Jim Landers - Vice President of Corporate Finance Richard A. Hubbell - Chief Executive Officer, President, Director, Chief Executive Officer of Marine Products Corporation, President of Marine Products Corporation and Director of Marine Products Corporation Ben M. Palmer - Chief Financial Officer, Principal Accounting Officer, Vice President and Treasurer

Neal Dingmann - SunTrust Robinson Humphrey, Inc., Research Division Robert J. MacKenzie - Iberia Capital Partners, Research Division John M. Daniel - Simmons & Company International, Research Division Michael R. Marino - Stephens Inc., Research Division Michael Cerasoli - Goldman Sachs Group Inc., Research Division Marc G. Bianchi - Cowen and Company, LLC, Research Division James Knowlton Wicklund - Crédit Suisse AG, Research Division Matthew D. Conlan - Wells Fargo Securities, LLC, Research Division Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division Thomas Curran - FBR & Co. Daniel J. Burke - Johnson Rice & Company, L.L.C., Research Division

Good morning, and thank you for joining us for RPC, Inc.'s Fourth Quarter and Year-end 2013 Earnings Conference Call. Today's call will be hosted by Rick Hubbell, President and CEO; 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 is being recorded. Jim will get us started by reading the forward-looking disclaimer.

Thank you, and good morning. I am going to do the forward-looking disclaimer. Before I do that though, I'd just like to tell everybody that we're having one of our rare winter storms in Atlanta, which is RPC's corporate headquarters, and the 3 participants on this call are not in their usual places, so I'm going to ask everyone's indulgence if things don't go as smoothly as we would like them to and as we hope they have in the past. So before we get started, I need to remind you that in order to talk about our company today, 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 2012 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 are also 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're also required to use EBITDA to report compliance with financial covenants under our revolving credit facility. The press release today in 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 haven't received the press release for any reason, you can see our website, again, at www.rpc.net for a copy. And I'll now turn the call over to our President and CEO, Rick Hubbell.

Thank you, Jim. This morning we issued our earnings press release for RPC's fourth quarter of 2013. Following my comments, Ben Palmer will discuss our financial results in more detail. In this highly competitive environment, we are pleased to report a 3.6% year-over-year increase in RPC's fourth quarter revenues. Our revenues increased due to the higher activity levels and greater service intensity and, to a lesser extent, a larger fleet of equipment in the fourth quarter of 2013 compared to last year. On a sequential basis, our revenues declined by less than 1% in spite of the holidays and winter weather. This too was due to higher service intensity and high activity levels in many of our service lines. However, fourth quarter operating profit, EBITDA and net income declined sequentially and year-over-year. Our profitability declined because of the competitive pricing for our services. Our pressure pumping fleet, which now operates exclusively in the spot market, continues to face intense competition, but we are pleased with our success in securing new work. Our Board of Directors voted yesterday to increase our quarterly dividend by $0.05 -- by 5% from $0.10 per share last quarter to $0.105 per share this quarter. Our CFO Ben Palmer will now review our financial results in more detail for the fourth quarter of 2013.

Okay. Thank you, Rick. For the quarter ended December 31, 2013, revenues increased 3.6% to $487 million, compared to revenues of $469.9 million in the prior year. These higher revenues resulted primarily from higher activity levels in most of our largest service lines. EBITDA for the quarter decreased 18% to $119.4 million, compared to $145.6 million for the same period last year. Operating profit for the quarter decreased 27.8% to $64.5 million, compared to $89.3 million in the prior year. Our diluted earnings per share for the quarter was $0.17, a 34.6% decrease, compared to $0.26 in the prior year. Cost of revenues increased from $279.4 million to $318.9 million in the current year due to higher activity levels and greater service intensity within our pressure pumping service line. Cost of revenues as a percentage of revenues increased from 59.5% in the prior year to 65.5% in the current year, due primarily to lower pricing for our services and increased materials and supplies expense due to job mix. Selling, general and administrative expenses during the quarter were $45.5 million, compared to $44.7 million in the prior year. SG&A expenses as a percentage of revenues decreased slightly from 9.5% last year to 9.4% this year. Depreciation and amortization were $54.3 million, a decrease of 1.8%, compared to $55.3 million in the prior year. Our Technical Services segment revenues for the quarter increased 4.3%, compared to the prior year. Operating profit decreased to $65.4 million or 14.4% of revenues, compared to $85.6 million or 19.7% of revenues during the same period in the prior year. Revenues increased due to greater service intensity and an improved job mix within this segment. Operating profit declined in this segment due to more competitive pricing as we have discussed previously. Our fourth quarter Support Services segment…

Thanks, Ben. As we discussed in last quarter's conference call, RPC is operating in an environment influenced by several opposing factors. On one hand, we have benefited from the transition from conventional to unconventional drilling and completions. With this change, service intensity has increased tremendously, requiring well-maintained equipment, strong supply chain management and logistical capabilities. We have anticipated these needs and benefited from our ability to provide the equipment and raw materials necessary to meet customers' requirements. We believe these characteristics will continue to present opportunities in the foreseeable future. On the other hand, rig count has been flat for a few years. Natural gas drilling is at an 18-year low, and there has been a significant increase in available service equipment. Additionally, the increase in rig efficiencies resulting in more pad drilling and 24-hour work has made the equipment oversupply situation even worse. Collectively, these factors have kept pricing for our services very competitive. These contradictory dynamics yield inconsistent operating results even in the short term. Although this environment is nothing like previous industry downturns, we believe our conservative management philosophy, including a constant focus on controlling costs and improving processes serves us well. As Ben just indicated, our total debt-to-capitalization radio -- ratio remains at approximately 5%. Our balance sheet strength allows us to take advantage of strategic opportunities, as well as reward our shareholders with actions such as this morning's dividend increase. I'd like to thank you for joining us for RPC's conference call this morning. And at this time, we'll open up the lines to answer any of your questions.

[Operator Instructions] And we'll take our first question from Neal Dingmann with SunTrust.

Say, hey, Ben, probably for you or Rick, just one on -- obviously, on the pricing issue out there right now, just the competitive price. And I guess, my question, Ben, is more just as it factors regionally-specific and then sort of services. I mean, is it sort of across-the-board? I mean, when you look, is it just pretty much equivalent, if I'm going down the line, Permian, Eagle Ford, Haynesville, as well as I'm looking at your pressure pumping, ThruTubing and coiled tubing, everything is kind of across-the-board, or is there certain ones that are just sort of sticking out?

Neal, this is Ben. I would say there's -- ThruTubing has some proprietary tools, so they tend to hold up a little bit better, but they, too, -- there is competitive pressure, and there's an even stronger with just the customer pressure on pricing, which is just constant and intense. Otherwise there aren't any significant differences from service line to service line, but we are pleased. We mentioned in the comments there that rental tools had a sequential improvement. One quarter does not a trend make, but we're pleased by that. And actually our nitrogen service line had a nice quarter. I think some of that was maybe natural gas prices and some non-oilfield services that we were able to secure, so we're pleased about that. So there are some bright spots. But I don't think, again, any particular service line is significantly more difficult than others. But obviously, pressure pumping, being our biggest service line in this transition now that we're completely in the spot market, certainly had a sequential impact on us.

Okay. And then I know, you all are obviously very careful and have a very solid balance sheet. Looking at sort of 2 things. One, are you continuing to see and having people approach you to maybe buy some additional equipment? I know you said you haven't added obviously any frac equipment since the third quarter. And then secondly, are there other areas you would consider -- newer plays you would consider moving to, or is that -- you would wait more on sort of clients ringing you there first?

Neal, I'll comment on the new equipment. I think we haven't seen as many opportunities. There seemed to be more in the last 3 to 6 months, not as much today. Jim, you want to comment on maybe moving into other plays?

Sure. Sure, Neal. So sort of a similar story you'd hear from our peers, Neal. We think there's some growing activity in the TMS, Tuscaloosa Marine Shale, and we feel that this may be a better year for the Utica than in the past, so we're prepared to work there. We've got locations nearby, certainly close enough to serve both those areas. The Permian Basin and everything going on in West Texas continues to evolve and continues to be exciting. We've got a big presence there and are ready to go anywhere we can in that whole region of West Texas to do some good work. But other than that, there's nothing that's just -- that's brand-new that you haven't yet heard about.

Okay. And then just lastly, just on the frac. Overall, not just your frac horsepower, but just overall in the segment. Is there still quite a bit more frac horsepower that's coming out there, new horsepower coming? I just haven't heard anything around this. Jim, if you or Ben could comment on that.

Neal, I don't believe that there's a whole lot more pressure pumping hydraulic horsepower coming. We don't know of any. There maybe some incremental adds, but don't know of any.

And we'll go next to Rob MacKenzie with Iberia Capital.

A question for you, I guess, on Technical Services costs and/or margins. And obviously, revenue came in fairly strong, but your cost line went way up. Can you help bridge me from 3Q to 4Q on how that played out, and also give us some view on how to think about that going forward?

Yes. Well, this is Ben. I would say, clearly, there was a large negative impact. We did have some of our final contract work roll off, so we had to -- our strategy was to go and quickly get that equipment working again. And we were successful in doing that, so we're very, very pleased about that. And that's difficult to do, to stay busy. We think our -- or we know that our focus now is going to be on trying to create the operational efficiency to bring up those margins, and we think there's opportunity to do that. We've identified some pretty significant changes, logistical-type changes that we can make, negotiating with some vendors and things like that, that we think we can make some meaningful improvements. But you first have to get the work, and we feel like that was our main focus in the fourth quarter. The fourth quarter is always very difficult with the weather and holidays and things like that. So again, with the volume of work, we're very pleased. And now we just need to work to improve the margins. Jim, you want to add anything to that? Jim, you have anything to add to that?

No. Not really, Ben, except that our cost of raw materials is not increasing in any -- many areas. It's declining, so I guess it's just echoing what you said.

That's true. Yes. And the mix of the work is something that's -- we -- some of the higher-priced -- well, the resin-coated and ceramic products took a bit of an upturn, and that's something we're working through as well. We think there are some opportunities there to try to capture some more margin, but that seemed to be a trend at the higher-priced, not because of inflation, but just the more specialty proppant usage was a bit higher in the fourth quarter than previous quarters.

Right. The margin on that is a bit lower at this point, so yes.

Okay. And I guess my follow-up is, when we had a -- when we were on the road with you and Clint [ph], late last year, Jim, I know you were both kind of pretty bullish on the outlook for growth in the business in 2014. Any kind of change to your viewpoint there?

No, Rob. It's still there. Everything that we and so many of our peers say are true. And longer laterals, greater service intensity and every time we spend time with our operations people, we hear the same things, and they're more -- there's more going on with different kinds of proppants. Somebody I know called it a science experiment, and there's a lot of that good stuff going on. We just went from -- our last contract expired, and we got put into the spot market there. And then some other new business that we garnered just happened to have unfavorable margin characteristics because of the harsh pricing environment and some of the margins on some of the materials and supplies that this new work uses. So that's just where we ended up for the fourth quarter. We watch it very closely, and you know the oilfield trends come up when you're not -- when you're least expecting them, but none of our view of the world has changed in the past quarter, even with the margin decline that we just reported.

We like the discipline, again, that the industry pressure pumper seem to be having on capacity adds. I mean, that's a positive. And certainly, natural gas prices firming a little bit, that would help everybody tremendously. If we had more work and some equipment rolling to some of those gassier basins, obviously that would free things up tremendously, so...

Great. And just a housekeeping question, apologize if you said it earlier, did you say at what percentage of your Technical Services was pumping in coil, Jim?

I did not say it. Of consolidated RPC revenue, pressure pumping was 56.0% of revenue. Coiled tubing was 8.9%. ThruTubing Solutions, which is our second biggest service line, as you know, was about 15.6% of revenue.

Great. And any update on what percentage of your business is driving the Permian now in the most recent quarter?

It is using pressure pumping as a proxy for the company, which is a decent way to do it. Probably -- well, pressure pumping is in the low-40 still, probably 43% to 45% of our revenue. Consolidated RPC would be in the mid-30%, maybe a little bit higher range.

And we'll go next to John Daniel with Simmons & Company. John M. Daniel - Simmons & Company International, Research Division: Hey, Jim, a couple of questions. How full is the job board today? And at this point, have you had to turn down any jobs in any of your regions?

Haven't had to turn anything down, John. But we are -- the job board continues to be full. I mean, obviously all on the spot market now, but we continue to be busy. I'm not aware of any turndowns recently. John M. Daniel - Simmons & Company International, Research Division: Okay. And then with respect to your '14 budget, just operating budget, are you treating the Q4 margins as an anomaly, or do you think we start the year off sort of in the a mid- to higher-teens margin?

We think in terms of 2014 operating results, we are starting from a lower base in third quarter of 2013. I mean, third quarter 2013 was perhaps especially high. Fourth quarter was a little bit lower than what our run rate is, and that gives you a wide range to bracket it. But first quarter operating margins will be probably better than fourth quarter, but not a whole lot at this point. And Ben, if you have anything else to add, please do.

No. No, I think that's probably accurate. I think there's an opportunity for it to be decently better, but there's, again, lots that we're working on. We've identified some opportunities, I think, that will help, but we're working on it every day. John M. Daniel - Simmons & Company International, Research Division: Okay. And Jim, my last question, just on the pressure pumping business with respect to trying to measure utilization. I think you guys talked about it. I think the quote was it's acceptable utilization. How much of the horsepower is either idle, or to the extent there can be upside utilization, how should we think about that?

Yes. We don't have any idle horsepower. And we've talked, and we talked to a lot of other friends who were on the call with us this morning that for us, the Marcellus Shale is -- or the Appalachian area is the least utilized, about 10% of our equipment is there that needs to be more utilized. We are not at full utilization or certainly utilization that would cause a pricing inflection at this point. So there's some room to grow there. John M. Daniel - Simmons & Company International, Research Division: Okay. And then -- but aside from the Marcellus, you say room to grow also on the other basins as well from the utilization, are you -- do you say you're [indiscernible]?

Well, utilization was higher in the fourth quarter. I regret that it didn't show up in the operating income line, but it showed up in revenue. So -- but I think mid-continent improved, which for us is Oklahoma. That improved, but could get better. South Texas was busy. And as Ben mentioned in his comments, the equipment that we bought in third quarter did work in fourth quarter, so utilization is okay. We're busy.

John, I would add. This is Ben. I think that there's clearly opportunity to increase utilization further with additional 24-hour work and just being able to work with our customers to get more steady work. Again, there's just a lot of -- we talked about the volatility in our results oftentimes due to the volatility of our work and the lack of consistency. So we're trying to work hard to create a little more consistency and predictability there, which will allow us, too, to continue to manage our costs and drive those down, and that will help the margins as well. John M. Daniel - Simmons & Company International, Research Division: Okay. And I guess -- and I'll wrap up with this one. I'm just trying to think about utilization. What's the upside to the extent, good quarter and Q4 with respect to top line results? And how should we look at revenue as we head into Q1? Is there much upside if we assume that pricing is off the table? It would seem that there might not be as much upside in revenues. Is that -- am I wrong in that assumption, Jim?

Well, first of all, if we can put weather aside because we're having troubles in Atlanta because of weather, but if you take out holidays and weather in fourth -- well, weather in fourth quarter cost us about 3%. So let's say there is no weather impact from first quarter, which is not true, but let's say there's not any. That will get you 3% right there. And then no midweek Christmas and New Year's holidays. So just based on that alone, first quarter should -- in terms of revenue should be higher than fourth quarter. We do know of some new work that has started here in late January in pressure pumping in a couple of our regions. So I mean, I could say that sequentially, first quarter 2014 revenue could be 5% to 7% higher maybe than fourth quarter.

I would just -- and I'd go back. I mean, it could be. But again, the nature of this work, it just -- it can be quite choppy, too, that sales part of the point, but we've tried [indiscernible]. It's -- there's a lot of volatility, a lot of choppiness. But I think what Jim said is certainly -- there's a potential for us to be able to achieve that. But I wouldn't be surprised if it was closer to flat or only slightly up. But that is achievable, what Jim said.

And we'll next -- we'll go to Michael Marino with Stephens Inc.

Wanted to clarify on the pricing commentary. Did spot pricing in the pumping business decline from Q3 to Q4?

Michael, this is Jim. I can say with as much sincerity as I have and this is my true belief, spot market pricing for the pressure pumping business did not decline between third quarter and fourth quarter. We moved from a contract to a non -- to a spot market work. We were very busy in the fourth quarter with that crew, but it was at lower margins because it was in the spot market. And then we had job mix as well, job mix issues. We got some new revenue in the fourth quarter that was very service-intensive, which in general is good, but the mix of raw materials that we used to provide those services didn't have the high margins on it. So I do not believe that spot market pricing has taken another lag down. It was just a situation for us relating to those contract to spot and new work anomalies on the margins. Could we have managed it better and tried to be much more profitable on the different raw materials? Sure, we could have tried. I don't know if we could have gotten better margins, but we certainly could have tried.

Is that mix function -- or is that mix a function of which basins were more active, or was it just kind of the way it fell to you guys in the quarter?

It can -- this is Ben. It can be customer-specific and basin. Customers oftentimes do change pretty quickly, so I think it was a combination of both of those things, basins and customer preferences.

But is it something that you see -- I mean, is it something that you can predict will continue, or is that kind of maybe the -- some of the reason for your comments around choppiness?

The latter, yes, what you just said.

Okay. And then just to clarify, were there any start-up costs associated with the new fleet or new equipment that maybe impacted margins?

No.

And we'll take our next question from Michael Cerasoli with Goldman Sachs.

You mentioned earlier about seeing a little bit of a pickup in the usage of ceramic and resin-coated sand. I'm just curious, can you maybe give a little bit more color on this? Are E&Ps more focused on production? Is that how they're expressing it? Or have we moved away from cost control? I mean, does that -- I guess -- there's more belief, I guess, that the spending is going to materialize in 2014 than, say, 2013?

Michael, this is Jim. Good question, your premise is right. It's consistent. We are seeing more ceramic usage and higher in proppants. Some of it's oil related. Some of it, I'm afraid I personally don't have a great answer as to whether our customers want their initial production to be a whole lot higher and they're making that financial decision where as they might not have been 6 months ago. Kind of hard to say.

Okay, and then maybe can -- go ahead.

I'm sorry, this is Ben. I was just going to say we'll know a lot more next quarter. Again, there was some movement in customers we were working with and things like that. So we'll know more next quarter after that sort of shakes out.

Okay. And then just continuing on that theme though, maybe give an update on your 24-hour work, how much are you doing? Are you kind of -- along with that coal production theme, are you seeing any indications from customers, Permian, anywhere else that we want to move more in that direction?

Yes, Michael, this is Jim. We have about 1/3 of our crews and about 1/3 of our equipment dedicated to 24-hour work, meaning they're geared up for it, they're ready and able, and they do some 24-hour work. They do not do 24-hour work all the time, and they are sort of scattered throughout our area more -- our company, more in West Texas now than in the past. I think we all know that trend perhaps, and more -- or a consistently high amount in the Marcellus. There is -- if those 24-hour crews and equipment, there's room for them to be utilized more.

Okay, and you mentioned utilization can improve in the Marcellus, was that more of a 4Q comment? I'm just kind of looking at gas prices. Have you seen any sort of reaction in the Marcellus, or is the under utilization more of an energy infrastructure issue in that region?

Yes, we believe it's an energy infrastructure issue, takeaway capacity issue, and fourth quarter actually was in terms of revenue might have been a little bit better than third quarter. But that is a -- that is something -- that's a phenomenon we've observed for a good 2 -- 2 plus quarters, 2 to 3 quarters. Too much gas, not enough pipeline to take it away.

Okay, and then just separately, you do have a position and you have some equipment in the Fayetteville and the Haynesville, realize that it's really just the more of the front months that have kind of gone up in price, but have you seen any sort of activity increase in those more gas-driven plays?

Yes. Just to clarify, we don't have any equipment or any activity in the Fayetteville Shale in Arkansas right now, but we are in these other places. Also, in the mid-continent is where we've seen a little bit of increase due to the increase in spot price of natural gas, and for us at RPC, we see that in our small diameter coiled tubing services and in nitrogen. Those are 2 things that you would use to workover old gas wells and enhance production. What we've also seen or has been reported to us is that with rig efficiencies and quick time to drill and lower cost, sometimes you make the choice to drill a new well rather than workover an old well. You make that choice today. That's not the same choice you might have made 5 or 10 years ago, but it's a phenomenon we're seeing today for what that's worth to you.

[Operator Instructions] And we'll take our next question from Marc Bianchi with Cowen and Company.

Following up to some of these questions about utilization and your commentary about the spot market, how much of your work is true callout work? And how much is sort of dedicated where there is some visibility because you're consistently working with the same customer? And how does that impact your utilization to the extent you have more dedicated work?

Yes, Marc, it gets into -- and we'll kind of pass this question around a little bit. I hate to say that it gets into semantics, but it does a little bit. We do have plenty of pricing agreements, and I would call those roughly 1/2 of our fleet, maybe a little more, might give you a different number on that, and that does give you some more visibility but not a whole lot more. As Ben has said a couple of times, the sporadic nature of this work, projects are starting and stopping and tend to move around a whole lot. So it's not as much visibility as we might hope, frankly.

Yes, this is Ben. I would agree with that, and I think that's our opportunities to work with our customers to create this additional efficiency for them and for us. I think there -- we want to work towards some level of broader commitment, whether it's contractual or not, but at least from a relationship standpoint so that we can get our work to be a little more steady. And again, that gives us opportunity to better control our costs, and in the end, that benefits the customer as well.

Sure, makes sense. Okay, great. One sort of modeling question, corporate ticked down sequentially here, I think, by about $1 million. Is that something that can be maintained or was there something unusual there? How should we think about that corporate line for 2014?

I don't know there's anything in particular. I would see SG&A remaining fairly consistent, the average of the last couple of quarters would -- it's a good indicator. There's no -- that line fluctuates with new operational locations and expansion of support staff and things like that, and there's no big initiatives in place. We're comfortable, we're getting leverage with the additional revenue, and we're always working to try to control those costs and managing as well as we can, but I wouldn't expect any significant increase or decrease. A piece of it certainly is dependent upon profitability. So if '14 turns out a bit more robust as we're expecting, there'll be a little bit more incentive comp. But that clearly will be covered by probably increased revenues and profitability. So I wouldn't expect any unusual variation going forward.

Okay, super. Last one for me. On the rental tools, there was some strength that you experienced. Can you elaborate on that? And is that something that should continue going forward, or how should we think about the rental tools going through 2014?

Yes, Mark, this is Jim. We did have some better pricing in rental tools in the fourth quarter compared to the third quarter. That is a very transactional business. We have expanded into the Permian Basin with rental tools, and that's a decent part of our revenue right now, and so that has improved. In some other areas, our pricing again -- and very transactional, but our pricing has improved as well. And I think pricing is probably a bit better in the Permian. There's so much going on there now. The shift from the old legacy vertical drilling and completion to horizontal or unconventional, however you want to define it, is continuing there, and that is, again, more service-intensive, and it gives us more opportunities for revenue including with things like rental tools.

It was probably targeted successes with individual customers and things like that so we're quite pleased with it. I would not want to hold it out to be that there's a continuous upward trend in that -- a confirmed upward trend in rental tools, but we're very pleased with that improvement and do expect it to hold.

And we'll take our next question from Jim Wicklund with Credit Suisse. James Knowlton Wicklund - Crédit Suisse AG, Research Division: A question, when a crew rolls off a contract these days on to spot, what's my pricing differential? What was the difference in the fourth quarter, I mean, just on a pricing basis, not margin basis particularly, but pricing basis, what are we dropping?

Obviously, it depends on the circumstance... James Knowlton Wicklund - Crédit Suisse AG, Research Division: I understand. I'm just talking generally.

Yes. So...

Yes [indiscernible]

Generally, we have not had a lot of -- Jim, have not had a lot of contract work over the last 6 to 9 months. This was a sort of specific situation and in this particular case, it was pretty dramatic. But -- so we don't really have any other experiences to relate to, to try to come up with a general comment. I understand your question, and it's a good one, but not sure we have enough examples to pull from. James Knowlton Wicklund - Crédit Suisse AG, Research Division: Now I assume that you would like to do more contract work. What is the impediment of companies signing you up to do contract work?

Well, Jim, the pricing would be really low right now. Per contract...

Yes. James Knowlton Wicklund - Crédit Suisse AG, Research Division: Okay. So you'd rather be in the spot market and work through that till business gets better before committing to term at these levels?

That is accurate. James Knowlton Wicklund - Crédit Suisse AG, Research Division: Okay. And how many players are there in the Permian that you guys compete against these days? Last count, that was something like 27?

38 to 40, if you're talking about pressure pumping in the Permian Basin. And at some level, we compete with all of them. We're #3 in the Permian for pressure pumping, but there are 35 behind us, and we do compete with all of them at some level. We differentiate ourselves with quality, well-maintained equipment, good safety programs, but price is another component of that as well. James Knowlton Wicklund - Crédit Suisse AG, Research Division: That's a lot of footsteps behind you, no question.

It is.

Yes, sir. James Knowlton Wicklund - Crédit Suisse AG, Research Division: Do you run into cost inflation? I know that's expensive to find places for people to stay and find people. What are you battling in terms of cost inflation in the Permian?

Labor still, Jim. The -- some of raw materials cost prices have actually not increased, in some cases, have decreased. Labor continues to be the big thing -- or not continues, labor is the big thing right now.

And we'll take our next question from Matt Conlan with Wells Fargo.

So Jim just asked my question about why you're not winning contracts, and that make sense that you don't want to lock in at these prices. So unrelated, when you reference the customers using higher-end proppants, does that include a shift from finer sand up to 20/40 sand?

This is Ben. I would say no, it's much more the resin-coated. The impacts we're talking about are moving to resin-coated and ceramics. I think the grade of the sand, the screen size of the sand has a much smaller impact on that.

Okay, good. Thank you very much for the clarity on that. And I noticed that your accounts receivable jumped in the quarter by about $30 million. Is that just a function of specific contracts, specific payment terms? Is that anything that is indicative of a change in trend?

We don't believe so. We don't have any large particular problem areas. I think it was just sort of -- we had a nice uptick in revenues and business, and I think it just flowed through into the AR line for the quarter. So no particular issues there.

We'll take our next question from Byron Pope with Tudor, Pickering, Holt. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: With regard to the 2014 CapEx essentially being flattish year-over-year, I mean, you've generally couched your recent CapEx is being essentially at maintenance levels, and so I'm trying to gauge in that, call it, $200 million of 2014 CapEx, is there much growth CapEx in there for any of your service lines, perhaps Thru Tubing or coiled tubing, or is it essentially maintenance level spending for you guys?

This is Ben. Again, it continues to be primarily maintenance level spending. There's a few specific planned additions, a little bit in pressure pumping, a very little bit in coiled tubing that we can see at this point in time. So obviously it could go higher or lower, depending upon what we see and what happens to industry conditions. But to your point, it's still a large percentage. 70-plus percent is more on the maintaining the size of our fleet. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: And then just a related question, I know you guys are returns-on-capital focused, not asking for specific numbers, but could you rank for your larger service lines where we are currently in the cycle, how they would rank in terms of returns on capital or payback or how do you want to -- how do guys look at it internally? I'm just trying to gauge where -- which of your service lines or how they would rank in terms of returns or payback?

I would say -- I always say when asked that question that returns clearly are measured over an extended period of time. Pressure pumping is clearly under the most pressure compared to where it's been historically. I think our proprietary tools, our downhole tool, the investment in that business unit is certainly the highest. So I would say of those at top 3, I would say downhole tools is the highest followed by coil tubing and then pressure pumping.

We'll take our next question from Thomas Curran with FBR Capital Markets. Thomas Curran - FBR & Co.: Returning to the major dry gas stations, could you refresh us on what percentage of your frac horsepower and coiled tubing fleet, respectively, are based in the Haynesville and Barnett?

Tom, this is Jim. I can run through that. This is some easy answers. Let's do pressure pumping first. We don't do any pressure pumping work or have any assets in the Barnett. In the Haynesville right now, we have true Eastern Texas, Northern Louisiana, Haynesville kind of work, it's 5% of the fleet. In terms of coiled tubing, our coiled tubing units are a lot more mobile. I would say a similar percentage of the coiled tubing fleet is working around in the East Texas, Haynesville area, and maybe a unit or 2 in the Barnett, but not much. So those are small areas for both of us -- for both of those service lines. Thomas Curran - FBR & Co.: Okay, and then in Haynesville, have you had any preliminary indications, however soft and premature from customers, that they're considering an activity response to the continued uptrend in gas prices or what more they might need to see there? And then secondly, when comes to the Barnett, is that a market you would consider entering? Should we start to see an activity response on the dry gas front?

Yes, a quick answer is we'll go where our customers want us to go, and if that's the Barnett, that would be fine. We have not been in that market ever. It seemed to be awfully price competitive, and just hasn't worked out for us. In terms of the Haynesville, we're seeing more indications of the price of natural gas that's going to help activity in places like Oklahoma than we are yet seeing in the Haynesville. And we've always said or we -- our operations people have said for a while that it would take a sustained, above $5 natural gas price to get things going in the Haynesville. Again, you see some things in the Cotton Valley and that area that are -- that respond a little better to increased natural gas prices, but the Haynesville for us would be probably the last place to come back.

And I would add, this is Ben, that the characteristics of the Haynesville with the high-pressure and the wear and tear on the equipment that, that -- it would have to be something pretty special for us to want to rush back in there. Thomas Curran - FBR & Co.: Okay, that's helpful. Last one for me, you commented earlier that you've remained pleasantly surprised by the continued discipline by your peers when it comes to frac horsepower construction. What about on the coiled tubing side? What's the outlook in 2014 for new capacity additions?

There's some private equity sponsored companies that continue to add coiled tubing units. I don't know of any there being added right this moment, first quarter 2014, but we know that in third and fourth quarter, there was some coiled tubing adds by our -- by some of our private equity funded companies out there that are the startups.

I think overall a lot of the bigger competitors, I think, are -- they're aware of the returns, as we talked about earlier, and the pressures. So we think there is decent constraint out there. Thomas Curran - FBR & Co.: But between the 2 markets, it sounds as if the smaller private equity funded startups still haven't quite been entirely discouraged yet so on the coiled tubing side?

Yes, that's correct. That capital seems to be perhaps more patient than one might think.

And we'll go next to Daniel Burke with Johnson Rice. Daniel J. Burke - Johnson Rice & Company, L.L.C., Research Division: Ben, I thought I heard you allude earlier in the Q&A to some self-help initiatives, I think you talked about the potential for meaningful improvement in margins. I was just wondering if self-help's been sort of a popular topic you could elaborate on, on anything you all are contemplating?

Good question. We don't really have any named initiative or anything like that. It's just that something that we always do, always trying to look to, again, control our costs, justify our infrastructure and support costs. And I think the bigger opportunity for us, again, as we move around and do this work, establishing logistical capabilities and establishing relationships with vendors, that's really where the opportunity is. And if we can create that efficiency and at least some improved level of commitment and coordination with the customers, it gives us an opportunity to create those efficiencies and work on our processes and things like that to be able to drive our costs down. So that's some of the initiatives we're working on internally, is just to be able to establish those capabilities and the infrastructure to be able to drive our costs down and create some consistency. It's just very difficult when you're constantly moving around the amount of equipment that's required to perform these big projects. So we need -- again, we need that consistency of work, and I think customers are so focused on trying to drive their costs down, and so they have the upper hand right now. But I think longer-term, they and we want to get to the point where we can have better processes and better control over our costs, and so that's just the types of things we're trying to focus on and focus our best people on to make sure that we are looking for every opportunity to, again, source materials, source vendors, and again, just work on our internal processes so... Daniel J. Burke - Johnson Rice & Company, L.L.C., Research Division: Okay, that's helpful, and 2 real quick specific ones. It was my impressions the contract that rolled turb to spot, that was effectively October 1, right, in terms of capturing that transition?

Yes. Daniel J. Burke - Johnson Rice & Company, L.L.C., Research Division: Okay. And then maybe a final one, just in terms of any change in international activity from Q3 to Q4? I know it's a very small part of the business, but just trying -- and partly captured it through the Thru Tubing description, but thought I'd ask that one.

Yes, Jim, if I'm not mistaken, I think international was down a little bit sequentially, and we are looking at -- do expect international to pick back up a little bit here in the first quarter. Yet to be seen whether it has a meaningful impact or not, but I think it will be incrementally sequentially better.

Yes. Ben, that's accurate. Our -- and Daniel was referring to Thru Tubing Solutions, which about 18% of that revenue is international. We have some other international revenue in our hydraulic workover area. That did decline from third to fourth quarter. So that was not a variance we called out because, Daniel, as you point out, it's a small percentage of our revenue, but yes, other international did decline third to fourth.

[Operator Instructions] And we'll take our next question from John Daniel with Simmons & Company. John M. Daniel - Simmons & Company International, Research Division: Just a couple of follow-ups. You guys alluded to the sort of the pricing arrangements that you all have. Are any of those below spot market today?

Below spot, no. They are spot. John M. Daniel - Simmons & Company International, Research Division: They are spot, okay. And then any of the arrangements have performance-based metrics that, should your efficiencies improve, it allows for price -- upwards pricing movement?

John, I'm one step away from those, but no, I don't believe that they have performance metrics involved with them. I do know because I witnessed it recently that there are very frequent conference calls between the customer and us or our operations people. But I don't believe there's an opportunity in a contract to change your pricing if you do better. John M. Daniel - Simmons & Company International, Research Division: Okay. And then just on the maintenance CapEx, well, first of all, on that discussion, you all noted that there'll be a little bit of incremental pressure pumping expansion this year. Can you quantify a little bit?

It's very early in the year, but we're talking 5%. John M. Daniel - Simmons & Company International, Research Division: Then maybe another fleet basically, is that there?

Yes [indiscernible].

Yes, yes, yes. John M. Daniel - Simmons & Company International, Research Division: Okay. And because the question obviously is where -- given the huge drop-off in margins, it begs the question, why do it, right? [indiscernible]

It's a good question, and we haven't done it yet. John M. Daniel - Simmons & Company International, Research Division: Yes, but does that at least suggest that you're feeling a lot better about the market, that you'd be even contemplating building a new fleet?

We're very -- we feel very good about the long-term and what's long term, but I think there's excitement about the potential for '14, and certainly with the continued industry trends that we've talked about with the longer laterals and greater service intensity and things like that. We think clearly there's lots of opportunities for us, and you haven't said this, but a 5% incremental improvement, that's just filling in some slots and opportunities here and there. It's not really a wholesale addition. Now -- and some of that spending that we're talking about is support equipment and things like that as well. But we, as you know, we are quite disciplined, and the future only knows how well it will perform in the next quarter or 2 or 3 after it's added. But we feel good about our position right now and where we're located, and I think it's a good long-term decision for us.

It's -- I'm sorry, this is -- let me just say one thing. This is Jim. It's almost 10:00 here on East Coast. We don't want cut people off, but if we have anymore questions, we'll take just one more question if there are any more.

And there are no further questions at this time.

Okay. And I didn't know that, folks, by the way, so that was not handicapped at all. Okay, well, if there are anymore questions, we appreciate everybody listening in and your questions and discussion this morning. Hope everybody has a good day.

This concludes today's conference. As a reminder, this call will be available for replay on the company's website within 2 hours. Thank you for attending.