• Revenues for the First Quarter Increased 47.3 Percent over Prior Year • Diluted EPS for the First Quarter Increased by 153.3 Percent to $0.38, Compared to $0.15 in the First Quarter of the Prior Year
ATLANTA, April 26, 2006 -- RPC, Inc. (NYSE: RES) announced its unaudited results for the first quarter ended March 31, 2006. RPC provides a broad range of specialized oilfield services and equipment primarily to independent and major oilfield companies engaged in the exploration, production and development of oil and gas properties throughout the United States and in selected international markets.
For the quarter ended March 31, 2006, revenues increased 47.3 percent to $136,024,000 compared to $92,330,000 in the first quarter last year. Operating profit for the quarter was $39,517,000 compared to $14,859,000 in the prior year. Net income was $24,900,000 or $0.38 diluted earnings per share, compared to $9,927,000, or $0.15 diluted earnings per share last year.
Cost of services rendered and goods sold was $65,751,000, or 48.3 percent of revenues, during the first quarter of 2006, compared to $50,411,000, or 54.6 percent of revenues, in the prior year. The increase in these costs was due to the variable nature of many of these expenses, including materials and supplies expenses, maintenance and repair expenses, and fuel costs. As a percentage of revenues, however, these costs decreased because of improved pricing and higher equipment and personnel utilization and the leveraging of fixed costs over higher revenues. Selling, general and administrative expenses increased by 14.5 percent in the first quarter of 2006 to $21,083,000 from $18,406,000 in the prior year. This increase was due primarily to higher compensation expenses consistent with higher activity levels and improved profitability. As a percentage of revenues, however, these costs decreased to 15.5 percent in 2006 compared to 19.9 percent last year due to the fixed nature of many of these expenses. Depreciation and amortization were $10,705,000 during the quarter, compared to $9,280,000 last year. This increase was due to the higher level of capital expenditures made during the recent quarters. Other income in the first quarter decreased to $261,000 in 2006 compared to $1,270,000 last year. Other income decreased due to proceeds from a litigation settlement that were realized in the first quarter of 2005.
"RPC's first quarter results reflect continued high activity levels, improved pricing, and capacity growth in our strongest service lines," stated Richard A. Hubbell, RPC's President and Chief Executive Officer. "The average domestic rig count during the first quarter was 1,521, 18.6 percent higher than the same period in 2005. The average price of oil increased almost 27 percent and the average price of natural gas increased by more than 16 percent during the quarter compared to the prior year, both of which served to drive the higher rig count. Our revenues grew at a greater rate than the domestic rig count due to increases in pricing and capacity, partially offset by the elimination of revenues from the service lines that we sold in August 2005. Our consolidated revenue growth rate was also positively impacted by an increase in our international revenues, which increased at a greater rate than our domestic revenues. We continued to support our strong service lines by making almost $26 million in capital expenditures during the quarter, almost twice as much as we invested in the first quarter of last year."
Summary of Segment Operating Performance
RPC's business segments are Technical Services and Support Services.
Technical Services includes RPC's oilfield service lines that utilize people and equipment to perform value-added completion, production and maintenance services directly to a customer's well. These services are generally directed toward improving the flow of oil and natural gas from producing formations or to address well control issues. The Technical Services include pressure pumping, hydraulic workover services, coiled tubing, nitrogen, wireline, well control, downhole tools, surface production equipment, and fishing tool operations.
Support Services includes RPC's oilfield service lines that provide equipment for customer use or services to assist customer operations. The equipment and services offered include rental of drill pipe and related tools, pipe handling, inspection and storage services and oilfield training services.
Both Technical Services and Support Services experienced stronger results due to the increased drilling rig count and related customer activity. Technical Services revenues rose 47.2 percent for the quarter compared to the prior year, driven by higher pricing in all of the services that comprise this segment, and increased capacity, partially offset by the elimination of revenues from the operating assets of its hammer, casing, laydown and casing torque-turn services, which were sold in August 2005. Support Services revenues rose by 48.1 percent during the quarter compared to the prior year. This increase was driven primarily by increased capacity in the rental tool service line, which is the largest service line within Support Services, as well as improved pricing in the service lines which comprise this segment. RPC provides a broad range of specialized oilfield services and equipment primarily to independent and major oilfield companies engaged in the exploration, production and development of oil and gas properties throughout the United States, including the Gulf of Mexico, mid-continent, southwest and Rocky Mountain regions, and in selected international markets. RPC's investor website can be found at www.rpc.net.
Certain statements and information included in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements regarding RPC's expected activity and performance in the future, such as the planned level of capital expenditures for new equipment in 2006. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of RPC to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. Such risks include the possibility of declines in the price of oil and natural gas, which tend to result in a decrease in drilling activity and therefore a decline in the demand for our services, the actions of the OPEC cartel, the ultimate impact of current and potential political unrest and armed conflict in the oil-producing regions of the world, which could impact drilling activity, adverse weather conditions in oil or gas producing regions, including the Gulf of Mexico, competition in the oil and gas industry, and risks of international operations. Additional discussion of factors that could cause the actual results to differ materially from management's projections, forecasts, estimates and expectations is contained in RPC's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2005.
For information about RPC, Inc., please contact:
BEN M. PALMER Chief Financial Officer 404.321.2140 irdept@rpc.net JIM LANDERS Corporate Finance 404.321.2162 jlanders@rpc.net |