respect to registrations initiated by us.

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, 2024. There have been no significant changes in the critical accounting policies since year-end.

IMPACT OF RECENT ACCOUNTING STANDARDS

See note to the Consolidated Financial Statements titled Recent Accounting Standards for a description of recent accounting 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 the Private Securities Litigation Reform Act of 1995. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “estimate,” “focus,” “plan,” and similar expressions generally identify forward-looking statements. Such forward-looking statements may include, without limitation, statements that relate to our business strategy, plans and objectives, and our beliefs and expectations regarding future demand for our equipment and services, trends in the industry, and other events and conditions that may influence the oilfield services market and our performance in the future. Forward-looking statements made elsewhere in this report include, without limitation, statements regarding: our belief that the operating results for the three and six months ended June 30, 2025, are not necessarily indicative of the results to be expected for the year ending December 31, 2025; our belief that Pintail is a leading provider of oilfield wireline perforating services in the Permian Basin; our belief that Pintail’s conventional and electric wireline units are among the newest in the industry; our belief that the acquisition of Pintail will build on RPC’s diversified oilfield services platform with geographic concentration in the most active oil producing region in the U.S. land market; our assessment that the preliminary purchase price allocation in connection with the Pintail acquisition is subject to change as additional information is obtained; our expectation that, in regards to the Pintail acquisition, the Company will finalize the purchase price allocation within the measurement period, which will not exceed one year from the acquisition date; our expectation that the Company anticipates finalizing the post-closing adjustment for an agreed-upon level of Pintail’s working capital by the end of fiscal year 2025; our belief that there were no favorable or unfavorable market terms in the assumed financing and operating leases in connection with the Pintail acquisition; our contention that goodwill is attributable to synergies expected to be achieved from the combined operations of the Company and Pintail and the assembled workforce; our expectation that the acquisition of Pintail builds on our diversified oilfield services platform with geographic concentration in the most active oil producing region in the U.S. land market; our expectation that the Company will distribute the balances of the SERP with the next 12 months by liquidating assets currently held in the Rabbi Trust; our belief that the likelihood of a material loss related to the outstanding state tax assessment is remote and cannot be reasonably estimated at this time, 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; statements that repurchases of the Company’s 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 determined by the Company; our ability to 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 belief that EBITDA, EBITDA margin and free cash flow are important indicators of performance; our belief that EBITDA and EBITDA margin enable investors to compare the operating performance of our core business consistently over various time periods without regard to changes in our capital structure and that free cash flow is an important financial measure for evaluating our financial condition; our belief that pressure pumping remains highly competitive; our belief that the industry continues to be over-supplied and efficiency gains are consistently adding pump hour capacity to the industry, and these challenges as well as a declining rig count, have resulted in activity, asset utilization, and pricing trending lower; our belief that international revenues will continue to be less than ten percent of our consolidated revenues in the foreseeable future; our belief that our financial condition remains strong; 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 expectation that we will not need our revolving credit facility to meet our liquidity requirements; our belief that the financial institutions are a safe place to hold our deposits; our expectation that capital expenditures will be between $165 million and $215 million during 2025 and our expectation that such expenditures will be mostly related to maintenance; our plan to continue to evaluate future investments and options to further upgrade our equipment across the business; our inability to estimate the outcomes of sales and use tax audits in various jurisdictions; our plan to continue the ERP implementation through a phased approach with costs being incurred over the next few years; our expectation to continue to pay cash dividends to common stockholders, subject to industry conditions and our earnings, financial condition, and other relevant factors; our belief that if inflation in the general economy increases, our costs for equipment, materials and labor could increase as well; our belief that increases in activity in the domestic oilfield can cause upward pressures in the labor markets from which it hires employees, especially if employment in the general economy increases; our belief that activity increases can cause supply disruptions and higher costs of certain materials and key equipment components used to provide our services to our customers; our expectation that tariffs on goods imported into the U.S. will increase equipment prices; our belief that current and projected prices of oil, natural gas and natural gas liquids are important catalysts for U.S. domestic drilling activity and can be impacted by economic and policy developments as well as geopolitical disruptions; our belief that oil prices currently remain at levels sufficient to motivate our customers to maintain drilling and completion activities, however, the recent decline of oil prices and potential further volatility could result in our customers opting to delay completion activity; our belief that long-term, projected steady higher demand for oil and natural gas should drive increased activity in most of the basins in which we operate; our belief that competition will remain intense; our plan to continue to monitor the supply and demand for our services and the competitive environment, including trends such as increasing customer preferences for lower emission and more efficient equipment; our expectation that changes in the foreign exchange rate will not have a material effect on our consolidated results of operations or financial conditions; our belief that the outcome of litigation will not have a material adverse effect on our financial position or results of operations; and our belief that the material weaknesses in Pintail’s audit for the fiscal year ended December 31, 2024, could adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner if not remediated.

Such forward-looking 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 the following: the volatility of oil and natural gas prices; our concentration of customers in the energy industry and periodic downturns; our business depends on 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 combined impact of the OPEC disputes and 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 ultimate impact of current and potential political unrest and armed conflict in the oil producing regions of the world, including the current conflict involving Israel and the Gaza Strip, which could impact drilling activity; adverse weather conditions in oil or gas producing regions, including the Gulf of America; competition in the oil and gas industry, especially in pressure pumping, and adverse impacts from the industry being over-supplied; limits to the Company’s ability to implement price increases; the potential impact of possible future regulations on hydraulic fracturing on our business; risks of international operations; reliance on large 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, 2024, and in this Quarterly Report on Form 10-Q.

The Company is subject to interest rate risk exposure through borrowings on its credit facility and the Pintail Seller Note. As of June 30, 2025, there were no outstanding interest-bearing advances on our credit facility, which provides for 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.

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 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, June 30, 2025 (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, which excluded the impact of the acquisition of Pintail, discussed below, 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.

As discussed in the Note titled “Acquisition” of the Notes to Consolidated Financial Statements in Part I – Item 1. “Financial Statements” of this Form 10-Q for the quarter ended June 30, 2025, we completed the acquisition of Pintail during the quarter. As part of our post-closing integration activities, we are engaged in the process of assessing the internal controls of Pintail and have begun to integrate policies, processes, people, technology, and operations for the post-acquisition combined company. As permitted for newly acquired businesses by interpretive guidance issued by the staff of the SEC, management has excluded the internal control over financial reporting of Pintail from the evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2025.

We have reported the operating results of Pintail in our Consolidated Statements of Operations and Statements of Cash Flows from the acquisition date through June 30, 2025. As of June 30, 2025, total assets related to Pintail represented approximately 18% of our total assets, recorded on a preliminary basis as the measurement period for the business combination remained open as of June 30, 2025. Revenues from Pintail represented approximately 24% of our total consolidated revenues for the three months ended June 30, 2025.

*Changes in internal control over financial reporting –*The Company has successfully completed the mapping of Pintail’s accounts to our existing financial reporting systems. The Company has begun an initial review of key controls and has implemented controls related to all Pintail financial statement line items and consolidation in order to enable the accurate preparation and timely reporting of their results.

Other than the changes to Pintail controls noted above, there were no changes in the Company’s internal control over financial reporting during the second quarter of 2025 which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, with the exception of the following:

Risks related to our business

Material weaknesses in the internal control over financial reporting of Pintail Alternative Energy, L.L.C. (“Pintail”), our significant subsidiary acquired on April 1, 2025, were identified by Pintail’s independent registered public accounting firm as part of their financial statement audit for the year ended December 31, 2024. These material weaknesses, if not remediated, could adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our disclosure controls, including our internal controls, and to disclose any changes in internal controls identified through such evaluations of those controls.

Material weaknesses in internal control over financial reporting were identified by Pintail’s independent registered public accounting firm as part of their audit of Pintail’s financial statements for fiscal year ended December 31, 2024. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the entity’s annual or interim financial statements will not be prevented or detected on a timely basis. To respond to these material weaknesses, we have undertaken immediate steps to implement compensating controls to continue to remediate and improve the internal controls over financial reporting relating to Pintail operations, including improvements regarding segregation of duties and documenting the review process around key controls.

Any failure to maintain adequate internal controls could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. The Company has controls in place to account for the purchase of Pintail. The material weaknesses are limited to Pintail’s internal controls.