$ 4.03 $ -0.17 -4.05% Menu LETTER FROM CEO DEAR STOCKHOLDERS, RPC began 2020 by generating improved financial results due to the benefits of the measures we took in 2019 to streamline our operations and dispose of under-utilized, older equipment. We were pleased that high-utilization customers awarded work to us, which allowed us to perform efficiently and generate acceptable projectedifinancial returns. Unfortunately, several developments late in the first quarter of 2020 overshadowed this progress and profoundly impacted the remainder of the year. While every industry was impacted by the COVID-19 pandemic, the U.S. oilfield was simultaneously impacted by an OPEC-led price shock. The combination of these forces caused swift, severe declines in commodity prices – highlighted by a negative oil futures contract price for the first time in U.S. history – followed in several weeks by a record low U.S. drilling rig count. RPC reacted to these conditions first by instituting procedures to ensure the health and safety of our employees, customers and vendors while in our facilities or on operational locations. At the same time, we reduced our workforce, reduced compensation for our remaining employees, lowered other parts of our expense structure and curtailed our capital expenditure plans. In recognition of the impact of this downturn on RPC’s stockholder value, we also recorded an impairment charge of $205.5 million during the first quarter. The year ended with higher commodity prices, a slightly improved operating environment and a strong financial position as we look ahead to sustained, gradual improvements in 2021. RPC’s 2020 revenues decreased by 51.1 percent to $598.3 million compared with $1.2 billion in 2019. Our revenues decreased due to lower activity levels and pricing throughout our service lines. Cost of revenues in 2020 was $480.7 million, compared with $919.6 million in 2019. Cost of revenues decreased by 47.7 percent due to declines in expenses that vary with activity levels. As a percentage of revenues, cost of revenues increased to 80.4 percent in 2020 compared with 75.2 percent in 2019 due to more competitive pricing and the fixed nature of many of these costs during the short term. Selling, general and administrative expenses of $123.7 million in 2020 decreased compared with $168.1 million in 2019, and as a percentage of revenues, these costs increased from 13.8 percent in 2019 to 20.7 percent in 2020. Depreciation and amortization expenses decreased from $170.4 million in 2019 to $95.5 million in 2020 due to the reduction in the carrying value of our fixed assets resulting from the impairment charge, as well as lower capital expenditures during 2020. Capital expenditures during 2020 were $65.1 million, a decrease of $185.6 million compared with $250.6 million in 2019. Our decreased level of capital expenditures in 2020 was directed principally toward capitalized maintenance of existing equipment. In spite of our significant cost reduction efforts in 2020, the combination of significantly lower revenues, cost inefficiencies and RPC’s impairment charges produced an operating loss of $309.6 million in 2020 compared with an operating loss of $114.3 million in 2019. Interest expense increased from $334 thousand in 2019 to $373 thousand in 2020. Interest expense in 2020 once again consisted principally of fees associated with our credit facility, since we did not draw on the facility during the year. Interest income of $496 thousand in 2020 decreased by $1.4 million compared with $1.9 million in 2019 due to lower interest rates earned on our cash balance. RPC incurred a net loss of $212.2 million in 2020, compared with a net loss of $87.1 million in 2019. RPC’s income tax benefit was $97.2 million in 2020, compared with an income tax benefit of $26.0 million in 2019. The effective tax rate in 2020 was 31.4 percent, an increase compared to 23.0 percent in 2019. The effective tax rate in 2020 reflects the benefit of the CARES Act allowing tax loss carrybacks including the beneficial revaluation of our 2019 net operating losses and the recording of our 2020 net operating losses both at 35 percent. RPC’s loss per share was $1.00 in 2020 compared with a loss per share of $0.41 in 2019. RPC’s earnings before interest, taxes, depreciation and amortization (EBITDA) was negative $214.0 million in 2020, a decrease of $269.8 million compared to $55.7 million in 2019. The average U.S. domestic drilling rig count, a traditional indicator of our industry’s activity levels, decreased by 53.8 percent, from 943 in 2019 to 436 in 2020. The average unconventional rig count decreased by 53.3 percent, from 889 in 2019 to 415 in 2020. Unconventional drilling as a percentage of total drilling was greater than 94 percent for the entire year. While the U.S. drilling rig count is an important measure of our customers’ activity levels, the U.S. well completion count is also important because the majority of our services are directed toward oilfield completion activities. During 2020 there were 7,394 oil and gas well completions reported in the U.S. domestic market, a decrease of 48.5 percent compared with 14,362 well completions reported for 2019. The average price of oil during 2020 was $39.50 per barrel, a decrease of 30.6 percent compared with an average price of $56.90 in 2019. The price of natural gas decreased during 2020 as well, to an average price of $2.03 per Mcf, a 20.9 percent decrease compared with the average price of $2.57 per Mcf in 2019. The average price of benchmark natural gas liquids was $0.47 per gallon in 2020, a decrease of 14.4 percent compared to $0.54 per gallon in 2019. Oil prices were extremely volatile in 2020, as the price briefly fell below $5.00 per barrel in the second quarter. During the first quarter of 2021 the prices of these commodities have risen to pre-pandemic levels, which reflects an improving global economy, a favorable demand outlook and moderating inventory levels. Cash provided by operating activities in 2020 was $78.0 million, a decrease of $131.2 million compared to 2019. Operating cash flow decreased because of deteriorating financial results in 2020, partially offset by decreases in accounts receivable and inventories. These current assets declined due to lower activity levels and our continued dedication to effective working capital management during 2020. In 2020 we suspended our 22-year tradition of annual cash dividends, as the collapse of commodity prices and our operating environment encouraged us to create the largest possible margin of safety to preserve our financial strength and operational readiness. For the same reason, we did not repurchase any of our common stock in 2020 under RPC’s open market repurchase program. We will continue to evaluate a structure for assessing the viability of cash dividends and intend to resume issuing dividends as soon as we believe it to be prudent. RPC underwent profound changes within our leadership and Board of Directors during 2020. Most significantly, Chairman R. Randall Rollins passed away in the third quarter following a brief illness. Randall served as our Chairman since RPC’s spin-off from its former parent company and managed the business for almost 50 years. Randall successfully guided RPC through many oilfield cycles and always supported our efforts to grow and become a better company. Gary W. Rollins, who also served on our Board since RPC’s spin-off from its former parent company, succeeded Randall. In addition to this transition at the Chairman level, three of our other long-standing Directors retired during the year. Their successors on the Board of Directors come to the Company with significant financial and corporate governance experience, and we look forward to working with them in the coming years. RPC endured a historically volatile, harsh year in 2020, but we emerged with no debt and $84.5 million in cash at the end of 2020, an increase of $34.5 million compared to our cash balance at the end of 2019. We begin 2021 with a streamlined operational structure, a newer, more capable fleet of equipment, and a customer base that is increasing its drilling and completion activities in response to improved commodity prices and economic optimism. Our competitive environment also has improved somewhat due to bankruptcies and consolidation among a few of our peers and indications of a new pricing discipline among oilfield service providers. During 2021 our focus on pricing and capital discipline will continue as we seek out high-utilization opportunities that will allow us to generate acceptable financial returns over an oilfield cycle. This process will also limit capital expenditures to capitalized maintenance efforts, unless we are reasonably certain that fleet expansion will serve stable customers conducting efficient, high-utilization operations. In addition, we will continue to upgrade some of our existing equipment with dual-fuel capability, which can reduce operating costs and carbon emissions. We are aware of the growing Environmental, Social and Governance (ESG) influences in our society in general and the energy industry in particular, and we will address any financially viable opportunity that supports ESG initiatives. Finally, RPC will continue to provide a safe, healthy working environment for our employees, customers and partners, whether in our operational locations or on one of the many job sites at which we serve our customers throughout the U.S. oilfield. We look forward to 2021 with cautious optimism and express our appreciation to all of our employees who have remained loyal to our company and given us their best efforts during the trying conditions of the past year. Sincerely, Richard A. Hubbell President and Chief Executive Officer ABOUT RPC COMPANY HISTORY LETTER FROM CEO CONTACT US SERVICE LINES PRESSURE PUMPING DOWNHOLE TOOLS COILED TUBING SNUBBING-HYDRAULIC WORKOVER NITROGEN WELL CONTROL RENTAL TOOLS OILFIELD PIPE INSPECTIONS SERVICES, MANAGEMENT AND STORAGE WELL CONTROL SCHOOL CONSULTING AND PROJECT MANAGEMENT GOVERNANCE MANAGEMENT DIRECTORS COMMITTEES SECTION 16 FILINGS PRESS RELEASES INVESTOR RELATIONS PROFILE SEC FILINGS ANNUAL REPORTS PRESENTATIONS STOCK QUOTE & CHART DIVIDEND HISTORY ANALYST COVERAGE JOIN EMAIL LIST REQUEST INVESTOR KITS CORPORATE RESPONSIBILITY CAREERS RPC, INC. CUDD ENERGY SERVICES THRU TUBING SOLUTIONS PATTERSON SERVICES PATTERSON TUBULAR SERVICES BRONCO OILFIELD SERVICES CUDD WELL CONTROL WELL CONTROL SCHOOL EMPLOYMENT VERIFICATION Disclaimer: This website contains statements that constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995, including all statements that look forward in time or express management's beliefs, expectations or hopes. In particular, such statements include, without limitation, statements regarding: our statement that we look ahead to sustained gradual improvements in 2021; our intentions to resume issuing dividends as soon as we believe it to be prudent; our plans to seek out high-utilization opportunities that will allow us to generate acceptable financial returns over an oilfield cycle; our plans to limit capital expenditures to capitalized maintenance efforts; our plans to continue to upgrade some of our existing equipment with dual-fuel capability; our plans to address any financially viable opportunity that supports ESG initiatives; our plans to provide a safe, healthy working environment for our employees, customers and partners; and our statement that we look forward to 2021 with cautious optimism. The actual results of the Company could differ materially from those indicated by the forward looking statements because of various risks and uncertainties, including, without limitation, those identified under the title "Risk Factors" in the Company's 2020 Annual Report on Form 10-K included as a part of this Annual Report. In addition, the timing of future dividend payments will depend on RPC's financial results and market conditions as well as on competing uses for cash. All of the foregoing risks and uncertainties are beyond the ability of the Company to control, and in many cases the Company cannot predict the risks and uncertainties that could cause its actual results to differ materially from those indicated in the forward-looking statements. The Company does not undertake to update these forward-looking statements. Privacy