Form 10-Q

RPC, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(In thousands)
(Unaudited)

	September 30,			December 31,
	2005			2004
ASSETS

Cash and cash equivalents	$	21,560		$	29,636
Accounts receivable, net		98,833			75,793
Inventories		12,186			10,587
Deferred income taxes		4,818			6,144
Prepaid expenses and other current assets		1,936			3,638
Total current assets		139,333			125,798
Property, plant and equipment, net		135,290			114,222
Goodwill and other intangibles, net		24,151			20,183
Other assets		3,219			2,739
Total assets	$	301,993		$	262,942



LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable	$	34,163		$	23,389
Accrued payroll and related expenses		10,706			10,842
Accrued insurance expenses		4,018			3,875
Accrued state, local and other taxes		2,665			2,183
Income taxes payable		7,216			113
Current portion of long-term debt		-			2,700
Other accrued expenses		2,512			5,187
Total current liabilities		61,280			48,289
Accrued insurance expenses		6,774			6,451
Long-term debt		-			2,100
Pension liabilities		11,515			11,379
Deferred income taxes		7,923			11,945
Other long-term liabilities		1,381			1,355
Total liabilities		88,873			81,519
Common stock		4,290			4,321
Capital in excess of par value		21,126			27,326
Retained earnings		200,051			160,189
Deferred compensation		(5,722	)		(3,527	)
Accumulated other comprehensive loss		(6,625	)		(6,886	)
Total stockholders' equity		213,120			181,423
Total liabilities and stockholders' equity	$	301,993		$	262,942

The accompanying notes are an integral part of these consolidated financial statements.

RPC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(In thousands except per share data)
(Unaudited)



	Three months ended September 30,					Nine months ended September 30,
	2005		2004			2005		2004

Revenues	$	115,801	$	88,721		$	310,076	$	254,149
Cost of services rendered and goods sold		61,424		50,233			167,581		146,529
Selling, general and administrative expenses		19,000		16,921			55,594		48,213
Depreciation and amortization		9,863		8,596			28,750		25,736
Operating profit		25,514		12,971			58,151		33,671
Interest income (expense), net		131		(17	)		301		(75	)
Other income, net		11,120		1,555			13,994		2,324
Income before income taxes		36,765		14,509			72,446		35,920
Income tax provision		13,658		4,272			27,502		12,408
Net income	$	23,107	$	10,237		$	44,944	$	23,512


HISTORICAL (ACTUAL) BASIS

Earnings per share
Basic	$	0.55	$	0.24		$	1.06	$	0.55
Diluted	$	0.53	$	0.24		$	1.03	$	0.54

Dividends per share	$	0.04	$	0.02		$	0.12	$	0.06

Average shares outstanding
Basic		42,029		42,482			42,291		42,443
Diluted		43,554		43,371			43,726		43,188


PRO FORMA BASIS (AS ADJUSTED FOR 3-FOR-2 STOCK SPLIT TO BE EFFECTIVE DECEMBER 12, 2005)

Earnings per share
Basic	$	0.37	$	0.16		$	0.71	$	0.37
Diluted	$	0.35	$	0.16		$	0.69	$	0.36

Dividends per share	$	0.03	$	0.01		$	0.08	$	0.04

Average shares outstanding
Basic		63,043		63,723			63,437		63,665
Diluted		65,331		65,057			65,589		64,782


The accompanying notes are an integral part of these consolidated financial statements.

RPC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
(In thousands)
(Unaudited)

	Nine months ended September 30,
	2005			2004
OPERATING ACTIVITIES
Net income	$	44,944		$	23,512
Noncash charges (credits) to earnings:
Depreciation, amortization and other non-cash charges		29,706			26,074
Gain on sale of property and equipment		(12,212	)		(2,195	)
Deferred income tax (benefit) provision		(2,856	)		812
(Increase) decrease in assets:
Accounts receivable		(23,040	)		(19,684	)
Income taxes receivable		0			267
Inventories		(1,542	)		(104	)
Prepaid expenses and other current assets		2,122			2,276
Other non-current assets		(480	)		(532	)
Increase (decrease) in liabilities:
Accounts payable		10,774			2,243
Accrued payroll and related expenses		(136	)		921
Pension liabilities		136			(2,959	)
Income taxes payable		7,221			-
Accrued insurance expenses		466			1,791
Accrued state, local and other expenses		482			172
Other accrued expenses		(315	)		174
Other non-current liabilities		26			899
Net cash provided by operating activities		55,296			33,667

INVESTING ACTIVITIES
Capital expenditures		(55,439	)		(36,594	)
Purchase of businesses		(6,965	)		(3,310	)
Proceeds from sale of assets		18,414			5,244
Net cash used for investing activities		(43,990	)		(34,660	)

FINANCING ACTIVITIES
Payment of dividends		(5,082	)		(2,558	)
Payments on debt		(4,800	)		(1,110	)
Cash paid for common stock purchased and retired		(10,268	)		(1,963	)
Proceeds received upon exercise of stock options		768			423
Net cash used for financing activities		(19,382	)		(5,208	)

Net decrease in cash and cash equivalents		(8,076	)		(6,201	)
Cash and cash equivalents at beginning of period		29,636			22,302
Cash and cash equivalents at end of period	$	21,560		$	16,101

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements include the accounts of RPC, Inc. and its wholly-owned subsidiaries (“RPC” or the “Company”) and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (all of which consisted of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.

On October 25, 2005 at its quarterly meeting, the Board of Directors authorized a three-for-two stock split by issuance on December 12, 2005 of one additional common share for every two common shares held of record as of November 11, 2005. Accordingly, the par value of additional shares issued will be adjusted between common stock and capital in excess of par value, and fractional shares resulting from the stock split will be settled in cash. The share and per share data on the historical (actual) basis presented in the interim financial statements have not been adjusted for the stock split. The consolidated statement of operations also presents, on a pro forma basis, share and per share information which reflects the stock split.

Statement of Financial Accounting Standard (“SFAS”) No. 128, “Earnings Per Share,” requires a basic earnings per share and diluted earnings per share presentation. The two calculations differ as a result of the dilutive effect of stock options and time lapse restricted shares and performance restricted shares included in diluted earnings per share, but excluded from basic earnings per share. Basic and diluted earnings per share are computed by dividing net income by the weighted average number of shares outstanding during the respective periods. A reconciliation of weighted average shares outstanding is as follows:

		Three months ended September 30				Nine months ended September 30
(In thousands except per share data amounts)		2005		2004		2005		2004
Net income available for stockholders (numerator for basic and diluted earnings per share):	$	23,107	$	10,237	$	44,944	$	23,512
Shares (denominator):
Weighted-average shares outstanding (denominator for basic earnings per share)		42,029		42,482		42,291		42,443
Effect of dilutive securities:
Employee stock options and restricted stock		1,525		889		1,435		745
Adjusted weighted average shares (denominator for diluted earnings per share)		43,554		43,371		43,726		43,188

Earnings per share:
Basic	$	0.55	$	0.24	$	1.06	$	0.55
Diluted	$	0.53	$	0.24	$	1.03	$	0.54

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs—An Amendment of ARB No. 43, Chapter 4" ("SFAS 151"). SFAS 151 amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Among other provisions, the new rule requires that items such as idle facility expense, excessive spoilage, double freight, and rehandling costs be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal" as stated in ARB No. 43. Additionally, SFAS 151 requires that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for fiscal years beginning after June 15, 2005 and therefore is required to be adopted by the Company in the first quarter of fiscal 2006, beginning on January 1, 2006. The Company is currently evaluating the effect that the adoption of SFAS 151 will have on its consolidated results of operations and financial condition but does not expect SFAS 151 to have a material impact.

In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), which replaces SFAS No. 123, “Accounting for Stock-Based Compensation,” (“SFAS 123”) and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The pro forma disclosures previously permitted under SFAS 123 will no longer be an alternative to financial statement recognition. Under SFAS 123R, the Company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at date of adoption. The transition methods include the modified prospective application and the modified retrospective application. Under the modified retrospective application, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The modified prospective application requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of SFAS 123R, while the modified retrospective application would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated. SFAS No. 123R states that the requirement is to adopt the provisions in the first interim or annual period beginning after June 15, 2005. However, the Securities and Exchange Commission issued a new rule that allows companies to implement Statement No. 123R at the beginning of their next fiscal year, instead of the next reporting period, that begins after June 15, 2005. The Company will implement the provisions of SFAS 123R in the first quarter of 2006 pursuant to this rule. In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) regarding the SEC’s interpretation of SFAS 123R and the valuation of shared-based payments for public companies. The Company is currently evaluating the impact of applying the various provisions of SFAS 123R and SAB 107.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets—An Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions" ("SFAS 153"). The amendments made by SFAS 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for non-monetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. Previously, Opinion 29 required that the accounting for an exchange of a productive asset for a similar productive asset or an equivalent interest in the same or similar productive asset should be based on the recorded amount of the asset relinquished. By focusing the exception on exchanges that lack commercial substance, SFAS 153 intends to produce financial reporting that more faithfully represents the economics of the transaction. SFAS 153 is effective for the fiscal periods beginning after June 15, 2005 with earlier application permitted for nonmonetary exchanges occurring in fiscal periods beginning after the date of issuance. The provisions are to be applied prospectively. The adoption of SFAS 153 did not have a material impact on the Company’s consolidated results of operations and financial condition.

FASB Staff Position ("FSP") No. 109-2, "Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004" ("FSP 109-2"), issued in December 2004, is intended to provide limited relief in the application of the indefinite reinvestment criterion due to ambiguities surrounding the implementation of the Act. The Jobs Act was enacted on October 22, 2004. FSP 109-2 states that an enterprise is allowed time beyond the financial reporting period of enactment to evaluate the effect of the Jobs Act on its plan for reinvestment or repatriation of foreign earnings for purposes of applying FASB Statement No. 109. RPC is currently evaluating the impact of the repatriation provisions but does not expect it to have a material impact.

In March 2005, the FASB issued FIN 47, “Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143” ("FIN 47"), which requires an entity to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability's fair value can be reasonably estimated. FIN 47 is effective for fiscal years ending after December 15, 2005 and therefore is required to be adopted by the Company in the fiscal year ended December 31, 2005. The Company is currently evaluating the effect that the adoption of FIN 47 will have on its consolidated results of operations and financial condition but does not expect it to have a material impact.

In May 2005, the FASB has issued FASB Statement No. 154, “Accounting Changes and Error Corrections” (“SFAS 154”) which replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, “Reporting Accounting Changes in Interim Financial Statements.” Among other changes, SFAS 154 requires that a voluntary change in accounting principle or a change required by a new accounting pronouncement that does not include specific transition provisions be applied retrospectively with all prior period financial statements presented on the new accounting principle, unless it is impracticable to do so. SFAS 154 also provides that (1) a change in method of depreciating or amortizing a long-lived nonfinancial asset be accounted for as a change in estimate (prospectively) that was effected by a change in accounting principle, and (2) correction of errors in previously issued financial statements should be termed a "restatement." SFAS 154 is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005 with early adoption permitted for accounting changes and correction of errors made in fiscal years beginning after June 1, 2005. Accordingly, the Company is required to adopt the provisions of SFAS 154 in the first quarter of fiscal 2006, beginning on January 1, 2006. The Company is currently evaluating the effect that the adoption of SFAS 154 will have on its consolidated results of operations and financial condition but does not expect SFAS 154 to have a material impact.

RPC accounts for its stock incentive plans using the intrinsic value method prescribed by Accounting Principles Board (”APB”) Opinion No. 25, “Accounting for Stock Issued to Employees.” The Company has computed for pro forma disclosure purposes the value of all options granted during the nine months ended September 30, 2005 and 2004 using the Black-Scholes option pricing model as prescribed by SFAS No. 123 “Accounting for Stock-Based Compensation." If RPC had accounted for the stock incentive plans in accordance with SFAS No.123, RPC’s reported net income and net income per share would have been as follows:

	Three months ended					Nine months ended
	September 30,					September 30
*(In thousands)*	2005			2004		2005			2004

Net income - as reported	$	23,107		$	10,237	$	44,944		$	23,512
Add: Stock-based employee compensation cost, included in reported net income, net of related tax effect		187			113		593			239
Deduct: Stock-based employee compensation cost, computed using the Black-Scholes option pricing model, for all awards, net of related tax effect		(356	)		42		(1,101	)		(467	)
Pro forma net income	$	22,938		$	10,392	$	44,436		$	23,284

Earnings per share, as reported
Basic	$	0.55		$	0.24	$	1.06		$	0.55
Diluted	$	0.53		$	0.24	$	1.03		$	0.54

Pro forma earnings per share
Basic	$	0.55		$	0.24	$	1.05		$	0.55
Diluted	$	0.53		$	0.24	$	1.02		$	0.54

RPC’s service lines have been aggregated into two reportable oil and gas services segments, Technical Services and Support Services, because of the similarities between the financial performance and approach to managing the service lines within each of the segments, as well as the economic and business conditions impacting their business activity levels. The other business segment includes information concerning RPC’s business units that do not qualify for separate segment reporting. These business units include an interactive training software developer, prior to its disposition in May 2005, and an overhead crane fabricator, prior to its disposition in April 2004. Corporate includes selected administrative costs incurred by the Company.

Technical Services include RPC’s oil and gas service lines that utilize people and equipment to perform value-added completion, production and maintenance services directly to a customer’s well. These services include pressure pumping services, snubbing, coiled tubing, nitrogen pumping, well control consulting and firefighting, down-hole tools, wireline, and fluid pumping. These Technical Services are primarily used in the completion, production and maintenance of oil and gas wells. The principal markets for this segment include the United States, including the Gulf of Mexico, the mid-continent, southwest and Rocky Mountain regions, and international locations including primarily Africa, Canada, China, Latin America and the Middle East. Customers include major multi-national and independent oil and gas producers, and selected nationally-owned oil companies.

Support Services include RPC’s oil and gas service lines that primarily provide equipment for customer use or services to assist customer operations. The equipment and services include drill pipe and related tools, pipe handling, inspection and storage services and oilfield training services. The demand for these services tends to be influenced primarily by customer drilling-related activity levels. The principal markets for this segment include the United States, including the Gulf of Mexico and the mid-continent regions, and international locations, including primarily Canada, Latin America, and the Middle East. Customers include domestic operations of major multi-national and independent oil and gas producers, and selected nationally-owned oil companies. During the fourth quarter of 2004, RPC sold the marine liftboat division previously reported in this segment.

	Three months ended September 30,						Nine months ended September 30,
	2005			2004			2005			2004
(in thousands)

Revenues:
Technical Services	$	99,046		$	73,404		$	262,963		$	209,523
Support Services		16,755			15,302			47,096			40,848
Other		0			15			17			3,778
Total revenues	$	115,801		$	88,721		$	310,076		$	254,149
Operating profit (loss):
Technical Services	$	24,911		$	13,024		$	57,029		$	35,706
Support Services		3,255			2,378			8,737			4,629
Other		(2	)		(382	)		(300	)		(803	)
Corporate		(2,650	)		(2,049	)		(7,315	)		(5,861	)
Total operating profit	$	25,514		$	12,971		$	58,151		$	33,671
Interest income (expense), net		131			(17	)		301			(75	)
Other income, net		11,120			1,555			13,994			2,324
Income before income taxes	$	36,765		$	14,509		$	72,446		$	35,920

The Company has previously filed amended federal tax returns for the years 1999, 2000 and 2001 to claim higher deductions for certain expenses and additional foreign tax credits representing potential tax benefits totaling up to approximately $4.0 million. These returns have been reviewed by the Internal Revenue Service and are currently being evaluated by the Joint Committee. The Company believes it has supportable positions for claiming these deductions and credits, but the amounts are subject to final approvals. Accordingly, the Company has not reflected these potential tax benefits in its financial statements. No tax benefits will be recognized in the financial statements until these gain contingencies are resolved through the eventual disposition with the respective tax authorities.

RPC, Inc. (“RPC”) provides a broad range of specialized oilfield services primarily to independent and major oilfield companies engaged in exploration, production and development of oil and gas properties throughout the United States, including the Gulf of Mexico, mid-continent, southwest and Rocky Mountain regions, and selected international locations. The Company’s revenues and profits are generated by providing equipment and services to customers who operate oil and gas properties and invest capital to drill new wells and enhance production or perform maintenance on existing wells. We continuously monitor factors that impact the level of current and expected customer activity levels, such as the price of oil and natural gas, changes in pricing for our services and equipment, and utilization of our equipment and personnel. Our financial results are affected by geopolitical factors such as political instability in the petroleum-producing regions of the world, overall economic conditions and weather in the United States, the prices of oil and natural gas, and our customers’ drilling and production activities.

During the third quarter of 2005, revenues increased 30.5 percent to $115.8 million compared to the same period in the prior year. The growth in revenues resulted primarily from higher capacity, increased utilization consistent with higher customer activity levels, and improved pricing for our equipment and services. The increase in prices is partially attributable to the issuance of new price books during the current quarter. Domestic revenues for the current quarter were affected by hurricanes Katrina and Rita which severely curtailed oilfield drilling and production activity in the Gulf of Mexico. We estimate that the financial impact of the hurricanes to the Company was not significant. International revenues for the third quarter of 2005 declined mainly due to a decrease in our China and West Africa operations partially offset by increases from business in our Mexico and Kuwait operations. We continue to focus on developing international growth opportunities; however, it is difficult to predict when contracts and projects will be initiated and their ultimate duration.

In the third quarter we sold all of the operating and intangible assets of the Company’s hammer, casing, laydown and casing torque-turn service lines generating proceeds of approximately $15.7 million and a pretax gain of approximately $10.7 million. The after tax gain was approximately $6.7 million or $0.15 diluted earnings per share ($0.10 adjusted for the three-for-two stock split payable December 12, 2005). Income before income taxes were $36.8 million during the third quarter of 2005 compared to $14.5 million in the prior year. The effective tax rate for the three months ended September 30, 2005 was 37.1 percent compared to 29.4 percent in the prior year. The prior year effective rate was lower due primarily to recognition of previously reserved foreign

tax credits carryovers. Diluted earnings per share increased to $0.53 ($0.35 adjusted for the three-for-two stock split) for the three months ended September 30, 2005 compared to $0.24 ($0.16 adjusted for the three-for-two stock split) for the prior year. Cash flows from operating activities were $55.3 million for the nine months ended September 30, 2005 compared to $33.7 million for the same period of the prior year, and cash and cash equivalents were $21.6 million at September 30, 2005, a decrease of $8.1 million compared to December 31, 2004. This decrease in cash and cash equivalents occurred despite improved operating results and proceeds from the sale of assets, primarily due to increased capital expenditures and increased share repurchases. As of September 30, 2005, we had no long term debt.

Consistent with our strategy to selectively grow our capacity and maintain our existing fleet of high demand equipment, capital expenditures were $21 million in the third quarter of 2005. Although we currently expect capital expenditures to be approximately $80 million during 2005, the total amount of 2005 expenditures will depend primarily on equipment maintenance requirements, expansion opportunities and the ultimate delivery dates for equipment on order. We expect these expenditures to be primarily directed toward our larger, core service lines including pressure pumping, snubbing, nitrogen, and rental tools.

In response to our strong earnings and stock price performance, the Board approved the Company’s second three-for-two stock split for 2005 at its regular quarterly meeting on October 25, 2005. The Company believes that this will reward our current shareholders and increase the investment appeal of our common stock. The share and per share data on the historical (actual) basis presented in the accompanying interim financial statements and management's discussion and analysis have not been adjusted for the stock split. The consolidated statement of operations and selected information in management's discussion and analysis also presents, on a pro forma basis, share and per share information which reflects the stock split.

Drilling activity in the U.S. domestic oilfields, as measured by the rotary drilling rig count, has been stable or gradually increasing for several years, and the overall domestic rig count during the third quarter of 2005 was approximately 17 percent higher than in the comparable period in 2004. The average price of oil rose by approximately 45 percent and the average price of natural gas rose by approximately 86 percent during the quarter compared to the prior year. While the overall drilling rig count has increased, drilling activity in the Gulf of Mexico remains weak, which is unfavorable to the Company because of its historical presence in this geographic market. The Company has responded to these trends by emphasizing investments in more robust domestic markets and making only selective investments in the Gulf of Mexico market. In spite of relatively stable industry conditions, the Company understands that factors influencing the industry are unpredictable. Our response to the industry's potential uncertainty is to maintain sufficient liquidity and a conservative capital structure. Based on current industry conditions and trends during the third quarter of 2005, we expect consolidated revenues for 2005 to increase as compared to 2004, although the volatility in our industry makes accurate near-term forecasts difficult.

The high activity levels in the domestic oilfield have increased demand for equipment from the manufactures of equipment and components used in the Company's business. This increased demand has increased the lead times for ordering and delivery of such equipment and components. If this increased demand and resulting delays in delivery continues, it could constrain the Company's ability to expand its capacity, which would negatively impact the Company's future financial results.

The oil and gas industry is undertaking a great deal of effort to rebuild the industry’s production infrastructure in the Gulf Coast region following Hurricanes Katrina and Rita during the third quarter of 2005. Several of the Company’s services may be utilized in support of this effort, and the Company hopes to participate in this effort during the fourth quarter of 2005 and during 2006. However, the Company is unable to predict the timing or the magnitude of its participation in the effort to rebuild the Gulf Coast’s oil and gas infrastructure.

	Three months ended September 30,						Nine months ended September 30,
	2005			2004			2005			2004

Consolidated revenues [in thousands]	$	115,801		$	88,721		$	310,076		$	254,149
Revenues by business segment [in thousands]:
Technical	$	99,046		$	73,404		$	262,963		$	209,523
Support		16,755			15,302			47,096			40,848
Other		-			15			17			3,778

Consolidated operating profit [in thousands]	$	25,514		$	12,971		$	58,151		$	33,671
Operating profit (loss) by business segment [in thousands]:
Technical	$	24,911		$	13,024		$	57,029		$	35,706
Support		3,255			2,378			8,737			4,629
Other		(2	)		(382	)		(300	)		(803	)
Corporate	$	(2,650	)	$	(2,049	)	$	(7,315	)	$	(5,861	)

Percentage cost of services rendered & goods sold to revenues		53.0	%		56.6	%		54.0	%		57.7	%
Percentage selling, general & administrative expenses to revenues		16.4	%		19.1	%		17.9	%		19.0	%
Percentage depreciation and amortization expense to revenues		8.5	%		9.7	%		9.3	%		10.1	%
Average U.S. domestic rig count		1,432			1,228			1,351			1,170
Average natural gas price (per thousand cubic feet (mcf))	$	10.11		$	5.45		$	7.85		$	5.73
Average oil price (per barrel)	$	63.15		$	43.66		$	55.60		$	39.03

Revenues for the three months ended September 30, 2005 increased 30.5 percent compared to the three months ended September 30, 2004. Domestic revenues increased 32.8 percent to $113.4 million during the third quarter of 2005 compared to the same period in the prior year. The increases in revenues are due to higher activity levels, increased capacity in our largest service lines and improved pricing. The increase in pricing is mostly attributed to new price books effective during the third quarter and higher customer demand for our services. The strength in our domestic oilfield revenues compared to the prior year was partially offset by the effects of no revenues from our domestic marine liftboat division, which was sold in the fourth quarter of 2004, and reduced revenues from our hammer, casing, laydown and casing torque-turn service lines, which were sold during the third quarter of 2005. During the third quarter of 2005, hurricanes Katrina and Rita severely curtailed oilfield drilling and production activity in the Gulf of Mexico which affected our operations by lost working days and temporary disruptions in the availability of materials and supplies. The Company estimates that the financial impact of these storms during the third quarter was a one percent reduction in revenues and a two to three percent reduction in net income. International revenues declined slightly from $3.3 million to $2.4 million. Revenues declined in our China and West African operations, although this decline was partially offset by increases from our Mexico and Kuwait operations. Our international revenues are impacted by the timing of project initiation and their ultimate duration.

In addition, the average price of natural gas increased by approximately 86 percent and the average price of oil increased almost 45 percent during the third quarter of 2005 as compared to the prior year. The average domestic rig count during the quarter was 17 percent higher than the same period in 2004. This increase in oil and gas prices and resulting increase in drilling activity had a positive impact on our financial results. We believe that our activity levels are affected more by the price of natural gas than by the price of oil, because the majority of U.S. domestic drilling activity relates to natural gas, and many of our services are more appropriate for gas wells than oil wells.

The Technical Services segment revenues for the quarter increased 34.9 percent compared to the third quarter of last year. Revenues in this segment increased due to higher customer activity, higher capacity through increased capital expenditures, and improved pricing. The Support Services segment revenues for the quarter increased 9.5 percent compared to the third quarter of prior year. This improvement was due to increased capacity driven by higher capital expenditures and improved pricing driven by higher customer demand in the rental tool service line, the largest within this segment, partially offset by the effect of having no revenues from our marine liftboat division, which was sold during the fourth quarter of 2004. The marine liftboat division generated revenues of $1.2 million during the third quarter of 2004. There were no revenues in the Other segment primarily due to the sale of a non-oilfield business unit in April 2004.

Cost of services rendered and goods sold increased 22.3 percent due to the variable nature of many of these expenses, including compensation, maintenance and repair expenses, materials and supplies expenses, as well as increases in fuel cost due to higher prices. Cost of services rendered and goods sold, as a percent of revenues, decreased from the third quarter of 2004 compared to the third quarter of 2005 due to leveraging of fixed costs over higher revenues as a result of increased equipment and personnel utilization, and improved pricing for our services.

Selling, general and administrative expenses for the three months ended September 30, 2005 increased 12.3 percent to $19.0 million compared to $16.9 million for the three months ended September 30, 2004. This increase was primarily due to higher employment costs because of an increase in field administrative personnel consistent with higher activity levels. These costs as a percent of revenues, however, decreased due to leveraging of these costs over higher revenues.

Other income, net for the three months ended September 30, 2005 was $11.1 million, an increase of $9.6 million compared to $1.6 million for the three months ended September 30, 2004. During the current quarter, the Company sold the operating and intangible assets related to the hammer, casing, laydown and casing torque-turn service lines generating a pre-tax gain of $10.7 million. The remainder of other income, net for the third quarters of 2005 and 2004 primarily reflects net gains and losses related to the sale or retirement of property and operating equipment.

Interest income (expense), net was $131,000 of net interest income for the three months ended September 30, 2005 compared to net interest expense of $17,000 for the quarter ended September 30, 2004. The increase in interest income (expense), net resulted primarily from the reduction in outstanding debt through annual principal payments made during 2004 and the first and third quarters of 2005, and small increases in interest income in the third quarter compared to the prior year. RPC generates interest income from investment of its available cash primarily in highly liquid investments with original maturities of three months or less.

Income tax provision was $13.7 million during the three months ended September 30, 2005, compared to $4.3 million in 2004. This increase was due to the increase in income before taxes coupled with an increase in the effective tax rate to 37.1 percent for the quarter compared to 29.4 percent in the prior year. The lower effective tax rate in the third quarter of the prior year was due primarily to recognition during the quarter of previously reserved foreign tax credit carryovers.

Revenues for the nine months ended September 30, 2005 increased $55.9 million or 22.0 percent compared to the nine months ended September 30, 2004. The Technical Services segment revenues for the nine months ended September 30, 2005 increased 25.5 percent from the same period of the prior year due primarily to increases in capacity driven by higher capital expenditures, improved utilization, and pricing driven by higher customer demand for our services. The Support Services segment revenues for the nine months ended September 30, 2005 increased 15.3 percent from the same period of the prior year as a result of higher equipment utilization and capacity in rental tools, which is the largest service line within this segment. The effects of higher equipment utilization and capacity were partially offset by the lack of revenues for the nine months ended September 30, 2005 from our marine liftboat division, which was sold in the fourth quarter of 2004. The marine liftboat division generated revenues of $3.0 million for the nine months ended September 30, 2004.

Domestic revenues increased during the period due to increases in capacity, utilization and improved pricing as a result of new price books issued during the third quarter of 2005 and increased customer demand for our services. The average domestic rig count during the nine months ended September 30, 2005 was 15 percent higher than the same period in 2004. In addition, the average price of natural gas increased by approximately 37 percent and the average price of oil increased by approximately 42 percent during the nine months ended September 30, 2005 compared to the same period in the prior year. This increase in oil and gas prices and the resulting increase in drilling activity had a positive impact on our financial results. These increases were partially offset by continued weakness in the Gulf of Mexico market. Foreign revenues decreased from $14.0 million for the nine months ended September 30, 2004 to $8.2 million for the nine months ended September 30, 2005 due to a decline in our Kuwait and West African operations which was partially offset by increases from new business in China and Mexico. Our international revenues are impacted by the timing of project initiation and their ultimate duration.

Cost of services rendered and goods sold for the nine months ended September 30, 2005 was $167.6 million compared to $146.5 million for the nine months ended September 30, 2004, an increase of $21.1 million or 14.4 percent. The increase in these costs was due to the variable nature of many of these expenses, including compensation, materials and supplies, maintenance and repair, and fuel costs. Cost of services rendered and goods sold, as a percent of revenues, decreased from the nine months ended September 30, 2004 compared to the same period of 2005 as a result of higher utilization of personnel and operating equipment, improved pricing, and the leveraging of fixed costs over higher revenues.

Selling, general and administrative expenses for the nine months ended September 30, 2005 were $55.6 million compared to $48.2 million for the nine months ended September 30, 2004, an increase of $7.4 million or 15.3 percent. This increase was primarily due to higher employment costs mainly as a result of an increase in number of employees and higher incentive compensation expenses consistent with higher activity levels and improved profitability. These expenses also increased due to higher public company compliance costs.

Other income, net for the nine months ended September 30, 2005 was $14.0 million, an increase of $11.7 million compared to $2.3 million for the nine months ended September 30, 2004. The increase is due primarily to the sale of the operating and intangible assets of the hammer, casing, laydown and casing torque-turn service lines which generated a pre-tax gain of $10.7 million during the third quarter of 2005. The remaining increase is attributed to proceeds of approximately $1.3 million from a litigation settlement in the first quarter of 2005 and higher other income from the net gains and losses related to the sale or retirement of property and equipment.

Interest income (expense), net was net interest income of $301,000 for the nine months ended September 30, 2005 compared to net interest expense of $75,000 for the nine months ended September 30, 2004. The increase in interest income (expense), net resulted primarily from the reduction in outstanding debt through annual principal payments made during 2004 and the nine months ended September 30, 2005, and small increases in interest income in the current year compared to the prior year.

Income tax provision was $27.5 million during the nine months ended September 30, 2005, compared to $12.4 million in 2004. This increase was due to the increase in income before income taxes during the period coupled with an increase in the effective tax rate to 38.0 percent for the period ending September 30, 2005 compared to 34.5 percent in the prior year. The lower effective tax rate during the prior year was due to the recognition of previously reserved foreign tax credit carryovers during the third quarter of 2004.

Cash provided by operating activities for the nine months ended September 30, 2005 increased $21.6 million compared to the comparable period in the prior year. Cash provided by operating activities increased primarily due to a $21.4 million increase in net income which includes a pre-tax gain of $10.7 million generated from the sale of assets of the hammer, casing, laydown and casing torque-turn service lines, a reduction of $1.6 million in cash contributions to the Company’s pension plan, and slower growth in our working capital requirements in the current period compared to the same period in the prior year. The primary contributors to this slower growth were increases in accounts payable and income taxes payable due to the timing of payments.

Cash used for investing activities for the nine months ended September 30, 2005 increased by $9.3 million, compared to the nine months ended September 30, 2004, primarily as a result of an increase in capital expenditures to increase capacity and maintain our existing equipment and earnout payments for acquisitions. These increases were partially offset by higher proceeds from the sale of assets including the assets of the service lines noted above.

The Company’s financial condition as of September 30, 2005, remains strong. We believe the liquidity provided by our existing cash and cash equivalents, our overall strong capitalization, which includes access to a $25 million credit facility with a financial institution, of which $12.1 million was available as of September 30, 2005, and cash expected to be generated from operations, will provide sufficient capital to meet our requirements for at least the next twelve months. The portion of the credit facility that is not currently available supports letters of credit relating to self-insurance programs or contract bids.

The Company’s Board of Directors announced a stock buyback program on March 9, 1998 authorizing the repurchase of 5,250,000 shares. During the second quarter of 2005, the Company repurchased 683,960 shares in the open market. The Company did not repurchase any common shares in the open market during the third quarter of 2005. As of September 30, 2005, there are 1,807,540 shares available for purchase under this program. The Company expects to continue repurchasing outstanding common shares periodically based on market conditions and our capital allocation strategies. The program does not have a predetermined expiration date.

In accordance with the respective purchase agreements, earnout payments to sellers of two businesses previously acquired by the Company have been paid on an annual basis and will be paid on interim periods ending during 2005. The Company made earnout payments of $4.6 million in April 2005 related to 2004 operating results and $2.4 million in August 2005 related to interim 2005 operating results. A final earnout payment of approximately $1.9 million is expected to be made to the seller of an acquired business during the fourth quarter of 2005 based on the results for the interim period ended June 30, 2005.

The Company purchases its equipment and materials from suppliers who provide competitive prices. Due to the recent increases in activity in the domestic oilfield, the Company has experienced some upward wage pressures in the labor markets from which it hires employees. If inflation in the general economy increases, the Company’s costs for equipment, materials and labor could increase as well. Also the price of steel, for both the commodity and for products manufactured with steel, has increased dramatically due to increased worldwide demand. Although prices have moderated, they remain high by historical standards. This factor has affected the Company's operations through delays in scheduled deliveries of new equipment and price quotations that were only valid for a limited period of time. If this factor continues, it is possible that the cost of the Company's new equipment will increase which would result in higher capital expenditures and depreciation expense. RPC may not be able to recover such increased costs through price increases to its customers, thereby reducing the Company's future profits.

Effective February 28, 2001, the Company spun-off the business conducted through Chaparral Boats, Inc. (“Chaparral”), RPC’s former powerboat manufacturing segment. In conjunction with the spin-off, RPC and Marine Products entered into various agreements that define the companies’ relationship. A detailed discussion of the various agreements in effect is contained in the Company’s annual report on Form 10-K for the year ended December 31, 2004. During the nine months ended September 30, 2005, RPC charged Marine Products for its allocable share of administrative costs incurred for services rendered on behalf of Marine Products totaling $449,000 compared to $408,000 for the comparable period in 2004.

RPC receives certain administrative services and rents office space from Rollins, Inc. (a company of which Mr. R. Randall Rollins is also Chairman, and which is controlled by Mr. Rollins and his affiliates). The service agreements between Rollins, Inc. and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months notice. The services covered by these agreements include office space, selected administration services for certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated approximately $53,000 for the nine months ended September 30, 2005 and $68,000 for the nine months ended September 30, 2004.

Oil and natural gas prices affect demand throughout the oil and natural gas industry, including the demand for the Company’s products and services. The Company’s business depends in large part on the conditions of the oil and gas industry, and specifically on the capital expenditures of its customers related to the exploration and production of oil and natural gas. There is a positive correlation between these expenditures and customers’ demand for the Company’s services. As such, when these expenditures fluctuate, customers’ demand for the Company’s services fluctuates as well. These fluctuations depend on the current and projected prices of oil and natural gas and resulting drilling activity, and are not seasonal to any material degree.

Certain statements made in this report that are not historical facts are “forward-looking statements” under Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, statements regarding the impact of inflation on the Company’s results, Hurricanes Katrina and Rita, the impact of efforts to rebuild the Gulf of Mexico region’s oil and gas infrastructure on the demand for our services, our ability to maintain a conservative, liquid balance sheet, our business strategy, plans and objectives, including the development of international growth opportunities, market risk exposure, adequacy of capital resources and funds, opportunity for growth and expansion, the anticipated relative impact of natural gas and oil prices on Company activity levels, the anticipated pension funding payments and capital expenditures, the impact of SFAS 151, SFAS 123R, SAB 107, SFAS 153, FSP 109-2, FIN 47 and SFAS 154, the effect of the three-for-two stock split on the appeal of the Company’s common stock, expectations as to future stock repurchases and payment of dividends, the anticipated amount of future earnout payments, and our beliefs and expectations regarding future demand for our products and services and other events and conditions that may influence the oilfield services market and our performance in the future.

The words "may," "will," ""expect," "believe," "anticipate," "project," "estimate," "focus," "plan," and similar expressions generally identify forward-looking statements. Such statements are based on certain assumptions and analyses made by our management in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes to be appropriate. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of RPC to be materially different from any future results, performance or achievements expressed or implied in such forward looking statements. Risk factors that could cause such future events not to occur as expected include those described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2004, its other SEC filings and the following: the possibility of declines in the price of oil and natural gas, which tend to result in a decrease in drilling activity and therefore a decline in the demand for our services, the actions of the OPEC cartel, the ultimate impact of current and potential political unrest and armed conflict in the oil producing regions of the world, which could impact drilling activity, adverse weather conditions in oil or gas producing regions, including the Gulf of Mexico, competition in the oil and gas industry, the Company’s ability to implement price increases, and risks of international operations.

As of September 30, 2005, cash and cash equivalents were primarily invested in overnight U.S. treasury bills and money market accounts which are highly liquid with maturities of three months or less. Management believes that we are not subject to material interest rate risk exposure on these investments, and during 2005, the Company has benefited from higher interest income as a result of an increase in interest rates. However, inherent in the Company’s investment philosophy is the possibility that lower interest rates could result in lower interest income from its short-term investments. This risk is managed through conservative policies to invest in high-quality obligations. During the third quarter of 2005 RPC repaid its debt with a variable interest rate and as of September 30, 2005 RPC is no longer exposed to any interest rate risk on debt. RPC did not experience any material changes in market risk exposures or how those risks are managed during the nine months ended September 30, 2005.

Evaluation of disclosure controls and procedures - The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to its management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, September 30, 2005 (the “Evaluation Date”), the Company carried out an evaluation, under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at a reasonable assurance level as of the Evaluation Date.


Period	Total Number of Shares (or Units) Purchased			Average Price Paid Per Share (or Unit)		Total number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (3)		Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs

Month #1
July 1, 2005 to July 31, 2005		10,785	(1)	$	18.65		-		1,807,540

Month #2
August 1, 2005 to August 31, 2005		3,558	(1)		22.05		-		1,807,540

Month #3
September 1, 2005 to September 30, 2005		14,909	(2)		25.30		-		1,807,540

Totals		29,252		$	22.45		-		1,807,540

(1)	All shares shown were tendered to the Company in connection with option exercises.

(2)	Includes 2,292 shares repurchased for taxes related to the release of performance restricted shares. The remaining shares shown were tendered to the Company in connection with option exercises.

(3)	The Company’s Board of Directors announced a stock buyback program in March 1998 authorizing the repurchase of 5,250,000 shares in the open market. During the third quarter of 2005, there were no purchases of shares on the open market. The program does not have a predetermined expiration date.

Exhibit Number		Description
3.1		Restated certificate of incorporation of RPC, Inc. (incorporated herein by reference to exhibit 3.1 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999).
3.2		Bylaws of RPC, Inc. (incorporated herein by reference to Exhibit 3.2 to the Registrant’s Quarterly Report on Form 10-Q filed on May 5, 2004).
4		Form of Stock Certificate (incorporated herein by reference to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
31.1		Section 302 certification for Chief Executive Officer.
31.2		Section 302 certification for Chief Financial Officer.
32.1		Section 906 certifications for Chief Executive Officer and Chief Financial Officer.

Delaware	58-1550825
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

Part I. Financial Information		Page No.
Item 1.	Financial Statements (Unaudited)
	Consolidated balance sheets - As of September 30, 2005 and December 31, 2004	3

	Consolidated statements of operations - For the three and nine months ended September 30, 2005 and 2004	4

	Consolidated statements of cash flows - For the nine months ended September 30, 2005 and 2004	5

	Notes to consolidated financial statements	6 - 13

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14 - 25

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25

Item 4.	Controls and Procedures
		26
Part II. Other Information

Item 1.	Legal Proceedings	27

Item 2.	Unregistered sales of equity securities and use of proceeds	27

Item 3.	Defaults upon Senior Securities	28

Item 4.	Submission of Matters to a Vote of Security Holders	28

Item 5.	Other Information	28

Item 6.	Exhibits	28

Signatures		29

		Three months ended September 30,						Nine months ended September 30,
(in thousands)		2005			2004			2005			2004

Service cost	$	-		$	-		$	-		$	-
Interest cost		436			437			1,308			1,311
Expected return on plan assets		(428	)		(361	)		(1,285	)		(1,083	)
Amortization of unrecognized net losses		263			231			790			692
Net periodic benefit cost	$	271		$	307		$	813		$	920

	RPC, INC.


	/s/ Richard A. Hubbell
Date: November 4, 2005	Richard A. Hubbell
	President and Chief Executive Officer
	(Principal Executive Officer)


	/s/ Ben M. Palmer
Date: November 4, 2005	Ben M. Palmer
	Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

	Three months ended September 30,				Nine months ended September 30
(In thousands)	2005		2004		2005		2004

Net income as reported	$	23,107	$	10,237	$	44,944	$	23,512
Change in unrealized gain on securities, net of taxes		129		38		261		31
Comprehensive income	$	23,236	$	10,275	$	45,205	$	23,543