RPC(RES) - 2020 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This part presents the unaudited consolidated financial statements and management's discussion and analysis of RPC, Inc. for the periods ended September 30, 2020 ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) This section presents the unaudited consolidated financial statements of RPC, Inc. and its subsidiaries for the periods ended September 30, 2020, and December 31, 2019, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, recent standards, revenue recognition, impairment charges, segment information, and other financial disclosures Consolidated Balance Sheets This section presents the consolidated balance sheets, detailing assets, liabilities, and stockholders' equity as of September 30, 2020, and December 31, 2019 | (In thousands) | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | ASSETS | | | | Cash and cash equivalents | $ 145,619 | $ 50,023 | | Accounts receivable, net | 123,157 | 242,574 | | Inventories | 84,566 | 100,947 | | Total current assets | 430,328 | 436,858 | | Property, plant and equipment, net | 275,124 | 516,727 | | Total assets | $ 800,877 | $ 1,053,218 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Accounts payable | $ 46,713 | $ 53,147 | | Total current liabilities | 93,262 | 101,402 | | Total liabilities | 163,322 | 222,885 | | Total stockholders' equity | 637,555 | 830,333 | | Total liabilities and stockholders' equity | $ 800,877 | $ 1,053,218 | - Total assets decreased by $252.3 million (23.96%) from $1,053.2 million at December 31, 2019, to $800.9 million at September 30, 2020, primarily driven by a $241.6 million decrease in Property, plant and equipment, net, and a $119.4 million decrease in Accounts receivable, net[7] - Total liabilities decreased by $59.56 million (26.72%) from $222.9 million at December 31, 2019, to $163.3 million at September 30, 2020, and total stockholders' equity also decreased by $192.78 million (23.22%) over the same period[8] Consolidated Statements of Operations This section presents the consolidated statements of operations, detailing revenues, operating loss, and net loss for the three and nine months ended September 30, 2020 and 2019 | (In thousands except per share data) | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $ 116,588 | $ 293,240 | $ 449,665 | $ 986,412 | | Operating loss | $ (31,752) | $ (92,639) | $ (287,989) | $ (86,413) | | Net loss | $ (16,437) | $ (69,181) | $ (201,953) | $ (63,749) | | Basic loss per share | $ (0.08) | $ (0.33) | $ (0.95) | $ (0.30) | | Diluted loss per share | $ (0.08) | $ (0.33) | $ (0.95) | $ (0.30) | - Revenues for the three months ended September 30, 2020, decreased by 60.2% YoY to $116.6 million, and for the nine months ended September 30, 2020, decreased by 54.4% YoY to $449.7 million, reflecting significantly lower activity levels and pricing[10] - Net loss for the three months ended September 30, 2020, improved to $(16.4) million from $(69.2) million in the prior year, while for the nine months, it widened to $(202.0) million from $(63.7) million, primarily due to higher impairment charges in 2020[10] Consolidated Statements of Comprehensive (Loss) Income This section presents the consolidated statements of comprehensive loss, including net loss and other comprehensive income (loss) for the three and nine months ended September 30, 2020 and 2019 | (In thousands) | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $ (16,437) | $ (69,181) | $ (201,953) | $ (63,749) | | Other comprehensive income (loss): | | | | | | Pension adjustment and reclassification adjustment, net of taxes | 186 | 173 | 1,104 | 520 | | Foreign currency translation | (25) | 82 | (423) | 513 | | Comprehensive loss | $ (16,276) | $ (68,926) | $ (201,272) | $ (62,716) | - Comprehensive loss for the three months ended September 30, 2020, was $(16.3) million, a significant improvement from $(68.9) million in the prior year, while for the nine months, comprehensive loss widened to $(201.3) million from $(62.7) million, primarily reflecting the increased net loss[14] Consolidated Statements of Stockholders' Equity This section presents the consolidated statements of stockholders' equity, detailing changes from December 31, 2019, to September 30, 2020, including net loss and stock repurchases | (In thousands) | Balance, Dec 31, 2019 | Net loss (9 months) | Stock purchased and retired (9 months) | Balance, Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total stockholders' equity | $ 830,333 | $ (160,423) (Q1) + (25,093) (Q2) + (16,437) (Q3) = (201,953) | $ (792) (Q1) + (6) (Q2) + (29) (Q3) = (827) | $ 637,555 | - Total stockholders' equity decreased from $830.3 million at December 31, 2019, to $637.6 million at September 30, 2020, primarily due to a net loss of $201.95 million for the nine months ended September 30, 2020[16] - The company repurchased and retired common stock totaling $827 thousand during the nine months ended September 30, 2020, contributing to the decrease in equity[16] Consolidated Statements of Cash Flows This section presents the consolidated statements of cash flows, detailing operating, investing, and financing activities for the nine months ended September 30, 2020 and 2019 | (In thousands) | Nine Months ended Sep 30, 2020 | Nine Months ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $ 131,364 | $ 169,713 | | Net cash used for investing activities | (34,941) | (196,869) | | Net cash used for financing activities | (827) | (39,583) | | Net increase (decrease) in cash and cash equivalents | 95,596 | (66,739) | | Cash and cash equivalents at end of period | $ 145,619 | $ 49,523 | - Net cash provided by operating activities decreased by $38.3 million (22.6%) to $131.4 million for the nine months ended September 30, 2020, compared to the prior year, primarily due to lower net income, partially offset by favorable changes in working capital and non-cash impairment charges[18][139] - Net cash used for investing activities significantly decreased by $161.9 million (82.2%) to $(34.9) million, driven by a substantial reduction in capital expenditures and increased proceeds from asset sales[18][140] - Cash and cash equivalents increased by $95.6 million, reaching $145.6 million at September 30, 2020, compared to a decrease of $66.7 million in the prior year, indicating improved liquidity despite operational challenges[18] Notes to Consolidated Financial Statements This section provides detailed disclosures and explanations for the consolidated financial statements, covering accounting policies, recent accounting standard adoptions, revenue recognition, significant impairment charges, earnings per share calculations, stock-based compensation, business segment performance, credit loss allowances, inventory, employee benefit plans, credit facility details, income taxes, fair value measurements, and accumulated other comprehensive loss 1. GENERAL This note outlines the basis of presentation for the unaudited interim financial statements and key control aspects of the Company - The unaudited consolidated financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions, including all necessary recurring accruals for fair presentation[20][21] - Operating results for the three and nine months ended September 30, 2020, are not necessarily indicative of the full year's results[21] - A group including the Company's Chairman, Gary W. Rollins, controls over 50% of the Company's voting power[23] 2. RECENT ACCOUNTING STANDARDS This note details the adoption of recent accounting standards, including CECL, goodwill impairment simplification, and cloud computing costs - The Company adopted ASU No. 2016-13 (CECL model) in Q1 2020, resulting in an immaterial cumulative-effect adjustment to retained earnings, requiring earlier recognition of credit losses[24] - ASU No. 2017-04, simplifying goodwill impairment testing by eliminating Step 2, was adopted prospectively in Q1 2020[24] - ASU No. 2018-15, aligning accounting for cloud computing implementation costs with internal-use software, was adopted in Q1 2020 with no material impact[24][25] - ASU No. 2019-12, simplifying income tax accounting, is effective in Q1 2021, and the Company is currently evaluating its impact[26] 3. REVENUES This note describes the Company's revenue recognition policies, contract types, and disaggregated revenue data for oilfield services - RPC generates contract revenues primarily from specialized oilfield services, with pricing based on agreed rates for equipment, labor, and consumables, and performance obligations satisfied over time[27] - Services are categorized into Technical Services (well site equipment/personnel) and Support Services (off-well site services/tools)[29][30][31] | (in thousands) | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Oilfield services transferred over time | $ 116,588 | $ 293,240 | $ 449,665 | $ 986,412 | | Total revenues | $ 116,588 | $ 293,240 | $ 449,665 | $ 986,412 | - Unbilled trade receivables, representing contract assets, decreased from $52.05 million at December 31, 2019, to $28.31 million at September 30, 2020[36] 4. IMPAIRMENT AND OTHER CHARGES This note details significant impairment and other charges recorded, primarily due to declines in oilfield activity and market conditions - The Company recorded $207.18 million in pre-tax impairment and other charges for the nine months ended September 30, 2020, primarily due to long-lived asset impairments ($204.77 million) in the Technical Services segment[40] - These charges were triggered by drastic declines in oilfield drilling and completions, low oil prices, and a substantial deterioration of market capitalization caused by the COVID-19 pandemic and geopolitical tensions[37][38] - No impairment charges were recorded for the three months ended September 30, 2020, compared to $71.65 million in the same period of 2019[40] - Goodwill was deemed not impaired as the fair value of each reporting unit exceeded its net book value[39] 5. EARNINGS PER SHARE This note provides the calculation of basic and diluted earnings per share, reflecting net loss and weighted-average shares outstanding | (In thousands) | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Net loss used in calculating EPS | $ (16,437) | $ (69,181) | $ (201,953) | $ (64,083) | | Shares used in calculating basic and diluted EPS | 212,544 | 212,025 | 212,391 | 212,285 | - Basic and diluted loss per share for the three months ended September 30, 2020, was $(0.08), an improvement from $(0.33) in the prior year, while for the nine months, it was $(0.95) compared to $(0.30) in the prior year[10] 6. STOCK-BASED COMPENSATION This note details stock-based compensation expenses, available shares for grant, and unrecognized compensation costs - The 2014 Stock Incentive Plan had 3,905,000 shares available for grant as of September 30, 2020[45] - Pre-tax stock-based compensation expense for the nine months ended September 30, 2020, was $9.32 million, up from $7.32 million in the prior year[47] - During Q3 2020, $3.3 million of accumulated amortization of restricted stock was recorded due to the passing of RPC's chairman[46] - Total unrecognized compensation cost related to non-vested restricted shares was $40.31 million as of September 30, 2020, expected to be recognized over a weighted-average period of 4.0 years[49] 7. BUSINESS SEGMENT INFORMATION This note provides financial information by business segment, Technical Services and Support Services, including revenues and operating results - RPC operates in two reportable segments: Technical Services (well site activities like pressure pumping, downhole tools) and Support Services (off-well site services like rental tools, pipe inspection)[50][51][52] | (in thousands) | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Segment Revenues: | | | | | | Technical Services | $ 109,278 | $ 274,483 | $ 417,511 | $ 926,596 | | Support Services | 7,310 | 18,757 | 32,154 | 59,816 | | Total revenues | $ 116,588 | $ 293,240 | $ 449,665 | $ 986,412 | | Operating (loss) gain: | | | | | | Technical Services | $ (24,941) | $ (18,174) | $ (71,248) | $ (15,782) | | Support Services | (3,840) | 1,632 | (4,139) | 8,787 | | Corporate Expenses | (6,534) | (2,720) | (13,003) | (10,678) | | Impairment and Other Charges | — | (71,650) | (207,175) | (71,650) | | Total operating loss | $ (31,752) | $ (92,639) | $ (287,989) | $ (86,413) | - Both Technical Services and Support Services experienced significant revenue declines for both the three and nine months ended September 30, 2020, compared to 2019, leading to increased operating losses in both segments[54][57] - United States revenues decreased by 60.0% and 54.9% for the three and nine months ended September 30, 2020, respectively, while international revenues decreased by 67.0% and 46.4% over the same periods[56] 8. CURRENT EXPECTED CREDIT LOSSES This note explains the adoption of the CECL model and the methodology for calculating the allowance for credit losses on accounts receivable - The Company adopted ASU No. 2016-13 (CECL model) on January 1, 2020, with an immaterial cumulative-effect adjustment to retained earnings[61] - The allowance for credit losses for accounts receivable is based on historical collection experience, current/future economic conditions, and customer financial status[61] | (in thousands) | 2020 | | :--- | :--- | | Beginning Balance, January 1 | $ 5,181 | | Provision (benefit) for current expected credit losses | (448) | | Write-offs | (315) | | Recoveries collected (net of expenses) | (8) | | Balance as of September 30 | $ 4,410 | 9. INVENTORIES This note details the composition and changes in inventory balances, primarily raw materials, parts, and supplies - Inventories, consisting of raw materials, parts, and supplies, decreased from $100.95 million at December 31, 2019, to $84.57 million at September 30, 2020[63] 10. EMPLOYEE BENEFIT PLAN This note provides information on net periodic benefit costs, plan contributions, and amendments to the Retirement Income Plan | (in thousands) | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Net periodic benefit cost | $ 262 | $ 70 | $ 787 | $ 210 | - The Company made a $4.45 million contribution to its Retirement Income Plan during the nine months ended September 30, 2020, with no contribution in the prior year[65] - In October 2020, the Retirement Income Plan was amended to offer a limited lump-sum payment window, expected to trigger settlement accounting in Q4 2020[66] - Trading gains, net, related to Supplemental Retirement Plan (SERP) assets were $1.14 million for the three months ended September 30, 2020, and $178 thousand for the nine months ended September 30, 2020[67] 11. NOTES PAYABLE TO BANKS This note details the Company's revolving credit facility, including its terms, amendments, and compliance with covenants - The Company has a revolving Credit Agreement with a $100 million line of credit, maturing July 26, 2023[68][70] - An amendment on September 25, 2020, reduced the maximum borrowing amount from $125 million to $100 million, decreased the minimum tangible net worth covenant from $600 million to $400 million, and increased margin spreads and commitment fees[70] - As of September 30, 2020, RPC had no outstanding borrowings and $80.2 million available under the facility, remaining in compliance with all covenants[72][75] 12. INCOME TAXES This note explains the effective income tax benefit rates and significant discrete tax adjustments for the reported periods - The effective income tax benefit rate for the three months ended September 30, 2020, was 47.0%, up from 25.9% in the prior year, reflecting $3.6 million in net beneficial discrete tax adjustments[77] - For the nine months ended September 30, 2020, the effective tax benefit rate was 30.1%, up from 25.6% in the prior year, including a $21.3 million net discrete provision primarily related to revaluation of deferred items and beneficial revaluation of 2019 operating loss carryback under the CARES Act[77] 13. FAIR VALUE DISCLOSURES This note describes the Company's fair value measurement hierarchy and the valuation of financial instruments and assets held for sale - The Company uses a three-level hierarchy for fair value measurements, distinguishing between observable and unobservable inputs[78][84] | (in thousands) | Total (Sep 30, 2020) | Level 1 (Sep 30, 2020) | Total (Dec 31, 2019) | Level 1 (Dec 31, 2019) | | :--- | :--- | :--- | :--- | :--- | | Equity securities | $ 78 | $ 78 | $ 237 | $ 237 | | Investments measured at net asset value | $ 28,657 | N/A | $ 28,476 | N/A | - Assets held for sale were valued at $5.39 million using Level 2 observable market data (estimated values per square foot of comparable properties)[84][85] 14. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME This note details the components of accumulated other comprehensive loss, including pension adjustments and foreign currency translation | (in thousands) | Pension Adjustment | Foreign Currency Translation | Total | | :--- | :--- | :--- | :--- | | Balance at December 31, 2019 | $ (20,908) | $ (2,315) | $ (23,223) | | Total activity for the period (9 months ended Sep 30, 2020) | 1,104 | (423) | 681 | | Balance at September 30, 2020 | $ (19,804) | $ (2,738) | $ (22,542) | - Accumulated other comprehensive loss improved slightly from $(23.22) million at December 31, 2019, to $(22.54) million at September 30, 2020, primarily due to a positive pension adjustment[86] - In Q1 2019, the Company reclassified approximately $2.7 million of stranded tax effects related to its pension plan from AOCI to retained earnings due to the Tax Cuts and Jobs Act[89] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on the Company's financial performance and condition, highlighting the severe impact of the COVID-19 pandemic and OPEC disputes on oilfield activity, revenues, and profitability. It details the results for the three and nine months ended September 30, 2020, compared to 2019, discusses the outlook for the industry, and outlines the Company's liquidity, capital resources, and risk factors Overview This section provides an overview of RPC's business, the impact of market disruptions, and initial responses to challenging industry conditions - RPC provides specialized oilfield services primarily in the U.S. and selected international markets, with revenues and profits tied to customer drilling and production activities[92] - The oil and gas industry experienced unprecedented disruption in 2020 due to the COVID-19 pandemic and OPEC disputes, leading to substantial declines in global oil demand and low activity levels[94][95] - In response, RPC reduced headcount, furloughed employees, and implemented compensation reductions to adjust its cost structure[95] - Capital expenditures for the nine months ended September 30, 2020, totaled $52.3 million, primarily for new revenue-producing equipment and maintenance[93] Outlook This section discusses the near-term outlook for U.S. oilfield activity, rig counts, oil prices, and market efficiency - U.S. oilfield well completion activity is expected to remain weak in the near term due to continued low oil prices and depressed industry activity[103] - The average U.S. domestic drilling rig count fell to the lowest level ever recorded in Q3 2020, decreasing by approximately 74% compared to Q3 2019[103] - Oil prices decreased by over 80% early in Q1 2020, reaching levels not seen since 1986 (inflation-adjusted), with continued uncertainty from the COVID-19 pandemic[104] - Increased efficiency in oilfield completion services has led to an oversupplied market, negatively impacting pricing, equipment utilization, and financial results in the near term[106] - Lower activity levels have reduced the cost and increased the availability of skilled labor and certain raw materials, partially offsetting negative implications from low oil prices and competition[111] Results of Operations This section presents a summary table of key financial metrics and operational data for the three and nine months ended September 30, 2020 and 2019 | | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Consolidated revenues [in thousands] | $ 116,588 | $ 293,240 | $ 449,665 | $ 986,412 | | Consolidated operating loss [in thousands] | $ (31,752) | $ (92,639) | $(287,989) | $ (86,413) | | Percentage cost of revenues to revenues | 86.5 % | 76.8 % | 80.7 % | 75.3 % | | Percentage selling, general & administrative expenses to revenues | 27.8 % | 14.5 % | 21.7 % | 13.3 % | | Average U.S. domestic rig count | 254 | 920 | 477 | 984 | | Average oil price (per barrel) | $ 40.83 | $ 56.39 | $ 38.46 | $ 57.00 | THREE MONTHS ENDED SEPTEMBER 30, 2020 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2019 This section analyzes the Company's financial performance for the three months ended September 30, 2020, compared to the prior year, highlighting revenue and expense changes - Revenues decreased by 60.2% to $116.6 million, driven by lower activity and pricing, with domestic revenues down 60.0% and international revenues down 67.0%[115] - Technical Services revenues decreased by 60.2%, and Support Services revenues decreased by 61.0%, both due to significantly lower activity and pricing[118] - Operating loss for Technical Services widened to $(24.9) million from $(18.2) million, and Support Services shifted to an operating loss of $(3.9) million from a profit of $1.6 million[118] - Cost of revenues decreased by 55.2% but increased as a percentage of revenues (86.5% vs. 76.8%) due to negative leverage over significantly lower revenues[119] - Selling, general and administrative expenses decreased to $32.4 million but increased as a percentage of revenues (27.8% vs. 14.5%) due to the revenue decline, partially offset by cost reduction initiatives and accelerated amortization of restricted stock[120] - Depreciation and amortization decreased by 58.3% to $18.7 million due to prior asset impairment charges[121] - The Company recorded a gain on disposition of assets of $3.6 million, compared to a loss of $1.7 million in the prior year[123] - Income tax benefit was $14.6 million, with an effective tax rate of 47.0%, reflecting beneficial discrete tax adjustments[125] NINE MONTHS ENDED SEPTEMBER 30, 2020 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2019 This section analyzes the Company's financial performance for the nine months ended September 30, 2020, compared to the prior year, focusing on revenue, expenses, and impairment charges - Revenues decreased by 54.4% to $449.7 million, primarily due to lower activity levels and pricing across most service lines[127] - Technical Services revenues decreased by 54.9%, and Support Services revenues decreased by 46.2%[129] - Technical Services operating loss widened to $(71.2) million from $(15.8) million, and Support Services shifted to an operating loss of $(4.1) million from a profit of $8.8 million[129] - Cost of revenues decreased by 51.1% but increased as a percentage of revenues (80.7% vs. 75.3%) due to negative leverage[130] - Selling, general and administrative expenses decreased to $97.7 million but increased as a percentage of revenues (21.7% vs. 13.3%) due to the revenue decline[131] - Depreciation and amortization decreased by 40.4% to $77.5 million due to prior asset impairment charges[132] - Impairment and other charges were $207.2 million, significantly higher than $71.7 million in the prior year, primarily from long-lived asset impairments and severance costs[133] - Gain on disposition of assets, net, increased to $7.6 million from $2.9 million[134] - Income tax benefit was $86.9 million, with an effective tax rate of 30.1%, reflecting a net discrete provision related to deferred tax assets/liabilities and the CARES Act[138] Liquidity and Capital Resources This section discusses the Company's cash position, cash flow activities, credit facility, capital expenditure plans, and dividend policy - Cash and cash equivalents increased to $145.6 million as of September 30, 2020, from $50.0 million at the beginning of the year[139] - Net cash provided by operating activities decreased by $38.3 million to $131.4 million, while net cash used for investing activities decreased significantly by $161.9 million to $(34.9) million, primarily due to reduced capital expenditures[139][140] - Net cash used for financing activities decreased by $38.8 million, mainly due to lower dividends paid and reduced share repurchases[141] - The Company's financial condition remains strong, with sufficient liquidity from existing cash and capitalization to meet requirements for at least the next twelve months, without needing the revolving credit facility[142] - The $100 million revolving credit facility had $80.2 million available as of September 30, 2020, and the Company was in compliance with all covenants[145] - Expected capital expenditures for 2020 are $60-$70 million, with $52.3 million spent by September 30, 2020, focusing on maintenance and dual-fuel upgrades[146] - The stock buyback program has 8,248,184 shares remaining available, but no open market purchases were made in 2020[149] - The Board suspended common stock dividends on October 22, 2019, with no timetable for resumption[150] Inflation This section addresses the potential impact of inflation on costs and how declining oilfield activity has influenced labor and material prices - Increased inflation could raise costs for equipment, materials, and labor, however, declining oilfield activity in 2019-2020 led to reduced labor costs and lower prices for certain raw materials[151] Off Balance Sheet Arrangements This section confirms the absence of any material off-balance sheet arrangements - The Company does not have any material off-balance sheet arrangements[153] Related Party Transactions This section details transactions with related parties, including administrative services and purchases from affiliated suppliers - RPC charged Marine Products Corporation $646 thousand for administrative services during the nine months ended September 30, 2020, a slight decrease from $656 thousand in the prior year[154] - The Company paid $710 thousand for products/services from suppliers owned by officers or significant stockholders for the nine months ended September 30, 2020, down from $1.068 million in the prior year[155] - Charges from Rollins, Inc. (an affiliate) for administrative services and office rent totaled $78 thousand for the nine months ended September 30, 2020, compared to $86 thousand in the prior year[156] Critical Accounting Policies This section states that there have been no significant changes to critical accounting policies since the prior fiscal year - There have been no significant changes in critical accounting policies since the fiscal year ended December 31, 2019[157] Impact of Recent Accounting Standards This section refers to Note 2 for details on the impact of recently adopted accounting standards - Refer to Note 2 of the Notes to Consolidated Financial Statements for details on recent accounting standards, adoption dates, and estimated effects[158] Seasonality This section clarifies that the Company's business is not materially seasonal but is highly dependent on oil and natural gas prices - The Company's business is highly dependent on oil and natural gas prices and customer capital expenditures, which are not seasonal to any material degree[159] Forward-Looking Statements This section highlights the forward-looking nature of certain statements and the inherent risks and uncertainties involved - The report contains forward-looking statements regarding future oilfield activity, international growth, capital expenditures, well completion activity, oil/gas prices, competition, and liquidity[161] - These statements are subject to known and unknown risks, uncertainties, and other factors, including the combined impact of OPEC disputes and COVID-19, declines in oil/gas prices, geopolitical unrest, adverse weather, and industry competition[162] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section addresses the Company's exposure to market risks, specifically interest rate risk and foreign exchange rate risk. It notes that there were no outstanding interest-bearing advances on the credit facility as of September 30, 2020, and foreign exchange risk is not expected to be material due to the majority of transactions occurring in U.S. currency - The Company is exposed to interest rate risk through borrowings on its credit facility, but had no outstanding interest-bearing advances as of September 30, 2020[163] - Market risk from changes in foreign exchange rates is not expected to have a material effect, as most transactions are in U.S. currency[164] ITEM 4. CONTROLS AND PROCEDURES This section details the Company's evaluation of its disclosure controls and procedures, concluding that they were effective at a reasonable assurance level as of September 30, 2020. It also states that no material changes in internal control over financial reporting occurred during the most recent fiscal quarter - The Company's disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of September 30, 2020[167][168] - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[169] PART II. OTHER INFORMATION This part provides additional information including legal proceedings, risk factors, equity sales, and other required disclosures ITEM 1. LEGAL PROCEEDINGS The Company is involved in routine litigation but does not anticipate that the outcomes will have a material adverse effect on its financial position or results of operations - RPC is involved in litigation in the ordinary course of business, but does not believe the outcome will have a material adverse effect on its financial position or results of operations[172] ITEM 1A. RISK FACTORS This section refers to the risk factors previously described in the Company's annual report on Form 10-K for the year ended December 31, 2019, and its quarterly report on Form 10-Q for the quarter ended March 31, 2020 - Risk factors are incorporated by reference from the Company's annual report on Form 10-K for 2019 and quarterly report on Form 10-Q for Q1 2020[173] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section details the shares repurchased by the Company during the third quarter of 2020, which were primarily in connection with taxes related to the vesting of restricted shares, rather than open market purchases. It also notes the remaining authorization under the stock buyback program | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Maximum Number of Shares that May Yet Be Purchased Under Programs | | :--- | :--- | :--- | :--- | | July 1, 2020 to July 31, 2020 | 811 | $ 3.18 | 8,248,184 | | August 1, 2020 to August 31, 2020 | 754 | $ 3.02 | 8,248,184 | | September 1, 2020 to September 30, 2020 | 155 | $ 3.08 | 8,248,184 | | Totals | 1,720 | $ 3.10 | 8,248,184 | - Shares repurchased during Q3 2020 were in connection with taxes related to the vesting of restricted shares, not open market purchases[176] - As of September 30, 2020, 8,248,184 shares remained available for repurchase under the Company's stock buyback program, which has no predetermined expiration date[175] ITEM 3. DEFAULTS UPON SENIOR SECURITIES The Company reported no defaults upon senior securities - There were no defaults upon senior securities[177] ITEM 4. MINE SAFETY DISCLOSURES This section indicates that the required mine safety disclosures are included in Exhibit 95.1 to this Form 10-Q - Mine Safety Disclosures are provided in Exhibit 95.1 to this Form 10-Q[178] ITEM 5. OTHER INFORMATION The Company reported no other information - No other information is reported[179] ITEM 6. EXHIBITS This section lists all exhibits filed as part of the Form 10-Q, including corporate organizational documents, a recent amendment to the credit agreement, Section 302 and 906 certifications, mine safety disclosures, and XBRL-related documents - Exhibit 10.1 includes Amendment No. 5 to the Credit Agreement dated September 25, 2020[181] - Includes Section 302 certifications for the Chief Executive Officer and Chief Financial Officer (Exhibits 31.1, 31.2) and Section 906 certifications (Exhibit 32.1)[181] - XBRL Instance Document and Taxonomy Extension Documents are provided as Exhibits 101.INS, 101.SCH, 101.CAL, 101.LAB, 101.PRE, and 101.DEF[181] Signatures This section contains the signatures of the authorized officers, Richard A. Hubbell (President and CEO) and Ben M. Palmer (VP, CFO, and Corporate Secretary), certifying the report on October 30, 2020 - The report is signed by Richard A. Hubbell, President and Chief Executive Officer, and Ben M. Palmer, Vice President, Chief Financial Officer and Corporate Secretary, on October 30, 2020[185]