ATLANTA - RPC, Inc. (NYSE: RES) today announced its unaudited results for the third quarter and nine months ended September 30, 2023.
RPC provides a broad range of specialized oilfield services and equipment primarily to independent and major oilfield companies engaged in the exploration, production, and development of oil and gas properties throughout the United States and in selected international markets.
'RPC's third quarter 2023 operating results for the majority of our service lines were relatively stable sequentially except for the even weaker than expected decline in pressure pumping,' stated Ben M. Palmer, RPC's President and Chief Executive Officer. 'We believed this pressure pumping weakness would prove temporary and made the decision to maintain our pricing discipline and service readiness. This decision resulted in carrying costs during the quarter in anticipation of a busy fourth quarter calendar working at acceptable terms. A highlight for the quarter was the recently acquired Spinnaker cementing business. The integration has proceeded smoothly and the business positively contributed to our financial results,' concluded Palmer.
Consolidated Financial Results
For the quarter ended September 30, 2023, RPC generated revenues of $330.4 million, a decrease compared to $415.9 million in the second quarter. Revenues fell primarily due to declines in RPC's pressure pumping business due to lower customer activity, partially offset by a full quarter of financial results from our recent cementing acquisition. Operating profit for the third quarter of 2023 was $22.7 million compared to $82.4 million in the second quarter. Net income for the third quarter of 2023 was $18.3 million, or $0.08 diluted earnings per share, compared to net income of $65.0 million, or $0.30 diluted earnings per share, in the second quarter.
Adjusted operating profit1 for the third quarter of 2023 was $22.7 million compared to $83.3 million in the second quarter of 2023. Adjusted net income2 for the third quarter of 2023 was $18.3 million, or $0.08 adjusted diluted earnings per share2, compared to adjusted net income of $65.7 million, or $0.30 adjusted diluted earnings per share, in the second quarter. Adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA)3 for the third quarter of 2023, for which there was no adjustment, was $51.9 million, a decrease compared to $110.1 million in the second quarter.
Cost of revenues, which excludes depreciation and amortization, during the third quarter of 2023 was $239.1 million compared to $265.8 million in the second quarter. These costs as a percentage of revenues were 72.4 percent in the third quarter of 2023, an increase compared to 63.9 percent of revenues in the second quarter because of lower revenues and the relatively fixed nature of direct employment costs. Selling, general and administrative expenses were $42.0 million in the third quarter of 2023 compared to $43.6 million in the second quarter of 2023. Depreciation and amortization was $28.4 million in the third quarter of 2023 compared to $26.2 million in the second quarter of 2023.
RPC's revenues for the quarter ended September 30, 2023 decreased by $129.2 million, or 28.1 percent, compared to the third quarter of the prior year due to lower activity levels and more competitive pricing. Cost of revenues, which excludes depreciation and amortization, during the third quarter of 2023 decreased by $70.7 million compared to the third quarter of 2022. As a percentage of revenues, cost of revenues increased to 72.4 percent in the third quarter of 2023 from 67.4 percent in the third quarter of 2022.
Selling, general and administrative expenses increased by $3.8 million in the third quarter of 2023 compared to the third quarter of the prior year. RPC's operating profit in the third quarter of 2023 was $22.7 million, compared to $92.2 million in the third quarter of 2022. Net income for the third quarter of 2023 was $18.3 million compared to $69.3 million in the third quarter of 2022. EBITDA3, in the third quarter of 2023 was $51.9 million compared to $113.0 million in the third quarter of 2022.
For the nine months ended September 30, 2023, revenues increased 9.2 percent to $1.2 billion compared to $1.1 billion for the same period last year. Net income for the nine-month period was $154.9 million, or $0.71 diluted earnings per share, compared to net income of $131.4 million, or $0.61 diluted earnings per share, in the same period last year.
Rig Count and Commodity Price Statistics
The average U.S. domestic rig count during the third quarter of 2023 was 649, a 9.7 percent decrease compared to the second quarter of 2023, and a 14.7 percent decrease compared to the third quarter of 2022. The average price of oil during the third quarter of 2023 was $82.17 per barrel, an 11.7 percent increase compared to the second quarter of 2023, but an 11.5 percent decrease compared to the third quarter of 2022. The average price of natural gas during the third quarter of 2023 was $2.59 per Mcf, an increase of 19.9 percent compared to the second quarter of 2023, but a 67.8 percent decrease compared to the third quarter of the prior year.
Summary of Segment Operating Performance
RPC manages two operating segments - Technical Services and Support Services.
Technical Services includes RPC's oilfield service lines that utilize people and equipment to perform value-added completion, production and maintenance services directly to a customer's well. These services are generally directed toward improving the flow of oil and natural gas from producing formations or to address well control issues. The Technical Services segment includes pressure pumping, downhole tools and services, coiled tubing, cementing, nitrogen, hydraulic workover services, surface pressure control equipment, well control, and fishing tool operations.
Support Services includes RPC's oilfield service lines that provide equipment for customer use or services to assist customer operations. The equipment and services offered include rental of tubulars and related tools, pipe inspection and storage services, and oilfield training services.
Technical Services third quarter 2023 revenues decreased by 22.3 percent compared to the prior quarter and decreased by 30.5 percent compared to the same period of the prior year. Technical Services generated an operating profit of $18.9 million in the third quarter of 2023 compared to $77.0 million in the prior quarter and an operating profit of $89.5 million in the third quarter of the prior year. The year-over-year declines in Technical Services operating results were driven by lower pressure pumping revenues, the largest service line within Technical Services.
Support Services revenues increased by 5.8 percent during the third quarter of 2023 compared to the prior quarter and increased by 14.8 percent compared to the same period of the prior year. The increases in revenues were due to higher activity levels in rental tools as compared to both comparable periods. Support Services generated an operating profit of $6.9 million in the third quarter of 2023 and $7.9 million in the second quarter of 2023.
RPC provides a broad range of specialized oilfield services and equipment primarily to independent and major oilfield companies engaged in the exploration, production and development of oil and gas properties throughout the United States, including the Gulf of Mexico, mid-continent, southwest, Appalachian and Rocky Mountain regions, and in selected international markets. RPC's investor website can be found at rpc.net.
Certain statements and information included in this press release constitute 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements that look forward in time or express management's beliefs, expectations or hopes. In particular, such statements include, without limitation, our expectations regarding a busy calendar in the fourth quarter working at acceptable terms. Additional discussion of factors that could cause the actual results to differ materially from management's projections, forecasts, estimates, and expectations is contained in RPC's Form 10-K for the year ended December 31, 2022.
1Adjusted operating profit is a financial measure which does not conform to GAAP. Additional disclosure regarding this non-GAAP financial measure and its reconciliation to operating profit, the nearest GAAP financial measure, is disclosed in Appendix A to this press release.
2Adjusted net income and adjusted diluted earnings per share are financial measures which do not conform to GAAP. Additional disclosure regarding these non-GAAP financial measures and their reconciliation to net income and income per share, the nearest GAAP financial measures, are disclosed in Appendix B to this press release.
3Adjusted EBITDA and EBITDA are financial measures which do not conform to GAAP. Additional disclosure regarding these non-GAAP financial measures and their reconciliation to net income, the nearest GAAP financial measure, are disclosed in Appendix C to this press release.
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RPC, INC. 
