RPC, Inc. (RES) Q2 2016 Earnings Report, Transcript and Summary

Good morning, and thank you for joining us for RPC Inc.'s Second Quarter 2016 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. James C. Landers - VP-Finance & Investor Relations Contact: Thank you, and good morning. Before we begin our call today, I want to remind you that in order to talk about our company, we're going to mention a few things that are not historical facts. Some of the statements that will be made on this call could be forward-looking in nature and reflect a number of known and unknown risks. I'd like to refer you to our press release issued today along with our 2015 10-K, and other public filings that outline those risks. All of which can be found on RPC's website, at www.rpc.net. In today's earnings release and conference call, we'll be referring 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 a copy of 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: Jim, thank you. This morning, we issued our earnings press release for RPC second quarter of 2016. Industry activity continued to decline during the second quarter and the rig count once again fell to a record low. The oversupply of service capacity provided larger service companies an opportunity to lower prices to gain market share and forced distress companies to secure work at even lower prices. We continued to price our work to achieve minimum projected contribution levels. While revenues decline roughly in line with the rig count, our operating loss for the quarter was similar to the first quarter's operating loss due to effective cost management. Our CFO, Ben Palmer, will now review our financial results in more detail, after which, I will have a few additional comments. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Thank you, Rick. In the second quarter, revenues decreased to $143 million compared to $297.6 million in the prior year. EBITDA for the second quarter was negative $19.1 million compared to a positive $17.6 million for the same period last year. Operating loss for the quarter increased to $75.2 million compared to a loss of $52.3 million in the prior year. Our loss per share was $0.23 compared to a loss per share of $0.16 in the prior year. Cost of revenues decreased in the second quarter to $127 million compared to $241.6 million in the same period last year. This was due primarily to lower cost resulting from lower activity levels and reduced head count. Cost of revenues, as a percentage of revenues, increased from 81.2% in the prior year to 88.8% due to competitive pricing for our services and lower activity levels. Selling, general and administrative expenses decreased in the second quarter to $36.5 million compared to $40.2 million in the same period last year, due to lower total employment costs from head count reductions, a decrease in several administrative costs including lower travel and entertainment costs. SG&A expenses, as a percentage of revenue, increased from 13.5% last year to 25.5% this year, primarily due to significantly lower revenues. Depreciation and amortization was $56.3 million during the second quarter, a decrease of 19.4% compared to $69.8 million in the same period last year. Depreciation continues to decline as capital expenditures have remained low. Our Technical Services segment revenues for the second quarter decreased 52.4% compared with the same period last year. Segment operating loss was $65.7 million compared to a loss of $49.3 million in the same period last year. Revenues and operating results decreased due to declines in activity and pricing. Our Support Services segment revenues for the quarter decreased 45.8% and operating loss was $7.2 million compared to a loss of $1.5 million in the same period last year. And now I'll discuss our sequential results. RPC second quarter revenues decreased to $143 million from $189.1 million in the prior quarter. The decrease in revenues was primarily due to declines in activity levels and slightly lower pricing. Cost of revenues, as a percentage of revenues, increased from 85.3% in the prior quarter to 88.8% due to lower revenues. SG&A expenses decreased by $7.1 million or 16.3%, due to lower bad debt expense and the non-recurring contingent professional fees that I mentioned last quarter. As a percentage of revenues, SG&A expenses increased from 23% in the prior quarter to 25.5% this quarter. RPC's consolidated operating loss in the second quarter of $75.2 million was approximately the same as the prior quarter. RPC's sequential EBITDA declined from negative $14.1 million in the first quarter to negative $19.1 million in the second quarter. As a reminder, the first quarter 2016 income tax benefit reflects the impact of a favorable resolution of the state tax issue. This increased the first quarter tax benefit by $15.7 million. Our Technical Services segment generated revenues of $131.2 million, 25.2% lower than revenues of $175.5 million in the prior quarter. Operating loss was $65.7 million compared to a loss of $63.3 million in the prior quarter, a 3.8% increase. Revenues in our Support Services segment declined 13.5% due to decreased activity in pricing. Our Support Services segment incurred an operating loss of $7.2 million in the second quarter compared to a loss of $6.6 million in the first quarter, a 7.9% increase. As of the end of the second quarter, RPC's pressure pumping fleet totaled 927,000 hydraulic horsepower, of which 51% is unmanned, but available to work. This compares to 40% at the end of the first quarter due to a decrease in head count to manage our costs in response to lower activity levels. As of June 30, RPC's total head count was approximately 20% lower than at the end of 2015, and approximately 30% lower compared to one year ago. Capital expenditures during the second quarter were $8.7 million, and we expect full-year 2016 capital expenditures to be approximately $35 million. During the quarter, we amended our credit facility to ensure that we will have sufficient access to capital in the event of a significant improvement in our business. We continue to remain focused on maintaining a strong balance sheet and ensuring our equipment is adequately maintained and ready to work. And with that, I'll now turn it over to Rick for some closing remarks. Richard A. Hubbell - President, Chief Executive Officer & Director: Thanks, Ben. The rig count has increased for several consecutive weeks. Activity levels in several of our service lines began to show signs of improvement during June. As we began the third quarter, we are seeing more customer activity and preparing for higher activity levels. While many believe that the domestic oil and gas industry has finally reached a cyclical trough, the lack of clear positive trend in oil prices reduces our confidence and the strength of a near-term recovery. Although these are challenging times and the downturn has lasted longer than expected, RPC is well positioned to prosper when the industry conditions improve. Thank you for joining us for RPC's conference call this morning. And at this time, we will open up the line for your questions.

Thank you. And our first question will come from Rob MacKenzie of IBERIA Capital.

Good morning, guys. Richard A. Hubbell - President, Chief Executive Officer & Director: Hey, Rob. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Good morning.

Question for you. I guess, in terms of your crystal ball and what you're seeing right now. There's been a number of E&P companies that have talked about putting more rigs back to work. We've seen the rig count pick up. We've heard from others so far this earnings season that that they're hearing more conversations from their client. Can you talk to us about what you guys are seeing specifically, especially in the context of being so heavy in the Permian where most of the incremental activity seems to be poised to be coming from? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Rob, this is Ben. I would say, yes, we too are seeing that there're certainly lots of discussion. And as we indicated, we're seeing some increased activity ourselves. I think we've really focused on trying to hold the line on our pricing. And I think the fact that we have secured some additional work here recently. That's an indication that pricing has improved a little bit. I wouldn't say that we said it's headed immediately higher from here, but certainly we feel good about the direction that it's taken here in the short-term. So, we'll continue to monitor that. I don't know that I have any other crystal ball in mind. I mean, we're certainly planning for, looking for, hoping for increased activity, but I wouldn't say that we've taken any firm, hard, definitive action in terms of severely or significantly cranking up our hiring activities or anything like that, but we're planning accordingly. We expect, at some time in the not too distant future, that we'll see some increased activity, but we'll not react ahead of time to that. We're going to remain cautious.

Great. Thanks. And on your pricing comment, would you say that the pricing increase you've seen is primarily just offsetting inflation or is there some net benefit there? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Well, for – I think for us it would be a net benefit. I mean, it's achieving our minimum, again, contribution thresholds that we've been seeking. So, we've been bidding recently fairly consistently. So, just I think the prices have come up, but now we're winning a few more jobs because our bids are securing the work. So, clearly, it's a net benefit to us because it's work that we're willing to do at those particular prices at this particular point in time.

Great. That's very helpful. And then, kind of, on your strategy here to be ready for the upturn, have excess capacity in the market, what kind of incremental margins do you expect we should see when you more fully utilize your equipment of people that are already in the field? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Well, this is Ben, again. Clearly, there'll be very strong incremental margins, but there are so many variables that go into that, that I think to throw out definitive percentages would be not very smart. But clearly, I think they would be strong. It depends on whether it's coming from activity, whether it's coming from pricing or activity and price; it depends on lots of things. But I think clearly, with the cost structure that we have in place today and with any sort of improvement, the incremental's could be quite nice.

Okay. And then one kind of more strategic question, how do you see the market, this next upcycle, being different from the last cycle? Is it your competitors from bankruptcy? What's changed and how do you see this cycle being different than prior cycles? James C. Landers - VP-Finance & Investor Relations Contact: Hey, Rob. This is Jim. The next upcycle, cloudy crystal ball but we certainly think that higher service intensity is an enduring feature of the oilfield service business. That probably means a lower mix peak rig count, but it also means that the equipment will be working harder. So, there are some operational dynamics that change; logistics become even more important, equipment quality becomes even more important. So, we think those are certainly features of the next upcycle. As bankruptcies or insolvencies work their way through the system, depending on how kind the capital markets are, that will tell you how much of the equipment and people remain, and we'll just have to see. The oilfield service market will always overbuild. We would just hope that next time it will overbuild a little more slowly than previous times. And certainly, some of the outside capital backers who've gotten involved in the business this time, because some of their institutional imperatives about the lives of their firms and everything, may have gotten burned enough this time that they will not jump back in so quickly next time. But understand that is a hope as much as an expectation on our part.

Great. Thank you. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Okay. (14:58).

Our next question will come from Marc Bianchi of Cowen & Co.

Hey. Thank you. Just back on the pricing conversation, it sounds like the low end of pricing where pricing was at, perhaps, a loss for some of the jobs that you weren't participating in has kind of gone away. One, is that correct or the right way to sort of frame the pricing situation? And two, is this larger players or smaller players that have sort of changed the way that they're behaving? Can you provide any color on that? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: This is Ben. We've certainly heard that our two largest competitors are talking as if they are pushing pricing. And I think that's probably showing up in some of our success and winning some additional business. I think that what's going to be a differentiator as well is, I think, the more distressed players and whether they'll have the ability to effectively be able to execute jobs on the well site. I mean, it's very difficult if you don't have well maintained equipment to consistently deliver quality services. And we're hoping in this next upcycle that's going to be another differentiator for us, because again, it's something that we very much focused on – the maintenance of our equipment. Now clearly, you can see based on our comments that we're nowhere near fully staffed, but the equipment's in good shape, the next phase when we make that decision will be to add the people to be able to put that quality equipment to work, and we think that'll be a differentiator for us.

Okay. Okay. Thanks for that. On the equipment topic, we've heard some other companies talk about water issues in the Permian, using recycled water, briny water that may be causing some increased wear and tear on the equipment. Is that something you're seeing? And then also curious thoughts on what it may cost to kind of reactivate all the idle capacity that you have? James C. Landers - VP-Finance & Investor Relations Contact: Marc, this is Jim. On the first question, we use a lot of produced water, including in the Permian. It has very high salt content; it also has very high iron oxide content. My understanding from spending time with our operations people is that there's nothing new about excess briny water and having – being hard on the equipment. It does make the chemistry difficult and it makes it sometimes harder to make the gel hold together with the proppant and then break at the right time in longer laterals. But that, as far as I'm aware, does not have anything to do with equipment wear and tear. In terms of how much it was going to cost to get an idle fleet back to work. What we've been saying and continue to say and believe is that we have maintained our equipment including the idle equipment, and so, a lot of those costs are behind us. So, reactivation of our idle fleets is not going to cost all that much money, however it's treated from an accounting point of view. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yeah. I would say, yes. This is Ben. There shouldn't be much capital cost involved other than normal. I mean, we've continued to maintain equipment. So, we've included some of the capital cost to replace component parts and we continue to be not a 100% caught up, but we're right where we normally are with normal down equipment and equipment that needs to be brought back up to spec. So, the cost to us is simply going to be by and large to get the equipment from wherever it is to where we want it to be. Hire the crews, get them trained and get them put in place. So, the cost to the equipment itself will not be very much.

Got it. Okay. Just one more if I could. You had some really impressive decremental margins holding the cost line I suppose here in the second quarter for Technical Services. If activities up, say, 10% or so in the third quarter, what sort of incremental margin should we see in this business? James C. Landers - VP-Finance & Investor Relations Contact: Mark, this is Jim. Ben answered a similar question a few moments ago. It's still a very good question, one we puzzled over. Depends on when pricing comes back. Keep in mind that a kind of breakeven profitability or below profitability, additional activity at current pricing doesn't help you a whole lot. And you can kind of have seen a reverse of that in the second quarter. So, there will definitely be some incremental margins. In the coming quarter, the coming months, coming quarter, you won't see the same incrementals at RPC probably that we saw at the beginning of the last upcycle in 2010. And those are in the 40% to 50% range. So, somewhere between zero and 40%, and I'm sorry I can't be more specific.

Understood. Thanks. I'll turn it back. James C. Landers - VP-Finance & Investor Relations Contact: Okay. Thanks, Marc.

Our next question will come from Tom Curran of FBR Capital Markets. Tom P. Curran - FBR Capital Markets & Co.: Good morning, guys. James C. Landers - VP-Finance & Investor Relations Contact: Hey, Tom. Tom P. Curran - FBR Capital Markets & Co.: Ben or Jim, when it comes time to start re-staffing the available but unmanned horsepower, what mechanisms do you have in place to ensure that you're going to be able to do that as efficiently as possible while adhering to your standards for experience in quality. And do you expect those mechanisms to be an advantage for you competitively, especially given your concentration not just in the Permian, but in the state of Texas? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: This is Ben. In terms of some of the things we're going to do, we don't have any magic formulas. I think it's being well-coordinated across the organization. We have tried to take advantage of and have been working on taking further advantage of some technology to try to speed up or to decrease the time it takes to get new employees on-boarded and into our system. That's always a challenge when you're geographically diversified. So, from that point, if all of the growth came in only a few areas that makes it a little bit easier because there's concentration of effort, communication improves and all those other things. So, I don't know that I would call it a competitive advantage per se, but I think it's just something we concentrate on, we've gone through. Sure, you're familiar that we've gone through a number of growth spurts in prior years. And so, we've had to gear up and design and implement processes to be able to again get the on-boarding taking place. First, getting the recruiting and the job fairs, and getting people on-boarded and after the interview process. So, we've been through it a number of times. It's always a difficult process, but one that I think will do better this time than we had in the past, and I think I expected to go reasonably smooth. And I think when the time comes, we'll be able to get up to speed as quickly as just about anybody. Tom P. Curran - FBR Capital Markets & Co.: Okay. So, I'm not hearing too much concern there about friction or a potential bottleneck? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Well, I don't want to say this. Again, I think, I said that it's not going to be simple. I think it'll be a challenge, but I think we've got a number of things. We've already been kicking around some ideas about how to try to jumpstart the process when the time comes and clearly, I think, the type of people you get, whether you can get experienced people or people that are brand-new to the oilfield that can make a big difference. So, those will be things that we make decisions about and implement specific steps to try to take advantage of those opportunities where we see them. Tom P. Curran - FBR Capital Markets & Co.: Thank you for that, Ben. Jim, in the past, you've shared some telling insightful anecdotes about the secondary market for frac horsepower. How has that market evolved since the last call? James C. Landers - VP-Finance & Investor Relations Contact: So, Tom, I think the fair market, if you want to call fair market value because it's a distressed sales, so it may not be fair market. The fair market value, as a percentage of replacement cost during a normal cycle, stays at around 20% of fair market value somewhere – 20% of replacement cost. We haven't seen too many transactions in the past month or so. One thing that's kind of interesting now is that we have seen some fairly new equipment. In other words, it only has a few hours on the pumps, which means it's never been used on a job that's been for sale at maybe 30% or 40% of replacement cost new. So, if you're in the market for new equipment, you would buy a few of those pumps before you buy the rest of the fleet. We have not seen too many offers or really any in the past month or so for distressed sale equipment, and I don't know exactly what that means. We also know one merchant bank on the West Coast that has been acquiring distressed frac in other oilfield service equipment and selling it in another secondary market, kind of, when the time is right. But, really not a lot of change recently, and we haven't seen many transactions or many potential transactions recently either. Tom P. Curran - FBR Capital Markets & Co.: Okay. Last one for me, two-part housekeeping question. Jim, could you just give us the standard breakdown for Technical Services revenue by segment? And then also, tell us what your sequential change was in profit consumption per frac stage. James C. Landers - VP-Finance & Investor Relations Contact: Yes. Sure thing. So, this is in descending order of size and as a percentage of consolidated revenue. Pressure pumping was 41.8% of revenue for the quarter. Thru Tubing Solutions was 24.5% of revenue for the quarter. Coiled tubing was 9.8% of revenue for the quarter. Nitrogen was 5.6% of revenue. And Patterson Tubular Services, which is our pipe handling storage and inspection business along the Gulf Coast, was 4.2% of revenue. Then sequentially, our amount of proppant per stage, which is sort of our proxy, our measure of service intensity, increased by a little less than 4%. Tom P. Curran - FBR Capital Markets & Co.: Great. Thanks for the answers guys. James C. Landers - VP-Finance & Investor Relations Contact: Okay. Thanks, Tom.

Our next question will come from Jim Wicklund of Credit Suisse. James Wicklund - Credit Suisse Securities (USA) LLC (Broker): Good morning, guys. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Good morning. James C. Landers - VP-Finance & Investor Relations Contact: Hey, Jim. James Wicklund - Credit Suisse Securities (USA) LLC (Broker): Last year, we were all listening to – I know there'd be a bid in the Permian and there'd be 37 or 39 people bid, which is ridiculous. How many people are you seeing in tenders now in the Permian when you put a little bit of equipment back to work, how many people are out there bidding these days? James C. Landers - VP-Finance & Investor Relations Contact: Jim, this is Jim. Many fewer. There're probably 12 potential bidders. How many people show up? Fewer than that. So, the number of bidders is greatly diminished. And having said that, there've been a few people like, I can think one, that have come into the Permian from other markets just because it's the least bad in many ways. But in general, the number of bidders has greatly diminished over the past year. James Wicklund - Credit Suisse Securities (USA) LLC (Broker): That's helpful. The number 12 beats number 37 all day long. James C. Landers - VP-Finance & Investor Relations Contact: Bids as well. James Wicklund - Credit Suisse Securities (USA) LLC (Broker): In your prepared management commentary, you note that the lower prices and provided larger service companies an incentive to lower pricing and gain market share. And we've heard about the big two doing some predatory business, but you guys also mentioned that your pricing is moving up because the big guys are pushing pricing. Have the big guys in your market, have they seem to abandon that incentive lower pricing and gain market share, and they're now sweeping you guys up in the move to higher pricing? James C. Landers - VP-Finance & Investor Relations Contact: Jim, we have heard that maybe coming but we have not yet seen it in financial results. So, we have heard that the bigger people who have the opportunity to do that have said pricing is unsustainable. We're going to start doing some different things. We have heard that, and have no reason not to believe it, if you don't mind a double negative. We haven't yet seen that in our financial results, or it hasn't yet materialized in consummated pricing, in other words pricing that we've won, but we do that for you (29:09). James Wicklund - Credit Suisse Securities (USA) LLC (Broker): So, you guys are talking about before you do as well. I'll take that. Of the horsepower that you currently have working 50% or so utilization, how much of your spreads are working 24/7 today? James C. Landers - VP-Finance & Investor Relations Contact: About 40% are configured to work 24/7. James Wicklund - Credit Suisse Securities (USA) LLC (Broker): Are they actually working though 24/7? I'm just trying to understand how much capacity you could bring to the market in terms of servicing your customer by just hiring another shift without actually putting any of your idle horsepower to work. James C. Landers - VP-Finance & Investor Relations Contact: Yeah. Yeah. I know that's part of your investment thesis on how the recovery is going to look. Our utilization, Jim, on our marketed fleet is very low. And it doesn't surprise you. So, when you talk about fleets being configured for 24-hour work, that means they are the right size and have the appropriate crew size, but they're working at pretty low level. So, those 24-hour fleets could work more than they're working now and I'm sorry, it's not... Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Jim, this is Ben. We did have, though, a pretty high percentage of the work during the second quarter was utilizing the 24-hour crew. So, I think that if that's an indicator maybe that is a trend that will continue and something that will take into account as we do our hiring and configure our crews and how we prepare them to work. James Wicklund - Credit Suisse Securities (USA) LLC (Broker): Okay. My last question, if I could. And I know this is an open-ended thing, but when should we expect – and I realize that none of us have crystal balls that work very well, but it seems obvious that if you just leave the future strip that 2017 will be some piece better than 2016 and most people believe 2018 will start getting back to almost a normalized market if there's actually such a thing going forward. Now that the rig counts quit going down, when do you think you can get your cost cuts to the point that you can get to breakeven? Is that in 2017 or is that an 2018 event? James C. Landers - VP-Finance & Investor Relations Contact: Breakeven P&L, Jim. I assume... James Wicklund - Credit Suisse Securities (USA) LLC (Broker): Yeah, just breakeven. Just that we get to the point that we're not losing money anymore. James C. Landers - VP-Finance & Investor Relations Contact: I think that's a determination... James Wicklund - Credit Suisse Securities (USA) LLC (Broker): (31:34) price and all, but I mean which year should it be? James C. Landers - VP-Finance & Investor Relations Contact: I think what you're asking is a combination of revenue increases and our cost structure being in line. James Wicklund - Credit Suisse Securities (USA) LLC (Broker): Correct. Correct. James C. Landers - VP-Finance & Investor Relations Contact: Just for the caveat that it's a muddy crystal ball that... James Wicklund - Credit Suisse Securities (USA) LLC (Broker): We won't hold you to anything, I promise. James C. Landers - VP-Finance & Investor Relations Contact: Yeah, yeah. It's probably 3Q of 2017, if things work well. If we gain 10 rigs a week for the next nine months or so. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: This is Ben. If the market gets as high it is, some people are indicating as quickly as it could. If I had to pull a number out of the air too, I would probably throw it out there, mid to late 2017. But I mean, as you know, there're so many variables involved in that. James Wicklund - Credit Suisse Securities (USA) LLC (Broker): No. No, there's too many moving parts, but just an idea, so that's helpful. Let me stake one more in. There was a question asked earlier about hiring people. Most of your operations are so centered in the Permian, and Midland doesn't have a whole lot of competing industries. How long do you think it would take to go out and hire and train another shift to go to work on one of your spreads? Is that five weeks or is that five months? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: You're talking about one incremental crew? James C. Landers - VP-Finance & Investor Relations Contact: Yeah, one incremental crew? James Wicklund - Credit Suisse Securities (USA) LLC (Broker): Yeah. James C. Landers - VP-Finance & Investor Relations Contact: Four weeks or five weeks; we just asked the question. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yeah. James C. Landers - VP-Finance & Investor Relations Contact: Yeah. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: As long as it's one crew. James Wicklund - Credit Suisse Securities (USA) LLC (Broker): Thanks much. Thanks so much. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Thank you. Sure.

And our next question will come from John Daniel of Simmons & Co. John M. Daniel - Simmons & Co. International: Hey, guys. Good morning. James C. Landers - VP-Finance & Investor Relations Contact: Hi, John. John M. Daniel - Simmons & Co. International: Just have a few for you today. Can you speak to the sequential change in stage counts as well as the monthly stage count evolution during Q2? James C. Landers - VP-Finance & Investor Relations Contact: John, this is Jim. We knew you'd ask that question. June was the best of the three months. May was the worst, but there was not – I mean, June was the best month of the quarter, but it wasn't a marked kind of big difference. But, June was definitely the best month of the quarter. John M. Daniel - Simmons & Co. International: And is July shaping up to be better than June? James C. Landers - VP-Finance & Investor Relations Contact: It is, incrementally. Incrementally. Yes. John M. Daniel - Simmons & Co. International: Incrementally. So, probably top line up, mid to high single-digits quarter-over-quarter, or are we...? James C. Landers - VP-Finance & Investor Relations Contact: John, that's fair. Quarter-to-date, the rig count is up sequentially by a little over 7%. I hope that we can get what the rig count gives us and maybe a little bit more. So, I think that's fair. John M. Daniel - Simmons & Co. International: Okay. You mentioned that you've recently secured additional work. Is that incremental crews going back or just better utilization for existing fleets? James C. Landers - VP-Finance & Investor Relations Contact: Was that – the latter? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yeah. Yes. It's mostly just better utilization of existing crews. John M. Daniel - Simmons & Co. International: Okay. Just a couple more quick ones here. And, when companies do emerge from the bankruptcy process or the debt restructuring process, and have clean balance sheets like yours, are you concerned that competition may potentially become even more intense than what it is today? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: John, this is Ben. I think there is debate about that. On the one hand, to say it seems really unfair for a distressed company to "snap their fingers" and prepackage bankruptcy and come out, and they've got a nice line of credit and all those other things. And we fear and need to try to certainly be cognizant of what they may be capable of doing. But I just have to imagine – I haven't obviously been invited in to any of those company's corporate offices or field locations to see what the attitudes are like and what the condition of their equipment is like. People have a working capital loan but their equipment has been ravaged and not maintained and cannibalized. How hard is it going to be to effectively get that equipment back in working order, mechanical order. And then just the attitudes of the people and their ability to attract quality personnel into a company that still is pretty distressed and that kind of thing. So, I think clearly the fact that they don't go completely away is certainly something to be aware of and to keep our eyes open to. But I think there's going to be a lot of challenges for those players. And that's something, again, alluding back to what I said earlier, it's going to be very difficult then for them to consistently provide quality services. And I hope that we'll be able to take advantage of those situations and try to capitalize on our consistency and quality of service. James C. Landers - VP-Finance & Investor Relations Contact: And then, John, another element is that we're seeing a lot of these distressed companies are treating their suppliers so badly that their suppliers are mad at them, and that's also impacted the customer, because in some cases the second tier suppliers are putting liens on the customers' wells. So the debate is, how long are people's memories and I don't have an answer to that. But certainly, the reputation of the individuals is bad. And I think if during these really, really bad times you get stiffed by one of your customers, if you're a trucking company or a sand provider, I think you'll remember those people when times get better the next time around. So, we are hopeful that there's still some justice for people who have good capital discipline and good business practices. And that is how we are going forward. John M. Daniel - Simmons & Co. International: All right; fair enough. Two quick ones and I'll turn it back over. What would you like to do with your cash position? And specifically, how actively are you looking at acquisitions right now? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: This is Ben. We, for the last several months, again, tried to keep our ears open and we've reached out to a number of folks, but nothing that's really hit us. I guess, today, given that, again, there's been a little – obviously a few weeks here of rig count increases, that again, we feel a little bit better about our business and the opportunity to maybe look for a nice tuck-in acquisition, but there's nothing on the horizon. But again, we would love to find something small. I think we're confident enough at this point that – again, something small that could really add something to our service offerings would be nice, but there's nothing right before us at this point. John M. Daniel - Simmons & Co. International: And last one for me and I'll jump back in. What's the utilization and outlook for your sand operation? James C. Landers - VP-Finance & Investor Relations Contact: Presently very low and outlook, it just depends. I mean, a lot of people talk about sand tightness. We – part of our thesis is service intensity increasing. So, we are ready and looking forward to more sand demand, but it's not there now. John M. Daniel - Simmons & Co. International: Okay. Thanks, guys. James C. Landers - VP-Finance & Investor Relations Contact: Okay. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Thanks, John.

Our next question will come from Byron Pope of Tudor, Pickering, Holt. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc.: Good morning, guys. James C. Landers - VP-Finance & Investor Relations Contact: Hey, Byron. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Hi, Byron. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc.: I've just got one question. In thinking about the revenue breakdown that you gave, Jim, it's a little bit different as we've gone through this downturn with Thru Tubing Solutions having a slightly higher percentage of the mix than at the prior cycle peak. And so, maybe for the three largest segments, pressure pumping, Thru Tubing Solutions, coiled tubing, can you just remind us at a high level the nature of the cost structure as you think about it in terms of fixed versus variable? I'm just trying to think through as the next upcycle unfolds how to think about the potential margin improvement associated with those three largest service lines from a revenue dollar perspective. James C. Landers - VP-Finance & Investor Relations Contact: Byron, in general, pressure pumping is a higher variable cost, lower fixed cost business. So, pressure pumping has had higher variable costs. Thru Tubing Solutions, kind of the same way; Thru Tubing Solutions has a high personnel cost, employment cost component in its cost structure. Coiled tubing maybe a little bit less on the variable cost part of things. So that's probably a decent way to characterize it. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yeah. Most, variable pumping; next, coiled tubing; and last, Thru Tubing. And the big driver for Thru Tubing, a lot of that is their technology and innovation, which is driven by a lot of other things. Strength of pricing and so forth is the demand for some of the techniques that they have. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc.: Okay. And then just a quick follow-on related to that. So, during this downturn, I'm assuming that at least some element of fixed costs have been taken out of the structure that should benefit during the next upcycle. Is it fair to think that those might be more skewed toward pressure pumping or would you say it's more balanced across the service lines in terms of where you might have been able to take some fixed costs out of the system? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Well, I think this may answer your question. We talked about head count reductions, that was consolidated head count reductions and there have been more that have come in pressure pumping than the other service lines. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc.: Okay. It's very helpful. Thanks, guys. Appreciate it. James C. Landers - VP-Finance & Investor Relations Contact: Thank you, Byron. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Thank you.

Our next question will come from Matthew Johnston of Nomura.

Hey. Good morning, gentlemen. James C. Landers - VP-Finance & Investor Relations Contact: Hey, Matt. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Hi.

Hey, I was just wondering if you could talk a little bit about how you think you're positioned on the logistics front, your ability to move sand, other proppant chemicals, fluids, et cetera from point to point. I know you probably stack up pretty well versus your peers today. But if the next upcycle is going to be characterized by higher service intensity and higher volumes for everything getting pumped down whole then presumably the industry infrastructure is going to be stressed. How do you think you stack up today? Do you think you'll need to make some more investments as the recovery unfolds on the logistics front? James C. Landers - VP-Finance & Investor Relations Contact: Matt, this is Jim. We have a good position in the Permian basin, and I think our logistics capabilities are strong and intact there. So, I think that's a positive for us. I think in some other basins, I think in the Mid-Con, we're pretty well positioned. The Eagle Ford has historically been a little bit difficult, but I think we're pretty well positioned there. If and when activity really comes back in the Bakken and for us in the Marcellus, we're going to have some work to do just because those areas have not been strong for us. I mean, they don't have great logistics capability. One thing we learned in the last cycle and over the past six years of expansion is, I think we learned some lessons about how to have logistics in place. How to work with the trucking companies for the last mile? How to manage transload facilities and just as importantly kind of on playing defense, how the price work when you know that your logistics may not be as good in one basin as in others. So, I think we've got some learnings for the next upcycle, which is not exactly answering your question. But I think we're well positioned in the Permian, and we'll have to think about some things in the Marcellus and the Bakken as things come back there.

Okay. Got it. Thanks. Thanks for that. That's great. And maybe just one quick follow-up, Jim, maybe you could just lend us your insights on the most up-to-date view on oversupply for hydraulic horsepower capacity throughout the industry. Any updated views on fleet attrition throughout the industry? James C. Landers - VP-Finance & Investor Relations Contact: Still oversupplied. The U.S. land market for hydraulic horsepower right now is probably 4.5 million hydraulic horsepower. In terms of the fleet that is out there that could go to work, and not counting personnel issues, we're just talking about equipment and equipment readiness. It's probably anywhere from 12 million hydraulic horsepower down to maybe 10 million. And that is, again just to emphasize, equipment that is ready to work whether or not the crew is in place. So, we're still oversupplied by several turns there.

Got it. Great. Thanks, guys. That's it for me. James C. Landers - VP-Finance & Investor Relations Contact: Okay, Matt. Thanks.

We'll now move on to Praveen Narra of Raymond James. Praveen Narra - Raymond James & Associates, Inc.: Hey, good morning, guys. James C. Landers - VP-Finance & Investor Relations Contact: Hey, Praveen. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Hi. Praveen Narra - Raymond James & Associates, Inc.: Just a couple questions. I guess in terms of as we look to the upcycle, how do you guys think about the CapEx needs as you go forward and need to reactivate your fleets? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: This is Ben. We touched on that briefly earlier. I think CapEx needs to reactivate the fleets will be minimal. More of the incremental cost is going to be on the interim period between recruiting and hiring and training and getting the crews up to speed. That's going to be where the vast majority of the incremental costs are going to be before they can begin to contribute. And we talked earlier about that could take as little as three weeks to four weeks, maybe as much as three months to four months to get a incremental crew put in place. And so, that's where that is. CapEx needs not that much. And when we look at, I'm sure many people have done this before, if you look at our total horsepower, and therefore our capability, we have a lot of brand-new equipment that's never worked before, that's not been put into field. So, we feel that we will not need to have a significant capital investment or expansion activity to be able to get up if industry conditions allow it to get up to generate significant cash flows again. So, I do not anticipate that we'll have, unless there's just a tremendous demand that we won't need to have a lot of capital investment for an extended period of time. Praveen Narra - Raymond James & Associates, Inc.: Okay. Perfect. And then, I guess, with the idea that you guys are seeing that we're at a cyclical trough and maybe M&A deal flow isn't as good or the opportunities aren't as good. How do you think about maybe revisiting the share repurchase program? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: This is Ben. Again, it's one of those things we always look at a combination of everything, share repurchases, dividends. At this point, it's all about maintaining the balance sheet and we'll have to have a lot more visibility and comfort with the direction and the duration and the speed of recovery in the industry before we're doing anything really aggressive. So, I think we're just trying to preserve the balance sheet and the cash, and we'll know lot more. Again, once we feel like things are sustainable and we have some comfort level with what the future looks like. Praveen Narra - Raymond James & Associates, Inc.: Okay. Perfect. Thank you very much, guys. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Sure. James C. Landers - VP-Finance & Investor Relations Contact: Thanks, Praveen.

And our next question will come from Jud Bailey of Wells Fargo.

Thanks. Good morning. James C. Landers - VP-Finance & Investor Relations Contact: Good morning. Hey, Jud.

Hey. A follow-up question on the stage count commentary earlier. Jim, did you say what was your stage count decline sequentially in the second quarter? I think I missed that. James C. Landers - VP-Finance & Investor Relations Contact: No, you didn't. We didn't say it. Let' see. In percentage terms, we just kind of sometimes talk around some of these numbers. But it was, as Ben has said in his prepared comments, it was responsible for the majority – activity levels declines were responsible for a majority of our revenue decline, and it was in the 30%-ish range.

30%-ish range sequentially for stages. Okay. Got it. And my other question is just a little more broad. If we think about the second half of the year, obviously, activity has started to move up some, inquiries are up and you're having dialog with customers it sounds like. Well, I guess, that you're also more cautious given the recent pullback in oil, which most people are. If oil, let's say, is $45 for the rest of the year, is it reasonable to think that we see on a 5% to 10% increase in activity in third quarter. And can activity continue to gradually move up in the fourth quarter or do we slip back down? I guess, I'm trying to figure out, do we need $50 to see continued gains at the end of the year or can we still move up even if oil stayed $45. I'd be curious in your thoughts. James C. Landers - VP-Finance & Investor Relations Contact: Jud, it's probably a matter of degrees. But the conversations and the work we're pricing today are for customers who are going to sell their oil in the market for mid $40s. We think $42 has a lower – if that's where the price is today that has a lower bias and the trend is not going in the right direction. But between $45 and $50, the incremental activity at that our customers are talking about I think stay in place. It doesn't get us back to our, I alluded to a 10 rig per week increase for the next year, that's probably not going to happen. But it still has some sequential improvement in place if we're $45 or north or there.

Okay. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: If you want my crystal ball, this is Ben. James C. Landers - VP-Finance & Investor Relations Contact: Yeah. James C. Landers - VP-Finance & Investor Relations Contact: I think, at $45, I think, we've seen some incremental improvement I think we'll continue to maybe see a little bit, but I think it needs to be at up closer to $50 or north of $50 or otherwise we're going to be subjected I think to the holiday slowdowns that sometimes we experience, and then people will be looking to early next year. So, that's the big question in my mind about the ultimately what the fourth quarter looks like, is, if it's sort of bumps along where it is right now, the increases will be muted, but if it begins to head up, people may feel like we got to get out there and get the work arranged and we're not going to take the long holiday, we need to get moving. So, I think it needs to be headed up toward $50 and higher to continue the current trends or increase the pace of growth.

Okay. No. That's helpful. Thanks. And then, my follow-up is, can you comment on the mix of operator's size, you're having discussions with? Is it big E&Ps, is it smaller privates, is it somewhere in between, if you can maybe comment on that please. James C. Landers - VP-Finance & Investor Relations Contact: Jud, this is Jim. It is our customer base, which typically is the large independents. Those are the people where pricing work for and planning to go to work for more.

Got it. Okay. Thanks. I'll turn it back. James C. Landers - VP-Finance & Investor Relations Contact: Thanks, Jud.

Our next question will come from Brad Handler of Jefferies.

Thanks. Good morning, guys. James C. Landers - VP-Finance & Investor Relations Contact: Hey, Brad. Good morning.

Hi. Hoping maybe just a little bit of clarifying here for me. I think a lot of the conversation around activity and pricing related specifically to frac. But just curious about coil, pipe handling maybe on the rental side, just to name a couple of dynamic competitive markets as opposed to Thru Tubing, which might have its own dynamic. If we look at revenues, for example, in coil, it's a little hard for us to calibrate, right, because Q1 had some specific variables. You recovered a little bit in Q2, and maybe it's now back on par with the market. But if you could maybe just – what pricing dynamics do you see or are they comparable to frac in a couple of the markets I mentioned? Are you doing more bidding work in those areas? Sorry for the multipart question here, but then, as it relates to coil and perhaps the other parts of the business, what should we read into some of the production support side of activity and inklings around demand there? So, thanks, and I can get back to remind you if there were too many parts to that question. James C. Landers - VP-Finance & Investor Relations Contact: We've kind of short attention spans, Brad.

Believe, I hear you. James C. Landers - VP-Finance & Investor Relations Contact: Yeah. I can speak to a couple of dynamics. This is Jim. Pressure pumping, pricing for that service has clearly been under the most pressure, forgive that pun over the past year. And there was renewed pricing pressure in second quarter, and that was a little bit of a surprise to us as perhaps to others in the industry. So, pressure pumping has been hurt the worst. Coiled tubing's revenue actually increased sequentially a little bit. You can kind of read that in the percentages of revenue that it comprise. And we think the supply-demand dynamic might be a little bit different in coiled tubing, I mean, everything is oversupplied right now, but coil tubing is probably less oversupplied or it's definitely less oversupplied than pressure pumping, maybe we can just go ahead and say that. In our tubular handling business, that's more a function of volume and the service we're providing. So, on a true comparable concept, it's hard to say that pricing is down or up, that business just doesn't move that way. The coiled tubing has been a little bit stronger. Our rental tools is drilling related. Pricing has declined a lot there, but in the overall dynamic, pressure pumping has been the worst. Our bidding and our potential work in the third quarter that we think is materializing is in the Permian and the Eagle Ford and a little bit in the Bakken, believe it or not. There's some discussions there that where some work might materialize. The Marcellus continues to be weak for us at RPC and that maybe company-specific. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: I'll add, Brad. This is Ben. I think for Patterson Tubular, it's been a pretty nice steady performer during this time period. Some of that is the customers we serve and it happens to be primarily focused offshore and I know offshore has been a little bit bumpy, but we've been fortunate with some of the technology we have there on the inspection side that we've been able to keep that work fairly steady. So, it's been a nice contributor throughout this cycle.

Okay. So, to paraphrase, just cherry-picking a couple things, and thank you for that broad brush. That was very helpful. So, the pricing in coil hasn't been – just to pick on that first, pricing in coil hasn't been as affected as much. But just to clarify, is there some push upwards, or do you have a little bit of latitude as if finance activity is also pushing upward a little bit in coil in the second half of the year? James C. Landers - VP-Finance & Investor Relations Contact: Coil tubing pricing has actually improved a little bit towards the end of the second quarter, Brad. That is...

Okay. James C. Landers - VP-Finance & Investor Relations Contact: Perhaps, neglected to say that, but that's the case.

Okay. All right. That's helpful. And then I get you on the tubular handling and the steadiness of that. So, that's helpful. Okay. And then just maybe specifically to the exposure you do have to true production-oriented activities, whether it's through Thru Tubing or in coil, what inklings are you getting around demand for that from your customers today? James C. Landers - VP-Finance & Investor Relations Contact: We probably don't have enough exposure or enough deep knowledge about the exposure that we do have to have much to say there. I mean, some of our surface pressure control tools and some of the metering type equipment, we're seeing a little more demand, but there's nothing that stands out either positively or negatively from the rest of our services.

Okay. James C. Landers - VP-Finance & Investor Relations Contact: Yeah. Probably can't help you there.

Got it. Okay. Understood. Thanks. And I'll turn it back. James C. Landers - VP-Finance & Investor Relations Contact: Okay. Thanks, Brad.

And we'll take a follow-up question from Marc Bianchi.

Thank you. Just back to the idle fleet and kind of what it would take for you to put it back. Some other companies have talked about a certain amount of price increase that they would need. Is there a number that's sort of a rule of thumb for you, or something you're thinking about in terms of a price increase that would be required to reactivate a crew for a customer? James C. Landers - VP-Finance & Investor Relations Contact: Marc, when asked that question recently in conferences and things we've said anywhere from 15%, some of our peers, similar peers, have said 20%, 25%, 30%. Unfortunately, the nature of the jobs is just so varied that it's impossible to put a rule of thumb on it. I mean, if a new job comes up and pricing may not be great, but it's proppant we have in a good basin with good crews, that required pricing increase would be lower than if it were in a basin where we didn't have good infrastructure, et cetera. So, there's a very wide variety of variables (57:58). Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yeah. This is maybe obvious, but this has been – if there was one particular job that came in and there was a significant price improvement, would we reactivate a crew? I'd say no. I mean, we're just like the operators. We're trying to look ahead. We're trying to see where do we feel like the trajectory of activity and pricing is? How comfortable are we? What's our feel for what our customers are saying? We'd be much more likely to initiate and move forward aggressively to add a crew or crews if a customer was making some sort of commitment to us in terms of the amount of work, where the work would occur and things like that. So, we have had, we'll have those conversations with customers, and how we feel about those conversations will also drive how quickly and aggressively we add crews. But clearly it would have to be – pricing has improved a bit, so some of the pricing we've been submitting at our minimum levels are now hitting. We'll see where pricing goes from here and how durable we think that is and what the trajectory is, and that'll be a factor in, again, when and how quickly and aggressively we begin to add crews.

Okay. Thanks very much. James C. Landers - VP-Finance & Investor Relations Contact: Thanks, Marc.

And we'll take another follow-up question from John Daniel. John M. Daniel - Simmons & Co. International: Guys, thanks for putting us back in. Jim, depreciation was down about $4 million this quarter. Can you just walk us through how that should evolve given the low levels of capital spending? James C. Landers - VP-Finance & Investor Relations Contact: Yeah. So, sequentially, depreciation should continue to decline by roughly that dollar amount each quarter. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Yeah. CapEx remains low. Yeah, that's kind of a – that trend here for the long (59:50). John M. Daniel - Simmons & Co. International: Fair enough. Okay. And then, did Q2 include any severance related costs built into the segments, and if so, can you break that out? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Probably not enough that was significant enough to be notable. John M. Daniel - Simmons & Co. International: Okay. James C. Landers - VP-Finance & Investor Relations Contact: Yeah. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: There will be a small incremental benefit moving forward, all things being equal, but not really that big. James C. Landers - VP-Finance & Investor Relations Contact: Yeah. A little bit of warrant, ex-severance, that sort of thing, so. John M. Daniel - Simmons & Co. International: And I know you weren't trying to provide specific financial guidance, but you mentioned the possibility of being earnings positive during second half 2017 (1:00:23). And again, I'm sure that's probably more just gut than anything, but is that view based off of reviewing a bunch of sell-side rig count and E&P capital spending forecast or is that based more on specific discussions of customers regarding their 2017 spending plans, the collapse in your depreciation expense and the benefits of the cost cuts? Just, given the lower incrementals coming out of this downturn, it would seem that such a view might be a tad optimistic? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Well, John, no customers have come to us and said, boy, we've got big plans for 2017 and we need you on board. Some of it's gut, some of it's just a macro view. We do believe that equipment attrition is understated by some amount. We do think that service intensity is so high that at some point supply and demand of pressure pumping equipment will come into equilibrium. I know how strange that sounds in the current environment. And that we will get some pricing power at that point. And we've seen, at RPC over the past 15 years, we've seen some drastic improvements and decrementals when things go bad, so it can certainly turn on a dime, but there are a lot of variables out there. But no, this is not an average of a bunch of people's forecasts and capital plans and that have told us that in July of 2017 we'll be P&L positive. James C. Landers - VP-Finance & Investor Relations Contact: Yeah. We could sit down – and we do run various scenarios on what could happen if this, that and the other occurred. But to your point, depreciation is falling and to my earlier point, we don't expect that we're going to have to have any significant capital expenditures to – without significant capital expenditures we can have significant quantities and capability of equipment to do a tremendous amount of work. So, I don't expect depreciation is going to increase anytime soon. John M. Daniel - Simmons & Co. International: Okay. Guys, thank you so much for your help. James C. Landers - VP-Finance & Investor Relations Contact: Okay, John. Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Thanks. John. James C. Landers - VP-Finance & Investor Relations Contact: Talk to you later.

Our next question will come from Chase Mulvehill of Wolfe Research.

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

Hey. Thanks for letting me in the call. I've got a couple – a few questions here. I guess the first question I wanted to ask about kind of horsepower per fleet trends, kind of, what you're seeing within the company. So, what is your average horsepower per horizontal fleet today, and how does that compare to 2014? James C. Landers - VP-Finance & Investor Relations Contact: Chase, this is Jim. Not sure I have that right in front of me, but the average horsepower per horizontal fleet is probably a little bit higher, call it 10% or 20%, and it's kind of hard to do seven-eighths of a truck or something. But, it's a little bit higher just because of higher service intensity requirements. Thinking about fleet requirements as a function of time, it's higher as well because we're getting more efficient and proud of the good job we're doing, but some of these longer laterals they just take longer. So, it's the same amount of equipment, same amount of equipment but it's just onsite longer even in spite of the efficiency gains we're getting. So, yeah, 10% or 20%.

Okay. And along those lines, if we think about an active fleet, and we look at the efficiency of those fleets, so, how does the number of frac stages per day, how has that been trending for your active fleets? Is it more or less efficient? James C. Landers - VP-Finance & Investor Relations Contact: That's been trending higher.

Okay. So, you've been getting better on that side? James C. Landers - VP-Finance & Investor Relations Contact: We've been getting better, and some of that as a function of slack resources. In other words, it's easier to get certain things, be it proppant or all the other things that go into a frac job that may not be our responsibility, water for example, personnel, other things. So, the number of frac stages per day has increased between 2014 and today.

Okay. All right. So, at today's pricing levels, what do you think gross margins are on a fully utilized 24-hour fleet? And gross margins not EBITDA margins and not variable margins. James C. Landers - VP-Finance & Investor Relations Contact: They're low.

They're low. Are they 20% on a fully utilized 24-hour fleet? James C. Landers - VP-Finance & Investor Relations Contact: No. No.

Okay. James C. Landers - VP-Finance & Investor Relations Contact: They would be, this is just a guess, high single digits, low teens.

Oh, wow. Okay. All right. James C. Landers - VP-Finance & Investor Relations Contact: Yeah. Yeah, pricing has been decimated in our (1:05:28). Right, not sustainable.

And so, if you looked at that, what would you think is a normalized level for a 24-hour fleet on a gross margin basis? James C. Landers - VP-Finance & Investor Relations Contact: Just general. Boy.

I mean we could go back into... James C. Landers - VP-Finance & Investor Relations Contact: I don't have a good enough answer just to throw out, to be honest.

Is it 30%, 40%, if SG&A is 10% of revenues? James C. Landers - VP-Finance & Investor Relations Contact: 30% to 40% EBITDA?

Gross margin. James C. Landers - VP-Finance & Investor Relations Contact: Gross margin.

Like, just trying to say what EBITDA margin do you need on a normalized basis? James C. Landers - VP-Finance & Investor Relations Contact: It seems not in there. I mean, on a normalized basis, it's higher than that. With everything working the way it's supposed to, and good utilization of your equipment, no equipment breakdowns, logistics working. The reason it's hard to say is that we've never actually seen that, so.

Okay. Okay. All right. Last one and then I'll turn it back over. Internally, do you have a target market share gains for the next upcycle? James C. Landers - VP-Finance & Investor Relations Contact: We don't have target market share gains. We have internally looked at what market share gains we might be able to achieve based on forecast from many including you, and some of the other things in our assessment of fleet, attritional, sort of thing. We have about 4% market share. And the idea would be that we could perhaps increase our market share to the 6% or 7% level in an upcycle, without too much exuberance from capital sources, putting pressure pumping equipment back into the field.

Okay. Awesome. That's all I had. Thanks, Jim. James C. Landers - VP-Finance & Investor Relations Contact: Right. Chase, thanks. Good hearing from you.

And we have time for one last question. Our final question will come from Rob MacKenzie.

Thanks for letting me back in. Ben, I had a follow-up for you, if I may. One of your bigger competitors indicated that they are going to apply an NOL carry back and generate close to $0.5 billion. Any plans on that as a source of cash for RPC? And as a kind of second part of that question, how should we think about your book and cash tax rate for the rest of this year? Ben M. Palmer - Chief Financial Officer, Treasurer & VP: Wow. Okay. Yeah. $0.5 billion, we're not going to get quite that much. Yes. We did a carry back and produced some cash. We did a carry back of 2015, in the prior year, generate some cash in 2016. We'll do the same for 2016, and generate some cash early in 2017. And we're looking a few tens of millions that'll come back to us. And then in terms of effective rates, I don't expect any of that large benefit in the first quarter that kind of throws things off. We, otherwise, are not looking at any significant changes to the effective tax rate for the year versus what it was in the second quarter, quarterly moving forward. Cash versus total tax rate, I've to do the calculation on that. You kind of back into it. Again, I believe that, got a hundred, I'll get back to you on that in terms of the cash rate. But I think that we could get a, again, tens of millions. So, obviously, it depends on what happened in the last six months as well. So, I'd be telling you what I thought the last six months are going to look like. And I told you what all those answers were and maybe why you're asking the question.

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

And it appears there are no further questions at this time. I'll turn the conference back over to Mr. Landers for any additional or closing comments. James C. Landers - VP-Finance & Investor Relations Contact: Okay. Thank you, and thanks everybody for calling in and asking questions. We enjoyed the discussion. Look forward to seeing everybody soon. Thanks a lot.

And that does conclude today's teleconference. Thank you all for your participation. Also, as a reminder, this call will be replayed on www.rpc.net within two hours following the completion of this conference.