Good morning and thank you for joining us for RPC Inc.'s Second Quarter 2015 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. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. 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. 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 we will make 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 2014 10-K, and other public filings that outline those risks, all of which can be found on RPC's website at www.rpc.net. Also need to tell you that in today's earnings release and our conference call, we refer 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. Our press release today and our website provide a reconciliation of EBITDA to net income, the nearest GAAP financial measure. Please review that disclosure if you're interested in seeing how it's calculated. If you've not received our press release and would like one, 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. Richard A. Hubbell - President, Chief Executive Officer & Director: Thanks, Jim. This morning we issued our earnings press release for RPC's second quarter of 2015. The second quarter of 2015 can best be summarized as a continued deterioration of the operating environment in the oilfield service industry. Over the last two quarters the U.S. domestic rig count has declined from 1,875 rigs at the end of…

Thank you. And we'll take our first question from Luke Lemoine with Capital One Securities.

Hi. Good morning. Richard A. Hubbell - President, Chief Executive Officer & Director: Hey, Luke.

Jim, could you give us a product line break out?

Sure. Absolutely. So what I'm going to quote you is product lines as a percentage of total or consolidated revenue for the second quarter. Number one was pressure pumping at 52.9% of consolidated revenues; number two is Thru Tubing, Thru Tubing Solutions, that's 17.6% of consolidated revenues; number three is coiled tubing at 9.7%; number four is nitrogen at 5.3%; number five is rental tools, which is our Support Services segment, as a percentage of consolidated revenues, it was 3.6%.

Okay. And then in 2Q, on your pressure pumping, were your decrementals worse there than they were in 1Q?

Pressure pumping decrementals, were they worse? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: I'd say they probably were. Don't have the calculation right in front of me here. But, obviously, there's been a lot of changes in the last six months. So, yeah, there was – the first quarter included some good times and some difficult times. And the second quarter was more consistent where we found that level of activity and pricing that's reflected in the results.

Okay. And considering your head count reductions, costs you're taking out of the system, lower pricing, things like that, if we look at 3Q in Technical Services, if activity in 3Q is just flat from the 2Q rig count exit rate, how should we think about decrementals in Technical Services? Would they be pretty flat with 2Q or should they be better? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Flat to better.

Yeah. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: I think flat to better.

Okay. All right. Thank you. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Sure.

And we'll take our next question from Waqar Syed with Goldman Sachs. Waqar M. Syed - Goldman Sachs & Co.: Thank you very much. Could you give us the number for exactly what the working capital changes were? What cash were you able to generate? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: What cash we were able to generate, meaning from, like, operating activity, like, a cash flow look? What are you... Waqar M. Syed - Goldman Sachs & Co.: No. Just from changes in the working capital, working capital as a source of cash, production and receivables, things like that. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yeah. Well, receivables – let's see, actually, I've got only year-to-date information here, but... Waqar M. Syed - Goldman Sachs & Co.: That's okay. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: (12:34) Waqar M. Syed - Goldman Sachs & Co.: We can wait till the Q. That's okay.

Yeah. It will be in the Q. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: But we know the debt. I mean, I think that's important to point out. The debt was $224 million, $225 million at the end of the year. And it's down to $55 million at the end of the June and we expect that to continue to decline. Richard A. Hubbell - President, Chief Executive Officer & Director: Yeah. Waqar M. Syed - Goldman Sachs & Co.: Now you mentioned service intensity is still rising. Could you quantify that in terms of what changes you saw in sand usage and maybe on frac stages?

Yeah. Hey, Waqar. This is Jim. We actually don't disclose frac stages. But we can tell you that service intensity increased pretty significantly. Proppant per stage increased by not 100%, but in the 70% to 75% range. So that's pounds of proppant per stage increased by that much. So service intensity increases were huge. Waqar M. Syed - Goldman Sachs & Co.: Now is that – you're saying year-over-year basis, 70%, 75% increase?

Oh, no. I'm sorry. That's actually sequential. Waqar M. Syed - Goldman Sachs & Co.: Oh, wow. Okay. All right. And then, do you have any of the new fleets still in inventory or everything is now in the field? Richard A. Hubbell - President, Chief Executive Officer & Director: Everything has been received, if that's your question. Everything has been received at this point. No additional horsepower will be coming. Waqar M. Syed - Goldman Sachs & Co.: As in working or are you recognizing DD&A on it, or is there still... Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yeah. Waqar M. Syed - Goldman Sachs & Co.: Some inventory there. Okay, so everything is... Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Everything received has been placed in service, even though as we indicated about 30% is either parked and/or not working in the near term is what we said. And that about half of that equipment is not staffed. Waqar M. Syed - Goldman Sachs & Co.: Okay. Now in terms of equipment attrition, could you give us your views on how much of your equipment could be potentially retired? And what are you seeing in the industry?

Waqar, this is Jim. As you know, we work pretty hard on equipment maintenance. So I can tell you that with the exception of things that might be down for periodic maintenance right now, none of our fleet is slated to be retired or should be retired at this point. So with crews and everything else, everything that's not working could go back to work pretty quickly. Big question on overall fleet attrition in the United States, it's a hard one. We all know anecdotally of some companies that have been – pretty much the entire company has been retired and the equipment has been parted out to various buyers, but we don't have a comprehensive list of that. And since so much equipment is not working anyway, it's impossible to know what equipment that's not working could not go back to work, if you'll forgive those double negatives, if there was demand for the service. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: I'll say, too, that currently our plans are not to reduce the fleet. We will continue to – with our refurb program, albeit, maybe, a little bit slower, but we are continuing with that program. So, again, no current expected or intended reduction to our total fleet size. Let me answer the questions. I did find some information on working capital. For the second quarter, the vast majority of that contribution from working capital was reduction in accounts receivable. Inventories didn't change very much. There was a little bit of a tax change, but primarily it was accounts receivable that contributed the cash flow to allow us that and a little bit, obviously, from operations, but that and the working capital change is what contributed or allowed us to pay down the debt. Waqar M. Syed - Goldman Sachs & Co.: Okay. Do you expect working capital to be a source of cash flow for the second half as well? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: To only a minor degree, but slightly. Yes. Waqar M. Syed - Goldman Sachs & Co.: Okay. And then just one final question, with the sharp sell-off in oil price over the last one month or so, are we seeing a change in conversation with customers? Or nothing has changed from where the oil price – when the price was $60?

Waqar, based on discussions with our field personnel, we have seen changes in the tone of conversations or discussions about pricing, that sort of thing, over the past few weeks as the price of oil has fallen. It makes our near-term visibility about as murky as it's ever been. There are some reasons to be somewhat optimistic and certainly to think that we're at a trough right now. But things have gotten a little bit cloudier based on the recent decline in oil prices and what customers are saying. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: We don't see that currently yet translated into specific customer reaction. They are still asking for more discounts, asking for more pricing concessions. But I'll tell you, and you can look at our results, that our pricing – you can find exceptions, but our pricing is not going to go any lower than where it is at this point, at least not intentionally. We're not – we've found the bottom. We searched for and we found the bottom and that was our intent and strategy, and that's what you see in our numbers. We found the bottom. That's where we are. And if it goes lower from here, there will be other things that we – because we're not going to go there. So if things go lower from here, we'll have to evaluate and take whatever additional necessary actions. But it's not possible to go any lower from here for us. Waqar M. Syed - Goldman Sachs & Co.: Thank you very much. Appreciate that. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yeah. Sure. Thanks.

And we'll take our next question from Ken Sill with Seaport Global.

Yeah. I just wanted to clarify. Last quarter you'd said that some of the new equipment had been stacked, was part of the 15% being stacked. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Is that your question?

(19:05) you're just kind of working it through? Yeah. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yeah. The 15% that's kind of where it equates to; 15% of the fleet is more or less stacked, parked, not being used.

Yeah. And, I guess, the question was, is that some of the new stuff that's been stacked or is it a – I mean, you know... Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yes. Yes. Yes. It's new stock.

Yeah. It's new stock. Okay. That clears that one up. With the reduction in head count, what impact do you think that's going to be having on your SG&A expense going forward? Is that going to drop that at all? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: From here, it might drop it a little bit. More of the reduction has come from the operating personnel as it relates to equipment, well site work activity, that sort of thing. So that's where more of it has come from to-date. So SG&A should come down a little bit from where we were in the second quarter, but, at this point, not significantly. We have not at this point closed any operational locations. As I said earlier if things – that would be the next thing we would look at. And at that point, there would be some direct SG&A reduction if that were to take place, because we would to sport personnel in that operational location. So that's the thing that we would watch for that would most – be most impactful to SG&A at this point going forward, if that were to happen.

Okay. That makes sense. And then getting back to price, I mean, in your prior comments you guys have basically said, look, we're willing to walk away from business that's below what you guys say is cash breakeven. And at current margins, I guess, but your view of you doing the refurbishment is at the price that you're bidding business you can maintain the fleet, but you're not going to work it below that? Is that kind of the message you've been sending to customers? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yeah.

Yeah. Yeah, Ken. That's right.

Okay. And then, I don't know if you want to get into this or not. But looking, so essentially your fleet would be attriting if you weren't doing the maintenance. How long can equipment work before it hits a substantial maintenance expense, say, something that would cost more than $100,000 or $150,000 to keep a unit working? And how long can it work before you have to do one of these kind of major sub unit – sub component repair/replacement kind of things? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Let me comment on one thing, the fluid ends. I want to make sure that that's understood what we were having there. Historically, before 2015, and as you may know, fluid ends cost in round numbers $50,000 to $100,000. It depends on – or could even be a little bit more than that if it's stainless steel or something like that. But if we do a threshold of $100,000, it's somewhere at or just below that sort of level. That's happening routinely; continues to happen routinely. So in terms of our results and what we had in our release, we talked about that. I think it was $11.3 million or so. Really what's happening there, we have not quantified what the net impact is. But really what we're talking about is reclassifying costs between loss on disposition and putting it up in cost of revenue. So it's happening just a little bit quicker. But depreciation's coming down, loss on disposition's coming down, but cost of revenues is going up. So it's really just a slight timing difference, but more of where those costs are hitting. Now beyond that, beyond the fluid ends, which are regularly failing in this environment with the higher service intensity, with some of the more major components you're looking at, and there can be exceptions, but you're still looking at – we're basically looking at a five- year – it depends on a lot of things, whether it's working 24-hour and everything else. But we're looking at a four-year to five-year sort of timeframe to require a major refurb, at least that's what we're looking at. And hopefully, a little longer than that, but that's the timeframe I would estimate at this point.

Okay. That's – I was trying to get, yeah, fluid ends are – they're like candy, I mean, you got to buy them... Ben M. Palmer - Chief Financial Officer, Treasurer & VP: That's right.

They are an expense. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Right.

And there was another question. I saw in one of the E&P press release statements – it'll be my last one, that they had actually – you're seeing a lot of productivity gains on the drilling side, but they said that they're seeing an increase in the number of stages they could do per day from five-and-a-half to six plus. So I'm assuming that's for 24-hour operations? Are you guys seeing? I mean, with more volumes being pumped, are you guys seeing any efficiency gains in terms of the number of stages you guys are getting done in a day? Or is that related more to being more on pads?

Ken, this is Jim. We've seen some incremental improvements in second quarter in the number of stages we can do. But that's a function of job design and a lot of other things. We have accomplished that during the second quarter. I'm not suggesting, though, that that's a macro change in the industry; it's just job mix and what we've been able to put together. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: We like to think that, and I do believe this, in a lot of cases, a lot of it comes down to the execution of the service company, including the frac company coordinating well with the customer. And we feel like that we do a good job with that and we want to go about making sure the customer understands the value that creates. If one service company seems to only be able to get two or three accomplished in a day and we can get five or six plus, there's a tremendous amount of value that's added there. And we want to make sure that we continually point that out to the customer, and hopefully, we'll be able to derive some value for ourselves from being able to be more productive and efficient.

Okay. Thank you.

All right. Thanks, Ken.

And we'll take our next question from Rob MacKenzie with IBERIA Capital Partners.

Great. Thanks, guys. Question for you, Ben, first off, was there any retroactive impact during the quarter from the change in accounting from capital, I think, to expensing fluid ends, et cetera? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: No retroactive. No.

Okay. So that was all second quarter specific? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yeah.

Great. And then, I guess, my other question would be regards to your implication of the future here, cutting the dividend to zero, paying down debt, preserving liquidity to potentially enhance your long-term strategic capabilities. What are you guys seeing in the market there? Is there something you think close that could be of strategic importance and what might that look like? Is that something that would be in the existing product lines? Or are you thinking of adding another arrow to the quiver?

Rob, this is Jim. There's nothing eminent from an M&A point of view at RPC. We are seeing a lot of opportunities, some good, some bad. We're not sure what the industry is going to – may morph into six months or nine months as this recovers. So we just want to be available. We just want to have the ability to look at things. We think we're not uniquely positioned. But we certainly have a strong capital structure and want to enhance that. But there is not anything new since the last we've had discussions that's eminent or in the near-term horizon. That's just a combination of wanting to be as strong as possible financially to not just enhance our viability, but to help with any strategic opportunities that are out there. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yeah. I think it's just a testament to our flexibility. And we certainly have the flexibility to reinstate the dividend as well so when the time comes. So I think it's just another example of our conservatism. But we stand ready. I mean, we've obviously paid dividends for a long, long time. So we stand ready to reinstate it when that makes sense to us.

Great. Thank you. My final question, I guess, would be coming back to the pricing commentary. I think you guys obviously made it clear you were not going to take your pricing any lower. But my question is more along the lines, I know you had at least one large competitor that was very aggressively pricing during the quarter. Are you seeing that pricing aggressiveness from your competitors abate here? Or is this still continuing?

No Rob. In general, as we entered the second quarter, the aggressive pricing from our competitors was continuing. We saw it in rental tools, pressure pumping, things of that nature. So the aggressive pricing is still out there. Yeah. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: And we don't really – I mean, it continues to stay low. We don't know if it's going lower or not. All we know is what we're quoting. And we know when we win or don't win opportunities. So we're not aware of, again, whether they're decreasing it further to get work. We just know what we're willing to price our work at.

Okay. Thank you. I'll turn it back.

Certainly, Rob. Thanks.

And we'll take our next from Scott Gruber with Citigroup.

Morning, gentlemen. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Hey, Scott.

You mentioned that your refurb program continues, but at a reduced pace. Are you tapping your idle equipment to reduce refurb outlays? Is that something you're doing or are considering?

No, Scott. This is Jim. Just to clarify that a little bit. Our refurbishment program is – the need for that refurbishment is a function of time and wear. The wear and tear on the equipment is very high right now. But utilization is pretty low. So if we are refurbishing perhaps less equipment or doing it at a slower pace, and you can probably see that at the end of the year in our capital expenditure line item, it's only because the equipment isn't – doesn't have the utilization and doesn't need to be refurbished right away. We are not – maybe to clarify some of the other conversations, the new equipment that we received in fourth quarter, first quarter, and second quarter, we want to preserve that for better times, higher utilization and certainly better pricing. But financial returns on equipment right now are probably not very high and putting new equipment in the field doesn't make sense. And we are not rotating that equipment into the field to give a rest to equipment that's otherwise not able to work.

And you would anticipate maintaining that strategy if the current pricing regime sustained into 2016?

That's correct. Yes. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: At this point. Yes.

Got it. And on the M&A front, if a sizable attractive acquisition came your way, where would you be comfortable taking your debt load in this environment?

In this environment – I guess, we can answer anything if you say in this environment. Our highest debt to total cap during the nine years we've had, that has been around the 30% range. So I'll throw that number out as the upper – perhaps, the upper-end of the range. But we'd have to look at that just on how good the opportunity is and how we feel about the near-term outlook. That's the answer right now, though.

And do you feel like... Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Today it doesn't feel too good, but hopefully, a couple, three months from now maybe we'll feel different.

Hopefully. And is your sense that asking prices for assets whether it's second-hand assets or whole companies, that's starting to become reasonable now in your discussions as you look across the opportunity set?

Since you don't see too many transactions of viable companies, it's hard to know what the market-clearing price is right now. So it's hard to know how far apart the bid-ask spread is. The asking price, as a percentage of year-ago replacement value, has gotten pretty low. So it's certainly approaching that. But until we see a transaction happen, it's hard to say what the market clearing is. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yeah, I think the quality or the state of the equipment that's being put out there on the market, quality's pretty low. So it's hard to gauge it, I think, from some of the numbers we've heard in terms of percentage off original cost, or whatever. I'm sure a lot of that equipment has been – pieces and parts have been taken off. So again, the quality's very low. So it's hard to gauge where the market value of that equipment is, I think.

Got it. Thanks. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Sure.

All right. Thanks, Scott.

And we'll take our next question from Chase Mulvehill with SunTrust.

Yes. This is Josh Large on for Chase. I just had one question. Could you kind of give us a breakdown of your cost in 2Q in terms of frac sand chemicals, and where they are year-to-date, and, I guess, any expectations going forward with this?

Yeah. Hey, Josh. This is Jim. As a percentage of our cost of revenues on that income statement, it's pretty similar to what we have talked with you about in the past. Our largest category is still what we call materials and supplies, which is proppant, chemicals, guar, things of that nature. It is down slightly below 40% of total cost, and it's usually been 40% or more. Personnel is still high in spite of the cost reductions that we've talked about this morning. That's in the just under the 30% range. One thing that has changed a little bit this quarter is maintenance and repair, and back to this theme of service intensity and replacing fluid ends and all that. Maintenance and repair is up just under 20%. Fuel expense is down a bit, and you kind of go down from there. But those are the major categories. And again, fairly consistent with what we've talked about in the past, except that maintenance and repair's a little bit higher, total employments costs are a bit lower.

Okay. Great. And then with some of those costs like rock sand input costs, what are you guys kind of seeing in pricing concession-wise?

Well, we're still seeing pricing concessions not to the degree – sequentially, not to the degree that we did in first quarter. So the price of proppants may have declined 15% to 20% in the second quarter compared to the first quarter, which is a lower decline rate than first quarter. Trucking expense is off – probably is down, that is to say, probably 25% or so. No relief yet on rail, which, as you know, is a component of transportation for proppant and it's the biggest component of that. In our prepared comments, we talked about changing compensation structure a little bit so that compensation is coming down over time and is coming down, that sort of thing. So there's some relief there on employment. But I think the overall thing to say it is that we got some additional decreases in second quarter, but that percentage decrease was lower than in the first quarter.

Okay. Great. That's all for me. Thank you.

All right. Thanks, Josh.

And we'll take our next question from John Daniel with Simmons & Company. John M. Daniel - Simmons & Company International: Thank you. Jim, want to start off, just a push, Luke's first question in a slightly different, but perhaps more direct way. But do you expect Q3 revenue to be up or down, and your views on margins?

John, Q3, we expect to be up very slightly based on things we know right now. Even with the caveat of just the simple math on the rig count, we still expect it to be up. We didn't talk about weather impact in the second quarter, but there was a small amount of weather impact because of all the rain in some of our areas. And we feel like margins sequentially will improve slightly based on what we know right now. John M. Daniel - Simmons & Company International: Okay. All right. And then, I want to come back to pricing. You guys noted that you don't – I mean, the desire is to not chase pricing lower, that you feel like you may have found a floor. But as Rob mentioned and we heard same things, several of your – certainly your private peers as well as a handful of the E&P players have shared that pricing, particularly from the largest frac companies, has gone lower again in Q3. So if you don't move down lower, I mean, that would potentially argue for lost market share. Is that a concern? And are you willing to let that play out?

Yeah, John. We are. I mean, it's hard to define market share when everybody's so much capacity is idle. I mean, we could even argue about what market share is, how you want to define it. John M. Daniel - Simmons & Company International: (37:25)

-- to have market share when the customer base is pretty fungible anyway, just to say we have high market share, but we're losing more money just we don't see the reason for that. John M. Daniel - Simmons & Company International: I would agree. But, I guess, let me define market share like this: you work for a customer, a good customer, and all of a sudden, a big red company comes in and lowers pricing dramatically, a big blue whatever it is, I don't care. But do you match that to work for that customer? Do you let the work go such that or you don't expect revenue to go down in Q3, something unforeseen happens and you just lost work because someone came in and underbid you? That's the nature of the question. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Well, John, this is Ben. I mean, that certainly is a possibility. John M. Daniel - Simmons & Company International: Yeah. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: I would say, right now and, obviously, it depends on the size of the relationship. And every job is not priced exactly the same. And we all know that or the profitability is not the same. But I would repeat what I said before or to answer your question, no. We would not, to significant degree, in any big relationship, go any lower than where we are now. John M. Daniel - Simmons & Company International: Where you are now. Okay. Thank you for that. And last one for me. When you look at the current share price right now, WTI gas, it likely point to – it would seem to point to lower E&P capital spending next year, perhaps down 10%, 15% year-over-year. Are you guys planning for that now? And what steps would you take if that actually plays out?

John, we're planning on not a strong recovery in 2016. I mean, our view again very murky right now is that 2016 might be incrementally better than 2015, but not a whole lot. So we are planning for some flatness. People are focusing on the negatives right now so are we. But production at some point, unless we've invented some perpetual motion machine in the oilfield, natural gas drilling was at its lowest level during the time these data have been recorded, last week. So unless these wells just keep on producing, by 2016, we're going to start to need to drill more natural gas wells, maybe, maybe not. Maybe it is a perpetual motion machine. But we don't see 2016 being a whole lot better than 2015. John M. Daniel - Simmons & Company International: Okay. You guys are certainly blessed to have a great balance sheet. Thank you for your time today.

Yes, sir. Thank you, John.

And we'll take our next question from Matt Marietta with Stephens.

Yeah. Hey, thanks for taking my questions here, guys. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Sure, Matt.

I want to circle back on attrition. We all know of competitors closing the doors, not bidding work in many cases. But are you guys actually seeing truck fleets being disassembled? I want to understand what's physically happening to the equipment. What gives you the confidence to point out attrition, because the obvious risk here is that this stuff is subject for rebuild in the future at a lower cost basis. So what are you seeing specifically?

Yeah. And, Matt, this is Jim. You can find an example of maybe anything you want to find. And we're bound by NDAs on some of this, but we are aware of one company that, in my opinion, probably had pretty good equipment. They didn't get a bid for the equipment, the assets themselves. And so the equipment has been disassembled. The tractors and trailers for the pressure pumping equipment went on to become tractors and trailers in the common carrier trucking industry. The equipment that's specific to pressure pumping is still, I believe, sitting in a field and I don't know if it's rusting or if it's just sitting there. But that's one case of equipment being disassembled. There are other cases of equipment probably being auctioned off and having a second line. So the reason it's hard to define an attrition rate is that you can find examples of a lot of things that you might want to find if you look at equipment that's not working right now. So that's another difficulty.

But definitely encouraging to hear it's being taken apart this cycle so far. But when you look at consumable parts and new build equipment, have you guys seen any deflation from your suppliers? What have you seen the most of and where do you have the most runway from here? Are there incentives to order equipment out there yet? Are we still kind of sitting at what would be considered about 1,000 horsepower? Maybe elaborate on the equipment side of this.

Yeah. I think you mean $1,000 of hydraulic horsepower, yeah, I'd stick with that benchmark. The equipment guys seem to sort of manage their backlogs pretty well. They don't charge too much during good times and don't give us a whole lot of price breaks during bad times. The industry is looking for different components right now that may last longer in the higher service intensity environments. And those prices are not going down. In fact, there's probably a little bit of a premium for that. But again, that just shows up in the income statement line item and if you're paying more for some of these disposable components, you're expecting they're going to last longer, too. So it's, kind of – there are puts and takes there. So we don't see any declines in price of equipment.

Is it fair to say that most of the cost savings can continue to come from labor from pass-throughs consumable, proppant, et cetera? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Cost savings for us?

Yeah.

Yes. Correct. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yeah. Off the cost savings, yes. I would agree. That's probably – more would come from that side than the product and the equipment side at this point.

Perfect. All out of me. Thanks a lot of taking the questions.

Sure, Matt. Thank you.

And we'll take our next question Jon Evans with JWEST.

Yes. Can you just talk about, or again, I might have missed it, you said you're going to spend $54 million of CapEx in the back half. Is that right? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: I think it's $26 million.

$26 million. Yes.

$26 million total?

Yeah. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: For The last six months.

For the last six month. Very little.

Okay. Got it. And then so the question I have for you, is that – can we take that times 2 and give you a run rate for 2016 in CapEx? Or is that just way too low? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: It's going to be as low as we can keep it.

Yeah. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: I don't know. I mean, a reasonable question, but I have no idea. If I had to lay odds on it, it would probably be more than $50 million next year.

Yeah.

Okay. But just, I mean, and when you speak to that, that is not cannibalizing your equipment, right? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Nope.

No. That's correct. We believe the industry will recover and it may not recover until 2017, but we want to be prepared for it when it does recover. We've seen the problems of not having well-maintained equipment, that is in operable condition. And as long as we are here and working and have a view that people need oil and gas, we are going to keep the equipment maintained. So, yeah.

Great. Hey, thank you for answering my question. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Sure.

Sure, Jon. Thank you.

And we'll take our next question from Byron Pope with Tudor, Pickering, Holt. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc.: Good morning, guys. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Good morning.

Hey, Byron. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc.: Jim, I'm still struck by your comment about the increased in the proppant per stage sequentially in Q2. And if I recall correctly, roughly, half your pressure pumping horsepower is in the Permian, maybe another 20% in the Eagle Ford. So of your equipment that's still working a day, is that regional composition the same? Or has that changed much, say, since the fall of last year?

The composition in terms of location has not changed a whole lot, Byron, except there's been some migration to the Eagle Ford, a little more in the Eagle Ford. So probably about a little over 40% of our equipment is in the Permian now whereas it used to be 48% or 49%. So that's changed. More equipment in the Eagle Ford than there has been in the past. So, yeah, and that's just customer-specific/job-design specific kind of thing. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc.: Okay. And so, it gets to my next question, because it just seems to me that the regional composition hasn't changed much. You guys have historically done a pretty good job of holding on to your core customers. So it sounds like your customer mix hasn't changed since – so it's just a notion of just, as you said, the job mix. And so as we think about the back half of the year with that job mix much higher concentrations of proppants, should we think about putting aside some of the cost reductions? But at the field job level, should we think about the incremental margins on that work being different just because the proppant loadings are so much higher and the proppant volumes are so much higher per well?

It's a valid question. Part of the job mix shift that we've talked about does relate to our bigger presence in the Permian, which has the Permian itself has just become more service-intensive with more unconventional completion, so that's something not to leave out; something to remember. It depends on how efficient we are and how well we execute on things like logistics. It's a valid question. I'm afraid I don't have a really great answer. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc.: Okay. And then last question from me. Support Services, and you mentioned that's still seeing pricing pressures in the rentals business. Just looking at the decremental margins in that business Q2, it almost feels like it's not necessarily a function of price, it's just that the pipe is coming back to the yard just because there isn't a need for it. So is that a fair characterization of the current state of the rental drill pipe market?

Yes. Very fair. Absolutely. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yeah. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc.: All right. Thanks, guys. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Thank you.

And we'll take our next question from James Schumm with Oppenheimer. James Schumm - Oppenheimer & Co., Inc. (Broker): Hey, good morning.

Hey, Jim. James Schumm - Oppenheimer & Co., Inc. (Broker): So you guys mentioned 30% of your pressure pumping fleet is idle and half of it is unstaffed, so half of it is staffed and idle. So are you guys effectively making a bet on some sort of recovery in activity? Or is this more of a normal operating procedure where you normally carry more heads, anticipating some improvement in activity? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: I don't know about a change in strategy, but it's probably somewhat reflective. And that was kind of a snapshot point in time. Not to say that the 15% that staffed worked on July 1, but we kind of view that as a snapshot kind of at the end of the quarter. Some of it is driven by the fact that again we haven't closed any of our current operational locations, but we do have them marginally staffed. So there's a little bit of that going on, right. Some of the lower activity areas that we're trying to maintain a presence and, obviously, actively looking for work at acceptable pricing. So I'd say that's more of it. Clearly, we would like to get it to work and working hard for that to be the case.

Jim, it's a hard balance when you don't know what the future looks like, but labor in the oilfield has been difficult the past few years. And so some of our equipment that is working might be working at lower utilization and we want to keep the cadre of crews intact and working together and trained and... Ben M. Palmer - Chief Financial Officer, Treasurer & VP: And have the ability to respond when an opportunity does come along.

Yeah. Yeah. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: And that's the mode we're in right now, but...

Yeah. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: So we're obviously looking at it and talking about it constantly internally.

Yeah. James Schumm - Oppenheimer & Co., Inc. (Broker): Okay. Okay. Yeah, I know some of your competitors have mentioned they're carrying maybe a higher cost structure than maybe they normally would at this point. But – and then just can you help me with – from a profitability perspective, which one is worse or better, pressure pumping or coiled tubing? And can you just help me quantify the difference between the two?

Yeah. Jim, we don't disclose profitability by service line. But we can tell you that coiled tubing's profitability is higher than pressure pumping right now. James Schumm - Oppenheimer & Co., Inc. (Broker): Okay. Can you say if they're close, or are they – is it a pretty wide – pretty noticeable difference?

I would say, it's noticeable. It's something you can tell the difference in. Pressure pumping is a lot more service-intense. Sorry to keep saying that. But so there's high maintenance and repair, and there's a lot of cost that goes into it. Coiled tubing, as you know, is now a completion service. And it's great when it works. It's not overly taxed. And then pricing pressure, pardon the pun, has really hit pressure pumping pretty hard, as it has all things. But pressure pumping worse than, say, coiled tubing. James Schumm - Oppenheimer & Co., Inc. (Broker): Okay. All right. Great. Thanks, guys. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Thank you.

Okay. Thank you, Jim.

And we'll take our next question from Thomas Curran with FBR Capital Markets. Thomas Curran - FBR Capital Markets & Co.: Good morning, guys.

Hey, Tom. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Good morning. Thomas Curran - FBR Capital Markets & Co.: Returning to the acquisition strategy topic, when we've talked about technology in the past and potential areas of interest, you've acknowledged that there are some technologies under the rubric of smarter engineered completions that could be of interest. Could you speak to that in some more detail? Would you be interested in or at least open to potentially adding software such as to geophysical frac job predictive modeling capabilities or chemicals, such as a diversion agent? What technologically might be of interest from a long-term strategic perspective?

Yeah. Tom, this is Jim. We've actually had some discussions about that internally. But there's – just like on the M&A front, there's nothing that we're – nothing worth talking about right now that we're about to come onto the market with. We totally understand your question. And we think it could be a good differentiator. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: And then something internally, obviously, we're constantly trying to, and we think it's ever more important in an environment like this and going forward to be able to have some technologies that help us sell through, create value for the customer, and accordingly, for us. So it's something that we are as focused on as we ever have been before. But as Jim said, there's nothing on the immediate horizon, but there are some initiatives to try to pursue some of those things perhaps more vigorously than we have in the past. Thomas Curran - FBR Capital Markets & Co.: Okay. And if you were to have identified an opportunity that you thought was the right one, but it was a small private company that was going to require a significant amount of internal investment once you had acquired it, would you be open to that type of buy-and-build acquisition where you'd basically have to potentially move into, say, R&D with technology after having purchased it?

Tom, sure. That's something – that kind of thing is something we've done in our past. You get higher financial returns from building though than buying. And sure, we have the ability, we have the financial ability, and the intellectual curiosity to take on something like that if it was a good idea. Absolutely. Thomas Curran - FBR Capital Markets & Co.: Certainly, you've done some of that already within Thru Tubing, right?

Correct. That's one thing I was thinking of. You could actually say that with pressure pumping also, although not quite to that degree. And in our history we've – with our predecessor companies have had looked at new technology and not been afraid to pursue it. Thomas Curran - FBR Capital Markets & Co.: Okay. Thanks for including me this time, guys. I'll turn it back. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Thank you.

Thanks, Tom.

And we'll go next to John Daniel with Simmons & Company. John M. Daniel - Simmons & Company International: Thanks for putting me back in. Jim, one quick sort of modeling question, just thoughts on the depreciation outlook, if you wanted a quarterly CapEx, sort of, in that $15 million range for a few quarters?

Yeah. John, CapEx and we've said this before and maybe that hasn't quite turned out that way, but CapEx will start to decline on a quarterly basis, but it's not going to decline by a whole lot anytime soon in the next few quarters. Depreciation will decline slightly, but not a lot. John M. Daniel - Simmons & Company International: Depreciation will. Okay. All right. And then on the coiled tubing business, can you talk about the utilization trends and, I mean, I know it is a challenge, but just the trends in utilization today and just if any concerns you may have with regard to the growing use of dissolvable plugs.

Right. Utilization in second quarter was lower than at first quarter. Pricing did not fall by all that much. So the sequential decline in coiled tubing revenue was a function of utilization rather than pricing. We certainly hear about and our guys who know pressure pumping, a lot of people in this room talk about the dissolvable plugs. There's some new potentials that could be worrisome over the long term. You still need coiled tubing for clean-outs. So we're certainly aware of it. We don't see any eminent threats to coiled tubing when a recovery takes hold. Any of these technologies – it's never going to be 100% of the market. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: It's something clearly on our radar. It's something we're monitoring. Something we're looking for – try to be prepared to combat it the best we can and many times those technologies – they typically don't take hold over night. So we're certainly not panicked, but we're aware of it and then are watching it very closely and trying to work through it and be aware of it. John M. Daniel - Simmons & Company International: But you guys at this point aren't investing in your own sort of dissolvable plugs? Is there R&D efforts there?

Something new dissolvable plugs. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: We're looking at all kind of opportunities. John M. Daniel - Simmons & Company International: Okay. Fair enough. All right. Thanks for putting me back in. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Sure, John. Thanks.

Yeah.

And there are no further questions. And I would now like to turn the conference back over to Jim Landers for any additional or closing remarks.

Okay. Thanks, everybody. We appreciate everybody calling in and enjoy the ongoing discussions. Have a good day. We'll see you soon.

This concludes today's conference. As a reminder, the conference will be replayed on www.rpc.net within two hours following the completion of this call. Thank you for participating. You may now disconnect.