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Edited Transcript of RES earnings conference call or presentation 23-Jan-19 2:00pm GMT

Q4 2018 RPC Inc Earnings Call

ATLANTA Jan 25, 2019 (Thomson StreetEvents) -- Edited Transcript of RPC Inc earnings conference call or presentation Wednesday, January 23, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Ben M. Palmer

RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer

* James C. Landers

RPC, Inc. - VP of Corporate Finance

* Richard A. Hubbell

RPC, Inc. - CEO, President & Director

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Conference Call Participants

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* Blake Geelhoed Gendron

Wolfe Research, LLC - SVP of Equity Research

* Bradley Philip Handler

Jefferies LLC, Research Division - MD & Senior Equity Research Analyst

* Charles P. Minervino

Susquehanna Financial Group, LLLP, Research Division - Senior Analyst

* Chase Mulvehill

BofA Merrill Lynch, Research Division - Research Analyst

* Connor Joseph Lynagh

Morgan Stanley, Research Division - Equity Analyst

* George Michael O'Leary

Tudor, Pickering, Holt & Co. Securities, Inc., Research Division - MD of Oil Service Research

* James Knowlton Wicklund

Crédit Suisse AG, Research Division - MD

* John Matthew Daniel

Simmons & Company International, Research Division - MD & Senior Research Analyst of Oil Service

* John Matthew Daniel

Piper Jaffray Companies, Research Division - Research Analyst

* Kenneth Irvin Sill

SunTrust Robinson Humphrey, Inc., Research Division - MD and Senior Oilfield Services Analyst

* Marc Gregory Bianchi

Cowen and Company, LLC, Research Division - MD

* Michael William Urban

Seaport Global Securities LLC, Research Division - MD & Senior Analyst

* Stephen David Gengaro

Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst

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Presentation

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Operator [1]

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Good morning, and thank you for joining us for RPC, Inc.'s Fourth Quarter 2018 Financial Earnings Conference Call. Today's call will be hosted by Rick Hubbell, President and CEO; and Ben Palmer, Chief Financial Officer. Also present is Jim Landers, Vice President of Corporate Finance. (Operator Instructions) I would like to advise everyone that this conference call is being recorded.

Jim will get us started by reading the forward-looking disclaimer.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [2]

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Thank you, and good morning. Before we begin our call today, I want to remind you that in order to talk about our company, we're going to mention a few things that are not historical facts. Some of the statements that will be made on this call could be forward-looking in nature and reflect a number of known and unknown risks. I'd like to refer you to our press release issued today, along with our 2017 10-K and other public filings that outline those risks, all of which can be found on RPC's website at www.rpc.net.

In today's earnings release and conference call, we'll be referring 2 non-GAAP measures of operating performance. The first is EBITDA. RPC uses EBITDA as a measure of operating performance because it allows us to compare performance consistently over various periods without regard to changes in our capital structure. We are also required to use EBITDA to report compliance with financial covenants under our revolving credit facility.

The second set of non-GAAP financial measures are net income and diluted earnings per share excluding the impact of tax reform. Management believes that presenting our 2017 operating results without the impact of tax reform enables us to compare RPC's operating performance during the fourth quarter and full year of 2018 to 2017 consistently.

Our press release issued today and our website contain reconciliations of these non-GAAP financial measures to net income and diluted earnings per share, which are the nearest GAAP financial measures. Please review these disclosures if you're interested in seeing how they're calculated. If you haven't received our press release for any reason, please visit our website at www.rpc.net for a copy.

I will now turn the call over to our President and CEO, Rick Hubbell.

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Richard A. Hubbell, RPC, Inc. - CEO, President & Director [3]

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Jim, thank you. This morning, we issued our earnings press release for RPC's fourth quarter of 2018. The unexpected decline in oil prices, budgetary constraints and holiday slowdowns during the fourth quarter of 2018 impacted our customers' drilling and completion activities with many curtailing operations in December. This decline was most pronounced in our pressure pumping service line.

Our CFO, Ben Palmer, will now review our financial results in more detail, after which I will have a few closing comments.

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [4]

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Okay, thank you, Rick. For the fourth quarter, revenues decreased to $376.8 million compared to $427.3 million in the prior year. Revenues decreased compared to the same period in the prior year due to lower activity levels caused by year-end budget depletion among many customers.

EBITDA for the fourth quarter was $61.7 million compared to $101.1 million for the same period last year. Operating profit for the quarter decreased to $19.7 million compared to $60.3 million in the prior year. Our diluted earnings per share were $0.06 compared to $0.18 diluted earnings per share in the prior year excluding the impact of tax reform. RPC's effective tax rate in 2018 was 21% compared to 30% in 2017.

Cost of revenues during the fourth quarter was $274.4 million or 72.8% of revenues compared to $285.7 million or 66.9% of revenues during the same period last year. Cost of revenues decreased due to lower materials and supplies expenses within RPC's pressure pumping service line as well as lower maintenance and repair expenses. As a percentage of revenues, cost of revenues increased due to labor inefficiencies caused by lower activity levels within pressure pumping.

Selling, general and administrative expenses were $40 million in the fourth quarter compared to $42 million last year. As a percentage of revenues, these costs increased from 9.8% in the prior year to 10.6% due to lower revenues and the relatively fixed nature of these expenses during the short term. For the full year 2018, selling, general and administrative expenses as a percentage of revenues were 9.8% compared to 10% in 2017. Depreciation and amortization expense was $42.6 million during the fourth quarter of '18, an increase of 11.9% compared to $38 million in the prior year.

Our Technical Services segment revenues for the quarter decreased 13.1% compared to the same quarter in the prior year and operating profit decreased to $19.9 million compared to $67 million in the prior year. These decreases were due to lower activity and lower pricing within our pressure pumping service line. Our Support Services segment revenues for the quarter increased to 20.8% and operating profit improved to $2.5 million compared to an operating loss of $1.6 million in the same period last year.

On a sequential basis, RPC's fourth quarter revenues decreased 14.4% to $376.8 million from $440 million in the third quarter. Revenues decreased due to lower activity levels and slightly lower pricing. Cost of revenues during the fourth quarter of '18 decreased $26.5 million or 8.8%, primarily due to decreases in variable costs, including materials and supplies, fuel and maintenance. As a percentage of revenues, cost of revenues increased 4.4 percentage points from 68.4% in the third quarter to 72.8% in the current quarter. This was due primarily to the relatively fixed nature of employment costs during the short term.

Selling, general and administrative expenses during the fourth quarter decreased by 4.2% compared to the third quarter. RPC's operating profit during the fourth quarter of 2018 was $19.7 million compared to $54.6 million in the prior quarter. Our EBITDA decreased from $97.8 million in the prior quarter to $61.7 million in the current quarter.

Technical Services segment revenues decreased $64.2 million or 15.3% to $357 million. Operating profit was $19.9 million compared to $56.2 million in the prior quarter. Our Support Services segment generated revenues in the fourth quarter of $19.7 million or 5.3% higher than the prior quarter. Operating profit was $2.5 million in the fourth quarter compared to operating profit of $1.8 million in the prior quarter. Our pressure pumping fleet remains at approximately 1,050,000 hydraulic horsepower.

And during the fourth quarter of 2018, capital expenditures were $43 million and our full year '18 capital expenditures were $243 million. We currently estimate the 2019 capital expenditure will be approximately the same amount but could be less if conditions warrant. At the end of the fourth quarter, our cash balance was $116.3 million and we continue to have no outstanding debt.

With that, I'll turn it back over to Rick for a couple of closing comments.

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Richard A. Hubbell, RPC, Inc. - CEO, President & Director [5]

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Thanks, Ben. During January, several customers notified us that they were concerned about the current oil prices and are reevaluating their 2019 budgets. This and current market conditions require us to be cautious regarding our early 2019 outlook. However, we remain focused on executing over the long term.

Although 2018 was challenging, we maintained our commitment to RPC shareholders through our dividends and share repurchases. Our strong balance sheet, conservative approach and management experience will allow us to manage through the near-term uncertainties. We have always focused on maximizing on invested capital, and we'll continue to use this key metric to manage our business.

Thank you for joining us for RPC's conference call this morning. And at this time, we will open up the lines for your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we'll take our first question from Marc Bianchi with Cowen.

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Marc Gregory Bianchi, Cowen and Company, LLC, Research Division - MD [2]

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I'd first like to ask -- I'd like to ask about the comment regarding customer budgets and the changing plans. What were these customers telling you before? And what's your best guess on where they're headed in 2019 and also near term here in the first quarter?

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [3]

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Marc, this is Ben. That's a very difficult question. The price fell obviously tremendously during the fourth quarter. Everybody is concerned as that begun to happen. And I think there's still a lot of uncertainty in their minds. The '19 budgets, of course, they set those before the end of the year. It's not like they're shutting down, but they're just a little more cautious at this point in time about how aggressive or how -- they're just going to manage it carefully, just like we're trying to manage our business. So all things being equal, they'll remain cautious and we'll just have to react accordingly.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [4]

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Marc, this is Jim. We believe that oil prices fell at a difficult time of the year because it was our customers' budgeting season. So the oil price decline happened as they were budgeting. Now in January, oil is up a little bit, but they're extremely uncertain about what 2019 looks like.

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Operator [5]

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All right, we'll move on to our next question. Next, we'll go to Chase Mulvehill with Bank of America Merrill Lynch.

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Chase Mulvehill, BofA Merrill Lynch, Research Division - Research Analyst [6]

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I guess, first, when we kind of come back to CapEx, you're kind of saying more or less kind of flattish. Can you talk about the ability to kind of scale that down if the environment warrants scaling that down and maybe talk about how much of your CapEx in a flat environment is kind of replacement or kind of new-build equipment?

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [7]

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Chase, this is Ben. We do have some ability to manage that down. We have ordered some additional pressure pumping equipment that will come in toward the middle of next year. This is a decision we didn't take lightly. It's something we've evaluated over time. It's -- like Rick indicated in his comments, we're trying to manage things over the long term. So we think it's the right decision for us as we're committed to the industry, and we think it still provides over time a great return. It will provide a good return, adequate return for us and our shareholders, so -- and that will be about a 10% addition to the fleet. But in terms of those numbers, we're indicating, obviously, we're saying about $240 million, $250 million in CapEx next year. And in terms of maintenance and growth, Jim, help me out, what did we...

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James C. Landers, RPC, Inc. - VP of Corporate Finance [8]

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Probably -- it's probably 60% maintenance, 40% growth, Chase. And we have started placing some orders for some pumps. But there's some flexibility, as Ben indicated, on either moving it back or deferring things, should we need to.

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Chase Mulvehill, BofA Merrill Lynch, Research Division - Research Analyst [9]

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Okay. In that 10% additional horsepower, is that a gross or a net number?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [10]

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Well, it's additional horsepower, period. We are thinking of it as 2 additional fleets coming in the middle of the year.

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Chase Mulvehill, BofA Merrill Lynch, Research Division - Research Analyst [11]

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Okay, all right. 2 fleets, all right. And then if we think about the dividend and CapEx and the uncertainty around the macro, how should we think about the dividend? Do you need to cover it with free cash? Or is it free cash plus cash and you just will pay your dividend with debt? So generally, just how do we think about the dividend and the sustainability of it?

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [12]

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Well, it depends on how '19 unfolds and how we eventually see or believe 2020 will roll out. Historically, I mean, we've been conservative in managing our balance sheet and so forth. We've obviously maintained the dividend, which gives some indication that we believe that it's sustainable at this point in time. But we'll react quickly, we have those levers available to us. And so it's too early to tell. We obviously don't -- I don't -- we don't here make the decisions for the board. But we will confer with them. And at this point in time, we believe that it's intact and sustainable.

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Operator [13]

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We'll go to our next question, James Wicklund with Crédit Suisse.

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James Knowlton Wicklund, Crédit Suisse AG, Research Division - MD [14]

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I noticed in the review of Q4 that it was -- 14.4% down is going with lower activity and slightly lower prices. And we were just all kind of wondering what "slightly " looks like in Q4. And of course, the expectation is, because Schlumberger and Halliburton have already kind of hinted at us, that pricing in Q1 could be down another 10% to 15% from Q4. Can you guys kind of put some numbers around where you think -- just short term, what happens to the rest of the year, who knows? But just short term, what pricing is looking like in pressure pumping?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [15]

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Jim, this is Jim. The Q4 answer is a lot easier than the Q1 answer. We believe that just based on our price book and how our discounts run, pricing declined 2% sequentially between third and fourth quarter in pressure pumping.

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James Knowlton Wicklund, Crédit Suisse AG, Research Division - MD [16]

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That's fabulous.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [17]

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Yes, it is. Well -- so activity declined a lot more. We are trying to find the balance right now of optimizing our EBITDA by finding the right mix of pricing and utilization. Fourth quarter was an anomaly because we had people who absolutely shut down in December. But taking those seasonal things away, we now need to find in the current environment the optimal mix between pricing and utilization. How much farther up -- or how much our pricing needs to climb in first quarter to get to that mix is not known to us right know. We just got to test the market, which our marketing and sales teams are doing as we speak, figuring out where that level is. So we don't have a number.

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James Knowlton Wicklund, Crédit Suisse AG, Research Division - MD [18]

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We're about a month in but no real indicators yet. Okay. And my follow-up, if I could, returns. I'm not going to make a big deal about it. But you talk about you're focused on return on invested capital. Can you just talk just a little bit about what that discipline is and how you determine what it is and kind of what do you think your cost of capital will be or should be? Can you just talk about around those metrics a little bit? Just because nobody in this industry generated consistent positive returns for a while. And so that's gives everybody a chance to scramble. But what do you guys look at as a return on invested capital-type hurdle?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [19]

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Well, Jim, this is Jim again. We feel that our cost of capital, which all of us could look up or calculate individually, somewhere in the low-teens. We traditionally look for low 20s as a hurdle because that's risk-adjusted, given this is a very risky business. And we try to be as flexible as we can by [put] cost in our capital plans as possible. In the month of December, did we earn that? Potentially not, but that is our long-term goal and the levers that we use to push the business. And it is a shame that things aren't better for our group. We've been a publicly traded company without the boat manufacturing company for almost 18 years. And our market cap on Friday was almost 8x our market cap in March of 2001 and almost 44x the market cap that we had when we were spun off from our former parent almost 34 years ago. So we, over the long term, have managed that and worked that fairly well. As the cycles appear to be potentially shallower and the high parts of the cycle tend to be shorter, we have to keep watching that. But it's always going to be return on capital. So that's how we're going to continue to manage the business.

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James Knowlton Wicklund, Crédit Suisse AG, Research Division - MD [20]

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Well, having a higher market cap than 15 years ago is an accomplishment in this group, so congratulations.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [21]

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Thank you, Jim. Thanks for your support.

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Operator [22]

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And next, we'll go to Mike Urban with Seaport Global Securities.

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Michael William Urban, Seaport Global Securities LLC, Research Division - MD & Senior Analyst [23]

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Just wondering if you could update us on where you stand in terms of spot versus dedicated fleets.

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [24]

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This is Ben. There hasn't been much change in that regard. And then in terms of our level, our dedicated fleets probably are a little bit different than some of our competitors. Obviously, everybody knows about one of our peers putting out their preannounced results yesterday. And they're to be congratulated, that's very impressive. But as we look at that, it just demonstrates or confirms that there's lots of opportunity out there. And we've got the same people operating our businesses that had for quite a while. And we've had a lot of success over time. So I believe we'll be able to figure it out and be able to -- we're not in the market share game. That's more a result than a strategy. But I expect we will be able to take some steps and be able to increase our level of business. And as Jim talked about earlier, it's really the balance between pricing and activity. And we just need to figure out how to get more activity and make sure the level of dedication we have to the right customers that give us the level of activity we need to generate the revenues and the cash flows to give us the types of returns that we expect even in this environment. So we think we can do better. I can guarantee you that all of us, including our operations folks, are dedicated to doing better than what we have here recently.

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Michael William Urban, Seaport Global Securities LLC, Research Division - MD & Senior Analyst [25]

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So it sounds like the preference is to continue to move toward a more dedicated fleet. And that was, I guess, going to be in my follow-up. If there was any pause in that strategy, even if on a shorter-term basis, just given that we're kind of sitting at a -- hopefully, sitting on a low point for the market, there might be some opportunity to kind of capture some upside as that market recovers. I think the next question is are you continuing to have that preference in terms of striking a balance between price and utilization? It sounds like it's more utilization, but I don't want to put words in your mouth.

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [26]

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Well, I'd say it's always a balance. But I think we're striving for more activity at the appropriate level of pricing. So that's what we're focused on.

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Operator [27]

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And next, we'll go to Ken Sill with SunTrust Robinson Humphrey.

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Kenneth Irvin Sill, SunTrust Robinson Humphrey, Inc., Research Division - MD and Senior Oilfield Services Analyst [28]

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I wanted to beat on that horse a little bit more. So we had Schlumberger and Halliburton both at least paying lip service to the idea that they're not interested in chasing pricing down. They'd rather stack equipment than work at lower rates. And you guys have said that before. I mean, part of last year, you guys were, "Look, we're not going to work our equipment at too low a return, we're willing to walk away." So given their commentary and kind of your history, how do you kind of expect pricing to lay out here in the next few months? And do you think it can bottom in Q1 or Q2 here?

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [29]

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Well, this is Ben. Well, I'm hopeful and that's better. That's not -- we are hopefully at a low point. And again, for us though, if you look at our margins, our margins are among the best of our peers. So we have some opportunities. If you talk about price on a per unit of work, we have the ability to lower that price if we get the right amount of volume. So we're willing to accept lower margins with the right amount of increased volumes. So again, that's what we're trying to strike. That's what we're trying to achieve. And we believe, yes, with the right balance, we can improve our results.

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Kenneth Irvin Sill, SunTrust Robinson Humphrey, Inc., Research Division - MD and Senior Oilfield Services Analyst [30]

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Okay. And then just kind of a housekeeping question, if you guys could do the breakout of revenues like you've done in the past in Technical Services and Support Services. And I'll turn it over to somebody else to ask questions.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [31]

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Sure, Ken, absolutely. So the numbers I'm about to give are our service line revenues as a percentage of consolidated RPC revenues for the fourth quarter. So it's the quarter, not the year. Pressure pumping was 48.7% of revenues. Thru Tubing Solutions was 29.3% of revenues. Coil tubing was 5.6% of revenues. Rental tools was 3.8% of revenues. And nitrogen was 3.5% of revenues.

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Operator [32]

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And next, we'll go to John Daniel with Simmons.

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John Matthew Daniel, Simmons & Company International, Research Division - MD & Senior Research Analyst of Oil Service [33]

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Jim, I guess, the first question is when you look at that total frac horsepower, 1,050,000, how would you characterize effect of marketed capacity?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [34]

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We have 16 fleets manned now.

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John Matthew Daniel, Simmons & Company International, Research Division - MD & Senior Research Analyst of Oil Service [35]

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16, okay. And where did that trough in Q4? Or is that the trough right now?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [36]

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That would be the trough.

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John Matthew Daniel, Simmons & Company International, Research Division - MD & Senior Research Analyst of Oil Service [37]

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Okay. The 2 fleets that you're ordering, is there anything different in the design of those fleets relative to what you've bought recently?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [38]

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We've got...

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [39]

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They're heavy-duty.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [40]

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Yes, heavy-duty.

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [41]

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Maybe slight differences but nothing significant. The last group that we ordered were much higher capacity and ability to work more intensely. And these are the same or maybe even a little more so, a little beefier.

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John Matthew Daniel, Simmons & Company International, Research Division - MD & Senior Research Analyst of Oil Service [42]

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Okay. So in theory, more efficient?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [43]

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Yes, they should be.

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John Matthew Daniel, Simmons & Company International, Research Division - MD & Senior Research Analyst of Oil Service [44]

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Not in theory, they are. Okay, Jim, just trying to dial into Q1 here, and sorry to be the ball and chain on this call. But if pricing is going to decline faster or more than in Q4 and if you're presently at the trough in terms of fleets, it would seem that the revenue compression in Q1 relative to Q4 could be mid-teens again. Is that a fair assessment? And also the press release talked about white space or the lack of work starting off the quarter.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [45]

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Well, that is a view, John.

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John Matthew Daniel, Simmons & Company International, Research Division - MD & Senior Research Analyst of Oil Service [46]

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Is it reasonable?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [47]

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And it's a reasonable view. On the other side, we are working right now to test the market and see how much higher utilization we can get at acceptable margins. And assuming that bears fruit, we -- revenues could be higher in first quarter than the view you just articulated. Also oil is in the low 50s [rather than] in the upper 40s. We don't have holidays thus far, no weather issues. So those things, while not huge, could drive revenue higher in first quarter than fourth quarter was. And I wish we had a better -- I wish we had a more certain view of what first quarter looks like.

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John Matthew Daniel, Simmons & Company International, Research Division - MD & Senior Research Analyst of Oil Service [48]

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I wish I did, too. But I guess, when you look at 16 manned fleets right now, as you look out on the calendar, I mean, we are at the end of January, do you see 17 manned fleets in February, right? I mean, do you just have anything concrete that would say your fleet count is going to rise?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [49]

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I personally do not know of that right now.

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [50]

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There's lots of opportunity to increase the utilization of our existing fleets.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [51]

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That's right.

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John Matthew Daniel, Simmons & Company International, Research Division - MD & Senior Research Analyst of Oil Service [52]

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Right. But I'm just -- what, I guess, I'm trying to get to is do you feel like this point that Q1 is the bottom in terms of utilization and pricing? I mean, who the hell knows, right? But I mean, just based off of -- I mean, we have some rebound in oil prices slightly but still not great.

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [53]

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Well, there's potential that Q4 could be the bottom.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [54]

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Yes.

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [55]

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For us. Again, huge seasonal impact for us more so than -- it appears more so than many of our peers. So hopefully, there's the normal -- not normal but somewhat of a bounce-back. We don't actually know...

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John Matthew Daniel, Simmons & Company International, Research Division - MD & Senior Research Analyst of Oil Service [56]

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Look, I hear you. But with the way you kind of characterized the commentary about pricing is likely to accelerate in Q1 on the downside, and there's no guarantee that you're going to necessarily pick up more work, right? You could lower your price and not have any more work. If that scenario plays out, you're lower?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [57]

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Yes. But I don't see us lowering -- I mean, John, who knows? It's not like we are asleep at the helm here.

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John Matthew Daniel, Simmons & Company International, Research Division - MD & Senior Research Analyst of Oil Service [58]

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No, I'm not trying to get -- it's early, I'm just trying to make sure I'm not going off and getting too crazy here.

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Operator [59]

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And next, we'll go to Stephen Gengaro with Stifel.

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Stephen David Gengaro, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst [60]

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Two quick things. The first is when you looked at the 4Q versus 3Q, I imagine, and you referenced this a bit, that the biggest dropoff was pressure pumping, how was pricing holding up in the other product lines in 4Q and into 1Q?

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [61]

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Actually, pretty well.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [62]

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Yes.

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [63]

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We'd [all] -- I would say, yes, flat probably. We've seen some recent firmness in pricing in many of our other service lines and not seeing any significant pressure at this point in time.

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Stephen David Gengaro, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst [64]

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Okay. And we can obviously do the math. So the dropoff in profitability was largely just decrementals on the pressure pumping side?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [65]

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Yes.

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [66]

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That is correct.

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Stephen David Gengaro, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst [67]

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Good. And then just a second question. As you look out to 2019, I know it's tough right now. But when you think about the Technical Services margin trajectory, I mean, it sounds like 1Q is clearly lower. But do you think that's a bottom? Is it hard to tell? Are you willing to make a guess at this point?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [68]

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Steve, tell us the price of oil in April and we'll answer that question.

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Stephen David Gengaro, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst [69]

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$51.50, no.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [70]

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That's great.

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Operator [71]

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And next, we'll go to Connor Lynagh with Morgan Stanley.

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Connor Joseph Lynagh, Morgan Stanley, Research Division - Equity Analyst [72]

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I was wondering if I could build off of what John was sort of getting at here. So I understand that your active horsepower in terms of what's actually working versus sitting on the fence will probably be lower in the first quarter based on what you're saying. And I guess, correct me if that's wrong, but can you give us some color for how utilized what you had working in the fourth quarter was? I mean, obviously all we sort of get to see is the aggregate numbers. I'm trying to get a feel for sort of true utilization from one quarter to the next, relative to what you're saying might require some pricing to improve that number. Any color you could give there would be helpful.

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [73]

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Pricing didn't change much, so utilization falls out, right?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [74]

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Yes. So you could solve for utilization. There were a few other things, Connor. We pumped more in-basin sands in the fourth quarter than we did the third quarter. And that has a negative impact on revenue. And we all sort of know how that runs through the P&L. So that's part of it, too, but Ben's right, utilization declined from third quarter to fourth quarter. I'm thinking the earlier part of your question, you mentioned something about lower utilization in first quarter than fourth quarter. We actually -- that would not be our view right now. And crews are a relatively fungible resource. We mentioned we have 16 fleets manned. But we can move crews around and work more if we need to. Plus many of our peers have had some layoffs, so we can get that still labor if we need to. So remember, we do try to have as flexible and operational model as possible.

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Connor Joseph Lynagh, Morgan Stanley, Research Division - Equity Analyst [75]

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No, that's fair. I mean, I think what I was trying to get at here is it seemed like you had a -- you were saying that the trough in fourth quarter activity is where you are today. In other words, your exit rate was lower than your average, right? Is that correct?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [76]

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Well, that is right. But the exit rate was the last week in December, which was very low. So the exit rate was lower than the average. And we see some pickup in the first quarter. The big variable is how does the pricing, utilization balance work as we seek that. That's our major uncertainty right now.

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Connor Joseph Lynagh, Morgan Stanley, Research Division - Equity Analyst [77]

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Right, understood. Maybe a higher-level one, so I mean, there's obviously a lot of concern in the market around if the pressure pumping market will balance. And certainly, it seems that you guys are strongly of the view that it will if you're adding capacity. So just sort of how you're seeing industry supply-demand, how oversupplied are we when...

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [78]

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And that's a fair question and characterization. But our view is that, again, we don't seek to, on our strategy, to increase market share. But there's lots of opportunity out there for us, given the level that we're beginning the year at, how first quarter will turn out. But we should have, all things being equal, lots of opportunity in the next couple of quarters to improve our results.

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Operator [79]

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Next, we'll go to George O'Leary with Tudor, Pickering, Holt & Co.

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George Michael O'Leary, Tudor, Pickering, Holt & Co. Securities, Inc., Research Division - MD of Oil Service Research [80]

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Take a little bit of a different tact and not kind of talk it up, trying to guesstimate when the bottom might be. But just could you just remind us? Historically, I believe you guys have been a little bit more skewed as a percentage of your customer base towards the privates. As a percentage of rig count, plus or minus, 40% of the rig count is private E&Ps. Can you just remind us where you sit today, where you sat in the fourth quarter from a private versus public customer perspective?

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [81]

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I don't know that we have that readily available at our fingertips here. It didn't change significantly. And I think it -- and that's illustrated, I think, in our results. I think the privates, as it turns out, I mean, we've seen it now in the last couple of years, are more likely to and more significantly reduce their activity levels around the holidays. And we've experienced that here now 2 years in a row. And it just -- it highlights the fact that we need to, if you will, diversify. We need to spread that out and find that right balance that we've talked about between activity and pricing. And we're working on that.

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George Michael O'Leary, Tudor, Pickering, Holt & Co. Securities, Inc., Research Division - MD of Oil Service Research [82]

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And Jim, as a follow-up, is for us, as we kind of pull the audience and talk to private players and sponsors and things of that nature, it feels like they're going to behave somewhat like the SMid-cap E&P space, which is likely to cut more than the large caps and the IOCs. And I think we could potentially -- we estimate that the [D&T] spend year-over-year could be down something like 15% for those folks. This is the anxiety you expressed with regards to 2019 customer budgets, is that part and parcel of that? Or are you particularly worried about those privates? So then what's the strategy for roping in more larger public E&P customers?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [83]

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Yes, George, that's a great question. We're formulating that strategy now. We are also mindful of the fact that there appears to be some consolidation in the E&P space, certainly on the smaller size -- smaller side. And we can be a winner or loser in those scenarios. We've been neither as of yet. It hadn't impacted us. But we certainly want to be there when a potential business combination happens. And we are looking at ways to approach customers who have -- let's define it this way, who have more line of sight, well-lined-out logistics and other processes who can not only say that they're going to have a lot of work for us, but in fact actually do have a lot of work for us. Let's not forget that job delays and operational inefficiencies have plagued everybody all year-long. So sometimes, the right customer may or may not have a New York Stock Exchange ticker but may in fact have really good logistical processes. So we look at that as well.

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Operator [84]

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And next, we'll go to Blake Gendron with Wolfe Research.

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Blake Geelhoed Gendron, Wolfe Research, LLC - SVP of Equity Research [85]

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So first, we've heard several large purveyors of horsepower, both public and private, potentially shopping their capacity around. This might be preemptive, just given that your utilization of your existing spreads can improve. But maybe this is a back half of 2019 question. If you have seen these potential deals, is it viable horsepower such that it's plug-and-play? Or is there additional capital that would potentially need to be put into it? And then secondly, what kind of price would RPC need to see in order to pull the trigger on some of this inorganic growth?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [86]

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Blake, this is Jim. Can't speak to whether we have or have not seen any deals, so I'll just have to speak from a 30,000-foot level. More and more as your fleets get bigger and reliability gets more and more important, you need uniformity and consistency in your fleet configurations. And we know that anecdotally from some of our friends who are maybe have bigger companies than ours, who've had that issue. So then there's also the issue of you can't tell how well maintained equipment has been. And then come back to our return on invested capital metric, we've traditionally done better with organic growth rather than through acquisitions and paying a premium for the intangible asset. We're going to turn value. So I don't see us doing anything like that in 2019 even if the environment improves tremendously or significantly, which a lot of people do believe. We are more in the mode of buying good, new equipment that we can spec out ourselves and operate in these high service intensity environments. So we're probably not someone who has a good amount of insight for you on that.

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Blake Geelhoed Gendron, Wolfe Research, LLC - SVP of Equity Research [87]

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Okay, understood. That's helpful. And then my follow-up, just piggybacking off of some of the other commentary around PerPetro seems to be departing from the month-to-month or quarter-to-quarter business model. Are there other opportunities to lock in several-year term? Or is the receptivity among your customers such that they want to stay fairly nimble? And then as you think about the strategy and maybe how you approach potential dedicated customer arrangements in 2019 and 2020, would you be willing to take a price cut in order to lock in, I guess, incremental visibility like PerPetro has?

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [88]

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This is Ben. Is it a price cut? I mean, we would look at more of the results and the volume of work and the revenues over a period of time. And no doubt, to qualify for significantly more utilization, we would have to cut the per unit price. So it's sort of a dynamic formula, if you will. But again, this is responsive. We know we'll have to cut the price to get the kind of volume we're looking for. But at the end of the day, it's cash flow relative to your capital invested evaluation. And we think there are opportunities to improve that metric from -- relative to our recent performance. So that's something we are looking at, again trying to strike that balance -- strike the balance between the volume of work and the pricing. And no doubt, to get much higher volumes, we would have to reduce pricing. But our returns -- we would expect that our returns would improve.

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Blake Geelhoed Gendron, Wolfe Research, LLC - SVP of Equity Research [89]

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Okay, understood. Just to rephrase, I guess, on the receptivity part of the question, are your customers approaching you with similar thoughts on this type of arrangement? Or is it still fairly early days, I guess, in terms of germinating the idea with E&Ps?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [90]

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Regarding multiyear arrangements, we are not having those kind of discussions right now. Our customers don't have that kind of visibility. The idea of closer alliances is a good topic. It's a very valid topic to discuss. It is too early for us right now to offer a view or to offer forecast based on really close customer alliances.

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [91]

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And based on our historical experiences, I think, I would doubt our customers would want to, and neither would we, I mean, given the volatility in the industry, to commit to multiyear commitments of pricing. We all recognize again, there is a lot of volatility in the industry and a lot of variables there. So the time frame that we're usually talking about in terms of making those arrangements obviously is much shorter than multiyear. It's always subject to change. I mean, we know historically you can have a great relationship with a customer. And if price of oil falls precipitously, they're probably going to be asking for some additional help, all things being equal, right? Pricing today is at a relatively low level. So there's not a whole lot of give available. But where that happens, the customer is going to have options and us, too, options about where we can go with our equipment. So those multiyear commitments probably won't happen.

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Operator [92]

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And next, we'll take a question from Chuck Minervino with Susquehanna.

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Charles P. Minervino, Susquehanna Financial Group, LLLP, Research Division - Senior Analyst [93]

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I just wanted to touch on the CapEx just a little bit more. If I heard you correctly, I think like 60-40 split there, maintenance and growth. It seems to imply that the maintenance kind of still is at a fairly high level relative to revenue kind of expectations for '19. And you've seen years here where you've taken the CapEx way lower. Was just curious the thought process there, I mean, if things kind of stay at these levels, do you anticipate that CapEx kind of staying where it is? Or can you flex that down even further? Just kind of wanted to hear what the baseline view there was.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [94]

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Chuck, this is Jim. Maintenance capital expenditures are concentrated in pressure pumping, no surprise there, and are really a function of utilization. So a general rule is that if utilization in pressure pumping equipment is lower, however one wishes to define that, maintenance capital expenditures will be lower as well. So in a scenario that we are not looking for but a scenario in which we have low utilization in 2019, our maintenance capital expenditures would be lower than what Ben has quoted. Also I'd like to point out, and this news is a couple of quarters old, but if I may refresh everybody's memory, the new equipment that we purchased and took delivery of over the past year or so is better. It has more continuous-duty components, and our capitalized maintenance per fleet is lower than it was a year ago. So that is another indicator that maintenance CapEx is under control and, again, is also a function of utilization. So that's kind of the best answer I think we would have for you.

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Charles P. Minervino, Susquehanna Financial Group, LLLP, Research Division - Senior Analyst [95]

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Sure. And then just I know you guys made a comment a little bit earlier that you're kind of testing the market here, you want to see if you can get that work at acceptable margins. And I guess, I was just curious, bigger picture, are the customers approaching contracts any differently? It seems like in every cycle, there's a different approach. Are you seeing customers approach contracts differently as we kind of enter 2019, whether it be are they looking to stay more spot? Are they looking go more dedicated to take advantage of the lower pricing, pricing that you're not willing to concede at this point? I was just kind of curious if there was any thoughts on that or things you can kind of relay to us.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [96]

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It's too early in the year to see any discernible differences between customers' agreement behavior now compared to 2018. They certainly are aware of the oversupply of the market, which in large part, is due to our increased efficiencies and our ability to work 24 hours a day with better equipment. And that has benefited them. So they aren't yet going out for long terms because they think pricing has bottomed. But who knows? Again, it's still early in the year.

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Charles P. Minervino, Susquehanna Financial Group, LLLP, Research Division - Senior Analyst [97]

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And the just a last one. I mean, you are at 16 fleets now, it sounds like manned. If things kind of stay at this level of demand, just kind of curious, do you stay like where -- what you see today, do you stay at those 16 fleets manned? Or would you kind of look to stack more equipment and kind of drive up the utilization of manned fleets?

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [98]

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This is Ben. I think we're going to have some patience here to see what we can generate in terms of additional volumes. And then we'll -- we're constantly reevaluating. But at this point, there's no active plans to tremendously increase or to decrease the fleet. I mean, we're okay with that level today. But we'll continue to revisit it.

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Operator [99]

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Next, we'll go to Mike Urban with Seaport Global Securities.

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Michael William Urban, Seaport Global Securities LLC, Research Division - MD & Senior Analyst [100]

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Just a couple of housekeeping questions. I believe you had ordered some coil and snubbing units that were supposed to start up kind of early part of this year. How many of those did you have? And are those indeed rolling out here in the first quarter or just kind of the roll-out schedule for that equipment?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [101]

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Yes, Mike, it's Jim. Still looking when they come in, it will be probably towards the end of the first half of the year.

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Michael William Urban, Seaport Global Securities LLC, Research Division - MD & Senior Analyst [102]

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Okay, all right. So that's more mid-year kind of time frame. And then I guess, a similar question on the new frac fleets, you guys said it's kind of a mid-year delivery. Is that somewhat kind of market-dependent at this point? Or do you have a clearer sense of when we might expect to see those deployed?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [103]

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We're still working on the specs of some of the components. We're wanting to make sure we get the right components. As you know, there are a lot of different interchangeable things. We want to get the right components and frankly working on pricing, too. So we don't have a hard date for delivery and putting in service at that new pressure pumping equipment. Let's say end of the first half of the year, just to put a date on it.

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Michael William Urban, Seaport Global Securities LLC, Research Division - MD & Senior Analyst [104]

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Got you. And then last one for me, did you have, if you could, the revenue from snubbing and fluid pumping?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [105]

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Yes, those are -- fluid pumping is actually a bit bigger than snubbing, but they're both fairly small, so we haven't disclosed those too recently. They're each under 2%.

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Operator [106]

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And next, we'll go to Brad Handler with Jefferies.

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Bradley Philip Handler, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [107]

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Can't help but come back around, I guess, at this point in the call certainly to a few questions. But are you ordering -- just on the CapEx side, first, are you ordering any other new equipment? I think you had -- we had discussed the new coil units as part of 2018's capital budget. But is there anything else that's on order that would add to your capabilities?

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [108]

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Nothing of significance.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [109]

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We told you about pressure pumping, coil and snubbing. So that's it.

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Bradley Philip Handler, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [110]

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Okay. But the coil and snubbing, are they actually falling into -- maybe I shouldn't say -- I should ask it as opposed to just talking, are they falling into your 2019 CapEx for coil and snubbing?

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [111]

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Yes.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [112]

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Yes, they are. Yes, that's a clarification that we probably should have given, yes.

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Bradley Philip Handler, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [113]

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Got you. And I'm sorry, how many -- maybe now I'll really try to get the -- how many coil units are you adding?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [114]

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It looks at this point like 4 of the large-diameter coil tubing units, Brad.

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [115]

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And there are some investments of trying to increase the capacity of another 4 or so units as well.

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Bradley Philip Handler, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [116]

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Great. Okay. And then I guess, back to on the pumping side, in 4Q, if there's a spectrum of what happened in December from a few customers' drop, like shutting down and doing very, very little work, to many customers just dropping a little bit of work, where did December fall out on your -- on that spectrum for you?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [117]

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It was probably a smaller number of larger customers, Brad. But that's just a qualitative judgment call on my part.

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Bradley Philip Handler, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [118]

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More customers dropping more significantly than certainly...

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James C. Landers, RPC, Inc. - VP of Corporate Finance [119]

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Yes.

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Bradley Philip Handler, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [120]

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Okay. Are those the same customers that are stutter-stepping with you now and are trying to figure out kind of how they approach 2019? Or is that a broader set?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [121]

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It seems fairly random, Brad. In other words, people who really shut down in December may or may not be figuring out what they're doing in 2019. So we know that a lot of people have not gotten their budgets yet. And again to an earlier comment, October, November and December were a bad time for oil prices to fall and -- just because that's budget season. So we believe that our customers have not yet set their budgets and made firm plans, other than things that -- there are exceptions to that with things that we don't know.

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Operator [122]

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And next, we'll go to Marc Bianchi with Cowen.

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Marc Gregory Bianchi, Cowen and Company, LLC, Research Division - MD [123]

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Just wanted to clarify a comment, Jim, I think you made, saying that these extra pressure pumping fleets are coming in next year. I just want to clarify that's 2019 and not 2020.

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [124]

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Yes, mid-year. That's right, mid-year '19.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [125]

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Yes. Sorry, we know it's 2019, but this is a 2018 earnings call. Thank you, Marc.

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Marc Gregory Bianchi, Cowen and Company, LLC, Research Division - MD [126]

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In terms of the activity on the ground, I mean, I know there's a lot of uncertainty for first quarter. But what have you seen so far in January? Is it pretty kind of flat with where the exit was in December? It sort of sounds that way if you really haven't seen what testing the market will do for your activity.

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [127]

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We have, as we traditionally do after a seasonal slowdown, we do have -- January is better, early January is better than the exit in late December.

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Marc Gregory Bianchi, Cowen and Company, LLC, Research Division - MD [128]

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Okay. And then the only other one I had was on the 16 fleets. Could you talk about geographically how they're positioned and then more broadly for RPC overall, where the geographic exposure is in the fourth quarter?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [129]

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Marc, sure. I mean, in very broad-brush terms, the center of gravity at RPC is the Permian Basin, a little less than half of our pressure pumping equipment's assets are in the Permian. Then you go sort of low-teens exposure in the Eagle Ford, East Texas, which is Kilgore as well as the other work that's going on there, the Mid-Continent. And then the Bakken is probably 8% or 9%. We did during 2018 move equipment around to help out and try to be flexible. We didn't take any out of the Permian. The anticipated takeaway capacity issue did not hit us in a way that's transparent to us. So everything stayed there. But we've moved other fleets around. And people, they've gone back home too. So that's pretty much the geographic distribution in the fourth quarter and today as we start 2019. We don't do pressure pumping in the Marcellus Shale or the Utica. But many of our other service lines, including coil tubing and our downhole tools and motors, service lines, Thru Tubing Solutions function -- operate in that area as well.

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Operator [130]

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(Operator Instructions) We'll take our next question from Ken Sill with SunTrust Robinson Humphrey.

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Kenneth Irvin Sill, SunTrust Robinson Humphrey, Inc., Research Division - MD and Senior Oilfield Services Analyst [131]

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I just wanted to ask it flat out, what was the average number of active fleets in Q4? You started at 20, ended up at 16. Was it 18, 17?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [132]

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It's a valid question. It wasn't 16. It was probably -- Ken, it's hard, let's call it 17 or 18, split the baby.

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Kenneth Irvin Sill, SunTrust Robinson Humphrey, Inc., Research Division - MD and Senior Oilfield Services Analyst [133]

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Yes, that's fair. And then before, you guys had talked about how many fleets are 24-hour versus doing vertical work? Do you still have a few fleets on straight days?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [134]

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Sure. 24-hour work was 90% of our activity in the fourth quarter compared to 94% of activity in the third quarter.

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Operator [135]

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And we'll move to our next question, John Daniel with Simmons.

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John Matthew Daniel, Simmons & Company International, Research Division - MD & Senior Research Analyst of Oil Service [136]

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Jim, this is -- I'm almost embarrassed to ask this question. But a point of clarification for me. When we were going back and forth talking about whether Q4 or Q1 could mark the bottom, were you guys referring to revenue or EBITDA?

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James C. Landers, RPC, Inc. - VP of Corporate Finance [137]

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We were referring to revenue. John, you're smart. We were talking about revenue. And think back on the context of our dialogue that a lot of what we were talking about related to finding that balance between pricing and utilization. And so that would imply, certainly, lower margins if we increase our utilization and lower pricing. But the discussion that we were having was definitely one related to revenue.

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John Matthew Daniel, Simmons & Company International, Research Division - MD & Senior Research Analyst of Oil Service [138]

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I'm not as smart as my peers. And I'm just getting confused looking at my model here. But if we -- so if revenues are up slightly, I mean, it seems like EBITDA could be down. You reset your accruals, payroll, taxes, all of that stuff. I mean, am I missing anything there?

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Ben M. Palmer, RPC, Inc. - VP, CFO, Treasurer, Corporate Secretary & Principal Accounting Officer [139]

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It is not outside the realm of possibility.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [140]

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That is correct.

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Operator [141]

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Actually, we have no further questions in the queue. I'd like to turn it back over to Jim Landers for any additional comments or closing remarks.

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James C. Landers, RPC, Inc. - VP of Corporate Finance [142]

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Okay, thank you. We thank everybody for listening in and spending this hour with us. We hope everyone has a good day, and we will see you soon. Thank you.

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Operator [143]

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A replay will be available at www.rpc.net within 2 hours following the completion of today's call. We thank you for your participation. You may now disconnect.