Good day, ladies and gentlemen, and welcome to the RPC second quarter earnings conference call. As a reminder, today's conference is being recorded. Now, I'd like to turn the conference over to your host, Mr. Jim Landers. Please go ahead, sir.

Thank, you, (Katherine), and good morning. Before we begin our call today, I wanted 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 we 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 2011 10-K and other public filings that outline those risks, all of which can be found on RPC's website at www.rpc.net. I also need to tell you that in today's earnings release and conference call, we'll be referring to EBITDA which is a non-GAAP measure of operating performance. 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. Our press release today and our website provide a reconciliation of EBITDA to net income, which is the nearest GAAP financial measure. Please review that disclosure if you're interested in seeing how we calculate it. If you have not received our press release for any reason, please visit our website to obtain a copy. I will now turn our call over to our president and CEO, Rick Hubbell.

Jim, thank you. This morning, we issued our earnings press release for RPC's second quarter of 2012. Following my comments, Ben Palmer will discuss our financial results in more detail. During the second quarter, we continued our strong operational execution in a difficult operating environment. While we are pleased with our quarterly results, low natural gas prices and the resulting decline in natural gas drilling activity continue to impact RPC's activity levels and pricing. We relocated some equipment from dry gas (spaces) with declining prospects to areas with stronger fundamentals and anticipate that the last fleet of pressure-pumping equipment that we received this year will work in the upcoming quarter. Our CFO, Ben Palmer, will now review our financial results for the second quarter.

Thanks, Rick. The quarter ended June 30, 2012. Revenues increased to $500.1 million, a 12.9% increase compared to the prior year. These high revenues resulted primarily from a larger fleet of equipment. EBITDA for the second quarter increased 5.3% to $172.9 million compared to $164.2 million for the same period last year and operating profit for the quarter was $119.9 million, essentially unchanged compared to the prior year. Our diluted earnings per share during the quarter were $0.33, also virtually the same compared to last year. Cost of revenues increased from $243 million in the prior year to $281.3 million in the current year due to the bearable nature of these expenses. Cost of revenues for the second quarter as a percentage of revenues increased from 54.8% in the prior year to 56.2% due primarily to the increasingly competitive pricing environment and inefficiencies associated with equipment relocation. These increases will partially offset our favorable variances in the cost of materials and supplies used in providing our services due to job mix and better logistical management compared to this time last year. Selling, general and administrative expenses during the quarter were $43.1 million, an increase of 19.9% compared to $36 million in the prior year due to higher head count to support higher activity levels and new operational locations. SG&A costs as a percentage of revenues increased slightly from 8.1% last year to 8.6% this year. Depreciation and amortization were $54 million for the second quarter, an increase of 20.2% compared to $44.9 million in the prior year. This increase is a result of additional equipment placed in service over the past 12 months. Our technical services segment revenues increased 13.5%. Operating profits for this segment increased $112.4 million compared to $109.5 million in the prior year. The improvement in revenue…

Thanks, Ben. As we begin the third quarter, RPC finds itself in an increasingly dynamic operating environment. Overall industry activity levels are close to recent cyclical highs, but the natural gas directed rig count is at its lowest level in over a decade. In contrast, oil-direct drilling has increased tremendously over the past few years. These high activity levels have also increased our need to ensure adequate supplies of raw materials and to manage the logistical requirements needed to transport them to sometimes remote job locations. In this environment, we have found it valuable to have operations in many domestic markets in order to move equipment and personnel from areas of lower activity to areas with stronger fundamentals. We've also benefited from our efforts to secure raw materials that are an increasingly critical component of our work. We're pleased with our second quarter results but are closely monitoring commodity prices and rig counts, competitive pressure and customer activity levels for sign of a deeper cyclical downturn. As always, we'll maintain a conservative capital structure and realistic view of our operating environment. I'd like to thank you for joining us for the call this morning and at this time we'll open the lines up to answer your questions.

Thank you. (Operator Instructions). Your first question comes from the line of Neal Dingmann - SunTrust.

Say, question, Rick, for you or Ben, just one, and you, Rick, you touched on this just at the end on raw materials just wondering going forward, are you still having difficulty procuring guar and such other raw materials and if so, are you locking in anything like some of your peers had or is this starting to ease a little bit?

Relative to guar it had, for us, very little impact on the current quarter due to arrangements that we made beginning a year or more ago. We don't expect it's going to impact us in the next few quarters either. I mean, we're in pretty good shape there. So again, it didn't impact our quarter sequentially or year-over-year and otherwise, I think we've read and heard and believe that maybe overall that for the industry guar availability and prices will probably be better beginning later this year and early next year.

Ben, what about just sand in general then?

Sand is probably a little bit better than it has been. No particular issues there. I think things have re-upped a little bit on that score.

And then just wanted two more, if I could. On the – you've gotten hit the last quarter, too, just on, like others, on the equipment transition or reallocation. Where do you sit now as most of the equipment now in the locations where you would like or is there still transitions occurring this third quarter and will that happen the fourth quarter?

Neal, it's something we constantly look at and monitor but at this point we are happy with where it is but we'll watch it and move some additional equipment if we feel that we need to or have an opportunity. But right now we're comfortable with where it is.

And then last one if I could, just on contracts and you mentioned quite a few times in your release about pricing, obviously a little bit under pressure for various reasons. Just wanted to know on your contracts that you see out there, is everything still on -- more or less on a spot basis or are you able to lock some customers in the perm and some of your core areas a bit longer on some sort of arrangements?

Currently, no as it relates to contracts. Very few people are interested in talking about contracts at this point and I think that's fine for us, too, at this point So we'll let the current ones roll off and we'll continue to, I'm sure, talk about it, monitor it, but no, there's not a lot of talk about trying to contract out long term at this point.

Your next question comes from Andrea Sharkey - Gabelli & Company.

One thing that I was a little bit surprised about in your press release was that you mentioned that there was pricing pressure kind of across other product lines in addition to pressure pumping, which some of the larger service companies have said that their pricing in other products ex pressure pumping were holding up. So I was just wondering if maybe you could give a little bit more color on where you're seeing pricing pressure whether it's coil tubing and rental tools, things like that, and if – are you guys maybe taking a little bit lower prices to keep equipment working and what's going on there?

Yes, in addition to pressure pumping, we see downward pricing pressure in the coil tubing service line and in rental tools I think most notably. We've talked a lot about coil tubing and what a strong service line it is in these directional and horizontal completion activities but the supply of coil tubing units has increased and the recount is somewhat flat, so that explains that. And then rental tools, there's been pricing pressure, particularly from our larger competitors who have been more aggressive in pricing, so that's happened, as well.

The fact that a lot of the rental tools are moving around I think has impacted us, I would expect others, as well, but that's impacted us, too. But interestingly enough, some of our smaller service lines have hung in very well and pricing is hanging in and they've performed very well. Unfortunately in the current quarter, in current environments, they are not a significant portion of our revenues and profits but they certainly helped and contributed and maybe it's just some indication of the potential of the overall industry. I think just some of the service lines that have been directed toward the shale plays and the horizontal plays and they're much more subjective to some of these equipment locations – relocations. And so I think that certainly makes it a little more difficult to – or makes pricing be much more competitive with all that movement. So I think again, it's good news on some of our other service lines are doing very, very well and we're pleased about that.

And then maybe just sticking with pricing a little bit, other commentary has been that there's at least been some stabilization in pricing in the natural gas space and for the pressure pumping, but now the declines are hitting the liquids regions particularly, the Eagle Ford. I was just curious if you could comment on that if that's what you're seeing, as well, and have found the declines in the liquids pricing are now similar to the natural gases? I think it was in the 15% to 20% price decline range.

I think the comment, and we probably agree with the comment, that the rate of decline for pricing declines in the dry gas regions is declining. In other words, pricing may be bottoming there as equipment is moved out, that sort of thing. Kind of harder for us to comment on South Texas because we've been in a contract there and just moved some equipment there, so it's really hard for us to have a good pricing trend that we can report to you regarding south Texas.

I'll agree to that. Still very dynamic.

There's one last question and then I'll turn it back. I know you guys have recently entered the backend pressure pumping market and I was just curious if you could talk about how that played out. Did it perform the way you expected it to? Were there any just startup issues or things that were different or better than you expected or worse than you expected?

We have just recently been able to work up there in pressure pumping and have not yet started to work. We have some jobs that are scheduled. So as I said in previous comments, all that equipment will get to work in the third quarter.

(Operator Instructions) Your next question comes from the line of John Daniel - Simmons & Company.

A couple thoughts or questions, the press release, we noted that the frack horsepower stayed the same at 683 and then the release talks about preparing the final fleet for deployment this quarter. You couple that with some of the equipment area locations you had in Q2. Do you see this incremental equipment, if you will, helping generate higher revenue quarter-over-quarter or does the pricing pressure more than offset that in Q3?

The incremental equipment, John?

Yes, I mean, you talked about the equipment that's been relocated so presumably operational inefficiencies, los of revenue coupled with this final frack fleet getting ready to be deployed.

John, it's kind of hard to know the offsets. As Rick just mentioned to another caller, we haven't gone to work yet in the Balkan. We're getting ready to. I think it would be fairly intuitive that equipment that has just arrived in West Texas will be working at lower pricing than the equipment that has been there for a number of years and is working customer relationships, so we're putting it all to work. It's a great question. I'm not sure I know …

It is. I would say that we don't see prices falling precipitously and the fact that we did move equipment around this quarter, that we do expect that to begin working more this coming quarter than it did in the second quarter and we do expect the Balkan to come onboard. So with all that being said, we are – hope is not a strategy, as Mr. Landers always says but we are hoping that with all of that that we should have an increase in revenue (inaudible).

The prior question we – a former caller talked about the pricing leveling off in the dry gas space and we hear that from a lot of folks. Can you say whether or not when you look at your pricing on the spot basis and the dry gas basins, are those frack crews operating at break-even margins? In other words, has it leveled off because there's simply no more downside? Do you follow where I'm going with this?

Our crews are working at positive profit margins. Can't speak to some of the smaller, more aggressive competitors who may be doing what they did last cycle but our crews are working and are working profitably in the dry gas basins.

Just two more from me now and then I'll turn it over for others. Just on the margin front, Jim, can you say whether or not characterize exit rate margins June versus April just in terms of magnitude of change, just to try to extrapolate into Q3?

Yes, you're asking about exit run rate margins versus full quarter margins. There are a few little wiggles that move around. I'd say that they're fairly consistent. Margins did not decline in June compared to the other two months in the quarter.

These are, John, very reasonable questions but again, it's a very dynamic environment. The fact that we were able to get some equipment working in the second quarter that hadn't worked as much as we had hoped in the first quarter, so that's certainly a contributor. We've got pricing declines, we've got theBalkan coming on board, so very reasonable question but it is dynamic. I think Jim's answer is right. I think it was fairly consistent during the quarter. Clearly it was down but June was decent.

It's just I want to understand a bit more on the CapEx in the back half of the year. It looks like about $150 million or so to be spent in the second half, which the vast majority sounds to be maintenance. Can you help us just understand what that maintenance CapEx, where that's going? And I presume it's going towards your frack leak. Are you rebuilding the equipment? Are you – I know you don't have new growth equipment on order but are you buying pumps to replace the pumps? Can you just walk us through how that money's being spent?

Yes, we've talked before about we have an active refurbishing program that we initiated. I guess we initiated it 12 to 18 months ago but it is now underway. We have some rotational pumps in place to be able to pull our older pumps out of service, sending them to be completely rebuilt and that'll be a 12 or more month process, but we are into that. We'll see that. That will impact what we're talking about CapEx, maintenance CapEx in the latter half of this year and even into next year.

Thank you. Your next question comes from the line of Doug Garber - Dahlman Rose.

I wanted to first ask you about in the dynamic kind of frack market, contract renegotiations and if your customers are either just doing the minimum in contracts or asking for lower pricing that may be longer term? Just how is that conversation going with your customers and have you had any contract renegotiations on the frack side?

More of what we've experienced with the timing of our contracts is that we've had some roll offs in the dry gas basins, so those customers weren't interested in continuing. They moved on. Otherwise, it's really pretty preliminary. As you can imagine, customers are asking for pricing concessions. They're certainly not in the mode of trying to allow us to negotiate prices upward. But I would say with the timing of our contract rollovers, there honestly has not been a tremendous amount of discussion with them at this point. That will be coming up probably much more next quarter, but we're prepping and expect, again, it's going to be – it will be difficult. Where contracts are going to go, it's hard to know. Being able to put the contracts in place 18 months ago was obviously a lot easier than it is today and than it will be in the next six months. I think there will be some form of a contract but who knows exactly where that'll end up. Right now, there's just a lot more – customers are much more interested, and frankly, I may be okay with this, too. They're much more interested in sort of having pricing agreements. There are some terms in conditions and things like that but they're not as interested in minimums. At this point, if things were to turn by early next year, we may be better off just riding this out and seeing where we end up. We may be in a much better position six months from now.

And a few of your peers have idled or parked equipment or are talking about idling or parking equipment. Are you guys having any of those conversations internally or some of your equipment that was in the gassy basins? Do you think there is a possibility of you parking any equipment in the next few quarters.

No, at this point, we don't see that at all.

Yes, Doug, we've moved equipment from lower activity levels to areas of more promise. And as you know from knowing us for a while, we have a history of maintaining our equipment and keeping it available to work and we will work as long as the profit margins meet our criteria, and right now, they do.

And previously, I think you guys have given the breakdown of your fleet in terms of percent in gassy basins or versus percent in kind of liquids and oily basins, the horsepower basis. Is that something you could give an update on following the second quarter move?

It is migrating more towards oil and away from gas. Clearly it's still slightly less than 50% gas -- I'm sorry, slightly less than 50% oil and slightly more than 50% gas.

And just a quick housekeeping question, the corporate expenses were a bit lower in the second quarter. Anything going forward there for a run rate that – how should we think about that line item?

We don't see any big change there. It might trend up slightly but we're pretty set, we think. We're watching our discretionary spending very closely in this environment and I don't expect it to increase at the same rate coming out of '11 as it has in early '12, but may take …

And just real quick, last housekeeping one, you guys have given historically the percent pressure pumping and percent coil tubing, the revenue breakup. Is that something you could share again?

Pressure pumping was 53% of second quarter consolidated revenues. Coil tubing was 11% of second quarter consolidated revenues. Our downhole tools service line was 14% of consolidated second quarter revenues.

Thank you. Your next question comes from the line of Luke Lemoine - Capital One.

Just on your crew mobilizations during the quarter, I believe you moved a crew from the Marcellus to the Permian and one from the Haynesville to Eagle Ford. How long will these stay on and when do they recommence operations?

Luke, I guess when all was said and done, they were down for a good part of the quarter just in moving and getting back on somebody else's schedule. They have recommenced operations in the new locations.

Did they recommence in 2Q or was that a 3Q event?

Sort of end of 2Q.

Yes, light 2Q, it began to work.

So it looks like most of the benefit from pumping posted a $4 million increase there was due to the new equipment in 1Q and maybe some improved utilization in some other plays. Is that correct?

Yes.

And then just kind of looking ahead a little bit, I think you have about 70,000 horsepower in the Fayetteville that rolls off contract at year end. Where are you thinking about moving that at this point? It seems like the Permian might be a logical choice just due to the pump configurations.

Well, that particular area, Luke, kind of fits our definition of dynamic. It's hard to know. We've actually felt like we'd be moving the equipment. We may also have an opportunity to stay in that basin. That's currently an open question for us.

And could you remind me of when those term contracts were signed? Were those two years ago, or what was the time frame on those?

Actually that one was – we've been working there under some form of contract for six years. I guess the current one's coming up on three years old.

And then just on a Permian spot pricing, how did that trend in the quarter from 1Q to 2Q maybe on average or if you kind of have leading edge pricing?

Trended down and leading edge pricing's down.

Like 5% to 10%, something like that?

Actually, I think that's about right, yes.

Thank you. Your next question comes from the line of John Lawrence - Tudor, Pickering, Holt.

Most of my questions have been asked but just wanted to – in this environment, you're still in cash build mode. How you think about the back half of the year when you talked about stock buybacks, increased dividends or cash build. Can you just rank those three?

Number one, we'd pay down the debt, which is essentially cash build. Beyond that, that's number one is going to be pay down the debt and the others, that's ongoing discussion, so nothing active at this point.

It depends on price of the stock, depends on how we see prospects and capital expenditures in 2013.

Too early to tell, I guess, for 2013 as far as CapEx numbers.

Yes.

Yes, think so.

Thank you. Your next question comes from the line of Michael Marino - Stevens Incorporated.

Question on I guess sequentially, you noted that Q2 you had some crudes moving around. I guess the Balkan wasn't working, the Haynesville you were moving in the Marcellus but revenues held relatively flat in pumping quarter-on-quarter. Where was the big utilization increase or was it specific to one region or was it just the oil basins in general?

It was actually a little bit of it was in some gas plays and some of it was in more oily plays. And I don't know that it's any commentary on a particular region. I think it was just our success and working with particular customers and seizing an opportunity I think is what happened.

When you say seizing an opportunity, kind of across the board or was there one specific ...

Just meaning in those instances where we were able to get the fleet working where they had not been working as much as we would like. I mean, just we had a – whatever you want to call it – relationship win. We were able to begin working actively with a couple of customers we have not been working with.

So market share gains, I guess.

You could say that, yes.

I was just going to clarify and say that in some cases, we even added crews to an existing customers.

Just to drill down a little bit on coil tubing, maybe kind of two-part question. One is how many units – did you add any in the second quarter and how many left are you adding for the remainder of the year? And then kind of the pricing dynamic that you're seeing there; I mean, order of magnitude, what kind of declines are we talking about when you say pricing has weakened and is it broad-based or is it specific to gas basins at this point?

On pricing, I think overall it seems to be declining perhaps in the mid single digit range sequentially for what that's worth to you. We did add a few (inaudible) units in second quarter and we have a few more coming at the end of the year.

Has utilization held?

Yes, it has, actually. I mean, it's down slightly but that's not the story. The story I think is more pricing.

Thank you. Your next question comes from the line of Ben Swomley - Morgan Stanley.

I just wanted to dig in a little bit more on your contracted status. Could you just explain to us – and sorry if I missed it – but what percent of your fractories are contracted right now? And how do you expect that to evolve over the next three to six months? I mean, I guess what I'm trying to get at is sort of the time line to when your crews roll into the spot market.

In three to six months, Ben, it would probably be the same or – next three to six months, it would be the same. Early 2013, it might be down or it might be the same.

So for the next two quarters more or less, the contracted status should resemble what we saw in the second quarter.

Yes.

More or less, I believe that's correct.

And you did mention that some dry gas contracts rolled off in the second quarter and I was wondering was that closer to the beginning or the end of the quarter?

Beginning.

So it should look pretty similar to 2Q's run rates. So just trying to put everything together, it sounds like we have some equipment going to work in the Balkan. That should be a positive for revenue. Utilization sounds like it's more or less stabilized and we're done with the equipment moves. Margins didn't really decline in June so the read through from that would be kind of flattish margins going out a quarter or two. So it sounds like higher revenue margins flat to maybe even up a little bit. It sounds like you expect earnings to trend flat or higher from here rather than taking another turn down. Is that a fair statement?

Ben, one thing you left out was pricing for pressure pumping. When we and our peers say things are uncertain, we're not kidding and it's hard to say what leading edge pricing is going to do over the next quarter in the Permian. Oil prices have been down; now they're back up. But they've been down. There was a pricing differential between West Texas intermediate and what you sell for in the Permian. The price of natural gas is up a little bit and that's actually probably helping with some pockets of activity. But if there's a bias to pressure pumping pricing over the next quarter, I think that bias would be downward, albeit at a lower decline rate than we've seen the past couple quarters.

Thank you. Your next question comes from the line of John Daniel - Simmons & Company.

Hey, just two from me. Jim, any comment or guidance for G&A depreciation for Q3?

I mentioned earlier on G&A that it may pick up a bit but not materially.

And depreciation will be up slightly as well, sequentially.

And then the last one from me just on the raw materials, as prices for things such as sand and guar go down, I mean, do you guys get put in a fixed markup or a percentage markup? In other words, those come down and the third-party cost goes down, your markup goes down, I mean, profits, in terms of total dollar profits – do those start to go down, as well, just because of the decline in the raw material and sand prices; following all this?

Yes, exactly. In general, that answer is yes. In the spot market, you can be helped or hurt by your ability to do some transactional pricing based on availability of raw materials and what you're able to do there. But in general, if the price of raw materials goes down, your profit margin in general would stay the same. Your dollars would decline.

John, let me clarify. On the guar front, make sure we're clear that that did not have any meaningful impact to our results in the current quarter and we don't see it materially changing our results in the coming quarters.

I just didn't know the idea of sand prices coming down, if that's going to have any type of material impact in terms of just margins don't change but just the actual either EBITDA dollars go down.

I think that's (right), and I just wanted to point out I think that's an appropriate question. Probably guar and sand for everybody but for us, the guar price changes don't impact us. Price and decline, but price declines will not impact our results.

On the guar, right, but on sand?

Yes.

The margins stay the same because of the decline in sand prices, but we should assume that there's a decline in the EBITDA dollars. Is that fair, Jim?

Yes, that's fair.

Thank you. (Operator Instructions) Your next question comes from the line of Luke Lemoine.

Hey, Jim, I guess you gave us the percentages on the coil tubing (inaudible). They're 11% for the quarter. It looks like coil tubing had about a $15 million hit in revenue or kind of 22% decline. Is that right?

You're talking sequentially?

Yes, sequentially.

No, it was a little bit less than that, Luke. Sequentially more like $5.5 million decline.

Was it 14% in 1Q for coil tubing wraps?

Let's see. We've gotten that question a few times. I think we said something wrong, made a mistake on our last call. It was about 12% of Q1 and it was 11% of Q2.

Thank you. Your next question comes from the line of Jeffery Spittel - Global Hunter Securities.

A couple of uick ones, number one, coil tubing, are you starting to get any pushback from operators on paying for standby times at all?

That's a great question. We're actually not seeing the standby rate in the intervening time between the beginning and ending of a completion decline. We're just seeing – I mean, again, it's a good question. It's hard to really isolate exactly where declines are happening in pricing.

We haven't heard much talk about that, but it may not have just come up, but that's clearly an area I guess somebody could attack pricing. We haven't heard that to be the case yet.

And finally, on the M&A front, I would imagine that there's some packages of equipment sitting out there that are relative new if not brand new. Are they enticing at all in terms of asking prices at this point where you feel like you could do something opportunistic or counter-cyclical?

We're always looking for the opportunistic deals, I guess. We haven't seen anything that was too compelling lately. I think if there's any comment worth giving you, it is that you see a lot of things come to market and the sellers' valuation expectations are probably a little bit higher than the market is willing to give right now, especially given the valuations that the public companies are trading for. Given our multiple of EBITDA, it's hard for us to pay five or six times EBITDA to sell.

Thank you, and we have no additional questions. I'll turn things back over to our speakers for any additional or closing remarks.

Thank you, (Katherine), and we appreciate everybody calling in to listen this morning. and we appreciate the questions and enjoyed the dialog. Hope everybody has a good day and we'll talk to you soon. Bye-bye.

Thank you. Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation.