RPC, Inc (RES)

[OilStockReport]

It totally sky rocketed! Here is some info about the shale plays, looks like some positive moves there.

One such region driving RPC’s success in 2011 will be the Eagle Ford Shale in Texas, which is seeing a recent flurry of drilling activity. As of last week, nearly 21% more active rigs were drilling in Texas, thanks in part to Eagle Ford. Another region driving oil rig activity is the Bakken shale in North Dakota, which already produces some 458k bbl/day of crude. Despite activity recently flattening, North Dakota’s active rig count is still 68% higher than this time last year. And, activity should increase again as road load restrictions end into dry weather. Overall, increased activity in non-traditional shale increases demand for hydraulic fracking crews and equipment, the sweet spot of RES’ products and services.

How strong has the demand been for RPC’s fracking crews? Pressure pumping activity in places like Haynesville and Marcellus drove RPC Q4 revenue up 115.3% to $328.14 million. The company cited both higher volume and pricing for its ability to expand margins. RPC’s cost of revenue fell to 53.2% from 67.1% a year ago. And, SG&A as a percentage of revenue fell to 9.6% from 15.6% thanks to leveraging fixed costs.

Overall, 2010 revenue rose 86.5% thanks to the average Q4 2010 domestic rig count running 52% above the average level of Q4 2009 and 4.3% higher than the average rig count in Q3. The majority of this growth has occurred in active horizontal rigs, used in shale drilling, which are 33% higher than last year. The rapid growth in horizontal activity is providing RES with the cash flow to invest in both capacity and shareholder friendly dividends and buybacks.
The company spent $81.4 million on equipment last quarter. Much of that equipment was received prior to quarter end, suggesting upside sales for Q1. Additionally, RES boosted its dividend by 16.7% and bought back 810,377 shares last quarter.