Oct. 28, 2009 (PR Newswire) --
ATLANTA, Oct. 28 /PRNewswire-FirstCall/ -- RPC, Inc. (NYSE: RES) today announced its unaudited results for the third quarter ended September 30, 2009. RPC provides a broad range of specialized oilfield services and equipment primarily to independent and major oilfield companies engaged in the exploration, production and development of oil and gas properties throughout the United States and in selected international markets.
For the quarter ended September 30, 2009, revenues decreased 44.3 percent to $132,159,000 compared to $237,217,000 in the third quarter last year. Revenues decreased compared to the prior year due primarily to dramatically lower pricing for our services coupled with lower utilization of our equipment and personnel. Operating loss for the quarter was $14,907,000 compared to operating profit of $44,232,000 in the prior year. Net loss was $10,385,000 or $0.11 per diluted share, compared to net income of $25,780,000 or $0.26 diluted earnings per share last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) declined by 74.5 percent to $18,984,000 compared to $74,321,000 in the prior year. (1)
Cost of revenues was $90,442,000, or 68.4 percent of revenues, during the third quarter of 2009, compared to $134,878,000, or 56.9 percent of revenues, in the prior year. The decrease in these costs was due to the variable nature of most 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, as well as lower fuel costs. As a percentage of revenues, cost of revenues increased primarily because of lower pricing for our services. Selling, general and administrative expenses decreased by 23.0 percent in the third quarter of 2009 to $22,843,000 from $29,660,000 in the prior year. This decrease was due to lower employment costs and other expenses resulting from expense reduction efforts instituted during 2009. As a percentage of revenues, however, these costs increased to 17.3 percent in 2009 compared to 12.5 percent last year due to the fixed nature of many of these expenses. Depreciation and amortization increased slightly to $33,289,000 during the quarter, compared to $30,445,000 last year, due to capital expenditures made during the last year. Interest expense decreased from $1,241,000 last year to $533,000 in 2009 due to reduced interest rates and a lower average balance on RPC's revolving credit facility.
For the nine months ended September 30, 2009, revenues decreased 32.9 percent to $435,448,000 compared to $649,133,000 last year. Net loss was $17,543,000 or $0.18 per diluted share, compared to net income of $62,995,000 or $0.64 per diluted share last year.
"Although we believe that the steep decline in domestic drilling activity over the past year bottomed in the second quarter of 2009, this was still a difficult quarter for our activity levels and pricing," stated Richard A. Hubbell, RPC's President and Chief Executive Officer. "The average domestic rig count during the third quarter was 970, a 51.0 percent decrease compared to the same period in 2008. The average price of natural gas was $3.13 per Mcf, a 65.2 percent decrease compared to the prior year, and the average price of oil was $68.15 per barrel, a 42.7 percent decrease compared to the prior year. The low rig count and depressed commodity prices, coupled with high equipment capacity in the domestic oilfield, continued to depress pricing for our services and utilization of our equipment, which led to lower revenues and continued operating losses during the quarter. Our revenues declined at a lower rate than the domestic rig count due to the timing of international project work that was active during the quarter and the relatively stronger performance of several of our specialized service lines. Although our cost control measures are still in place and we continue to look for opportunities to make our operations more efficient, our efforts have not been sufficient to allow us to realize an operating profit during the quarter.
"During the third quarter we began to see signs of increasing customer activity levels and some improvement in our own personnel and equipment utilization consistent with the sequential increases in the domestic rig count and the price of oil. This was reflected in a 3.9 percent sequential increase in the rig count, and a 4.0 increase in RPC's revenues, all due to higher activity levels. RPC's operating loss during the third quarter narrowed as compared to the second quarter, due to leverage of fixed costs over higher revenues, as well as reductions in employment costs and materials and supplies. While customer activity levels increased slightly we remain in a difficult pricing environment.
"We continue to focus on maintaining a conservative balance sheet, and we are pleased to report that the balance on our credit facility declined to $101.9 million at the end of the third quarter, a $21.7 million decrease compared to the end of the second quarter. Our capital expenditures during the quarter were $15.5 million. We continue to believe that our strong capital structure serves us well in the current operating environment, and believe that the financial pressure on our more aggressively capitalized peers continues," concluded Hubbell.
Summary of Segment Operating Performance
RPC's business segments are Technical Services and Support Services.
Technical Services includes RPC's oilfield service lines that utilize people and equipment to perform value-added completion, production and maintenance services directly to a customer's well. These services are generally directed toward improving the flow of oil and natural gas from producing formations or to address well control issues. The Technical Services segment includes pressure pumping, coiled tubing, hydraulic workover services, nitrogen, downhole tools, surface pressure control equipment, well control, and fishing tool operations.
Support Services includes RPC's oilfield service lines that provide equipment for customer use or services to assist customer operations. The equipment and services offered include rental of drill pipe and related tools, pipe handling, inspection and storage services and oilfield training services.
Technical Services revenues declined 42.8 percent for the quarter compared to the prior year, impacted by competitive pricing and lower equipment utilization. Support Services revenues decreased by 53.1 percent during the quarter compared to the prior year because of decreased customer activity and lower pricing in the rental tool service line, which is the largest service line within Support Services. Operating losses in Technical and Support Services segments were realized due to lower revenues and higher costs and expenses as a percentage of revenues which we could not reduce as dramatically as the rate of pricing decline.
