Executive Summary / Key Takeaways

• Strategic Diversification and M&A Focus: RPC, Inc. is actively rebalancing its portfolio, strategically growing less capital-intensive service lines through organic investments and accretive acquisitions like Pintail Completions, to reduce volatility and strengthen its customer mix with blue-chip E&Ps.
• Technological Differentiators Driving Efficiency: Proprietary innovations such as the A10 downhole motor and UnPlug technology are enhancing operational efficiency, reducing costs for customers, and capturing market share, providing a competitive moat independent of broader oilfield services demand.
• Robust Financial Health Amidst Volatility: RPC maintains a strong balance sheet with $163.5 million in cash and no outstanding revolving debt as of September 30, 2025, supporting its capital allocation strategy, including consistent dividends and opportunistic share repurchases.
• Pintail Acquisition Powers Revenue Growth: The acquisition of Pintail Alternative Energy, L.L.C. significantly boosted Q3 2025 revenues by $99.8 million, establishing RPC as a leading wireline provider in the Permian Basin and contributing to a 32.4% year-over-year increase in total revenues.
• Cautious Outlook with Strategic Flexibility: Management anticipates continued market challenges due to oil price volatility and geopolitical uncertainties, guiding 2025 capital expenditures between $170 million and $190 million, primarily for maintenance and IT upgrades, while remaining poised to capitalize on M&A opportunities.

A New Chapter in Oilfield Services: RPC's Strategic Rebalancing

RPC, Inc., founded in 1984, has evolved into a diversified oilfield services company, strategically adapting to the dynamic energy landscape. Following its spin-off from Marine Products Corporation, RPC sharpened its focus on specialized oilfield services. The company's overarching strategy is to create long-term shareholder value through world-class service delivery and conservative financial management. This approach has historically enabled RPC to generate consistent profitability and free cash flow, supporting shareholder returns through dividends and share buybacks while maintaining a highly liquid balance sheet for growth.

The industry landscape is characterized by significant volatility, driven by geopolitical factors, economic conditions, and fluctuating oil and natural gas prices. The average price of oil was 14% lower in Q3 2025 compared to Q3 2024, while natural gas prices were 44.8% higher. The average domestic rig count also saw a 7.8% decline in Q3 2025 year-over-year. These trends, coupled with increased efficiencies in completion services, have contributed to an oversupplied oilfield services market, particularly in pressure pumping, intensifying competition. In response, RPC has articulated clear strategic imperatives: improving margins and execution, optimizing assets, increasing operational scale through M&A, rebalancing its portfolio towards high cash flow service offerings, and strengthening its customer mix by focusing on blue-chip exploration and production companies.

Technological Edge: Driving Efficiency and Market Share

RPC's commitment to innovation is a cornerstone of its competitive strategy, particularly through its Thru-Tubing Solutions subsidiary. The company is actively developing and deploying proprietary technologies that offer tangible benefits to customers and enhance its market position.

The A10 downhole motor is a prime example of this technological differentiation. This new product is proving highly effective, particularly for longer laterals and wells requiring higher flow rates. Its design allows for a smaller output, reduced operational complexity, and improved performance in demanding pressure environments, making it exceptionally versatile. The A10 motor has already been utilized by over 50 customers and has completed more than 100 runs with major operators, translating into market share gains by getting jobs done more reliably and quicker.

Another significant innovation is RPC's UnPlug technology. This innovative product is designed to reduce and, in some cases, eliminate the need for bridge plugs, delivering faster drill-out times while achieving highly effective stage isolation. Following successful field trials in Q3 2024, UnPlug is now in full commercial deployment, having been used in hundreds of stages across numerous well sites. This technology is strategically positioned to capture a share of the North American land frac plug market and is viewed as a potential growth catalyst largely independent of broader oilfield services demand.

These technological advancements contribute directly to RPC's competitive moat by offering superior operational efficiency and cost savings to customers. By focusing on solutions that address critical pain points in well completion, RPC enhances its value proposition, fostering stronger customer relationships and potentially commanding better pricing in specialized segments.

Competitive Dynamics and Strategic Positioning

RPC operates in a highly competitive oilfield services market, contending with global giants like Halliburton Company , Schlumberger Limited , Baker Hughes Company (BKR), and Weatherford International plc (WFRD), as well as numerous smaller, specialized players.

Compared to larger, more integrated competitors like Halliburton and Schlumberger , RPC differentiates itself through agility and specialized expertise. While Halliburton (HAL) and Schlumberger (SLB) offer broader, often tech-heavy, end-to-end solutions with extensive global R&D capabilities, RPC focuses on delivering reliable, hands-on services and specialized tools. For instance, RPC's downhole tools business, with its A10 motor, directly competes in efficiency for longer laterals, a key industry trend. However, larger rivals often exhibit stronger cash flow generation and efficiency due to their sheer scale, which can provide greater resilience during downturns. RPC's EBITDA margin of 14.06% (TTM) reflects its operational efficiency within its chosen segments.

The pressure pumping market, a significant component of RPC's Technical Services, remains intensely competitive and oversupplied. Management notes that efficiency gains consistently add pump hour capacity, leading to pricing pressure. RPC has responded by exercising economic discipline, idling assets rather than operating them without adequate returns. The company is strategically shifting its pressure pumping operations towards more dedicated customers, which generally involves an increased mix of simul-frac and twin frac operations. This shift aims to improve activity levels and minimize the typical seasonal slowdowns that have impacted the business in prior years.

The wireline market, particularly in the Permian Basin, is also challenging, with intensifying pricing pressure from smaller competitors seeking to increase utilization. Despite this, RPC's recent acquisition of Pintail, the largest wireline provider in the Permian, is strategically positioned with new, efficient units and a blue-chip customer base to withstand these pressures.

RPC's strategy to bolster less capital-intensive service lines, both organically and through acquisitions, aims to reduce volatility in its financial results. This approach allows RPC to leverage its strengths in specialized services and customer relationships, while selectively participating in more capital-intensive segments like pressure pumping with a focus on returns.

Financial Performance and Operational Momentum

RPC's financial performance in the nine months ended September 30, 2025, reflects a period of strategic growth and adaptation amidst a challenging market.

For the three months ended September 30, 2025, RPC reported revenues of $447.1 million, a substantial 32.4% increase compared to the same period in 2024. This growth was primarily driven by the acquisition of Pintail Alternative Energy, L.L.C., which contributed $99.8 million in revenues during the quarter. Technical Services, representing 94% of total revenues, saw a 34.7% year-over-year increase in revenues, largely due to Pintail, though partially offset by a decrease in pressure pumping revenues. Support Services revenues increased by 3.1%, primarily from higher activity in rental tools.

Despite the revenue growth, net income for Q3 2025 was $13 million, or $0.06 diluted earnings per share, down from $18.8 million, or $0.09 diluted EPS, in Q3 2024. This decline was influenced by an unusually high effective tax rate of 42.6% (compared to 19.9% in Q3 2024), primarily due to non-deductible acquisition-related employment costs and tax return adjustments. Adjusted EBITDA for Q3 2025 was $72.3 million, with an Adjusted EBITDA margin of 16.2%, showing a sequential improvement from 15.6% in Q2 2025.

For the nine months ended September 30, 2025, revenues reached $1.20 billion, an 11.2% increase over the prior year, again largely attributable to Pintail's contribution of $198.6 million from April 1 to September 30, 2025. Net income for this period was $35.1 million, or $0.16 diluted EPS, significantly lower than $78.7 million, or $0.37 diluted EPS, in the same period of 2024. The effective tax rate for the nine months was 37.7%, impacted by the same acquisition-related employment costs.

RPC's liquidity remains robust. As of September 30, 2025, the company held $163.5 million in cash and cash equivalents, down from $326 million at December 31, 2024, primarily due to the cash component of the Pintail acquisition. Importantly, RPC has no outstanding borrowings on its $100 million revolving credit facility, with $84.2 million available after accounting for letters of credit.

Net cash provided by operating activities for the nine months ended September 30, 2025, was $139.5 million, a decrease from $255.2 million in the prior year, mainly due to unfavorable changes in working capital and lower net income. Free cash flow for the nine months was $21.7 million, down from $75.8 million, influenced by the decrease in operating cash flow partially offset by lower capital expenditures. The company's two-year cumulative free cash flow (2023-2024) exceeded $340 million, demonstrating its ability to generate significant cash even after substantial capital investments.

Outlook and Strategic Initiatives

RPC's management maintains a cautious yet opportunistic outlook for the remainder of 2025 and beyond, acknowledging the prevailing market uncertainties.

Capital Expenditures: The company projects full-year 2025 capital expenditures to be between $170 million and $190 million. These investments are primarily allocated to maintenance, opportunistic asset purchases, and ongoing ERP and IT system upgrades. Notably, this guidance does not include a new frac fleet, as RPC continues to prioritize economic discipline and will only invest in incremental frac equipment if firm customer commitments justify it, retiring older fleets to avoid adding to industry capacity.

Acquisition Integration and Performance: The Pintail acquisition is expected to be accretive to EPS and cash flow for 2025. While initial expectations for Pintail's EBITDA margins were around 20%, management now anticipates they might track slightly lower due to intensifying pricing pressure in the wireline market. The first principal payment of $20 million on the $50 million Pintail Seller Note is due within the next 12 months, with the remaining $30 million payable over two years thereafter.

Shareholder Returns: RPC remains committed to returning capital to shareholders, having declared a regular quarterly cash dividend of $0.04 per share payable in December 2025. The company also has an active stock buyback program, with 12.77 million shares remaining available as of September 30, 2025.

Operational Diversification: RPC continues to strategically grow its less capital-intensive service lines. Cudd Pressure Control, for instance, has secured a multi-year contract for regulatory-driven gas storage well maintenance and is exploring diversification into non-oilfield applications, such as drilling a geoexchange well at a major university. The deployment of the largest coiled tubing unit in the U.S. in July 2025, uniquely suited for long laterals, further enhances RPC's capabilities in this growing segment. Furthermore, Cudd Energy Services is testing new 100% natural gas frac pumps, evaluating alternative technologies to enhance its pressure pumping offerings.

Risks and Challenges

Several factors could impact RPC's performance and investment thesis. The inherent volatility of oil and natural gas prices remains a primary risk, as customer drilling and completion activities are highly sensitive to commodity markets. The oversupplied and highly competitive pressure pumping market continues to exert pressure on pricing and asset utilization. Geopolitical factors, overall economic conditions, and weather also introduce uncertainty.

The company's effective tax rate is expected to remain unusually high due to the non-deductible portion of acquisition-related employment costs associated with the Pintail acquisition, impacting net income. Tariffs on imported goods are anticipated to result in materially higher equipment costs, further pressuring capital spending discipline across the industry. While RPC's strong balance sheet provides a buffer, these external pressures necessitate continuous prudent management and strategic adaptation.

Conclusion

RPC, Inc. is executing a deliberate strategy of portfolio rebalancing and technological innovation to strengthen its market position and enhance shareholder value amidst a challenging oilfield services environment. The pivotal acquisition of Pintail Completions has significantly expanded its wireline capabilities in the Permian Basin, contributing substantially to revenue growth and diversifying its customer base towards blue-chip E&Ps. Coupled with proprietary technologies like the A10 downhole motor and UnPlug system, RPC is building a competitive moat through operational efficiency and specialized solutions that address critical industry needs.

Despite ongoing pressures from commodity price volatility and intense competition, particularly in pressure pumping, RPC's robust financial health, characterized by a strong cash position and no outstanding revolving debt, provides the flexibility to pursue accretive M&A opportunities and maintain consistent shareholder returns. The company's disciplined capital allocation and focus on less capital-intensive service lines underscore its commitment to long-term stability. While the outlook remains cautious due to macro uncertainties, RPC's strategic initiatives, technological leadership, and prudent financial management position it to capitalize on improving fundamentals and emerge stronger from industry cycles.