In 2024 we continued to generate strong cash flow, launched new products and services and invested in new assets, while navigating a challenging oilfield services market. We remained focused on driving aspects of the business within our control and worked diligently to mitigate the impact of external factors. While we always strive to do better, we are proud to have withstood significant competitive pressures, and we emerged from 2024 with a strong and liquid balance sheet. We look to 2025 to provide more stability in our end-markets and leverage the investments in assets and capabilities we made this past year. Our corporate objective is to create long-term shareholder value by delivering world-class oilfield services to our customers with a conservative financial management approach. We believe our actions have been consistent with that vision.

Even with a difficult environment in 2024, RPC remained profitable and boasted a rock-solid balance sheet with ample liquidity and no debt. Revenues declined to $1.4 billion, with intense competition across the businesses putting pressure on margins. That said, we still generated operating cash flow of nearly $350 million. After investments in our assets, we netted nearly $130 million of free cash flow(1), from which we continued to pay steady dividends to our stockholders. We ended 2024 with over $325 million in cash, an increase of more than $100 million from year-end 2023. We are actively exploring strategic acquisition opportunities to deploy our capital and increase our scale, but are doing so with the same rigor and economic discipline that has helped us achieve our strong financial position.

SELECT 2024 INDUSTRY DATA   The price of U.S. crude oil had its moments of positive momentum in the first half of the year, but generally trended lower throughout 2024, finishing at approximately $72 per barrel. Natural gas showed strength in the second half of the year, but not enough to warrant a significant ramp up in completion activity. More importantly for our business, both the U.S. rig count and well completion activity trended down during the year and ended weaker than a year ago. These are two key indicators for our industry’s activity levels, and those trends were consistent with our revenue performance. The average U.S. domestic drilling rig count decreased 13%, from 688 in 2023 to 600 in 2024. U.S. well completion count also is significant because most of our services support oilfield completion activities. During 2024 there were 11,660 oil and gas well completions reported in the U.S. domestic market, which was a decrease of 9% compared to 2023. Despite these headwinds, we remain active with initiatives to drive incremental revenues and improve margins and believe these efforts can help partially mitigate those external forces should they persist.

FINANCIAL REVIEW   RPC’s 2024 revenues decreased by 13% year-over-year to $1.4 billion. While pressure pumping, our largest individual service line, declined by 24%, our diversified portfolio of other service lines decreased by only 2%, providing a counterbalance to the acute pressures we faced in the frac market. We believe a continued focus on growing these non-pumping businesses is key to maintaining a resilient portfolio of offerings and minimizing volatility of our financial performance. After stabilizing at about 620 in the latter part of 2023, the U.S. rig count steadily drifted lower to the 580 range by mid-2024, holding steady at or above that level through the end of 2024. In addition, reported domestic frac spreads spent most of the year trending lower, as did industry-wide completion activity. With this backdrop, our industry has been quite competitive as oilfield services providers seek to maximize utilization of assets.

Cost of revenues (which excludes depreciation and amortization) was $1.0 billion for 2024, down $53 million, or approximately 5%, versus 2023, but did not decline as much as revenues given certain fixed costs inherent in our business. We took decisive actions in response to lower demand by reducing our staffing levels; however, we were careful not to disrupt the business or jeopardize our ability to rapidly respond to the marketplace when improved demand materializes in the future.

Selling, general and administrative expenses (SG&A) decreased $9.5 million, or approximately 6% versus 2023, to $156.4 million. The decrease was primarily due to rigorous cost controls in response to challenging market conditions. Depreciation and amortization (D&A) increased $24.5 million, or approximately 23% versus 2023, to $132.6 million. The increase in D&A was a function of the investments we made in a new Tier 4 dual-fuel frac fleet in 2024 on top of the new fleet we also bought in 2023. These investments are critical to the health of our pressure pumping business, as these modern, fuel-efficient fleets are our most in-demand assets.

Operating income was $97.5 million in 2024, compared with operating income of $245.0 million in 2023. The decline stemmed primarily from lower revenues and the associated impact of a high fixed cost structure, as well as the $24.5 million of higher D&A (non-cash).

Net interest income of $12.4 million in 2024 was up compared to $8.3 million in 2023 due to higher average cash balances from strong cash generation throughout the year. We did not draw on our credit facility during 2023 or 2024.

Net income was $91.4 million in 2024 compared to net income of $195.1 million last year. Diluted earnings per share was $0.43 in 2024 compared to $0.90 last year.

Earnings before interest, taxes, depreciation and amortization (EBITDA)⁽¹⁾ was $233.0 million in 2024 compared to $356.1 million in 2023.

2023 GAAP results included the impact of pension settlement charges: Excluding the impact of these charges, 2023 adjusted net income(1) was $209.0 million, adjusted EPS(1) was $0.97, and adjusted EBITDA⁽¹⁾ was $374.4 million.

Cash provided by operating activities in 2024 was $349.4 million, down from $394.8 million last year. Operating cash flow benefited significantly from working capital changes, which were a $116.7 million source of cash and included the receipt of a $53 million tax refund from the IRS related to prior years.

Capital expenditures increased to $219.9 million, from $181.0 million in 2023. Our capital spending included the addition of a new fleet of pressure pumping assets, as referenced above, and maintenance of existing equipment.

Free cash flow⁽¹⁾ (defined as cash flow from operations less capital expenditures) was $129.5 million in 2024. While not as high as 2023, this strong cash flow generation resulted in two-year cumulative cash flow from operations of nearly $745 million and two-year cumulative free cash flow of more than $340 million, which we believe is a strong achievement in a capital-intensive business given the recent industry conditions. We will continue to prudently deploy capital by investing in and upgrading our asset base while not increasing industry capacity. Given current demand conditions, however, we do not currently have a new Tier 4 dual-fuel frac fleet on order.

As a result of our strong cash flow and commitment to returning capital to our stockholders, RPC continued to pay dividends and buy back stock in 2024. For the year, we paid $34.4 million in common stock dividends and bought back $7.5 million of stock under our share repurchase program (approximately 1 million shares). We are pleased that our strong cash generation supported investments in the business and a steady return of capital to stockholders, yet still left the balance sheet debt-free.

LOOKING AHEAD   We are proud of our track record of profitability and cash generation even when the industry presents challenges and unfavorable trends. Our financial discipline has suited us well, and we are poised to make investments to grow our business, which is a key strategic focus for us in 2025 and beyond. We have internal initiatives underway to improve our execution and margins. In addition, we continue to invest in innovative new products and services, which we expect to begin ramping up in 2025 after receiving positive feedback from our customers. Regarding potential acquisitions, we are rigorously assessing opportunities to expand our business. We believe we can benefit from increased scale and adding high cash flow businesses with strong customer bases to our diversified portfolio. The recent successful acquisition and integration of Spinnaker, coupled with our conservative management approach and financial strength, make us a “buyer of choice” for owners looking to sell their businesses and become part of a larger company with increased customer reach and broad service capabilities. We look forward to assessing these opportunities, finding the right strategic and cultural fit for RPC and ultimately executing on value-creating transactions.

In closing, we want to recognize the hard-working people across our organization for demonstrating the resilience required to succeed in today’s competitive marketplace. We also thank our customers, for whom we work tirelessly to live up to our long reputation for delivering reliability, exceptional value, and overall outstanding service. In addition, we thank two of our Directors, Gary W. Rollins and Pamela R. Rollins, who have chosen not to stand for re-election at our upcoming Annual Shareholders’ Meeting, for their many years of service and support on our Board. Lastly, I want to express to all our stakeholders that we remain committed to the financial discipline and conservative approach that has been our hallmark for decades and the backbone of our longevity and success.

Sincerely,