UNITED
      STATESSECURITIES
      AND EXCHANGE COMMISSIONWASHINGTON,
      D.C. 20549FORM
      10-QQuarterly
      report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934For
      the quarterly period ended June 30, 2009Commission
      File No. 1-8726RPC,
      INC.(Exact
      name of registrant as specified in its
charter)




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(Address
      of principal executive offices) (zip code)Registrant’s
      telephone number, including area code — (404)
      321-2140




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 xNo o




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 month (or for such shorter period that the
registrant was required to submit and post such files). Yes o No o




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


Large
      accelerated filer o
            Accelerated
      filer xNon-accelerated
      filer o (Do
      not check if a smaller reporting company)
            Smaller
      reporting company o




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




As of
July 29, 2009, RPC, Inc. had 98,407,052 shares of common stock
outstanding.





1


RPC,
INC. AND SUBSIDIARIES




TABLE OF
CONTENTS


Page
              No.Part
      I. Financial InformationItem
      1.
            Financial
      Statements (Unaudited)Consolidated
      Balance Sheets –
              As
      of June 30, 2009 and December 31, 2008
            
            3Consolidated
      Statements of Operations –
              For
      the three and six months ended June 30, 2009 and 2008
            
            4Consolidated
      Statement of Stockholders’ Equity –
              For
      the six months ended June 30, 2009
            
            5Consolidated
      Statements of Cash Flows –
              For
      the six months ended June 30, 2009 and 2008
            
            6Notes
      to Consolidated Financial Statements
            
            7 –
      20Item
      2.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            
            21
      – 33Item
      3.
            Quantitative
      and Qualitative Disclosures about Market Risk
            
            33Item
      4.
            Controls
      and Procedures
            
            34Part
      II. Other InformationItem
      1.
            Legal
      Proceedings
            
            35Item
      1A.
            Risk
      Factors
            
            35Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            
            35Item
      3.
            Defaults
      upon Senior Securities
            
            36Item
      4.
            Submission
      of Matters to a Vote of Security Holders
            
            36Item
      5.
            Other
      Information
            
            36Item
      6.
            Exhibits
            
            37Signatures
            
            38





2




RPC,
      INC. AND SUBSIDIARIESPART
      I. FINANCIAL INFORMATIONITEM
      1. FINANCIAL STATEMENTSCONSOLIDATED
      BALANCE SHEETSAS
      OF JUNE 30, 2009 AND DECEMBER 31, 2008(In
      thousands)(Unaudited)





June
      30,
                  2009
                
                
                December
      31,
                  2008(Note
      1)ASSETSCash
      and cash equivalents
                
                $
                2,812
                
                
                $
                3,037Accounts
      receivable, net
                
                
                121,276
                
                
                
                210,375Inventories
                
                
                54,044
                
                
                
                49,779Deferred
      income taxes
                
                
                5,634
                
                
                
                6,187Income
      taxes receivable
                
                
                18,377
                
                
                
                15,604Prepaid
      expenses and other current assets
                
                
                3,594
                
                
                
                7,841Total
      current assets
                
                
                205,737
                
                
                
                292,823Property,
      plant and equipment, net
                
                
                444,856
                
                
                
                470,115Goodwill
                
                
                24,093
                
                
                
                24,093Other
      assets
                
                
                7,966
                
                
                
                6,430Total
      assets
                
                $
                682,652
                
                
                $
                793,461LIABILITIES
      AND STOCKHOLDERS’ EQUITYAccounts
      payable
                
                $
                36,061
                
                
                $
                61,217Accrued
      payroll and related expenses
                
                
                9,662
                
                
                
                20,398Accrued
      insurance expenses
                
                
                4,746
                
                
                
                4,640Accrued
      state, local and other taxes
                
                
                2,999
                
                
                
                2,395Income
      taxes payable
                
                
                927
                
                
                
                3,359Other
      accrued expenses
                
                
                255
                
                
                
                320Total
      current liabilities
                
                
                54,650
                
                
                
                92,329Long-term
      accrued insurance expenses
                
                
                9,008
                
                
                
                8,398Notes
      payable to banks
                
                
                123,550
                
                
                
                174,450Long-term
      pension liabilities
                
                
                12,872
                
                
                
                11,177Other
      long-term liabilities
                
                
                1,668
                
                
                
                3,628Deferred
      income taxes
                
                
                50,542
                
                
                
                54,395Total
      liabilities
                
                
                252,290
                
                
                
                344,377Common
      stock
                
                
                9,840
                
                
                
                9,770Capital
      in excess of par value
                
                
                5,290
                
                
                
                3,990Retained
      earnings
                
                
                424,588
                
                
                
                445,356Accumulated
      other comprehensive loss
                
                
                (9,356
                )
                
                
                (10,032
                )Total
      stockholders’ equity
                
                
                430,362
                
                
                
                449,084Total
      liabilities and stockholders’ equity
                
                $
                682,652
                
                
                $
                793,461




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


3




RPC,
      INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF OPERATIONSFOR
      THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008(In
      thousands except per share data)(Unaudited)





Three
      months ended June 30,
                                                                                      
                                                                                      
                                                                                      Six
      months ended June 30,2009
                                                                                      
                                                                                      
                                                                                      2008
                                                                                      
                                                                                      
                                                                                      2009
                                                                                      
                                                                                      
                                                                                      2008Revenues
                                                                                      
                                                                                      $
                                                                                      127,018
                                                                                      
                                                                                      
                                                                                      $
                                                                                      214,689
                                                                                      
                                                                                      
                                                                                      $
                                                                                      303,289
                                                                                      
                                                                                      
                                                                                      $
                                                                                      411,916Cost
      of revenues
                                                                                      
                                                                                      
                                                                                      91,080
                                                                                      
                                                                                      
                                                                                      
                                                                                      120,175
                                                                                      
                                                                                      
                                                                                      
                                                                                      201,050
                                                                                      
                                                                                      
                                                                                      
                                                                                      237,845Selling,
      general and administrative expenses
                                                                                      
                                                                                      
                                                                                      23,372
                                                                                      
                                                                                      
                                                                                      
                                                                                      29,010
                                                                                      
                                                                                      
                                                                                      
                                                                                      50,978
                                                                                      
                                                                                      
                                                                                      
                                                                                      57,327Depreciation
      and amortization
                                                                                      
                                                                                      
                                                                                      32,376
                                                                                      
                                                                                      
                                                                                      
                                                                                      29,177
                                                                                      
                                                                                      
                                                                                      
                                                                                      64,396
                                                                                      
                                                                                      
                                                                                      
                                                                                      56,503Gain
      on disposition of assets, net
                                                                                      
                                                                                      
                                                                                      (312
                                                                                      )
                                                                                      
                                                                                      
                                                                                      (1,473
                                                                                      )
                                                                                      
                                                                                      
                                                                                      (2,034
                                                                                      )
                                                                                      
                                                                                      
                                                                                      (3,000
                                                                                      )Operating
      (loss) profit
                                                                                      
                                                                                      
                                                                                      (19,498
                                                                                      )
                                                                                      
                                                                                      
                                                                                      37,800
                                                                                      
                                                                                      
                                                                                      
                                                                                      (11,101
                                                                                      )
                                                                                      
                                                                                      
                                                                                      63,241Interest
      expense
                                                                                      
                                                                                      
                                                                                      (527
                                                                                      )
                                                                                      
                                                                                      
                                                                                      (1,250
                                                                                      )
                                                                                      
                                                                                      
                                                                                      (1,121
                                                                                      )
                                                                                      
                                                                                      
                                                                                      (2,721
                                                                                      )Interest
      income
                                                                                      
                                                                                      
                                                                                      52
                                                                                      
                                                                                      
                                                                                      
                                                                                      24
                                                                                      
                                                                                      
                                                                                      
                                                                                      85
                                                                                      
                                                                                      
                                                                                      
                                                                                      46Other
      income, net
                                                                                      
                                                                                      
                                                                                      608
                                                                                      
                                                                                      
                                                                                      
                                                                                      105
                                                                                      
                                                                                      
                                                                                      
                                                                                      751
                                                                                      
                                                                                      
                                                                                      
                                                                                      98(Loss)
      income before income taxes
                                                                                      
                                                                                      
                                                                                      (19,365
                                                                                      )
                                                                                      
                                                                                      
                                                                                      36,679
                                                                                      
                                                                                      
                                                                                      
                                                                                      (11,386
                                                                                      )
                                                                                      
                                                                                      
                                                                                      60,664Income
      tax (benefit) provision
                                                                                      
                                                                                      
                                                                                      (7,741
                                                                                      )
                                                                                      
                                                                                      
                                                                                      14,221
                                                                                      
                                                                                      
                                                                                      
                                                                                      (4,228
                                                                                      )
                                                                                      
                                                                                      
                                                                                      23,449Net
      (loss) income
                                                                                      
                                                                                      $
                                                                                      (11,624
                                                                                      )
                                                                                      
                                                                                      $
                                                                                      22,458
                                                                                      
                                                                                      
                                                                                      $
                                                                                      (7,158
                                                                                      )
                                                                                      
                                                                                      $
                                                                                      37,215(Loss)
      Earnings per shareBasic
                                                                                      
                                                                                      $
                                                                                      (0.12
                                                                                      )
                                                                                      
                                                                                      $
                                                                                      0.23
                                                                                      
                                                                                      
                                                                                      $
                                                                                      (0.07
                                                                                      )
                                                                                      
                                                                                      $
                                                                                      0.39Diluted
                                                                                      
                                                                                      $
                                                                                      (0.12
                                                                                      )
                                                                                      
                                                                                      $
                                                                                      0.23
                                                                                      
                                                                                      
                                                                                      $
                                                                                      (0.07
                                                                                      )
                                                                                      
                                                                                      $
                                                                                      0.38Dividends
      per share
                                                                                      
                                                                                      $
                                                                                      0.07
                                                                                      
                                                                                      
                                                                                      $
                                                                                      0.06
                                                                                      
                                                                                      
                                                                                      $
                                                                                      0.14
                                                                                      
                                                                                      
                                                                                      $
                                                                                      0.12Average
      shares outstandingBasic
                                                                                      
                                                                                      
                                                                                      96,317
                                                                                      
                                                                                      
                                                                                      
                                                                                      96,778
                                                                                      
                                                                                      
                                                                                      
                                                                                      96,247
                                                                                      
                                                                                      
                                                                                      
                                                                                      96,603Diluted
                                                                                      
                                                                                      
                                                                                      96,317
                                                                                      
                                                                                      
                                                                                      
                                                                                      98,120
                                                                                      
                                                                                      
                                                                                      
                                                                                      96,247
                                                                                      
                                                                                      
                                                                                      
                                                                                      98,124




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


4





RPC,
      INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENT OF STOCKHOLDERS’ EQUITYFOR
      THE SIX MONTHS ENDED JUNE 30, 2009(In
      thousands)(Unaudited)





Capital
      in
                                    Excess
      of
                                    Par
      Value
                                  
                                  
                                  
                                  Accumulated
                                    Other
                                    Comprehensive
                                    LossComprehensive
                                    Income
      (Loss)
                                  
                                  
                                  
                                  
                                  
                                  
                                  Retained
                                    EarningsCommon
      StockShares
                                  
                                  Amount
                                  
                                  
                                  
                                  
                                  TotalBalance,
      December 31, 2008
                                  
                                  
                                  
                                  
                                  
                                  97,705
                                  
                                  $
                                  9,770
                                  
                                  $
                                  3,990
                                  
                                  $
                                  445,356
                                  
                                  $
                                  (10,032
                                  )
                                  $
                                  449,084Stock
      issued for stock incentive plans, net
                                  
                                  
                                  
                                  
                                  
                                  930
                                  
                                  
                                  93
                                  
                                  
                                  (198
                                  )
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  (105
                                  )Stock
      purchased and retired
                                  
                                  
                                  
                                  
                                  
                                  (233
                                  )
                                  
                                  (23
                                  )
                                  
                                  (1,914
                                  )
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  (1,937
                                  )Net
      loss
                                  
                                  $
                                  (7,158
                                  )
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  (7,158
                                  )
                                  
                                  —
                                  
                                  
                                  (7,158
                                  )Pension
      adjustment, net of taxes
                                  
                                  
                                  554
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  554
                                  
                                  
                                  554Change
      in cash flow hedge, net of taxes
                                  
                                  
                                  129
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  129
                                  
                                  
                                  129Foreign
      currency translation, net of taxes
                                  
                                  
                                  (3
                                  )
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  (3
                                  )
                                  
                                  (3
                                  )Unrealized
      loss on securities, net of taxes
                                  
                                  
                                  (4
                                  )
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  (4
                                  )
                                  
                                  (4
                                  )Comprehensive
      loss
                                  
                                  $
                                  (6,482
                                  )Dividends
      declared
                                  
                                  
                                  
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  (13,610
                                  )
                                  
                                  —
                                  
                                  
                                  (13,610
                                  )Stock-based
      compensation
                                  
                                  
                                  
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  2,088
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  2,088Excess
      tax benefits for share-based payments
                                  
                                  
                                  
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  1,324
                                  
                                  
                                  —
                                  
                                  
                                  —
                                  
                                  
                                  1,324Balance,
      June 30, 2009
                                  
                                  
                                  
                                  
                                  
                                  98,402
                                  
                                  $
                                  9,840
                                  
                                  $
                                  5,290
                                  
                                  $
                                  424,588
                                  
                                  $
                                  (9,356
                                  )
                                  $
                                  430,362




The
accompanying notes are an integral part of this consolidated financial
statement.


5








RPC,
      INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE SIX MONTHS ENDED JUNE 30, 2009 and 2008(In
      thousands)(Unaudited)





Six
      months ended June 30,2009
              
              
              2008OPERATING
      ACTIVITIESNet
      (loss) income
              
              $
              (7,158
              )
              
              $
              37,215Adjustments
      to reconcile net (loss) income to net cash provided by operating
      activities:Depreciation,
      amortization and other non-cash charges
              
              
              64,378
              
              
              
              56,515Stock-based
      compensation expense
              
              
              2,088
              
              
              
              1,809Gain
      on disposition of assets, net
              
              
              (2,034
              )
              
              
              (3,000
              )Deferred
      income tax (benefit) provision
              
              
              (4,376
              )
              
              
              793Excess
      tax benefits for share-based payments
              
              
              (1,324
              )
              
              
              (767
              )Changes
      in current assets and liabilities:Accounts
      receivable
              
              
              89,241
              
              
              
              (17,221
              )Income
      taxes receivable
              
              
              (1,449
              )
              
              
              12,815Inventories
              
              
              (4,204
              )
              
              
              (6,131
              )Prepaid
      expenses and other current assets
              
              
              4,239
              
              
              
              2,100Accounts
      payable
              
              
              (23,221
              )
              
              
              6,702Income
      taxes payable
              
              
              (2,432
              )
              
              
              (1,340
              )Accrued
      payroll and related expenses
              
              
              (10,736
              )
              
              
              (1,818
              )Accrued
      insurance expenses
              
              
              106
              
              
              
              408Accrued
      state, local and other taxes
              
              
              604
              
              
              
              1,295Other
      accrued expenses
              
              
              (88
              )
              
              
              (81
              )Changes
      in working capital
              
              
              52,060
              
              
              
              (3,271
              )Changes
      in other assets and liabilities:Accrued
      pension
              
              
              2,566
              
              
              
              799Accrued
      insurance expenses
              
              
              610
              
              
              
              530Other
      non-current assets
              
              
              (1,525
              )
              
              
              (798
              )Other
      non-current liabilities
              
              
              (1,755
              )
              
              
              (662
              )Net
      cash provided by operating activities
              
              
              103,530
              
              
              
              89,163INVESTING
      ACTIVITIESCapital
      expenditures
              
              
              (43,214
              )
              
              
              (101,263
              )Proceeds
      from sale of assets
              
              
              4,170
              
              
              
              5,035Net
      cash used for investing activities
              
              
              (39,044
              )
              
              
              (96,228
              )FINANCING
      ACTIVITIESPayment
      of dividends
              
              
              (13,610
              )
              
              
              (11,642
              )Borrowings
      from notes payable to banks
              
              
              146,850
              
              
              
              186,950Repayments
      of notes payable to banks
              
              
              (197,750
              )
              
              
              (160,800
              )Debt
      issue costs for notes payable to banks
              
              
              —
              
              
              
              (94
              )Excess
      tax benefits for share-based payments
              
              
              1,324
              
              
              
              767Cash
      paid for common stock purchased and retired
              
              
              (1,628
              )
              
              
              (5,671
              )Proceeds
      received upon exercise of stock options
              
              
              103
              
              
              
              245Net
      cash (used for) provided by financing activities
              
              
              (64,711
              )
              
              
              9,755Net
      (decrease) increase in cash and cash equivalents
              
              
              (225
              )
              
              
              2,690Cash
      and cash equivalents at beginning of period
              
              
              3,037
              
              
              
              6,338Cash
      and cash equivalents at end of period
              
              $
              2,812
              
              
              $
              9,028




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


6


RPC,
INC. AND SUBSIDIARIES




NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


1.
              GENERALThe
      accompanying unaudited consolidated financial statements include the
      accounts of RPC, Inc. and its wholly-owned subsidiaries (“RPC” or the
      “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 generally accepted accounting principles for
      complete financial statements. 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 six month period ended June 30, 2009 are not necessarily
      indicative of the results that may be expected for the year ending
      December 31, 2009.The
      balance sheet at December 31, 2008 has been derived from the audited
      financial statements at that date but does not include all of the
      information and footnotes required by generally accepted accounting
      principles 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 year ended December 31, 2008.A
      group that includes the Company’s Chairman of the Board, R. Randall
      Rollins and his brother Gary W. Rollins, who is also a director of the
      Company, and certain companies under their control, controls in excess of
      fifty percent of the Company’s voting power.The
      Company has considered subsequent events through August 5, 2009, the date
      of issuance, in preparing the consolidated financial statements and notes
      thereto.2.
              REVENUESRPC’s
      revenues are generated principally from providing services and the related
      equipment. Revenues are recognized when the services are rendered and
      collectibility is reasonably assured. Revenues from services and equipment
      are based on fixed or determinable priced purchase orders or contracts
      with the customer and do not include the right of return. Rates for
      services and equipment are priced on a per day, per unit of measure, per
      man hour or similar basis. Sales tax charged to customers is presented on
      a net basis within the consolidated statement of operations and excluded
      from revenues.





7


RPC,
INC. AND SUBSIDIARIES




NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


3.
              EARNINGS
      PER SHAREStatement
      of Financial Accounting Standard (“SFAS”) No. 128, “Earnings Per Share,”
      requires a basic earnings per share and diluted earnings per share
      presentation. The two calculations differ as a result of the dilutive
      effect of stock options and time lapse restricted shares and performance
      restricted shares included in diluted earnings per share, but excluded
      from basic earnings per share. Basic and diluted earnings per share are
      computed by dividing net (loss) income by the weighted average number of
      shares outstanding during the respective periods. A reconciliation of
      weighted average shares outstanding is as
  follows:





Three
      months ended
                                                                                                                                              June
      30,
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            Six
      months ended
                                                                                                                                              June
      30,(In
      thousands except per share data)
                                                                                                                                            
                                                                                                                                            2009
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            2008
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            2009
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            2008Net
      (loss) income available for stockholders (numerator for basic and diluted
      (loss) earnings per share):
                                                                                                                                            
                                                                                                                                            $
                                                                                                                                            (11,624
                                                                                                                                            )
                                                                                                                                            
                                                                                                                                            $
                                                                                                                                            22,458
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            $
                                                                                                                                            (7,158
                                                                                                                                            )
                                                                                                                                            
                                                                                                                                            $
                                                                                                                                            37,215Shares
      (denominator):Weighted
      average shares outstanding (denominator for basic (loss) earnings per
      share)
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            96,317
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            96,778
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            96,247
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            96,603Effect
      of dilutive securities:Employee
      stock options and restricted stock
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            —
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            1,342
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            —
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            1,521Adjusted
      weighted average shares (denominator for diluted (loss) earnings per
      share)
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            96,317
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            98,120
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            96,247
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            98,124(Loss)
      earnings per share:Basic
                                                                                                                                            
                                                                                                                                            $
                                                                                                                                            (0.12
                                                                                                                                            )
                                                                                                                                            
                                                                                                                                            $
                                                                                                                                            0.23
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            $
                                                                                                                                            (0.07
                                                                                                                                            )
                                                                                                                                            
                                                                                                                                            $
                                                                                                                                            0.39Diluted
                                                                                                                                            
                                                                                                                                            $
                                                                                                                                            (0.12
                                                                                                                                            )
                                                                                                                                            
                                                                                                                                            $
                                                                                                                                            0.23
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            $
                                                                                                                                            (0.07
                                                                                                                                            )
                                                                                                                                            
                                                                                                                                            $
                                                                                                                                            0.38





The
      effect of the Company’s stock options and restricted shares as shown below
      have been excluded from the computation of diluted (loss) earnings per
      share for the following periods, as their effect would have been
      anti-dilutive:




(in
      thousands)
                                                                                                                                  
                                                                                                                                  Three
      months ended June 30,
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  Six
      months ended June 30,2009
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  2008
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  2009
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  2008Stock
      options
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  883
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  —
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  883
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  —Restricted
      stock
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  2,055
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  —
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  2,055
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  —





In
      June 2008, the FASB issued FASB Staff Position (FSP) EITF 03-6-1,
      “Determining Whether Instruments Granted in Share-Based Payment
      Transactions Are Participating Securities,” to clarify that all
      outstanding unvested share-based payment awards that contain
      non-forfeitable rights to dividends or dividend equivalents, whether paid
      or unpaid, are participating securities. An entity must include
      participating securities in its calculation of basic and diluted earnings
      per share (EPS) pursuant to the two-class method, as described in SFAS
      128, Earnings per Share. The Company has periodically issued share-based
      payment awards that contain non-forfeitable rights to dividends. The
      Company evaluated the impact of FSP EITF 03-6-1 and determined that the
      impact was not material and determined the basic and diluted earnings per
      share amounts as reported are equivalent to the basic and diluted earnings
      per share amounts calculated under FSP EITF
  03-6-1.





8


RPC,
INC. AND SUBSIDIARIES




NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


4.
                RECENT
      ACCOUNTING PRONOUNCEMENTSRecently
      Adopted Accounting Pronouncements:Financial
      Accounting Standards Board StatementsIn
      May 2009, the FASB issued SFAS No. 165, “Subsequent Events.” SFAS 165
      establishes general standards of accounting for and disclosure of events
      that occur after the balance sheet date but before financial statements
      are issued or are available to be issued. SFAS 165 provides guidance
      regarding the period after the balance sheet date during which management
      of a reporting entity should evaluate events or transactions that may
      occur for potential recognition or disclosure in the financial statements;
      the circumstances under which an entity should recognize events or
      transactions occurring after the balance sheet date in its financial
      statements; and the disclosures that an entity should make about events or
      transactions that occurred after the balance sheet date. The Company
      adopted SFAS 165 in the second quarter of 2009 and the adoption did not
      have a material effect on the Company’s consolidated financial
      statements.Financial
      Accounting Standards Board Staff Positions and
    InterpretationsIn
      April 2009, the FASB issued FSP SFAS 157-4, “Determining Fair Value When
      the Volume and Level of Activity for the Asset or Liability Have
      Significantly Decreased and Identifying Transactions That Are Not
      Orderly.” FSP SFAS 157-4 affirms that the objective of fair value when the
      market for an asset is not active is the price that would be received to
      sell the asset in an orderly transaction, and includes additional factors
      for determining whether there has been a significant decrease in market
      activity for an asset when the market for that asset is not active. FSP
      SFAS 157-4 requires an entity to base its conclusion about whether a
      transaction was not orderly on the weight of the evidence. The Company
      adopted FSP 157-4 in the second quarter of 2009 and the adoption of this
      FSP did not have a material impact on the Company’s consolidated financial
      statements.





9


RPC,
INC. AND SUBSIDIARIES




NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS




In
      April 2009, the FASB issued FSP SFAS 115-2 and SFAS 124-2, “Recognition
      and Presentation of Other-Than-Temporary Impairments.” FSP SFAS 115-2 and
      SFAS 124-2 (i) changes existing guidance for determining whether an
      impairment is other than temporary to debt securities and (ii) replaces
      the existing requirement that the entity’s management assert it has both
      the intent and ability to hold an impaired security until recovery with a
      requirement that management assert: (a) it does not have the intent to
      sell the security; and (b) it is more likely than not it will not have to
      sell the security before recovery of its cost basis. Under FSP SFAS 115-2
      and SFAS 124-2, declines in the fair value of held-to-maturity and
      available-for-sale securities below their cost that are deemed to be other
      than temporary are reflected in earnings as realized losses to the extent
      the impairment is related to credit losses. The amount of the impairment
      related to other factors is recognized in other comprehensive income. The
      Company adopted this FSP in the second quarter of 2009 and the adoption of
      this FSP did not have a material impact on the Company’s consolidated
      financial statements.In
      April 2009, the FASB issued FSP SFAS 107-1 and APB 28-1, “Interim
      Disclosures about Fair Value of Financial Instruments.” FSP SFAS 107-1 and
      APB 28-1 amends SFAS 107, “Disclosures about Fair Value of Financial
      Instruments,” to require an entity to provide disclosures about fair value
      of financial instruments in interim financial information and amends
      Accounting Principles Board (APB) Opinion No. 28, “Interim Financial
      Reporting,” to require those disclosures in summarized financial
      information at interim reporting periods. Under FSP SFAS 107-1 and APB
      28-1, a publicly traded company shall include disclosures about the fair
      value of its financial instruments whenever it issues summarized financial
      information for interim reporting periods. In addition, entities must
      disclose, in the body or in the accompanying notes of its summarized
      financial information for interim reporting periods and in its financial
      statements for annual reporting periods, the fair value of all financial
      instruments for which it is practicable to estimate that value, whether
      recognized or not recognized in the statement of financial position, as
      required by SFAS 107. The Company adopted this FSP in the second quarter
      of 2009. See Note 13 for related disclosures.Recently
      Issued Accounting Pronouncements Not Yet Adopted:Financial
      Accounting Standards Board StatementsIn
      June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards
      CodificationTM
      and the Hierarchy of Generally Accepted Accounting Principles, a
      replacement of FASB Statement No. 162.” SFAS 168 establishes the
      Codification as the single source of authoritative U.S. generally accepted
      accounting principles in addition to the rules and interpretive releases
      of the SEC under authority of federal securities laws. SFAS 168 and the
      Codification are effective for financial statements issued for interim and
      annual periods ending after September 15, 2009. When effective, the
      Codification will supersede all existing non-SEC accounting and reporting
      standards. As required, the Company plans to adopt SFAS 168 in the third
      quarter of 2009 and does not expect the adoption to have a material impact
      on its consolidated financial
statements.





10


RPC,
INC. AND SUBSIDIARIES




NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


In
      June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of
      Financial Assets,” SFAS 166 is a revision to SFAS No. 140, “Accounting for
      Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities,” and requires more information about transfers of financial
      assets, including securitization transactions, and where entities have
      continuing exposure to the risks related to transferred financial assets.
      It eliminates the concept of a “qualifying special-purpose entity,”
      changes the requirements for derecognizing financial assets, and requires
      additional disclosures. SFAS 166 is effective January 1, 2010, for a
      calendar year-end entity, with early application not being permitted.
      Adoption of this standard is not expected to have a material impact on the
      Company’s consolidated financial statements.In
      June 2009, the FASB issued SFAS No. 167, “Amendments to FASB
      Interpretation No. 46(R).” SFAS 167 changes how a reporting entity
      determines when an entity that is insufficiently capitalized or is not
      controlled through voting (or similar rights) should be consolidated. The
      determination of whether a reporting entity is required to consolidate
      another entity is based on, among other things, the other entity’s purpose
      and design and the reporting entity’s ability to direct the activities of
      the other entity that most significantly impact the other entity’s
      economic performance. SFAS 167 is effective January 1, 2010, for a
      calendar year-end entity, with early application not being permitted.
      Adoption of this standard is not expected to have a material impact on the
      Company’s consolidated financial statements.Financial
      Accounting Standards Board Staff Positions and
    InterpretationsIn
      December 2008, the FASB issued FASB Staff Position (FSP) FAS 132R-1,
      “Employers’ Disclosures about Postretirement Benefit Plan Assets.” The
      FASB issued the FSP, which amends FASB Statement 132R, “Employers’
      Disclosures about Pensions and Other Postretirement Benefits,” in order to
      provide adequate transparency about the types of assets and associated
      risks in employers’ postretirement plans. Disclosures are designed to
      provide an understanding of how investment decisions are made: the major
      categories of plan assets; the inputs and valuation techniques used to
      measure the fair value of plan assets; the effect of fair value
      measurements using significant unobservable inputs on changes in plan
      assets for the period; and significant concentrations of risk within plan
      assets. The disclosures about plan assets required by this FSP are
      required to be provided for fiscal years ending after December 15, 2009,
      with no restatement required for earlier periods that are presented for
      comparative purposes, upon initial application. Earlier application of the
      provisions of this FSP is permitted. The Company is currently in the
      process of determining the additional disclosures required upon the
      adoption of this FSP.





11


RPC,
INC. AND SUBSIDIARIES




NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


5.
              COMPREHENSIVE
      (LOSS) INCOMEThe
      components of comprehensive (loss) income are as
  follows:




Three
      months ended
                            June
      30,
                          
                          
                          Six
      months ended
                            June
      30,(In
      thousands)
                          
                          2009
                          
                          
                          2008
                          
                          
                          2009
                          
                          
                          2008Net
      (loss) income as reported
                          
                          $
                          (11,624
                          )
                          
                          $
                          22,458
                          
                          
                          $
                          (7,158
                          )
                          
                          $
                          37,215Pension
      adjustment, net of taxes
                          
                          
                          245
                          
                          
                          
                          44
                          
                          
                          
                          554
                          
                          
                          
                          44Change
      in cash flow hedge, net of taxes
                          
                          
                          243
                          
                          
                          
                          —
                          
                          
                          
                          129
                          
                          
                          
                          —Foreign
      currency translation, net of taxes
                          
                          
                          161
                          
                          
                          
                          10
                          
                          
                          
                          (3
                          )
                          
                          
                          54Unrealized
      (loss) gain on securities, net of taxes
                          
                          
                          66
                          
                          
                          
                          440
                          
                          
                          
                          (4
                          )
                          
                          
                          459Comprehensive
      (loss) income
                          
                          $
                          (10,909
                          )
                          
                          $
                          22,952
                          
                          
                          $
                          (6,482
                          )
                          
                          $
                          37,772




6.
                STOCK-BASED
      COMPENSATIONThe
      Company reserved 5,062,500 shares of common stock under its 2004 Stock
      Incentive Plan which expires ten years from the date of approval. This
      plan provides for the issuance of various forms of stock incentives,
      including, among others, incentive and non-qualified stock options and
      restricted stock. As of June 30, 2009, there were approximately 2,186,000
      shares available for
grants.





12


RPC,
INC. AND SUBSIDIARIES




NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS




Stock-based
employee compensation expense was as follows for the periods
indicated:


Three
      months ended
                      June
      30,
                    
                    Six
      months ended
                      June
      30,(in
      thousands)
                    2009
                    
                    2008
                    
                    2009
                    
                    2008Pre-tax
      expense
                    
                    $
                    1,073
                    
                    
                    $
                    920
                    
                    
                    $
                    2,088
                    
                    
                    $
                    1,809After
      tax expense
                    
                    
                    681
                    
                    
                    
                    584
                    
                    
                    
                    1,326
                    
                    
                    
                    1,160




Stock
Options




Transactions
involving RPC’s stock options for the six months ended June 30, 2009 were as
follows:


Shares
                                                  
                                                  Weighted
                                                    Average
                                                    Exercise
      Price
                                                  Weighted
                                                    Average
                                                    Remaining
                                                    Contractual
                                                    Life
                                                  
                                                  Aggregate
                                                    Intrinsic
      ValueOutstanding
      at January 1, 2009
                                                  1,108,022
                                                  
                                                  $
                                                  3.12
                                                  2.68
      yearsGranted
                                                  —
                                                  
                                                  
                                                  —
                                                  N/AExercised
                                                  (215,862
                                                  )
                                                  
                                                  2.75
                                                  N/AForfeited
                                                  (8,715
                                                  )
                                                  
                                                  3.76
                                                  N/AExpired
                                                  —
                                                  
                                                  
                                                  —
                                                  N/AOutstanding
      and exercisable at June 30, 2009
                                                  883,445
                                                  
                                                  $
                                                  3.39
                                                  2.74
      years
                                                  
                                                  $
                                                  4,382,000




The
      total intrinsic value of stock options exercised was approximately
      $1,376,000 during the six months ended June 30, 2009 and approximately
      $5,596,000 during the six months ended June 30, 2008. The tax benefits
      related to options exercised totaled $329,000 during the six months ended
      June 30, 2009 were credited to capital in excess of par value and are
      classified as financing cash flows in accordance with SFAS 123(R),
      “Shared-Based
Payments.”





13


RPC,
INC. AND SUBSIDIARIES




NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


Restricted
      StockThe
      following is a summary of the changes in non-vested restricted shares for
      the six months ended June 30,
2009:




Shares
                                  
                                  
                                  Weighted
      Average
                                    Grant-Date
      Fair
                                    ValueNon-vested
      shares at January 1, 2009
                                  
                                  
                                  1,762,478
                                  
                                  
                                  $
                                  11.34Granted
                                  
                                  
                                  722,000
                                  
                                  
                                  
                                  8.55Vested
                                  
                                  
                                  (421,138
                                  )
                                  
                                  
                                  9.19Forfeited
                                  
                                  
                                  (8,051
                                  )
                                  
                                  
                                  12.96Non-vested
      shares at June 30, 2009
                                  
                                  
                                  2,055,289
                                  
                                  
                                  $
                                  10.79




The
      total fair value of shares vested during the six months ended June 30,
      2009 was approximately $3,682,000 and during the six months ended June 30,
      2008 was approximately $3,675,000. The tax benefits for compensation tax
      deductions in excess of compensation expense for the six months ended June
      30, 2009 totaled approximately $995,000 and were credited to capital in
      excess of par value and are classified as financing cash flows in
      accordance with SFAS 123(R).Other
      InformationAs
      of June 30, 2009, total unrecognized compensation cost related to
      non-vested restricted shares was approximately $21,160,000 which is
      expected to be recognized over a weighted-average period of 4.1 years. As
      of June 30, 2009, all of the compensation cost related to stock options
      has been recognized.7.
                BUSINESS
      SEGMENT INFORMATIONRPC’s
      service lines have been aggregated into two reportable oil and gas
      services segments, Technical Services and Support Services, because of the
      similarities between the financial performance and approach to managing
      the service lines within each of the segments, as well as the economic and
      business conditions impacting their business activity levels. Corporate
      includes selected administrative costs incurred by the Company that are
      not allocated to business units. Gains or losses on disposition of assets
      are reviewed by the Company’s chief decision maker on a consolidated
      basis, and accordingly the Company does not report gains or losses at the
      segment level.





14


RPC,
INC. AND SUBSIDIARIES




NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


Technical
      Services include RPC’s oil and gas service lines that utilize people and
      equipment to perform value-added completion, production and maintenance
      services directly to a customer’s well. These services include pressure
      pumping services, snubbing, coiled tubing, nitrogen pumping, well control
      consulting and firefighting, down-hole tools, wireline, and fluid pumping
      services. These Technical Services are primarily used in the completion,
      production and maintenance of oil and gas wells. The principal markets for
      this segment include the United States, including the Gulf of Mexico, the
      mid-continent, southwest and Rocky Mountain regions, and international
      locations including primarily Africa, Canada, China, Latin America and the
      Middle East. Customers include major multi-national and independent oil
      and gas producers, and selected nationally-owned oil
      companies.Support
      Services include RPC’s oil and gas service lines that primarily provide
      equipment for customer use or services to assist customer operations. The
      equipment and services include drill pipe and related tools, pipe
      handling, inspection and storage services and oilfield training services.
      The demand for these services tends to be influenced primarily by customer
      drilling-related activity levels. The principal markets for this segment
      include the United States, including the Gulf of Mexico and the
      mid-continent regions, and international locations, including primarily
      Canada, Latin America, and the Middle East. Customers include domestic
      operations of major multi-national and independent oil and gas producers,
      and selected nationally-owned oil companies.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.Certain information
      with respect to RPC’s business segments is set forth in the following
      tables:




Three
      months ended June 30,
                                                                                                                
                                                                                                                
                                                                                                                Six
      months ended June 30,2009
                                                                                                                
                                                                                                                
                                                                                                                2008
                                                                                                                
                                                                                                                
                                                                                                                2009
                                                                                                                
                                                                                                                
                                                                                                                2008(in
      thousands)Revenues:Technical
      Services
                                                                                                                
                                                                                                                $
                                                                                                                109,987
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                185,284
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                261,066
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                354,515Support
      Services
                                                                                                                
                                                                                                                
                                                                                                                17,031
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                29,405
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                42,223
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                57,401Total
      revenues
                                                                                                                
                                                                                                                $
                                                                                                                127,018
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                214,689
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                303,289
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                411,916Operating
      (loss) profit:Technical
      Services
                                                                                                                
                                                                                                                $
                                                                                                                (15,212
                                                                                                                )
                                                                                                                
                                                                                                                $
                                                                                                                31,958
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                (9,064
                                                                                                                )
                                                                                                                
                                                                                                                $
                                                                                                                52,644Support
      Services
                                                                                                                
                                                                                                                
                                                                                                                (1,616
                                                                                                                )
                                                                                                                
                                                                                                                
                                                                                                                6,764
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                2,090
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                12,622Corporate
                                                                                                                
                                                                                                                
                                                                                                                (2,982
                                                                                                                )
                                                                                                                
                                                                                                                
                                                                                                                (2,395
                                                                                                                )
                                                                                                                
                                                                                                                
                                                                                                                (6,161
                                                                                                                )
                                                                                                                
                                                                                                                
                                                                                                                (5,025
                                                                                                                )Gain
      on disposition of assets, net
                                                                                                                
                                                                                                                
                                                                                                                312
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                1,473
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                2,034
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                3,000Total
      operating (loss) profit
                                                                                                                
                                                                                                                $
                                                                                                                (19,498
                                                                                                                )
                                                                                                                
                                                                                                                $
                                                                                                                37,800
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                (11,101
                                                                                                                )
                                                                                                                
                                                                                                                $
                                                                                                                63,241Interest
      expense
                                                                                                                
                                                                                                                
                                                                                                                (527
                                                                                                                )
                                                                                                                
                                                                                                                
                                                                                                                (1,250
                                                                                                                )
                                                                                                                
                                                                                                                
                                                                                                                (1,121
                                                                                                                )
                                                                                                                
                                                                                                                
                                                                                                                (2,721
                                                                                                                )Interest
      income
                                                                                                                
                                                                                                                
                                                                                                                52
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                24
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                85
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                46Other
      income, net
                                                                                                                
                                                                                                                
                                                                                                                608
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                105
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                751
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                98(Loss)
      Income before income taxes
                                                                                                                
                                                                                                                $
                                                                                                                (19,365
                                                                                                                )
                                                                                                                
                                                                                                                $
                                                                                                                36,679
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                (11,386
                                                                                                                )
                                                                                                                
                                                                                                                $
                                                                                                                60,664





15


RPC,
INC. AND SUBSIDIARIES




NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS




Six
      months ended June 30, 2009
                                  
                                  Technical
                                    Services
                                  
                                  
                                  Support
                                    Services
                                  
                                  
                                  Corporate
                                  
                                  
                                  Total(in
      thousands)Identifiable
      assets at June 30, 2009
                                  
                                  $
                                  466,753
                                  
                                  
                                  $
                                  167,624
                                  
                                  
                                  $
                                  48,275
                                  
                                  
                                  $
                                  682,652Capital
      expenditures
                                  
                                  
                                  31,392
                                  
                                  
                                  
                                  11,469
                                  
                                  
                                  
                                  353
                                  
                                  
                                  
                                  43,214Depreciation
      and amortization
                                  
                                  
                                  50,450
                                  
                                  
                                  
                                  13,575
                                  
                                  
                                  
                                  371
                                  
                                  
                                  
                                  64,396




8.
                INVENTORIESInventories
      of $54,044,000 at June 30, 2009 and $49,779,000 at December 31, 2008
      consist of raw materials, parts and supplies.9.
                EMPLOYEE
      BENEFIT PLANThe
      following represents the net periodic benefit cost (credit) and related
      components of the Company’s multiple employer Retirement Income
      Plan:





Three
      months ended
                                  June
      30,
                                
                                
                                Six
      months ended
                                  June
      30,(in
      thousands)
                                
                                2009
                                
                                
                                2008
                                
                                
                                2009
                                
                                
                                2008Service
      cost
                                
                                $
                                —
                                
                                
                                $
                                —
                                
                                
                                $
                                —
                                
                                
                                $
                                —Interest
      cost
                                
                                
                                484
                                
                                
                                
                                461
                                
                                
                                
                                969
                                
                                
                                
                                921Expected
      return on plan assets
                                
                                
                                (380
                                )
                                
                                
                                (636
                                )
                                
                                
                                (760
                                )
                                
                                
                                (1,272
                                )Amortization
      of net losses
                                
                                
                                385
                                
                                
                                
                                71
                                
                                
                                
                                769
                                
                                
                                
                                142Net
      periodic benefit cost (credit)
                                
                                $
                                489
                                
                                
                                $
                                (104
                                )
                                
                                $
                                978
                                
                                
                                $
                                (209
                                )




The
      Company has not made any contributions to the plan during the six months
      ended June 30, 2009 and does not currently expect to make any
      contributions to this plan during the remainder of
  2009.





16


RPC,
INC. AND SUBSIDIARIES




NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


10.
                NOTES
      PAYABLE TO BANKS




The
      Company currently has a revolving credit agreement (the “Revolving Credit
      Agreement”) with SunTrust Capital Markets, Inc, as Joint Lead Arranger and
      Sole Book Manager, Banc of America Securities LLC as Joint Lead Arranger,
      and a syndicate of other lenders. The Revolving Credit Agreement includes
      a full and unconditional guarantee by RPC’s 100% owned domestic
      subsidiaries whose assets equal substantially all of the consolidated
      assets of RPC and its subsidiaries. The subsidiaries of the Company that
      are not guarantors are considered minor.The
      Revolving Credit Agreement has a general term of five years and provides
      for an unsecured line of credit of up to $296.5 million, which includes a
      $50 million letter of credit subfacility, and a $20 million swingline
      subfacility. The maturity date of all revolving loans under the Credit
      Agreement is September 8, 2011. The Company has incurred loan origination
      fees and other debt related costs associated with the line of credit and
      Commitment Increase Amendment in the aggregate of approximately $514,000.
      These costs are being amortized over the remaining term of the five year
      loan, and the net amount is classified as non-current other assets on the
      consolidated balance sheets.Revolving
      loans under the Revolving Credit Agreement bear interest at one of the
      following two rates, at RPC’s election:●          the
      Base Rate, which is the greater of SunTrust Bank’s “prime rate” for the
      day of the borrowing and a fluctuating rate per annum equal to the Federal
      Funds Rate plus .50%; or●          with
      respect to any Eurodollar borrowings, Adjusted LIBOR (which equals LIBOR
      as increased to account for the maximum reserve percentages established by
      the U.S. Federal Reserve) plus a margin ranging from .40% to .80%, based
      upon RPC’s then-current consolidated debt-to-EBITDA ratio. In addition,
      RPC will pay an annual fee ranging from .10% to .20% of the total credit
      facility based upon RPC’s then-current consolidated debt-to-EBITDA
      ratio.The
      Revolving Credit Agreement contains customary terms and conditions,
      including certain financial covenants and restrictions on indebtedness,
      dividend payments, business combinations and other related items. Further,
      the Revolving Credit Agreement contains financial covenants limiting the
      ratio of RPC’s consolidated debt-to-EBITDA to no more than 2.5 to 1, and
      limiting the ratio of RPC’s consolidated EBIT to interest expense to no
      less than 2 to 1.





17


RPC,
INC. AND SUBSIDIARIES




NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


As
      of June 30, 2009, RPC has outstanding borrowings of $123.6 million under
      the Revolving Credit Agreement. Interest incurred on the line of credit
      was $598,000 and $1,255,000 during the three and six months ended June 30,
      2009, and $1,473,000 and $3,221,000 during the three and six months ended
      June 30, 2008. The weighted average interest rate was 1.9% and 1.8% for
      the three and six months ended June 30, 2009, and 3.4% and 3.9% for the
      three and six months ended June 30, 2008. For the six months ended June
      30, 2009, and June 30, 2008, the Company capitalized interest of
      approximately $123,000 and $533,000 related to facilities and equipment
      under construction. Additionally there were letters of credit outstanding
      relating to self-insurance programs and contract bids for $15.0 million as
      of June 30, 2009.Effective
      December 2008 the Company entered into an interest rate swap agreement
      that effectively converted $50 million of the Company’s variable-rate debt
      to a fixed rate basis, thereby hedging against the impact of potential
      interest rate changes on future interest expense. The agreement terminates
      on September 8, 2011. Under this agreement the Company pays a fixed
      interest rate of 2.07%. In return, the issuing lender refunds the Company
      the variable-rate interest paid to the syndicate of lenders under the
      Company’s revolving credit agreement on the same notional amount,
      excluding the margin that varies from 0.40% to 0.80%, depending upon RPC’s
      then-current consolidated debt-to-EBITDA ratio.11.
              INCOME
      TAXESThe
      Company determines its periodic income tax benefit or expense based upon
      the current period income and the annual estimated tax rate for the
      Company adjusted for any change to prior period estimates. 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 current annual
      estimated tax rate.12.
              SUPPLEMENTAL
      CASH FLOWS INFORMATIONThe
      Company had accounts payable for purchases of property, plant and
      equipment of approximately $7,441,000 as of June 30, 2009, and
      approximately $14,482,000 as of June 30, 2008.13.
              FAIR
      VALUE DISCLOSURESThe
      Company adopted SFAS 157, “Fair Value Measurements,” and FSP 157-2,
      “Effective Date of FASB Statement No. 157,” in the first quarter of 2008
      for financial assets and liabilities. SFAS 157 defines fair value,
      establishes a framework for measuring fair value and expands disclosure
      requirements about items measured at fair value. SFAS 157 does not require
      any new fair value measurements. It applies to accounting pronouncements
      that already require or permit fair value
  measures.





18


RPC,
INC. AND SUBSIDIARIES




NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS




SFAS 157
establishes a fair value 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 – Inputs other than level 1 that are either directly or indirectly
      observable.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 sheet as of June 30, 2009:




Fair
      value measurements at June 30, 2009 with:(in
      thousands)
                      
                      Quoted
      prices in
                        active
      markets for
                        identical
      assets
                      
                      
                      Significant
      other
                        observable
      inputs
                      
                      
                      Significant
                        unobservable
                        inputs(Level
      1)
                      
                      
                      (Level
      2)
                      
                      
                      (Level
      3)Assets:Trading
      securities
                      
                      $
                      5,632
                      
                      
                      $
                      —
                      
                      
                      $
                      —Available
      for sale securities
                      
                      
                      504
                      
                      
                      
                      —
                      
                      
                      
                      —Liabilities:Interest
      rate swap
                      
                      $
                      —
                      
                      
                      $
                      (626
                      )
                      
                      $
                      —




At
June 30, 2009 and December 31, 2008, there was $123,550,000 and $174,450,000
outstanding under the Company’s Revolving Credit Agreement. The borrowings under
the Company’s Revolving Credit Agreement bear interest at the variable rate
described in Note 10 and therefore approximate fair value at June 30, 2009 and
December 31, 2008. The Company is subject to interest rate risk on the variable
component of the interest rate. The Company’s risk management objective is to
lock in the interest cash outflows on a portion of the Company’s debt. As a
result, as described in Note 10, the Company entered into an interest rate swap
agreement on $50 million of debt to a fixed-rate, thereby hedging against the
impact of potential interest rate changes on future interest expense. The
interest rate swap had a negative fair value, which is recorded in other
long-term liabilities, of $626,000 at June 30, 2009 and $830,000 at December 31,
2008. The fair value of the interest rate swap was based on quotes from the
issuer of the swap and represents the estimated amounts that the Company would
expect to pay to terminate the swap.


19


RPC,
INC. AND SUBSIDIARIES




NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS




The
Company’s financial instruments consist primarily of cash and cash equivalents,
accounts receivable, marketable securities, accounts payable, an interest rate
swap, and debt. The carrying value of cash and cash equivalents, accounts
receivable and accounts payable approximate their fair value due to the
short-term nature of such instruments. The marketable securities classified as
available-for-sale and the securities held in the SERP classified as trading are
carried at fair value, through quoted market prices, in the accompanying
consolidated balance sheets.




In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities — including an amendment of FASB
Statement No. 115.” This statement permits entities to choose to measure
many financial instruments and certain other items at fair value. This statement
is effective for financial statements issued for fiscal years beginning after
November 15, 2007, including interim periods within that fiscal year. The
Company did not elect the fair value option for any of its existing financial
instruments as of June 30, 2009 and the Company has not determined whether or
not it will elect this option for financial instruments it may acquire in the
future.


20


RPC,
INC. AND SUBSIDIARIES


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” on page 32.




RPC,
Inc. (“RPC”) provides a broad range of specialized oilfield services primarily
to independent and major oilfield companies engaged in exploration, production
and development of oil and gas properties throughout the United States,
including the Gulf of Mexico, mid-continent, southwest and Rocky Mountain
regions, and 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 the level of current and expected customer activity levels,
such as the price of oil and natural gas, changes in pricing for our services
and equipment, and utilization of our equipment and personnel. Our financial
results are affected by geopolitical factors such as political instability in
the petroleum-producing regions of the world, overall economic conditions and
weather in the United States, the prices of oil and natural gas, and our
customers’ drilling and production activities.




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, 2008 is incorporated herein by reference. Since year-end, the
Company’s operational strategies have not changed.




During
the second quarter of 2009, revenues decreased 40.8 percent to $127.0 million
compared to the same period in the prior year. The decline in revenues resulted
primarily from lower pricing for our services, coupled with lower utilization of
our equipment and personnel. International revenues for the second quarter of
2009 declined slightly due to declines in Oman, Saudi Arabia, the United Arab
Emirates, Canada and Bolivia, partially offset by increases in Australia, New
Zealand, Mexico, South Africa, Cameroon and Egypt. We continue to focus on
developing international growth opportunities; however, it is difficult to
predict when contracts and projects will be initiated and their ultimate
duration.




Expense
reduction measures taken in 2009 only slightly offset the dramatically lower
revenues in the second quarter of 2009. Although these measures did contribute
to the overall decreases in cost of revenues and selling, general and
administrative expenses, they were not sufficient to overcome the effects of
lower pricing for our services.




Cost
of revenues as a percentage of revenues increased approximately 15.7 percentage
points in the second quarter of 2009 compared to the same period of 2008. This
increase was due primarily to the effects on revenues of lower pricing due to
competition, and higher materials requirements for more service-intensive work,
partially offset by the expense reduction measures taken.


21


RPC,
INC. AND SUBSIDIARIES




Selling,
general and administrative expenses as a percentage of revenues increased by
approximately 4.9 percentage points in the second quarter of 2009 compared to
the same period in the prior year due to negative leverage of these costs
resulting from lower revenues. The Company realized an operating loss in the
current quarter due to lower revenues and increased depreciation, partially
offset by lower costs of revenues and selling, general and administrative
expenses.




The
Company realized a pretax loss of $19.4 million for the three months ended June
30, 2009 compared to pretax income of $36.7 million in the prior year. The
pretax loss for the three months ended June 30, 2009 resulted in the Company
recording an income tax benefit for the quarter, compared to income tax
provision of $14.2 million, or an effective tax rate of 38.8 percent, in the
prior year. Diluted loss per share was $0.12 for the three months ended June 30,
2009 compared to diluted earnings per share of $0.23 in the same period in the
prior year. Cash flows from operating activities were $103.5 million for the six
months ended June 30, 2009 compared to $89.2 million for the same period in the
prior year due to decreased working capital requirements realized consistent
with lower revenues and business activity levels. The notes payable to banks
were $123.6 million as of June 30, 2009 and $182.6 million as of June 30,
2008.




Capital
expenditures were $43.2 million during the first six months of 2009. We
currently expect capital expenditures to be approximately $70 million during
2009. This estimated amount is lower than in any of the previous three fiscal
years, due to low pricing and utilization on our existing fleet of equipment at
the present time, and our strategy to maintain a conservative balance sheet. We
expect that our capital expenditures in 2009 will be primarily directed toward
routine and emergency maintenance and for equipment related to specific projects
in which we have a contract with a customer, rather than growth in our fleet of
equipment.




Outlook




Drilling
activity in the U.S. domestic oilfield, as measured by the rotary drilling rig
count, experienced a cyclical peak in the third quarter of 2008, and since that
time has declined at the fastest annualized rate in history. Following a peak of
2,031 in the third quarter of 2008, the U.S. domestic rotary drilling rig count
fell 56.5 percent to 876 near the end of the second quarter of 2009. The overall
domestic rig count during the six months ended June 30, 2009 was approximately
37.3 percent lower than in the comparable period in 2008. As of the beginning of
the third quarter of 2009, the rotary drilling rig count appears to have
stabilized, although there are no indications that it will significantly
increase in the near term. The average price of oil decreased by approximately
53.6 percent and the average price of natural gas decreased by approximately
58.9 percent during the six months ended June 30, 2009 compared to the prior
year. Our response to the industry’s rapid decline is to maintain sufficient
liquidity and a conservative capital structure. As discussed in the Overview
section above, we have reduced our capital expenditures and reduced costs during
2009, one result of which is that the balance on our revolving credit facility
has been reduced by $50.9 million since December 31, 2008. We expect revenues
will be lower in 2009 than in 2008. Although we have reduced headcount and taken
additional steps to reduce employment costs, as well as reduced costs in other
areas, we believe that we will generate operating and net losses for the 12
months ended December 31, 2009.


22


RPC,
INC. AND SUBSIDIARIES




In
most of the Company’s service lines and all of our geographic markets, we are
experiencing the negative impacts of increased competition, including lower
pricing for our services and lower utilization of our equipment and
personnel.




Further
discussion of the Company’s outlook is set forth under the Outlook section in
the Company’s annual report on Form 10-K for the fiscal year ended December 31,
2008 and is incorporated herein by reference. There have been no significant
changes in the Company’s outlook since the filing of the 10-K for 2008 except as
discussed above.




RESULTS OF
OPERATIONS


Three
      months ended
                          June
      30,
                        
                        
                        Six
      months ended
                          June
      30,2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008Consolidated
      revenues [in thousands]
                        
                        $
                        127,018
                        
                        
                        $
                        214,689
                        
                        
                        $
                        303,289
                        
                        
                        $
                        411,916Revenues
      by business segment [in thousands]:Technical
                        
                        $
                        109,987
                        
                        
                        $
                        185,284
                        
                        
                        $
                        261,066
                        
                        
                        $
                        354,515Support
                        
                        
                        17,031
                        
                        
                        
                        29,405
                        
                        
                        
                        42,223
                        
                        
                        
                        57,401Consolidated
      operating (loss) profit [in thousands]
                        
                        $
                        (19,498
                        )
                        
                        $
                        37,800
                        
                        
                        $
                        (11,101
                        )
                        
                        $
                        63,241Operating
      (loss) profit by business segment [in thousands]:Technical
                        
                        $
                        (15,212
                        )
                        
                        $
                        31,958
                        
                        
                        $
                        (9,064
                        )
                        
                        $
                        52,644Support
                        
                        
                        (1,616
                        )
                        
                        
                        6,764
                        
                        
                        
                        2,090
                        
                        
                        
                        12,622Corporate
                        
                        $
                        (2,983
                        )
                        
                        $
                        (2,395
                        )
                        
                        $
                        (6,161
                        )
                        
                        $
                        (5,025
                        )Gain
      on disposition of assets, net
                        
                        $
                        312
                        
                        
                        $
                        1,473
                        
                        
                        $
                        2,034
                        
                        
                        $
                        3,000Percentage
      cost of revenues to revenues
                        
                        
                        71.7
                        %
                        
                        
                        56.0
                        %
                        
                        
                        66.3
                        %
                        
                        
                        57.7
                        %Percentage
      selling, general & administrative expenses to revenues
                        
                        
                        18.4
                        %
                        
                        
                        13.5
                        %
                        
                        
                        16.8
                        %
                        
                        
                        13.9
                        %Percentage
      depreciation and amortization expense to revenues
                        
                        
                        25.5
                        %
                        
                        
                        13.6
                        %
                        
                        
                        21.2
                        %
                        
                        
                        13.7
                        %Average
      U.S. domestic rig count
                        
                        
                        934
                        
                        
                        
                        1,864
                        
                        
                        
                        1,139
                        
                        
                        
                        1,817Average
      natural gas price (per thousand cubic feet (mcf))
                        
                        $
                        3.69
                        
                        
                        $
                        11.33
                        
                        
                        $
                        4.10
                        
                        
                        $
                        9.98Average
      oil price (per barrel)
                        
                        $
                        60.06
                        
                        
                        $
                        125.24
                        
                        
                        $
                        51.85
                        
                        
                        $
                        111.64





23


RPC,
INC. AND SUBSIDIARIES




THREE MONTHS ENDED JUNE 30,
2009 COMPARED TO THREE MONTHS ENDED JUNE 30, 2008




Revenues.Revenues for the three months ended June 30, 2009 decreased 40.8 percent
compared to the three months ended June 30, 2008. Domestic revenues decreased
42.5 percent to $118.4 million compared to the same period in the prior year.
The decreases in revenues are due primarily to dramatically lower pricing for
our services coupled with modestly lower utilization of our equipment and
personnel. International revenues remained unchanged at $8.7 million for the
three months ended June 30, 2009 and June 30, 2008. Our international revenues
are impacted by the timing of project initiation and their ultimate duration and
can be volatile in nature.




The
average price of natural gas decreased approximately 67.4 percent and the
average price of oil decreased 52.0 percent during the second quarter of 2009 as
compared to the prior year. The average domestic rig count during the quarter
was approximately 49.9 percent lower than the same period in 2008. This decrease
in drilling activity had a negative impact on our financial results. We believe
that our activity levels are affected more by the price of natural gas than by
the price of oil, because the majority of U.S. domestic drilling activity
relates to natural gas, and many of our services are more appropriate for gas
wells than oil wells.




The
Technical Services segment revenues for the quarter decreased 40.6 percent
compared to the same period in the prior year. Revenues in this segment
decreased due primarily to competitive pricing pressures and lower equipment
utilization. The Support Services segment revenues for the quarter fell by 42.1
percent compared to the same period in the prior year. This decline was due
primarily to lower pricing and decreased activity in the rental tool service
line, the largest within this segment. Operating profit decreased in both
segments primarily due to lower revenues and higher costs and expenses as a
percentage of revenues.




Cost
of revenues. Cost of revenues decreased 24.2 percent to $91.0 million for
the three months ended June 30, 2009 compared to $120.2 million for three months
ended June 30, 2008. This decrease was due to the variable nature of several of
these expenses as well as the impact of expense reduction measures taken during
2009, including employment cost reductions and greater efficiencies in the
purchase of materials and supplies. Cost of revenues, as a percentage of
revenues, increased in the second quarter of 2009 compared to the second quarter
of 2008 due primarily to lower pricing for our services, higher materials
requirements for more service-intensive work and negative leverage from direct
personnel costs.




Selling, general and administrative
expenses.Selling, general and administrative expenses for the three
months ended June 30, 2009 decreased 19.4 percent to $23.4 million compared to
$29.0 million for the three months ended June 30, 2008. This decrease was
primarily due to lower employment costs and other expenses resulting from
expense reduction efforts instituted in 2009. However, these costs as a percent
of revenues increased during the three months ended June 30, 2009 compared to
the same period in the prior year due to lower revenues and the fixed nature of
several of these expenses.


24


RPC,
INC. AND SUBSIDIARIES




Depreciation and amortization.Depreciation and amortization totaled $32.4 million for the three months
ended June 30, 2009, an 11.0 percent increase, compared to $29.2 million for the
quarter ended June
30, 2008. This increase in depreciation and amortization resulted from capital
expenditures made during the last year within both Technical Services and
Support Services to increase capacity, expand facilities and to maintain our
existing fleet of equipment.




Gain on disposition of assets,
net. Gain on disposition of assets, net was $312 thousand for the three
months ended June 30, 2009 compared to $1.5 million for the three months ended
June 30, 2008. The gain on disposition of assets, net includes gains or 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 $608 thousand for the three months ended June 30, 2009 and $105
thousand for the same period in the prior year. Other income, net primarily
includes gains and losses from investments in the non-qualified benefit plan
being marked to market, settlements of various legal and insurance claims, and
royalty receipts.




Interest expense and interest
income.Interest expensewas $527 thousand for
the three months ended June 30, 2009 compared to $1.3 million for the quarter
ended June 30, 2008. The decrease in 2009 is due to lower interest rates and a
lower average balance on our revolving line of credit, net of interest
capitalized on equipment and facilities under construction. Interest income was
$52 thousand for the three months ended June 30, 2009 and $24 thousand for the
three months ended June 30, 2008.




Income tax (benefit) provision.Income tax benefit was $7.7 million during the three months ended June
30, 2009, compared to a $14.2 million income tax provision for the same period
in 2008. This change was due to the decrease in income before taxes. The
effective tax rate was 40.0 percent for the three months ended June 30, 2009
compared to 38.8 percent for the three months ended June 30, 2008.


25


RPC,
INC. AND SUBSIDIARIES




SIX MONTHS ENDED JUNE 30,
2009 COMPARED TO SIX MONTHS ENDED JUNE 30, 2008




Revenues.Revenues for the six months ended June 30, 2009 decreased 26.4 percent
compared to the six months ended June 30, 2008. Domestic revenues decreased 27.8
percent to $285.0 million compared to the same period in the prior year. The
decreases in revenues are due primarily to lower pricing for our services and
lower utilization of our equipment and personnel. International revenues
increased from $17.1 million to $18.3 million compared to the same period in the
prior year. Our international revenues are impacted by the timing of project
initiation and their ultimate duration and can be volatile in
nature.




The
average price of natural gas decreased approximately 58.9 percent and the
average price of oil decreased 53.6 percent during the six months ended June 30,
2009 as compared to the prior year. The average domestic rig count during the
period was approximately 37.3 percent lower than the same period in 2008. This
decrease in drilling activity had a negative impact on our financial results. We
believe that our activity levels are affected more by the price of natural gas
than by the price of oil, because the majority of U.S. domestic drilling
activity relates to natural gas, and many of our services are more appropriate
for gas wells than oil wells.




The
Technical Services segment revenues for the first six months of 2009 decreased
26.4 percent compared to the prior year. Revenues in this segment decreased due
primarily to competitive pricing and lower equipment utilization. The Support
Services segment revenues for the first six months of 2009 fell by 26.4 percent
compared to the prior year. This decline was due primarily to decreased activity
in the rental tool service line, the largest within this segment. Operating
profit decreased in both segments primarily due to lower revenues and higher
costs and expenses as a percentage of revenues.




Cost
of revenues. Cost of revenues decreased 15.5 percent to $201.1 million
for the six months ended June 30, 2009 compared to $237.8 million for six months
ended June 30, 2008. This decrease was due to the variable nature of several of
these expenses as well as the impact of expense reduction measures taken during
2009. Cost of revenues, as a percentage of revenues, increased in the first six
months of 2009 compared to the first six months of 2008 due primarily to lower
pricing for our services, higher maintenance and repairs expenses and negative
leverage from direct personnel costs.




Selling, general and administrative
expenses.Selling, general and administrative expenses for the six months
ended June 30, 2009 decreased 11.1 percent to $51.0 million compared to $57.3
million for the six months ended June 30, 2008. This decrease was primarily due
to lower employment costs and other expenses resulting from expense reduction
efforts instituted in 2009. However, these costs as a percent of revenues
increased during the six months ended June 30, 2009 compared to the same period
in the prior year due to lower revenues and the fixed nature of several of these
expenses.




Depreciation and amortization.Depreciation and amortization totaled $64.4 million for the six months
ended June 30, 2009, a 14.0 percent increase, compared to $56.5 million for the
six months ended June 30, 2008. This increase in depreciation and amortization
resulted from capital expenditures made during the last twelve months within
both Technical Services and Support Services to increase capacity, expand
facilities and to maintain our existing fleet of equipment.


26


RPC,
INC. AND SUBSIDIARIES




Gain
on disposition of assets, net. Gain on disposition of assets, net was
$2.0 million for the six months ended June 30, 2009 compared to $3.0 million for
the six months ended June 30, 2008. The gain on disposition of assets, net
includes gains or 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 $751 thousand for the six months ended June 30, 2009 and $98
thousand for the same period in the prior year. Other income, net primarily
includes gains and losses from investments in the non-qualified benefit plan
being marked to market, settlements of various legal and insurance claims, and
royalty receipts.




Interest expense and interest
income.Interest expensewas $1.1 million for
the six months ended June 30, 2009 compared to $2.7 million for the six months
ended June 30, 2008. The decrease in 2009 is due to lower interest rates and a
lower average balance on our revolving line of credit, net of interest
capitalized on equipment and facilities under construction. Interest income was
$85 thousand for the six months ended June 30, 2009 and $46 thousand for the six
months ended June 30, 2008.




Income tax (benefit) provision.Income tax benefit was $4.2 million during the six months ended June 30,
2009, compared to a $23.4 million income tax provision for the same period in
2008. This change was due to the decrease in income before taxes. The effective
tax rate was 37.1 percent for the six months ended June 30, 2009 compared to
38.7 percent for the six months ended June 30, 2008.


27


RPC,
INC. AND SUBSIDIARIES




LIQUIDITY
AND CAPITAL RESOURCES




Cash
Flows




The
Company’s cash and cash equivalents at June 30, 2009 were $2.8 million. The
following table sets forth the historical cash flows for the six months ended
June 30, 2009 and 2008:




Six
      months ended June 30,(In
      thousands)
                                            
                                            2009
                                            
                                            
                                            2008Net
      cash provided by operating activities
                                            
                                            $
                                            103,530
                                            
                                            
                                            $
                                            89,163Net
      cash used for investing activities
                                            
                                            
                                            (39,044
                                            )
                                            
                                            
                                            (96,228
                                            )Net
      cash (used for) provided by financing activities
                                            
                                            
                                            (64,711
                                            )
                                            
                                            
                                            9,755




Cash
provided by operating activities for the six months ended June 30, 2009
increased by $14.4 million compared to the comparable period in the prior year.
Although net income decreased $44.4 million for the six months ended June 30,
2009 compared to the same period of 2008, cash provided by operating activities
increased due primarily to decreases in working capital, and an increase in
depreciation due to higher capital expenditures in 2008. The significant changes
in working capital requirements were decreases in accounts receivable, as
revenue declined, partially offset by decreases in accounts payable from lower
activity levels, and increases in inventory.




Cash
used for investing activities for the six months ended June 30, 2009 decreased
by $57.2 million, compared to the six months ended June 30, 2008, primarily as a
result of lower capital expenditures.




Cash
used for financing activities for the six months ended June 30, 2009 increased
by $74.5 million, compared to the six months ended June 30, 2008, due to an
increase in net repayments of notes payable to banks and an increase in
dividends per share paid to common stockholders, partially offset by lower open
market repurchases of the Company’s shares.




Financial
Condition and Liquidity




The
Company’s financial condition as of June 30, 2009, remains strong. We believe
the liquidity provided by our existing cash and cash equivalents, our overall
strong capitalization, cash expected to be generated from operations and our
credit facility will provide sufficient capital to meet our requirements for at
least the next twelve months. The Company currently has a $296.5 million
revolving credit facility (the “Revolving Credit Agreement”) that matures in
September 2011. The Revolving Credit Agreement contains customary terms and
conditions, including certain financial covenants including covenants
restricting RPC’s ability to incur liens or merge or consolidate with another
entity. Our outstanding borrowings were $123.6 million at June 30, 2009 and
approximately $15.0 million of the credit facility supports outstanding letters
of credit relating to self-insurance programs or contract bids. A total of
$157.9 million was available under our facility as of June 30, 2009. Additional
information regarding our Revolving Credit Agreement is included in Note 10 to
our Consolidated Financial Statements included in this report.


28


RPC,
INC. AND SUBSIDIARIES




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 credit 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 the financial covenants in our
credit facility.


29


RPC,
INC. AND SUBSIDIARIES




Cash
Requirements




The
Company currently expects that capital expenditures during 2009 will be
approximately $70 million, of which $43.2 million has been spent as of June 30,
2009. We expect these expenditures for the remainder of 2009 to be primarily
directed towards maintenance of our revenue-producing equipment in our larger,
core service lines including pressure pumping, snubbing, nitrogen, and rental
tools. The actual amount of 2009 expenditures will depend primarily on equipment
maintenance requirements, expansion opportunities, and equipment delivery
schedules.




The
Company has ongoing sales and use tax audits in various jurisdictions and may be
subjected to varying interpretations of statutes that could result in
unfavorable outcomes that cannot be currently estimated.




The
Company’s Retirement Income Plan, a multiple employer trusteed defined benefit
pension plan, provides monthly benefits upon retirement at age 65 to eligible
employees. The Company did not make any contributions to the pension plan in the
six months ended June 30, 2009 and does not currently expect to make any
contributions to the pension plan for the remainder of 2009.




The
Company’s Board of Directors announced a stock buyback program on March 9, 1998
authorizing the repurchase of 11,812,500 shares. The Company repurchased no
shares of common stock under the program during the six months ended June 30,
2009 but may repurchase outstanding common shares periodically based on market
conditions and our capital allocation strategies and restrictions under our
credit facility. The stock buyback program does not have a predetermined
expiration date.




On
July 28, 2009, the Board of Directors approved a $0.04 per share cash dividend
payable September 10, 2009 to stockholders of record at the close of business
August 10, 2009. This reduction in dividend, along with reduced headcount,
employment costs and discretionary expenses, enhances and strengthens our
capital structure giving us the opportunity to pay down debt and continue to
maintain a solid, conservative balance sheet. The Company expects to continue to
pay cash dividends to common stockholders, subject to the earnings and financial
condition of the Company and other relevant factors.




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 increase as well. Upward wage pressures abated
with the sudden, steep decline in domestic oilfield activity which began in the
third quarter of 2008. The Company has recently reduced the compensation of
salaried and hourly employees and changed the structure of incentive
compensation plans, thus lowering these costs. The Company has experienced
shortages for critical materials used in some of its largest service lines over
the past several years, and these shortages have caused price increases for
these materials as well as higher transportation costs, since some alternative
suppliers are located farther from the Company’s operational locations than the
original suppliers. Inventory levels have also grown due to price increases and
our purchases of large quantities of these materials in order to receive
quantity discounts. We believe that this cost pressure is abating as well, due
to lower oilfield activity coupled with supply increases from international
sources. If these trends continue, the Company’s costs and working capital
requirements relating to labor and materials and supplies will be lower in the
future. However, such lower costs many not necessarily lead to higher future
profitability, as the Company is experiencing tremendous competitive pricing
pressures for its services due to lower oilfield activity and a large amount of
oilfield service capacity in the markets in which we operate.


30


RPC,
INC. AND SUBSIDIARIES




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, the Company spun-off the business conducted through Chaparral
Boats, Inc, RPC’s former powerboat manufacturing segment. In conjunction with
the spin-off, RPC and Marine Products entered into various agreements that
define the companies’ relationship. A detailed discussion of the various
agreements in effect is contained in the Company’s annual report on Form 10-K
for the year ended December 31, 2008. During the six months ended June 30, 2009,
RPC charged Marine Products for its allocable share of administrative costs
incurred for services rendered on behalf of Marine Products totaling
approximately $379,000 compared to $516,000 for the comparable period in
2008.




Other




The
Company periodically purchases in the ordinary course of business products or
services from suppliers who are owned by officers or significant shareholders
of, or affiliated with the directors of RPC. The total amounts paid to these
affiliated parties were approximately $298,000 for the six months ended June 30,
2009 and $152,000 for the six months ended June 30, 2008.




RPC
receives certain administrative services and rents office space from Rollins,
Inc. (a company of which Mr. R. Randall Rollins is also Chairman, and which is
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 six months notice. The services
covered by these agreements include office space, selected administration
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 approximately $45,000 for the
six months ended June 30, 2009 and $48,000 for the six months ended June 30,
2008.


31


RPC,
INC. AND SUBSIDIARIES




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, 2008. There have been no significant changes in the critical accounting
policies since year-end.




IMPACT OF RECENT ACCOUNTING
PRONOUNCEMENTS




See
Notes 4 and 13 of the Notes to Consolidated Financial Statements for a
description of recent accounting pronouncements, 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 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; expected pension plan contributions during 2009; expected
capital expenditures during 2009; our belief that declines in the rotary
drilling rig count appear to have stabilized as of the beginning of third
quarter of 2009; forecasted revenues, costs, expenses and operating loss and net
loss for 2009; 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;
expectations as to future payment of dividends; 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 and expectations
regarding future demand for our products 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 to update its forward-looking
statements.


32


RPC,
INC. AND SUBSIDIARIES




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 in the Company’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2008, its other SEC filings and the
following: the 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, the Company’s ability to implement price increases,
and risks of international operations.




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 June 30, 2009, there are outstanding interest-bearing
advances of $123.6 million on our credit facility which bear interest at a
floating rate. Effective December 2008 we entered into a $50 million interest
rate swap agreement that effectively converted this portion of the outstanding
variable-rate borrowings under the Revolving Credit Agreement to a fixed-rate
basis, thereby hedging against the impact of potential interest rate changes.
Under this agreement, we pay a fixed interest rate of 2.07% and in return, the
issuing lender refunds us the variable-rate interest paid to the syndicate of
lenders under our Revolving Credit Agreement on the same notional amount,
excluding the margin. The swap agreement terminates on September 8, 2011. As of
June 30, 2009 the interest rate swap had a negative fair value of $626,000 and
is reflected in other long-term liabilities on the balance sheet. An increase in
interest rates of one percent would result in the interest rate swap having a
positive fair value of approximately $417,000. A decrease in interest rates of
one percent would result in the interest rate swap having a negative fair value
of approximately $1,684,000. A change in interest rates will have no impact on
the interest expense associated with the $50,000,000 of borrowings under the
Revolving Credit Agreement that are subject to the interest rate swap. A change
in the interest rate of one percent on the remaining outstanding balance of the
credit facility at June 30, 2009 not subject to the interest rate swap would
cause a change of $736,000 in total annual interest costs.


33


RPC,
INC. AND SUBSIDIARIES




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 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, 2009 (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 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.


34


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
risk factors described in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2008.




ITEM
      2.
            UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS




Purchases
of Equity Securities by the Issuer and Affiliated Purchasers




Shares
repurchased by the Company and affiliated purchases in the second quarter of
2009 are outlined below.




Period
                                                                                                                                                    
                                                                                                                                                    Total
      Number of
                                                                                                                                                      Shares
      (or Units)
                                                                                                                                                      Purchased
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    Average
      Price Paid
                                                                                                                                                      Per
      Share (or Unit)
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    Total
      Number of
                                                                                                                                                      Shares
      (or Units)
                                                                                                                                                      Purchased
      as Part of
                                                                                                                                                      Publicly
      Announced
                                                                                                                                                      Plans
      or Programs
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    Maximum
      Number (or
                                                                                                                                                      Approximate
      Dollar Value) of
                                                                                                                                                      Shares
      (or Units) that May Yet
                                                                                                                                                      Be
      Purchased Under the Plans
                                                                                                                                                      or
      Programs (1)Month
      #1April
      1, 2009 to April 30, 2009
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    31,134
                                                                                                                                                    (2)
                                                                                                                                                    
                                                                                                                                                    $
                                                                                                                                                    9.44
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    -
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    2,807,265Month
      #2May
      1, 2009 to May 31, 2009
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    -
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    -
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    -
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    2,807,265Month
      #3June
      1, 2009 to June 30, 2009
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    -
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    -
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    -
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    2,807,265Totals
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    31,134
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    $
                                                                                                                                                    9.44
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    -
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    2,807,265(1)
                                                                                                                                                    The
      Company’s Board of Directors announced a stock buyback program in March
      1998 authorizing the repurchase of 11,812,500 shares in the open market.
      Currently the program does not have a predetermined expiration
      date.(2)
                                                                                                                                                    Consists
      of shares repurchased by the Company in connection with option exercises
      and taxes related to the vesting of restricted shares.




35


RPC,
INC. AND SUBSIDIARIES




ITEM
      3.
            DEFAULTS
      UPON SENIOR SECURITIES




None




ITEM
      4.
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
HOLDERS




The
Company’s Annual Meeting of Stockholders was held on April 28, 2009. At the
meeting, the stockholders elected four Class II directors to the Board of
Directors for terms expiring in 2012.




The
following table sets forth the votes cast with respect to each of these
proposals:




Proposal
                                    For
                                    WithheldRe-election
      of Richard A. Hubbell
                                    90,518,304
                                    4,036,450Re-election
      of Linda H. Graham
                                    90,437,597
                                    4,117,157Re-election
      of Bill J. Dismuke
                                    93,839,302
                                    715,452Election
      of Larry L. Prince
                                    93,873,877
                                    680,877




Messrs.
R. Randall Rollins, Henry B. Tippie, James B. Williams, Wilton Looney, Gary W.
Rollins and James A. Lane, Jr., were not up for re-election and have continued
as directors.




ITEM
      5.
            OTHER
      INFORMATION




None


36


RPC,
INC. AND SUBSIDIARIES




ITEM
      6.
            Exhibits




Exhibit
                                  Number
                                
                                Description3.1(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).3.2
                                
                                Amended
      and Restated Bylaws of RPC, Inc. (incorporated herein by reference to
      Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on
      October 25, 2007).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).10.1
                                
                                Summary
      of Compensation arrangements with executive officers as of April 16,
      2009.31.1
                                
                                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.





37


RPC,
INC. AND SUBSIDIARIES




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. HubbellDate:
      August 5, 2009
            Richard
      A. HubbellPresident
      and Chief Executive Officer(Principal
      Executive Officer)/s/
      Ben
      M. PalmerDate:
      August 5, 2009
            Ben
      M. PalmerVice
      President and Chief Financial Officer(Principal
      Financial and Accounting Officer)






38